Filed Pursuant to Rule 424(b)(4)
Registration Statement No. 333-273841
PROSPECTUS
23,571,429 Series 1 Units, each consisting
of One Ordinary Share
and
One Series 2024-A Warrant to Purchase One Ordinary Share and One Series 2024-C Warrant to Purchase One Ordinary Share
and
0 Series 2 Units, each consisting
of One Pre-Funded Series 2024-B Warrant to Purchase
One
Ordinary Share and One Series 2024-A Warrant
to
Purchase One Ordinary Share and One Series 2024-C Warrant to Purchase One Ordinary Share
and
Placement
Agent Warrants to Purchase Up to 1,035,714 Ordinary Shares
and
1,035,714
Ordinary Shares Underlying the Placement Agent Warrants
Genius
Group Limited
We
are offering for sale up to 23,571,429 Series 1 units (at a public offering price of $0.35 per unit (the “public
offering price”), with each Series 1 unit consisting of one ordinary share and one Series 2024-A warrant to purchase one ordinary
share and one Series 2024-C warrant to purchase one ordinary share. Each full Series 2024-A warrant entitles the holder thereof to purchase
one ordinary share. Each full Series 2024-C warrant entitles the holder thereof to purchase one ordinary share. Each Series 1 unit will
be sold at a fixed price of $0.35 (at the public offering price) per Series 1 unit until the completion of this offering.
The Series 1 units will not be issued or certificated. The ordinary shares and the Series 2024-A warrants and Series 2024-C warrants
are immediately separable and will be issued separately but will be purchased together in this offering.
We
are also offering to those purchasers, whose purchase of Series 1 units in this offering would otherwise result in the purchaser, together
with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of
our outstanding ordinary shares following the consummation of this offering, the opportunity to purchase, if such purchaser so chooses,
to purchase, in lieu of some or all Series 1 units, up to 23,571,429 Series 2 units. Each Series 2 unit will consist of one pre-funded
Series 2024-B warrant to purchase one ordinary share and one Series 2024-A warrant to purchase one ordinary share and one Series 2024-C
warrant to purchase one ordinary share. Each full pre-funded Series 2024-B warrant entitles the holder thereof to purchase one ordinary
share. Each Series 2 unit will be sold at the public offering price minus $0.0001 (which is the per share exercise price of each
pre-funded Series 2024-B warrant). For each Series 2 unit we sell, the number of Series 1 units we are offering will be decreased on
a one-for-one basis. Because we will issue one Series 2024-A warrant and one Series 2024-C warrant as part of each Series 1 unit and
Series 2 unit, the number of Series 2024-A warrants and Series 2024-C warrants sold in this offering will not change as a result of a
change in the mix of the Series 2 units and Series 1 units sold. The Series 2 units will not be issued or certificated. The pre-funded
Series 2024-B warrants and the Series 2024-A warrants and Series 2024-C warrants are immediately separable and will be issued separately
but will be purchased together in this offering. No Series 2 units or pre-funded Series 2024-B warrants have been sold in this offering.
The
ordinary shares issuable from time to time upon exercise of the Series 2024-A warrants, the Series 2024-C warrants, the
pre-funded Series 2024-B warrants and the Placement Agent Warrants (as hereinafter defined) are also being offered pursuant to
this prospectus.
The
Series 2024-A warrants, with an exercise price of $0.35 per ordinary share, will be exercisable commencing on the date of issuance
and will expire on the five-year anniversary of the date of issuance. The Series 2024-C warrants, with an exercise price of $0.35
per ordinary share, will be exercisable commencing on the date of issuance and will expire on the 18-month anniversary of the date
of issuance. The pre-funded Series 2024-B warrants will be exercisable commencing on the date of issuance and will expire on the five-year
anniversary of the date of issuance, with an exercise price of $0.0001 per ordinary share. The public offering price per Series
2 unit will be pre-paid, except for a nominal exercise price of $0.0001 per ordinary share subject to the pre-funded Series 2024-B warrants,
upon issuance of the pre-funded Series 2024-B warrants and, consequently, no additional payment or other consideration (other than the
nominal exercise price of $0.0001 per share) will be required to be delivered to us by the holder upon exercise of the pre-funded Series
2024-B warrants. See “Description of Warrants” for more information on the securities offered hereby.
Roger
Hamilton has agreed to convert $1 million of his loan to the Company, as described in further detail in this prospectus, into Series
1 Units upon the same terms and conditions as offered by this prospectus (the “Founder Securities”). The Founder Securities
are included in the Series 1 Units being offered pursuant to this prospectus.
The
placement agent has agreed to use reasonable best efforts to arrange for the sale of the securities. There is no required minimum number
of securities or amount of proceeds that must be sold as a condition to completion of this offering.
Our
ordinary shares are listed on the NYSE American under the symbol “GNS.” The Series 2024-A warrants, the Series
2024-C warrants and the pre-funded Series 2024-B warrants are not, and will not be, listed for trading on any national securities
exchange or other trading system.
We
are both an “emerging growth company” and a “foreign private issuer” as defined under the U.S. federal securities
laws and, as such, may elect to comply with certain reduced public company reporting requirements for this and future filings. See “Prospectus
Summary — Implications of Being an Emerging Growth Company” and “Prospectus Summary — Implications
of Being a Foreign Private Issuer.”
Investing
in our ordinary shares involves a high degree of risk. See “Risk Factors” beginning on page S-14. Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
We
have retained H.C. Wainwright & Co., LLC, or the placement agent, as our exclusive placement agent to use its reasonable best
efforts to solicit offers to purchase the securities in this offering. The placement agent has no obligation to buy any of the
securities from us or to arrange for the purchase or sale of any specific number or dollar amount of the securities. We have agreed
to pay the placement agent fees set forth in the table below, which assumes that we sell all of the securities we are offering.
There is no arrangement for funds to be received in escrow, trust or similar arrangement. There is no minimum offering requirement
as a condition of closing of this offering. We will bear all costs associate with the offering. See “Plan of
Distribution” for more information regarding these arrangements.
| |
Per Series 1 Unit | |
|
Total | |
Public offering price | |
$ | 0.35 | |
|
$ | 8,250,000 | |
Placement agent fees(1) | |
$ | 0.02625 | |
|
$ | 543,750 | |
Proceeds, before expenses, to us(2) | |
$ | 0.32375 | |
|
$ | 7,706,250 | |
|
(1) |
The
placement agent fee does not reflect any selling concessions.
We have also agreed to reimburse the placement agent’s legal fees and expenses in the amount of up to $150,000. See “Plan
of Distribution” for a description of the compensation and Placement Agent Warrants to be received by the placement
agent. |
|
|
|
|
(2) |
Because
there is no minimum offering amount required as a condition to closing in this offering, the actual public offering amount, placement
agent fees and proceeds to us, if any, are not presently determinable and may be substantially less than the total maximum offering
amounts set forth above. For more information, see “Plan of Distribution.” |
Delivery
of the securities offered hereby is expected to be made on or about January 17, 2024.
H.C. WAINWRIGHT &
CO.
The
date of this prospectus is January 11, 2024.
Table
Of Contents
About
This Prospectus
Except
where indicated or where the context otherwise requires, the terms “Genius Group,” “we,” “us,” “our,”
the “Company,” “our Company”, “company” and “our business” refer to Genius Group
Limited together with its consolidated subsidiaries. For explanations of certain other terms used in this prospectus, please read “Prospectus
Summary — Overview — A Brief Glossary” beginning on page S-3.
You
should rely only on the information contained in this prospectus. We have not, and the placement agent has not, authorized anyone
to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on
it. We are not, and the placement agent is not, making an offer to sell securities in any jurisdiction where the offer or sale
is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date
on the front of this prospectus.
For
investors outside of the United States of America (the “United States” or the “U.S.”): Neither we nor the placement
agent has done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction, other
than the United States, where action for that purpose is required. Persons outside of the United States who come into possession of this
prospectus must inform themselves about, and observe any restrictions relating to, the offering of our ordinary shares and the distribution
of this prospectus outside of the United States.
The
Company’s reporting currency is the U.S. dollar. The functional currencies of the Genius Group and its subsidiaries are their local
currencies (Singapore dollar, British pound, Indonesian rupiah and South African Rand, New Zealand Dollar) and the functional currency
of ERL, UAV and RF is the U.S. dollar. The Company engages in foreign currency denominated transactions with customers and suppliers,
as well as between subsidiaries with different functional currencies. Gains and losses resulting from transactions denominated in non-functional
currencies are recognized in earnings.
.
Unless
otherwise noted, (i) all industry and market data in this prospectus is presented in U.S. dollars, (ii) all financial and other data
related to Genius Group in this prospectus is presented in U.S. dollars, (iii) all references to “$” or “USD”
in this prospectus (other than in our financial statements) refer to U.S. dollars, and (iv) all references to “S$”
or “SGD” in this prospectus refer to Singapore dollars.
Our
fiscal year end is December 31. References to a particular “fiscal year” are to our fiscal year ended December 31 of that
calendar year. Our audited consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”), as issued by the International Accounting Standards Board.
We
obtained the industry, market and competitive position data in this prospectus from our own internal estimates, surveys, and research
as well as from publicly available information, industry and general publications and research, surveys and studies conducted by third
parties. None of the independent industry publications used in this prospectus were prepared on our behalf. Industry publications, research,
surveys, studies and forecasts generally state that the information they contain has been obtained from sources believed to be reliable,
but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained
from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this prospectus,
and to risks due to a variety of factors, including those described under “Risk Factors.” These and other factors could cause
results to differ materially from those expressed in these forecasts and other forward-looking information.
Unless
we indicate otherwise or the context otherwise requires, all information in this prospectus gives effect to the 6-for-1 share split with
respect to our ordinary shares, which took effect on April 29, 2021.
We
have proprietary rights to trademarks used in this prospectus that are important to our business, many of which are registered under
applicable intellectual property laws. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus
are without the ®, ™ and other similar symbols, but the absence of such references is not intended to indicate, in any way,
that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks,
service marks and trade names.
This
prospectus contains additional trademarks, service marks and trade names of others. All trademarks, service marks and trade names appearing
in this prospectus are, to our knowledge, the property of their respective owners. We do not intend our use or display of other companies’
trademarks, service marks or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other person.
This
prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, our ordinary shares were not
offered or sold or caused to be made the subject of an invitation for subscription or purchase and will not be offered or sold or caused
to be made the subject of an invitation for subscription or purchase, and this prospectus or any other document or material in connection
with the offer or sale, or invitation for subscription or purchase, of our ordinary shares, has not been circulated or distributed, nor
will it be circulated or distributed, whether directly or indirectly, to any person in Singapore other than (i) to an institutional investor
(as defined in Section 4A of the Securities and Futures Act 2001 of Singapore, as modified or amended from time to time (“SFA”))
pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of
the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the
SFA and (where applicable) Regulation 3 of the Securities and Futures (Classes of Investors) Regulations 2018, or (iii) otherwise pursuant
to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where
our ordinary shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
(a)
a corporation (which is not an accredited investor
(as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned
by one or more individuals, each of whom is an accredited investor; or
(b)
a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust
is an individual who is an accredited investor, securities or securities-based derivatives contracts (each term as defined in Section
2(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be
transferred within six months after that corporation or that trust has acquired the ordinary shares pursuant to an offer made under Section
275 of the SFA, except:
| ➢ |
to
an institutional investor or to a relevant person, or to any person arising from an offer
referred to in Section 275(1A) of the SFA or Section 276(4)I(ii) of the SFA; |
| ➢ |
where
no consideration is or will be given for the transfer; |
| ➢ |
where
the transfer is by operation of law; |
| ➢ |
as
specified in Section 276(7) of the SFA; or |
| ➢ |
as
specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities
and Securities-based Derivatives Contracts) Regulations 2018. |
Any
reference to the SFA is a reference to the Securities and Futures Act 2001 of Singapore and a reference to any term as defined in the
SFA or any provision in the SFA is a reference to that term as modified or amended from time to time including by such of its subsidiary
legislation as may be applicable at the relevant time.
Notification
under Section 309B(1)(c) of the SFA: The Company has determined, and hereby notifies all persons (including relevant persons (as defined
in Section 309A(1) of the SFA)) that the ordinary shares are prescribed capital markets products (as defined in the Securities and Futures
(Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale
of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).
By
accepting this prospectus, the recipient hereof and thereof represents and warrants that such recipient is entitled to receive it in
accordance with the restrictions set forth above and agrees to be bound by the limitations contained herein. Any failure to comply with
these limitations may constitute a violation of law.
PROSPECTUS
SUMMARY
This
summary highlights certain information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including
our financial statements and related notes and the risks described under “Risk Factors.” Our actual results and future events
may differ significantly based upon a number of factors. The reader should not put undue reliance on the forward-looking statements in
this document, which speak only as of the date on the cover of this prospectus.
Overview
A
Brief Glossary
To
aid in the understanding the entities, acquisitions, products, services and certain other concepts referred to in this prospectus, the
following non-exhaustive glossary of terms is provided:
AI
is an abbreviation of Artificial Intelligence and refers to technology that enables machine learning, specifically in the case of
Genius Group where our Genie virtual assistant is able to recommend personalized steps for each student based on Genie learning the personal
strengths, passions, purpose, preferences and level of each student through their inputs on our Edtech platform.
Acquisitions refers
to the five companies that we acquired following our IPO including Revealed Films acquired in Oct 2022. The acquisition companies are
Education Angels, E-Square, Property Investors Network, University of Antelope Valley and Revealed Films.
Certification
refers to the digital courses on our GeniusU platform that faculty members take in order to be certified to mentor students on GeniusU,
and to be able to add their own courses and products to GeniusU.
City
Leader refers to our Mentors who host monthly events in their city to support the Students and Mentors in their local area.
E-Square
refers to E-Squared Education Enterprises (Pty) Ltd, a South African private limited company and one of the Acquisitions as defined
below.
Edtech
is an abbreviation of Educational Technology and refers to technology designed to improve the effectiveness, efficiency and experience
of the education process. Genius Group is focused on growing as an Edtech group with the ability to scale rapidly and operate globally.
Education
Angels refers to Education Angels in Home Childcare Limited, a New Zealand private limited company and one of the Acquisitions as
defined below.
Entrepreneurs
Institute refers to Wealth Dynamics Pte Ltd, a Singapore private limited company and one of the companies in the Pre-IPO Group.
Entrepreneur
Resorts refers to Entrepreneur Resorts Limited, a Seychelles public listed company on the Seychelles Merj Stock Exchange (Ticker:
ERL). Entrepreneur Resorts was acquired by Genius Group in 2020 (spin-off completed on October 2, 2023).
Genius Group (or
the Group)
refers to the entire group of companies within Genius Group, which include the four companies in the Pre-IPO Group and, following the
closing of their acquisitions, the five Acquisitions as defined below
Genius
Group Ltd refers specifically to the holding company, Genius Group Limited, the Singapore public limited company which owns the other
companies in the Group. Prior to a corporate name change in August 2019, it was known as GeniusU Pte Ltd. For the avoidance of
doubt, references in this prospectus to Genius Group Ltd with respect to periods prior to its August 2019 name change should be
understood as references to the company as operated under its previous name.
GeniusU
Ltd refers to the company formed in August 2019 under the corporate name GeniusU Pte Ltd, and subsequently converted to a public
company, GeniusU Ltd in May 2021 (as distinct from its parent Genius Group Ltd, the current Group holding company, which until August
2019 used the name GeniusU Pte Ltd).
GeniusU,
when used without any corporate suffix or otherwise not as part of a corporate name, refers to the Edtech platform including website,
mobile app, AI system, data and software system under the GeniusU brand.
IASB
refers to International Accounting Standards Board.
IFRS
refers to International Financial Reporting Standards as issued by IASB.
Mentor
refers to our faculty members who have taken and passed Certifications on GeniusU.
microcamp
refers to courses that are a combination of digital content on our GeniusU Edtech platform and live in-person courses conducted with
our Mentors.
microdegree
refers to the digital courses on our GeniusU Edtech platform. These are a combination of video, audio and text-based learning with
assessments and exercises that students can take in their own time, on their own or with the guidance of our faculty.
microschool
refers to the scheduled, live digital courses on our GeniusU Edtech platform. These are similar in format to microdegrees but differ
in that they are conducted live together with other students and the guidance of our faculty, with live interaction, feedback and challenge-based
presentations, competitions and awards.
Partners
refer to all individuals who are creating, marketing delivering or hosting courses on GeniusU and PIN, and all faculty members delivering
courses in all other Group companies.
Pre-IPO
Group refers to the four companies which were already operating as a group in 2020 prior to the Acquisitions closed in 2022, namely
Genius Group Ltd, GeniusU Ltd, Entrepreneurs Institute and Entrepreneur Resorts.
Property
Investors Network (or PIN) refers to Property Investors Network Ltd combined with its sister company Mastermind Principles
Limited, a United Kingdom (“U.K.”) private limited company and one of the Acquisitions as defined above.
Revealed
Films (or RF) refers to Revealed Films Inc, US Corporation and one of the Acquisitions as defined above.
students
refer to all individuals who have registered for courses in our Group companies. This is further divided into Free Students, who
have registered for free courses, and Paying Students, who have registered and paid for courses.
University
of Antelope Valley (or UAV) refers to University of Antelope Valley, Inc., a California corporation and one of the Acquisitions
as defined above.
Our
Company
We
believe that we are a world leading entrepreneur Edtech and education group based on student numbers with a student base of 3.34
million on GeniusU at the end of June 2023. Our mission is to disrupt the current education model with a student-centered, lifelong
learning curriculum that prepares students with the leadership, entrepreneurial and life skills to succeed in today’s market.
To
help achieve our mission, we have completed an IPO on NYSE American, on April 14, 2022 and then dual listed the company on Upstream on
April 6, 2023 (although we subsequently found that there was little demand for Upstream and on September 19, 2023, Genius Group. Ltd.
publicly announced that it had commenced the process to delist its securities from Upstream, which process was completed
on September 29, 2023. The Genius Group will have no further contact with Upstream as a result of this delisting. It will not
be involved with or take part in any distribution of or listing of the shares of its spun off subsidiary, Entrepreneur Resorts Ltd (“ERL”)
on Upstream or any other exchange, which will be the sole responsibility of ERL. The decision to delist the Company from Upstream is
due to complex securities regulations arising from the dual listing on Upstream and NYSE and de minimis use of Upstream by GNS shareholders).
We have also raised additional capital through a follow-on private placement of a Convertible Note in September 2022. We grew
from a Pre-IPO Group of four companies to a post IPO Group of nine companies, once the five Acquisitions closed.
Starting from October 30, 2023, U.S. individuals
will no longer have the authorization to engage in securities trading activities (including buying, selling, or depositing) on the Upstream/MERJ
Exchange. All U.S. shareholders will be promptly removed from Upstream and their holdings will be transferred back to the ERL book entry
system. Investors will still need to follow the process to claim their ERL shares, but these shares will be exclusively held with ERL
through the registrar. Shareholders won’t be able to view their positions on Upstream, as they will no longer be maintained in
Upstream accounts. Trading these securities won’t be possible after a 6-month period, and shareholders will remain as such until
ERL lists on another market or until the SEC accepts the Upstream/MERJ position of 15A-6.
Our
Pre-IPO Group includes our holding company, Genius Group Ltd, our Edtech platform, GeniusU Ltd, and two companies that we acquired: Entrepreneurs
Institute in 2019 and Entrepreneur Resorts in 2020 (spin-off completed on October 2, 2023).
The
entrepreneur education system of our Pre-IPO Group has been delivered virtually and in-person, in multiple languages, locally and globally
mainly via our GeniusU Edtech platform to adults seeking to grow their entrepreneur and leadership skills. Our partners and community
are global with an average of 8,900 new students joining our GeniusU platform each week in 2023. Our City Leaders have
been conducting our events (physically or virtually) in over 100 cities and over 2,500+ faculty members have been operating their microschools
using our online tools.
We
are now expanding our education system to age groups beyond our adult audience, to children and young adults. The five Acquisitions are
our first step towards this. They include: Education Angels, which provides early learning in New Zealand for children from 0-5 years
old; E-Square, which provides primary and secondary school education in South Africa; University of Antelope Valley, which provides vocational
certifications and university degrees in California, USA; Property Investors Network, which provides property investment courses and
events in England, UK; and Revealed Films, a media production company that specializes in multi-part documentaries.
Our
plan is to combine their education programs with our current education programs and Edtech platform as part of one lifelong learning
system, and we have selected these acquisitions because they already share aspects of our Genius Curriculum and our focus on entrepreneur
education.
The
five Acquisitions have added $7.6 million in revenue to the Group in the period ended June 30, 2023, which represents
85% of the $8.9 million pro forma Group revenue during this period, while the Pre-IPO Group generated $1.4 million
(excluding ERL). For the year ended December 31, 2022, the five Acquisitions have added $18.6 million in revenue to the Group, which
represents 79% of the $23.5 million pro forma Group revenue during this period, while the Pre-IPO Group generated $4.9 million.
In
coming years, we plan to continue the growth of our Group through a combination of organic growth of our Edtech platform together with
the acquisition of various education companies that we believe provide complementary programs that can be added to our Genius Curriculum.
This Prospectus provides details of both our acquisition strategy together with our plans to integrate these Acquisitions together
with future acquisitions into our Edtech platform, “entrepreneur education” vision, Genius Curriculum and “freemium”
student and partner conversion models.
We
define “entrepreneur education” as personalized discovery-based learning that leads to higher levels of self-awareness, self-mastery
and self-expression. We believe this in turn develops leadership and entrepreneurial skills through which students can independently
create value and “create a job” rather than being dependent on a system in which they need to “get a job”. We
believe these skills can be nurtured from an early age.
We
also believe these skills can be learned at any age, enabling adults to reskill and upskill themselves. We describe our Genius Curriculum,
together with the philosophy, principles, learning methodology, course content and delivery of our curriculum in the Business section
set forth below in this prospectus.
On December
15, 2023, we publicly disclosed that we have revised our guidance from a net loss of $17 million to a net profit of $3 million as a result
to the omission of certain non-cash items.
Roger Hamilton has agreed to convert $1 million
of his loan to the Company into Series 1 Units upon the same terms and conditions as offered by this prospectus (the “Founder Securities”).
The remaining balance of the loan of approximately $1.1 million shall be repaid in cash at a date no sooner than July 1, 2024.
Summary
of Risks Affecting Our Company
The
following is a summary of certain, but not all, of the risks that could adversely affect our business, operations and financial results.
If any of the risks actually occur, our business could be materially impaired, the trading price of our ordinary shares could
decline, and you could lose all or part of your investment.
Risks
Related to Our Business and Industry (All Group companies)
|
➢ |
We
are a global business subject to complex economic, legal, political, tax, foreign currency and other risks associated with international
operations, which risks may be difficult to adequately address. |
|
➢ |
Our
growth strategy anticipates that we will create new products, services, and distribution channels and expand existing distribution
channels. If we are unable to effectively manage these initiatives, our business, financial condition, results of operations and
cash flows would be adversely affected. |
|
➢ |
Our
growth may have a negative effect on the successful expansion of our business, on our people management, and on the increase in complexity
of our software and platforms. |
|
➢ |
If
our growth rate decelerates significantly, our prospects and financial results would be adversely affected, preventing us from achieving
profitability. |
|
➢ |
We
may be unable to recruit, train and/or retain qualified teachers, mentors, and other skilled professionals. |
|
➢ |
Our
business may be materially adversely affected if we are not able to maintain or improve the content of our existing courses or to
develop new courses on a timely basis and in a cost-effective manner. |
|
➢ |
Failure
to attract and retain students to enroll in our courses and programs, and to maintain tuition levels, may have a material adverse
impact on our business and prospects. |
|
➢ |
If
student performance falls or parent and student satisfaction declines, a significant number of students may not remain enrolled in
our programs, and our business, financial condition and results of operations will be adversely affected. |
|
➢ |
Our
curriculum and approach to instruction may not achieve widespread acceptance, which would limit our growth and profitability. |
|
➢ |
The
continued development of our brand identity is important to our business. If we are not able to maintain and enhance our brand, our
business and operating results may suffer. |
|
➢ |
If
our partnerships are unable to maintain educational quality, we may be adversely affected. |
|
➢ |
There
is significant competition in the market segments that we serve, and we expect such competition to increase; we may not be able to
compete effectively. |
|
➢ |
We
cannot assure you that we will not be subject to liability claims for any inaccurate or inappropriate content in our training programs,
which could cause us to incur legal costs and damage our reputation. |
|
➢ |
We
may be subject to legal liability resulting from the actions of third parties, including independent contractors and teachers, which
could cause us to incur substantial costs and damage our reputation. |
|
➢ |
We
may not have sufficient insurance to protect ourselves against substantial losses. |
|
➢ |
A
cybersecurity attack or other security breach or incident could delay or interrupt service to our users and customers, harm our reputation
or subject us to significant liability. |
Risks
Related to Our Business and Industry
|
➢ |
We
are a growing company with a limited operating history. If we fail to achieve further marketplace acceptance for our products and
services, our business, financial condition and results of operations will be adversely affected. |
|
➢ |
Our
Edtech platform is technologically complex, and potential defects in our platforms or in updates to our platforms could be difficult
or even impossible to fix. |
|
➢ |
System
disruptions, capacity constraints and vulnerability from security risks to our online computer networks could impact our ability
to generate revenues and damage our reputation, limiting our ability to attract and retain students. |
|
➢ |
Our
current success and future growth depend on the continued acceptance of the Internet and the corresponding growth in users seeking
educational services on the Internet. |
|
➢ |
We
are susceptible to the illegal or improper use of our content, Edtech and platform (whether from students, teachers, mentors, management
personnel and other employees, or third parties), or other forms of misconduct, which could expose us to liability and damage our
business and brand. |
Risks
Related to Our Business and Industry (Specific to Acquisitions)
|
➢ |
We
have acquired the acquisitions and may pursue other strategic acquisitions or investments. The failure of an acquisition or investment
(including but not limited to the Acquisitions) to be completed or to produce the anticipated results, or the inability to fully
integrate an acquired company, could harm our business. |
|
➢ |
Public
perception and regulatory changes in the primary school and secondary school systems in countries that E-Square may expand to may
have a materially adverse impact on the company. |
|
➢ |
Our
growth plans for E-Square and our plans to expand into the primary school and high school markets will be a complex and lengthy process
where future success is not assured. |
|
➢ |
If
we cannot maintain student enrollments and maintain tuition levels in our Acquisition, UAV, the university’s results of operations
may be materially adversely affected. |
Risks
Related to Investing in a Foreign Private Issuer or a Singapore Company
|
➢ |
As
a foreign private issuer, we are permitted to follow certain home country corporate governance practices in lieu of certain requirements
under the NYSE American listing standards. This may afford less protection to holders of our ordinary shares than U.S. regulations. |
|
➢ |
We
are a foreign private issuer and, as a result, we are not subject to U.S. proxy rules and are instead subject to the Securities Exchange
Act of 1934, as amended (the “Exchange Act”) reporting obligations that, to some extent, are more lenient and less detailed
than those for a U.S. issuer. |
|
➢ |
We
may lose our foreign private issuer status, which would then require us to comply with the Exchange Act’s domestic reporting
regime and cause us to incur additional legal, accounting and other expenses. |
6-for-1
Share Split
On
April 29, 2021, we effected a 6-for-1 share split with respect to our ordinary shares. Unless we indicate otherwise or the context otherwise
requires, all information in this prospectus gives effect to this share split.
Implications
of Being an Emerging Growth Company
We
qualify as an “emerging growth company” (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012
(the “JOBS Act”). We had less than $1.07 billion in revenue during our last fiscal year, and have not tripped any of the
measures that would cause us to no longer qualify as an EGC. As such, we may take advantage of reduced public reporting requirements.
These provisions include, but are not limited to:
|
➢ |
Being
permitted to present only two years of audited financial statements and only two years of related Management’s Discussion and
Analysis of Financial Condition and Results of Operations in our filings with the SEC; |
|
➢
|
Not
being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting; |
|
➢ |
Reduced
disclosure obligations regarding executive compensation in periodic reports, proxy statements and registration statements; and |
|
➢ |
Exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute
payments not previously approved. |
We
may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the date of the first
sale of ordinary shares pursuant to the IPO. However, if certain events occur before the end of such five-year period, including
if we become a “large accelerated filer,” if our annual gross revenues exceed $1.07 billion or if we issue more than $1.0
billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company before the end of such five-year
period.
Section
107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section
7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting
standards. We have elected to take advantage of this extended transition period and acknowledge such election is irrevocable pursuant
to Section 107 of the JOBS Act.
Implications
of Being a Foreign Private Issuer
We report under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), as a non-U.S. company with “foreign private issuer” status. Even
after we no longer qualify as an emerging growth company, so long as we qualify as a foreign private issuer under the Exchange Act, we
are exempt from certain provisions of the Exchange Act and the rules thereunder that are applicable to U.S. domestic public companies,
including:
|
➢ |
the
rules under the Exchange Act that require U.S. domestic public companies to issue financial statements prepared under U.S. Generally
Accepted Accounting Principles (“U.S. GAAP”); |
|
➢ |
the
sections of the Exchange Act that regulate the solicitation of proxies, consents or authorizations in respect of any securities registered
under the Exchange Act; |
|
➢ |
the
sections of the Exchange Act that require insiders to file public reports of their stock ownership and trading activities and that
impose liability on insiders who profit from trades made in a short period of time; and |
|
➢ |
the
rules under the Exchange Act that require the filing with the SEC of quarterly reports on Form 10-Q, containing unaudited financial
and other specified information, and current reports on Form 8-K, upon the occurrence of specified significant events. |
We
file with the SEC, within four months after the end of each fiscal year (or as otherwise required by the SEC), a prospectus on
Form 20-F containing financial statements audited by an independent registered public accounting firm.
We
may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We would cease to be a foreign private
issuer at such time as more than 50% of our outstanding voting securities are held of record by U.S. residents and any of the
following three circumstances applies: (i) the majority of our executive officers or directors are U.S. citizens or residents, (ii) more
than 50% of our assets are located in the United States or (iii) our business is administered principally in the United States. Both
foreign private issuers and emerging growth companies are also exempt from certain of the more extensive SEC executive compensation disclosure
rules. Therefore, if we no longer qualify as an emerging growth company but remain a foreign private issuer, we will continue to be exempt
from such rules and will continue to be permitted to follow our home country practice as to the disclosure of such matters.
Corporate
Information
Our
principal executive offices are located at 8 Amoy Street, #01-01, Singapore 049950, which is also our registered address, and our telephone
number is +65 8940 1200. The address of our website is www.geniusgroup.net. Information contained on, or available through,
our website does not constitute part of, and is not deemed incorporated by reference into, this prospectus. Our agent for service of
process in the United States is Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711.
The
Offering
Series
1 units offered by us in this offering |
|
Up
to 23,571,429 Series 1 units. |
|
|
|
Series
2 units offered by us in this offering |
|
Up
to 23,571,429 Series 2 units. We are offering to those purchasers whose purchase of Series 1 units in this offering would
otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99%
or 9.99%, at the election of the purchaser, of our outstanding ordinary shares following the consummation of this offering, the opportunity
to purchase, if such purchaser so chooses, Series 2 units, in lieu of Series 1 units that would otherwise result in beneficial ownership
in excess of 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding ordinary shares. No Series 2 units have been
sold in this offering. |
|
|
|
Ordinary
shares offered by us in this offering |
|
23,571,429
ordinary shares (assuming the sale of all units
covered by this prospectus, the exercise in full of all pre-funded Series 2024-B warrants included in the Series 2 units, and no
exercise of any Series 2024-A warrants or Series 2024-C warrants included in the Series 1 or Series 2 units). |
|
|
|
Series
2024-A and Series 2024-C warrants offered by us in the offering |
|
Series
2024-A warrants to purchase up to 23,571,429 ordinary shares and Series 2024-C warrants
to purchase up to 23,571,429 ordinary shares. Each full Series 2024-A warrant and
each full Series 2024-C warrant will entitle the holder to purchase one ordinary share. The
Series 2024-A warrants and Series 2024-C warrants will be exercisable commencing on the date
of issuance and will expire on the five-year anniversary of the date of issuance (for the
Series 2024-A warrants) and on the 18 month anniversary of the date of issuance (for the
Series 2024-C warrants), for both series of warrants at an exercise price of $0.35
per share.
This
prospectus also relates to the offering of the shares issuable upon exercise of the Series 2024-A warrants and the Series 2024-C
warrants. The exercise price of the Series 2024-A warrants and Series 2024-C warrants and the number of shares into which
the Series 2024-A warrants and the Series 2024-C warrants may be exercised are subject to adjustment in certain circumstances. |
|
|
|
Pre-funded
Series 2024-B warrants offered by us in the offering |
|
Pre-funded
Series 2024-B warrants to purchase up to 23,571,429 shares. Each full pre-funded Series
2024-B warrant, if any, will entitle the holder to purchase one share. The pre-funded Series
2024-B warrants will be exercisable commencing on the date of issuance and will expire on
the five-year anniversary of the date of issuance, at an exercise price of $0.0001 per share.
The public offering price of $0.35 per share will be pre-paid, except for a
nominal exercise price of $0.0001 per share, upon issuance of the pre-funded Series 2024-B
warrants and, consequently, no additional payment or other consideration (other than the
nominal exercise price of $0.0001 per share) will be required to be delivered to us by the
holder upon exercise. No pre-funded Series 2024-B warrants have been sold in this offering.
This
prospectus also relates to the offering of the ordinary shares issuable upon exercise of the pre-funded Series 2024-B warrants. The
exercise price of the pre-funded Series 2024-B warrants and the number of shares into which the pre-funded Series 2024-B warrants
may be exercised are subject to adjustment in certain circumstances. |
Beneficial
Ownership Limitation in Series 2024-A warrants and Series 2024-C warrants and the pre-funded Series 2024-B warrants |
|
A
holder (together with its affiliates) may not exercise any portion of the Series 2024-A warrants and/or Series 2024-C warrants
and/or pre-funded Series 2024-B warrants to the extent that the holder, together with its affiliates and certain related parties,
would beneficially own more than 4.99% (or, at the election of the holder prior to the date of issuance, 9.99%) of our outstanding
ordinary shares after exercise. The holder may increase or decrease this beneficial ownership limitation to any other percentage
not in excess of 9.99% upon notice to us, provided that, in the case of an increase of such beneficial ownership limitation, such
notice shall not be effective until 61 days following notice to us. |
|
|
|
Shares outstanding after this offering |
|
97,445,213 ordinary shares (assuming the exercise
of all of the pre-funded Series 2024-B warrants and no exercise of any Series 2024-A warrants or Series 2024-C warrants included
in the Series 1 or Series 2 units). |
|
|
|
Use
of proceeds |
|
We
estimate that our net proceeds from this offering will be approximately $6,416,250,
assuming no exercise of any Series 2024-A warrants or Series 2024-C warrants issued in this
offering, after deducting the placement agent’s fees and estimated offering expenses
payable by us.
We
intend to use the net proceeds received from this offering to fund working capital and for other general corporate purposes. See
“Use of Proceeds.”
Because
this is a best efforts offering with no minimum amount of securities or offering proceeds as a condition to closing, we may not sell
all or any of the securities offered hereby. As a result, we may receive significantly less in net proceeds than we currently estimate. |
|
|
|
Risk
factors |
|
Investing
in our securities involves a high degree of risk. See the section entitled “Risk Factors” of this prospectus and the
section entitled “Risk Factors” in the documents incorporated by reference herein for a discussion of factors you should
carefully consider before investing in our securities. |
|
|
|
NYSE
American symbol |
|
“GNS.”
The Series 2024-A warrants, the Series 2024-C warrants and the pre-funded Series 2024-B warrants are not, and will
not be, listed for trading on any national securities exchange or other nationally recognized trading system, including the NYSE
American. |
Unless
otherwise noted, the number of ordinary shares to be outstanding immediately after this offering as set forth above is based on 73,873,784
shares outstanding as of December 27, 2023, and excludes:
| ● | 2,516,581
management
and employee share options issued and reserved. |
| ● | Any
further conversion from the convertible debt issuance or any outstanding warrants. |
Unless
otherwise indicated, the information in this prospectus assumes no exercise of the Series 2024-A warrants or Series 2024-C warrants
or the Placement Agent Warrants (as hereinafter defined) offered hereby.
SUMMARY
COMBINED UNAUDITED PRO FORMA FINANCIAL DATA AND CONSOLIDATED FINANCIAL DATA
Please
refer to the glossary of terms provided in the Prospectus Summary for aid in understanding the entities, acquisitions, products, services
and certain other concepts referred to in the financial data presented herein.
The
following tables set forth summarizes combined pro forma financial data and summary consolidated financial data for the periods and as
of the dates indicated. The summary combined unaudited pro forma financial data below includes the consolidated financials of all companies
in the Genius Group, including the Pre-IPO Group and the Acquisitions as if they were operating as one group in the periods indicated
and excludes the spin-off entity, Entrepreneur Resorts Ltd. The pro forma financials for period ended June 30, 2023 include the
financial data of the Pre-IPO Group and Acquisitions from the audited financials and the unaudited financial data of the Acquisitions.
The
summary income data for the years ended December 31, 2022 and the interim periods ended June 30, 2023 and 2022 and the
summary balance sheet data as of June 30, 2023 and December 31, 2022 for the Group are derived from the consolidated
financial statements included in the Company’s Amended Annual Report. Our consolidated financial statements have been prepared
in U.S. dollars and in accordance with IFRS, as issued by the IASB
On January 30, 2023, the Board of Directors
for Genius Group Ltd, approved with conditions of Singapore court approval, the spinoff of Entrepreneur Resorts Ltd. This spinoff was
completed in order to further its strategy for streamlining and rationalize the group’s operations into Genius with its Edtech
focus, and ERL, with its hospitality focus. On August 1, 2023, the Singapore court approved the group to spinoff of ERL from the group
which enabled the management teams of both companies to grow their respective business models most effectively. The Company also
announced the record date on August 31, 2023 with the spin-off completed on October 2, 2023.
Genius
Group is made up of nine companies (taking into account the Acquisitions) that have varying financial performance. For this reason, you
should read the summary combined pro forma financial data in conjunction with our audited consolidated financial statements and related
notes beginning on page F-1 of the Company’s Prospectus, and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” included elsewhere in the Company’s Prospectus. Our historical results do not
necessarily indicate our expected results for any future periods.
Financial Statement Data
| |
Group Unaudited Financials Six
months Ended June 30, | | |
Group Audited Financials Year
Ended December 31, | |
| |
2023 | | |
2022 | | |
2022 | | |
2021 | |
| |
(USD 000’s) | | |
(USD 000’s) (Restated) | | |
(USD
000’s) | | |
(USD 000’s) | |
Sales | |
| 11,796 | | |
| 5,343 | | |
| 18,194 | | |
| 8,295 | |
Cost of goods sold | |
| (5,593 | ) | |
| (3,112 | ) | |
| (9,555 | ) | |
| (5,537 | ) |
Gross profit | |
| 6,203 | | |
| 2,231 | | |
| 8,639 | | |
| 2,757 | |
Other Operating Income | |
| 4 | | |
| 225 | | |
| 280 | | |
| 324 | |
Operating Expenses | |
| (15,369 | ) | |
| (5,428 | ) | |
| (50,502 | ) | |
| (7,250 | ) |
Operating Loss | |
| (9,162 | ) | |
| (2,972 | ) | |
| (41,583 | ) | |
| (4,168 | ) |
Other income | |
| 68 | | |
| 31 | | |
| 419 | | |
| 0 | |
Other Expense | |
| (2,005 | ) | |
| (580 | ) | |
| (15,151 | ) | |
| (450 | ) |
Net Loss Before Tax | |
| (11,099 | ) | |
| (3,521 | ) | |
| (56,315 | ) | |
| (4,618 | ) |
Tax Benefits | |
| 325 | | |
| 24 | | |
| 1,064 | | |
| 129 | |
Net Loss After Tax | |
| (10,774 | ) | |
| (3,497 | ) | |
| (55,252 | ) | |
| (4,489 | ) |
Other Comprehensive Loss | |
| (600 | ) | |
| (70 | ) | |
| (1,045 | ) | |
| 230 | |
Total Loss | |
| (11,374 | ) | |
| (3,567 | ) | |
| (56,297 | ) | |
| (4,259 | ) |
Net income per share, basic and diluted | |
| (0.32 | ) | |
| (0.20 | ) | |
| (2.44 | ) | |
| (0.28 | ) |
Weighted-average number of shares outstanding, basic and diluted | |
| 33,668,483 | | |
| 17,794,634 | | |
| 22,634,366 | | |
| 16,155,812 | |
| |
Group Unaudited
Financials Six
months ended June 30 | | |
Group
Audited Financials year ended December
31, | |
| |
2023 | | |
2022 | | |
2021 | |
| |
(USD
000’s) | | |
(USD
000’s) | | |
(USD
000’s) | |
Summary
Balance Sheet Data: | |
| | | |
| | | |
| | |
Total
current assets | |
| 9,350 | | |
| 24,251 | | |
| 6,496 | |
Total
non-current assets | |
| 66,052 | | |
| 67,009 | | |
| 11,099 | |
Total
Assets | |
| 75,402 | | |
| 91,260 | | |
| 17,595 | |
Total
current liabilities | |
| 17,486 | | |
| 23,378 | | |
| 7,140 | |
Total
non-current liabilities | |
| 51,776 | | |
| 53,927 | | |
| 2,469 | |
Total
Liabilities | |
| 69,262 | | |
| 77,305 | | |
| 9,609 | |
Total
Stockholders’ Equity | |
| 6,140 | | |
| 13,955 | | |
| 7,986 | |
Total
Liabilities and Shareholders’ Equity | |
| 75,402 | | |
| 91,260 | | |
| 17,595 | |
Pro
forma Financials
Pro
forma financials are derived by reducing the financial impact of spin off of Entrepreneur Resorts Ltd and adding back acquisition financials
for the period prior to acquisition date. Due to the intercompany receivable from Entrepreneur Resorts Ltd, the balance sheet effect
of spin-off results in an increase in assets (current assets) which is reflected by a negative balance under Entrepreneur Resorts Ltd.
| |
Genius
Group Unaudited Pro
forma Six
Months Ended June
30, 2023 | |
| |
Unaudited Financials | | |
Entrepreneur Resorts | | |
Acquisitions | | |
Pro forma Financials | |
| |
(USD 000’s) | | |
(USD 000’s) | | |
(USD 000’s) | | |
(USD 000’s) | |
Sales | |
| 11,796 | | |
| (2,834 | ) | |
| - | | |
| 8,962 | |
Cost of goods sold | |
| (5,594 | ) | |
| 963 | | |
| - | | |
| (4,631 | ) |
Gross profit | |
| 6,202 | | |
| (1,871 | ) | |
| - | | |
| 4,331 | |
Other Operating Income | |
| 4 | | |
| 3 | | |
| - | | |
| 7 | |
Operating Expenses | |
| (15,369 | ) | |
| 1,613 | | |
| - | | |
| (13,756 | ) |
Operating Loss from the continuing operations | |
| (9,163 | ) | |
| (255 | ) | |
| - | | |
| (9,418 | ) |
| |
Genius
Group Unaudited Pro
forma Year
Ended December
31, 2022 | |
| |
Audited Financials | | |
Entrepreneur Resorts | | |
Acquisitions | | |
Pro forma Financials | |
| |
(USD 000’s) | | |
(USD 000’s) | | |
(USD 000’s) | | |
(USD 000’s) | |
Sales | |
| 18,194 | | |
| (4,660 | ) | |
| 9,936 | | |
| 23,470 | |
Cost of goods sold | |
| (9,555 | ) | |
| 2,776 | | |
| (3,773 | ) | |
| (10,552 | ) |
Gross profit | |
| 8,639 | | |
| (1,884 | ) | |
| 6,162 | | |
| 12,918 | |
Other Operating Income | |
| 280 | | |
| (95 | ) | |
| - | | |
| 185 | |
Operating Expenses | |
| (50,502 | ) | |
| 11,725 | | |
| (6,512 | ) | |
| (45,289 | ) |
Operating Loss from the continuing operations | |
| (41,583 | ) | |
| 9,746 | | |
| (349 | ) | |
| (32,186 | ) |
| |
Genius
Group Unaudited Pro
forma Six
months Ended June
30, 2023 | |
| |
Unaudited Financials | | |
Entrepreneur Resorts | | |
Pro forma Adjustment | | |
Pro forma Financials | |
| |
(USD 000’s) | | |
(USD 000’s) | | |
(USD 000’s) | | |
(USD 000’s) | |
Summary Balance Sheet Data: | |
| | | |
| | | |
| | | |
| | |
Total current assets | |
| 9,350 | | |
| 3,229 | | |
| - | | |
| 12,579 | |
Total non-current assets | |
| 66,052 | | |
| (946 | ) | |
| - | | |
| 65,106 | |
Total Assets | |
| 75,402 | | |
| 2,283 | | |
| - | | |
| 77,685 | |
Total current liabilities | |
| 17,486 | | |
| (2,527 | ) | |
| - | | |
| 14,959 | |
Total non-current liabilities | |
| 51,776 | | |
| (2,266 | ) | |
| - | | |
| 49,511 | |
Total Liabilities | |
| 69,262 | | |
| (4,793 | ) | |
| - | | |
| 64,470 | |
Total Stockholders’ Equity | |
| 6,140 | | |
| 7,076 | | |
| - | | |
| 13,216 | |
Total Liabilities and Shareholders’ Equity | |
| 75,402 | | |
| 2,283 | | |
| - | | |
| 77,686 | |
Non-IFRS
Financial Measures — Adjusted EBITDA
We
have included Adjusted EBITDA in this Prospectus because it is a key measure used by our management and board of directors to
understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and
long-term operational plans. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure
for period-to-period comparisons of our core business. Non-IFRS financial measures are not a substitute for IFRS financial measures.
We
calculate Adjusted EBITDA as Net loss for the period plus income taxes plus/ minus net finance result plus depreciation and amortization
plus/minus share-based compensation expenses plus bad debt provision. Share-based compensation expenses and bad debt provision are included
in General and administrative expenses in the Consolidated Statements of Operations.
Derived from Financial Statement Data
| |
Group Unaudited
Financials Six
months ended June
30, | | |
Group Audited
Financials Year
ended December
31, | |
| |
2023 | | |
2022 | | |
2022 | | |
2021 | |
| |
(USD 000’s) | | |
(USD
000’s) (Restated) | | |
(USD 000’s) | | |
(USD 000’s) | |
Net Loss | |
| (10,775 | ) | |
| (3,497 | ) | |
| (55,252 | ) | |
| (4,489 | ) |
Tax Benefits | |
| (325 | ) | |
| (24 | ) | |
| (1,064 | ) | |
| (129 | ) |
Interest Expense, net | |
| 1,999 | | |
| 99 | | |
| 1,312 | | |
| 450 | |
Depreciation and Amortization | |
| 1,209 | | |
| 836 | | |
| 2,351 | | |
| 1,575 | |
Impairment | |
| - | | |
| 480 | | |
| 28,246 | | |
| - | |
Revaluation Adjustment of Contingent Liabilities | |
| - | | |
| - | | |
| 13,838 | | |
| - | |
Stock Based Compensation | |
| 403 | | |
| 150 | | |
| 1,309 | | |
| 294 | |
Bad Debt Provision | |
| 170 | | |
| - | | |
| 1,509 | | |
| (39 | ) |
Adjusted EBITDA | |
| (7,318 | ) | |
| (1,956 | ) | |
| (7,750 | ) | |
| (2,338 | ) |
Pro
forma Financials
Pro
forma EBITDA is derived by reducing the financial impact of spin off of Entrepreneur Resorts Ltd and adding back acquisition financials
for the period prior to acquisition date.
| |
Genius
Group Unaudited Pro
forma Six
Months Ended June 30, 2023 | |
| |
Unaudited Financials | | |
Entrepreneur Resorts | | |
Acquisitions | | |
Pro forma Financials | |
| |
(USD 000’s) | | |
(USD 000’s) | | |
(USD 000’s) | | |
(USD 000’s) | |
Net Loss | |
| (10,775 | ) | |
| - | | |
| - | | |
| (10,775 | ) |
Tax Benefits | |
| (325 | ) | |
| - | | |
| - | | |
| (325 | ) |
Interest Expense, net | |
| 1,999 | | |
| - | | |
| - | | |
| 1,999 | |
Depreciation and Amortization | |
| 1,209 | | |
| (30 | ) | |
| - | | |
| 1,179 | |
Impairment | |
| - | | |
| - | | |
| - | | |
| - | |
Revaluation Adjustment of Contingent Liabilities | |
| - | | |
| - | | |
| - | | |
| - | |
Stock Based Compensation | |
| 403 | | |
| | | |
| - | | |
| 403 | |
Bad Debt Provision | |
| 170 | | |
| | | |
| - | | |
| 170 | |
Adjusted EBITDA | |
| (7,318 | ) | |
| (30 | ) | |
| - | | |
| (7,348 | ) |
| |
Genius
Group Unaudited Pro
forma Year
Ended December
31, 2022 | |
| |
Audited Financials | | |
Entrepreneur Resorts | | |
Acquisitions | | |
Pro forma Financials | |
| |
(USD 000’s) | | |
(USD 000’s) | | |
(USD 000’s) | | |
(USD 000’s) | |
Net Loss | |
| (55,252 | ) | |
| - | | |
| 348 | | |
| (54,903 | ) |
Tax Benefits | |
| (1,064 | ) | |
| - | | |
| - | | |
| (1,064 | ) |
Interest Expense, net | |
| 1,312 | | |
| - | | |
| 12 | | |
| 1,325 | |
Depreciation and Amortization | |
| 2,351 | | |
| (1,105 | ) | |
| 103 | | |
| 1,348 | |
Impairment | |
| 28,246 | | |
| (7,986 | ) | |
| - | | |
| 20,260 | |
Revaluation Adjustment of Contingent Liabilities | |
| 13,838 | | |
| - | | |
| - | | |
| 13,838 | |
Stock Based Compensation | |
| 1,309 | | |
| (111 | ) | |
| - | | |
| 1,198 | |
Bad Debt Provision | |
| 1,509 | | |
| (9 | ) | |
| 19 | | |
| 1,520 | |
Adjusted EBITDA | |
| (7,750 | ) | |
| (9,211 | ) | |
| 482 | | |
| (16,479 | ) |
Key
Business Metrics
Education
segment — Genius Group (including Acquisitions)
| |
Key Business Metrics – Education Segment | |
| |
For the six months
ended June 30, 2023 | | |
For the year
ended December 31,2022 | | |
For the year
ended December 31,2021 | |
Number of students and users | |
| 5,365,626 | | |
| 4,450,852 | | |
| 2,825,628 | |
Number of Free Students and users | |
| 5,186,477 | | |
| 4,278,933 | | |
| 2,768,530 | |
Number of Paying Students and users | |
| 179,149 | | |
| 171,919 | | |
| 72,422 | |
Number of Partners | |
| 14,942 | | |
| 14,760 | | |
| 11,414 | |
Number of countries of operation | |
| 191 | | |
| 191 | | |
| 191 | |
Marketing Spend | |
| 849,155 | | |
| 1,994,331 | | |
| 1,139,928 | |
Education Revenue | |
| 8,961,780 | | |
| 23,469,609 | | |
| 25,468,253 | |
Revenue from New Paying Students | |
| 2,796,560 | | |
| 10,164,848 | | |
| 7,377,236 | |
New Students | |
| 450,741 | | |
| 1,640,698 | | |
| 890,328 | |
New Paying Students | |
| 8,488 | | |
| 19,681 | | |
| 10,425 | |
Conversion rate | |
| 1.88 | % | |
| 1.20 | % | |
| 1.17 | % |
Average Acquisition Cost per New Paying Student | |
| 100 | | |
| 101 | | |
| 109 | |
Average Annual Revenue per New Paying Student | |
| 329 | | |
| 516 | | |
| 707 | |
Net Income (Loss) margin | |
| (48.48 | )% | |
| (172.07 | )% | |
| (4.56 | )% |
Adjusted EBITDA margin | |
| (29.00 | )% | |
| (11.76 | )% | |
| 4.10 | % |
The
key business metrics for education segment is measured and calculated as
Number
of students and users – The Number of Students, Number of Free Students, and Number of Paying Students are the total numbers
for each at the end of the year. For purposes of determining the Number of Students, we treat each student account that registers with
a unique email as a student and adjust for any cancellations. This number is then divided into the Number of Paying Students, who have
made one or more purchases, and the Number of Free Students, who are utilizing our free courses and products without making a purchase.
Number
of Partners - The Number of Partners is the total number of partners at the end of the year. For purposes of determining our Number
of Partners, we treat each partner account who registers as a partner with an ability to earn on our platform as a partner.
Number
of countries of operation – The Number of Countries of Operation is the total number of countries in which we have students
or partners at the end of the year.
Marketing
Spend - The Marketing Spend is the total annual marketing spend by the business to acquire new students and partners.
Education
Revenue - Education Revenue is all revenue from the education segment of our total revenue.
Revenue
from New Paying Students - Revenue from New Paying Students is the total amount of revenue generated from new paying students for
the year.
New
Students and New Paying Students - New Students is the total number of new students who joined as a student during the period. New
Paying Students is the total number of paying students who have become customers for the first time during the year.
Conversion
Rate - Conversion rate is calculated as the total students (including free students and paying students) converting into paying students
and is derived by dividing the number of new paying students by the total number of new students.
Average
Acquisition Cost per New Paying Student – The Average Acquisition Cost per New Paying Student is calculated by dividing the
Marketing Spend by the Number of New Paying Students.
Average
Annual Revenue per New Paying Student – This metric is calculated as the total revenue for the year derived from New Paying
Students divided by the total number of New Paying Students.
Net
Income (Loss) margin – The net income (Loss) margin is calculated as net income divided by the total education revenue.
Adjusted
EBITDA margin – The adjusted EBITDA margin is calculated as Adjusted EBITDA divided by the total education revenue. The Adjusted
EBITDA is Net Income (Loss) excluding tax expenses, interest expenses, depreciation and amortization, impairment, Revaluation Adjustment
of Contingent Liabilities, stock-based compensation and bad debt provision.
Campus
segment – Entrepreneur Resorts (spin-off completed on October 2, 2023)
| |
Key Business Metrics – Campus Segment | |
| |
For the six months
ended June 30, 2023 | | |
For the year
ended December 31, 2022 | | |
For the year
ended December 31, 2021 | |
Revenue | |
| 2,833,933 | | |
| 4,638,122 | | |
| 3,100,750 | |
No of Locations | |
| 6 | | |
| 6 | | |
| 6 | |
No of Seats/Rooms | |
| 367 | | |
| 367 | | |
| 367 | |
Utilization | |
| 35 | % | |
| 33 | % | |
| 28 | % |
Total Orders | |
| 70,454 | | |
| 136,204 | | |
| 96,390 | |
Revenue Per Order | |
| 40 | | |
| 34 | | |
| 32 | |
The
key business metrics for campus segment is measured and calculated as
Note
on Campus segment business models
Our
campus segment is divided into our three venue models within Entrepreneur Resorts, described as follows
Cafe
— Our Cafe model is our smaller scale venue combining a cafe, co-working space, education and event space, with revenue from food
& beverage, home delivery and venue rental.
Central
— Our Central model is our larger scale venue combining a cafe, co-working space, education and event space, with revenue from
food & beverage, home delivery and venue rental.
Resort
— Our Resort model is our resort campus with revenue from accommodation, food and beverage, spa and ancillary services and conference
facilities.
Revenue
- Revenue is all revenue from the campus segment of our total revenue.
No
of Locations – Location is the total operating location within campus segment.
No
of Seats/Rooms - For Cafe and Central locations, this is a measure of the number of customer seats on premises at the end of the year.
For Resort locations, this is a measure of the daily number of available guest rooms at the end of the year.
Utilization
- Utilization is the percentage of the total capacity of Seats and Rooms that is utilized in orders throughout the year.
Total
Order - This metric is calculated as the total number of customer orders fulfilled by each of our venues during the year. The number
includes dine-in, take away and delivery orders.
Revenue
Per Order - This metric is calculated as Revenue divided by Total Orders.
RISK
FACTORS
Investing
in our ordinary shares is highly speculative and involves a significant degree of risk. You should carefully consider the following risks,
as well as other information contained in this prospectus, before making an investment in our Company. The risks discussed below could
materially and adversely affect our business, prospects, financial condition, results of operations, cash flows, ability to pay dividends
and the trading price of our ordinary shares. Additional risks and uncertainties not currently known to us or that we currently deem
to be immaterial may also materially and adversely affect our business, prospects, financial condition, results of operations, cash flows
and ability to pay dividends, and you may lose all or part of your investment.
Risks
Related to Our Business and Industry (All Group Companies)
Investing
in our ordinary shares is highly speculative and involves a significant degree of risk. You should carefully consider the following risks,
as well as other information contained in this Prospectus, before making an investment in our Company. The risks discussed below
could materially and adversely affect our business, prospects, financial condition, results of operations, cash flows, ability to pay
dividends and the trading price of our ordinary shares. Additional risks and uncertainties not currently known to us or that we currently
deem to be immaterial may also materially and adversely affect our business, prospects, financial condition, results of operations, cash
flows and ability to pay dividends, and you may lose all or part of your investment.
Going
Concern
Pursuant
to IAS 1, Presentation of Financial Statements, the Company is required to and does evaluate at each annual and interim period whether
there are conditions or events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern
within one year after the date that the consolidated financial statements are issued. Based on the definitions in the relevant accounting
standards, and due to recent changes in the Company’s 2022 convertible loan terms in which company elected to pay all future payments
in cash, negative cash flows, and continued net losses, management has determined that without additional capital raised, in the next
twelve months, there is substantial doubt about the Company’s ability to continue as a going concern. This has been disclosed
in the audit report of the Company’s amended audit report published in the form of 20-F/A.
The
Company’s consolidated financial statements as of June 30, 2023 and December 31,2022 have been prepared on a going concern
basis. Although the Company has taken, and plans to continue to take, proactive measures to enhance its liquidity position and provide
additional financial flexibility, including discussions with lenders and bankers, there can be no assurance that these measures, including
the timing and terms thereof, will be successful or sufficient.
The
substantial doubt about the Company’s ability to continue as a going concern may negatively affect the price of the Company’s
ordinary shares, may impact relationships with third parties with whom the Company does business, including customers, vendors
and lenders, may impact the Company’s ability to raise additional capital or implement its business plan.
Risks
Related to Our Business and Industry (All Group Companies)
We
are a global business subject to complex economic, legal, political, tax, foreign currency and other risks associated with international
operations, which risks may be difficult to adequately address.
In
2021, 2022 and first half of 2023, over 90% of our revenues from the Pre-IPO Group were generated from operations outside
of the United States. When including the Acquisitions, over 50% of our pro forma revenues for Genius Group for these same periods were
generated from operations outside of the United States. Our GeniusU Edtech platform has students in 191 countries, each of which is subject
to complex business, economic, legal, political, tax and foreign currency risks. As we continue to expand our international operations
with our Acquisitions, we may have difficulty managing and administering a globally dispersed business and we may need to expend additional
funds to, among other things, staff key management positions, obtain additional information technology infrastructure and successfully
implement relevant course and program offerings for a significant number of international markets, which may materially adversely affect
our business, financial condition and results of operations.
Additional
challenges associated with the conduct of our business overseas that may materially adversely affect our operating results include:
|
➢ |
the
large scale and diversity of our operational institutions present numerous challenges, including difficulty in staffing and managing
foreign operations as a result of distance, language, legal, labor relations and other differences; |
|
➢ |
each
of our programs and services are subject to unique business risks and challenges including competitive pressures and diverse pricing
environments at the local level; |
|
➢ |
difficulty
maintaining quality standards consistent with our brands and with local accreditation requirements; |
|
➢ |
fluctuations
in exchange rates, possible currency devaluations and currency controls, inflation and hyperinflation; |
|
➢ |
difficulty
selecting and monitoring partners in different jurisdictions; |
|
➢ |
compliance
with a wide variety of domestic and foreign laws and regulations; |
|
➢ |
expropriation
of assets by governments; |
|
➢ |
political
elections and changes in government policies; |
|
➢ |
changes
in tax laws, assessments or enforcement by taxing authorities in different jurisdictions; |
|
➢ |
difficulty
protecting our intellectual property rights overseas due to, among other reasons, the uncertainty of laws and enforcement in certain
countries relating to the protection of intellectual property rights; |
|
➢ |
lower
levels of availability or use of the Internet, through which our online programs are delivered; |
|
➢ |
limitations
on the repatriation and investment of funds, foreign currency exchange restrictions and inability to transfer cash back to the United
States without taxation; |
|
➢ |
potential
economic and political instability the countries in which we operate, including student unrest; or |
|
➢ |
business
interruptions from acts of terrorism, civil disorder, labor stoppages, public health risks, crime and natural disasters, particularly
in areas in which we have significant operations. |
Our
success in growing our business profitably will depend, in part, on the ability to anticipate and effectively manage these and other
risks related to operating in various countries. Any failure by us to effectively manage the challenges associated with the maintenance
or expansion of our international operations could materially adversely affect our business, financial condition and results of operations.
Our
growth strategy anticipates that we will create new products, services, and distribution channels and expand existing distribution channels.
If we are unable to effectively manage these initiatives, our business, financial condition, results of operations and cash flows would
be adversely affected.
As
we create new products, services, and distribution channels and expand our existing distribution channels, we expect to face challenges
distinct from those we currently encounter, including:
|
➢ |
The
challenge of tailoring new products and services to new technologies as they develop, including artificial intelligence, augmented
reality and virtual reality; |
|
➢ |
Additional
local competition as we localize our products and services to different countries, cultures and languages, each with new, local distribution
channels; |
|
➢ |
Changing
student habits as new distribution channels for learning content are developed globally; and |
|
➢ |
Unpredictable
market behavior as the education market develops new distribution channels for learning outside the traditional school system, including
via online courses and virtual learning. |
Our
failure to manage these new distribution channels, or any new distribution channels we pursue, may have an adverse effect on our business,
financial condition, results of operations and cash flows.
Our
growth may have a negative effect on the successful expansion of our business, on our people management, and on the increase in complexity
of our software and platforms.
We
are currently experiencing a period of significant expansion and are facing a number of expansion related issues, such as the acquisition
and retention of experienced and talented personnel, cash flow management, corporate culture and internal controls, among others. These
issues and the significant amount of time spent on addressing them may result in the diversion of our management’s attention from
other business issues and opportunities.
We
anticipate that these expansion related issues will increase with our Acquisitions and future growth. In addition, we believe that our
corporate culture and values are critical to our success, and we have invested a significant amount of time and resources building them.
If we fail to preserve our corporate culture and values, our ability to recruit, retain and develop personnel and to effectively implement
our strategic plans may be harmed.
We
must constantly update our software and platforms, enhance and improve our billing and transaction and other business systems, and add
and train new software designers and engineers, as well as other personnel to help us with the increased use of our platforms and the
new solutions and features we regularly introduce.
This
process is time intensive and expensive and may lead to higher costs in the future. Furthermore, we may need to enter into relationships
with various strategic partners, such as online service providers and other third parties necessary to our business. The increased complexity
of managing multiple commercial relationships could lead to execution problems that can affect current and future revenue, and operating
margins.
We
cannot assure you that our current and planned platforms, systems, products, procedures and controls, personnel and third-party relationships
will be adequate to support our future operations. In addition, our current expansion has placed a significant strain on management and
on our operational and financial resources, and this strain is expected to continue. Our failure to manage growth effectively could harm
our business, results of operations and financial condition.
If
our growth rate decelerates significantly, our prospects and financial results would be adversely affected, preventing us from achieving
profitability.
We
believe that our growth depends on a number of factors, including, but not limited to, our ability to:
|
➢ |
Integrate
the Acquisitions into the Group; |
|
➢ |
Continue
to introduce our products and services to new markets; |
|
➢ |
Provide
high-quality support to students and partnerships using our products and services; |
|
➢ |
Expand
our business and increase our market share; |
|
➢ |
Compete
with the products, services, offers, prices and incentives offered by our competitors; |
|
➢ |
Develop
new products, services, offerings and technologies; |
|
➢ |
Identify
and acquire or invest in businesses, products, offerings or technologies that we believe may be able to complement or expand our
platform; and |
|
➢ |
Increase
the positive perception of our brands. |
We
may not be successful in achieving the above objectives. Any slowdown in the demand from students, teachers, mentors, and partnerships
for our products and services caused by changes in customer preferences, failure to maintain our brands, inability to expand our portfolio
of products or services, changes in the global economy, taxes, competition or other factors may lead to a decrease in revenue or growth
and our financial results and future prospects could be negatively affected. We expect that we will continue to incur significant expenses
as a result of our efforts to continue growing, and if we cannot increase our revenue at a faster rate than the increase in our expenses,
we will not be able to achieve profitability.
We
may be unable to recruit, train and/or retain qualified teachers, mentors, and other skilled professionals.
Effective
teachers and mentors are critical to maintaining the quality of our learning system and curriculum and assisting students with their
lessons. The educational content and materials we provide are a combination of content developed in-house, by our teachers, and our mentors.
Teachers and mentors must have strong interpersonal communications skills to be able to effectively instruct students, especially in
virtual settings. They must also possess the technical skills to use our technology-based learning systems and be willing to publish
their content on our platform.
Our
requirement for teachers at all levels has increased with the Acquisitions completed. There is a limited pool of qualified individuals
with these specialized attributes. We must also provide continuous training to teachers and mentors so that they can stay abreast of
changes in student demands, academic standards and other key trends necessary to teach online effectively. We may not be able to recruit,
train and retain enough qualified teachers and mentors to keep pace with our growth while maintaining consistent teaching quality and
robust platform content.
Shortages
of qualified teachers or mentors, or decreases in the quality of our instruction or the amount and quality of educational content we
can produce and offer as a result, whether actual or perceived, would have an adverse effect on our business.
Our
success also depends in large part on our senior management and key personnel as well as in general upon highly trained finance, technical,
recruiting and marketing professionals in order to operate our business, increase revenues from our existing products and services and
to launch new product offerings. If any of these employees leave us and we fail to effectively manage a transition to new personnel,
or if there is a shortage in the number of people with the requisite skills or we fail to attract and retain qualified and experienced
professionals on acceptable terms, our business, financial conditions and results of operations could be adversely affected.
Our
business may be materially adversely affected if we are not able to maintain or improve the content of our existing courses or to develop
new courses on a timely basis and in a cost-effective manner.
We
continually seek to maintain and improve the content of our existing courses and develop new courses in order to meet changing market
needs. Revisions to our existing courses and the development of new courses may not be accepted by existing or prospective students in
all instances. If we cannot respond effectively to market changes, our business may be materially adversely affected. Even if we are
able to develop acceptable new courses, we may not be able to introduce these new courses as quickly as students require or as quickly
as our competitors are able to introduce competing courses. If we do not respond adequately to changes in market requirements, our ability
to attract and retain students could be impaired and our financial results could suffer. This applies to most of our Pre-IPO Group companies
and Acquisitions.
Establishing
new courses or modifying existing courses also may require us to make investments in specialized personnel and capital expenditures,
increase marketing efforts and reallocate resources away from other uses. We may have limited experience with the subject matter of new
courses and may need to modify our systems and strategy. If we are unable to increase the number of students, offer new courses in a
cost-effective manner or otherwise manage effectively the operations of newly established courses, our business, financial condition
and results of operations could be materially adversely affected.
Failure
to attract and retain students to enroll in our courses and programs, and to maintain tuition levels, may have a material adverse impact
on our business and prospects
The
success of our business depends primarily on the number of student enrollments in the courses and programs we offer on our platform microschools,
and events, and the amount of our course and program fees. As a result, our ability to attract students to enroll in our courses and
programs is critical to the continued success and growth of our business. This, in turn, will depend on several factors, including, among
others, our ability to develop new educational programs and enhance existing educational programs to respond to the changes in market
trends, student demands and government policies, to maintain our consistent and high teaching quality, to market our programs successfully
to a broader prospective student base, to develop additional high-quality educational content, sites and availability of our platform
and to respond effectively to competitive market pressures.
If
our students or their parents perceive that our education quality deteriorated due to unsatisfying learning experiences, which may be
subject to a number of subjective judgments that we have limited influence over, our overall market reputation may diminish, which in
turn may affect our word-of-mouth referrals and ultimately our student enrollment. In addition, the expansion of our offering of courses
and services may not succeed due to competition, our failure to effectively market our new courses and services (whether due to defects
in our marketing tools and/or failure to adjust our strategy in order to meet the needs of current and potential customers), maintain
the quality of our courses and services, or other factors. We may be unable to develop and offer additional educational content on commercially
reasonable terms and in a timely manner, or at all, to keep pace with changes in market trends and student demands. If we are unable
to control the rate of student attrition, which can be affected by various factors outside our control such as students’ personal
circumstances and local socioeconomic factors, our overall enrollment levels are likely to decline or if we are unable to charge tuition
rates that are both competitive and cover our rising expenses, our business, financial condition, cash flows and results of operations
may be materially adversely affected.
If
student performance falls or parent and student satisfaction declines, a significant number of students may not remain enrolled in our
programs, and our business, financial condition and results of operations will be adversely affected.
The
success of our business depends on a family’s decision to have their child continue his or her education through our programs.
This decision is based on many factors, including student achievement and parent and student satisfaction. We expect that, as our enrollments
increase and the portion of students that have not used our learning system for multiple years increases, the average performance of
all students using our learning system may decrease, even if the individual performance of other students improves over time. Additionally,
parent and student satisfaction may decline as not all parents and students are able to devote the substantial time and energy necessary
to complete our curriculum. A student’s satisfaction may also suffer if his or her relationship with the virtual schoolteacher
does not meet expectations. If a student’s performance or satisfaction declines, students may decide not to remain enrolled in
one or more of our programs, financial condition and results of operations will be adversely affected.
Our
curriculum and approach to instruction may not achieve widespread acceptance, which would limit our growth and profitability.
Our
curriculum and approach to instruction are based on students learning how to “create a job” rather than “get a job.”
The goal of this approach is to make students entrepreneurs. This approach, however, is not accepted by all students, academics and educators,
who may favor more traditional and formalistic methods, along with more traditional course offerings and curriculums. Accordingly, some
students, academics and educators are opposed to the principles and methodologies associated with our approach to learning and have the
ability to negatively influence the market for our products and services.
The
continued development of our brand identity is important to our business. If we are not able to maintain and enhance our brand, our business
and operating results may suffer.
Expanding
brand awareness is critical to attracting and retaining students, teachers, and mentors, and for serving additional jurisdictions. We
believe that the quality of our curriculum and management services has contributed significantly to the success of our brand. As we continue
to increase enrollments and extend our geographic reach, maintaining quality and consistency across all of our services and products
may become more difficult to achieve, and any significant and well-publicized failure to maintain this quality and consistency will have
a detrimental effect on our brand. We cannot provide assurances that our new sales and marketing efforts will be successful in further
promoting our brand in a competitive and cost-effective manner. If we are unable to further enhance our brand recognition and increase
awareness of our products and services, or if we incur excessive sales and marketing expenses, our business and results of operations
could be adversely affected.
Each
of our companies has worked hard to establish the value of its individual brand. Brand value may be severely damaged, even by isolated
incidents, particularly if the incidents receive considerable negative publicity. There has been a marked increase in use of social media
platforms, including weblogs (blogs), social media websites, and other forms of Internet-based communications that allow individuals
access to a broad audience of interested persons. We believe students and prospective teachers and mentors value readily available information
about our companies and programs and often act on such information without further investigation or authentication, and without regard
to its accuracy. Social media platforms and devices immediately publish the content their subscribers and participants post, often without
filters or checks on the accuracy of the content posted. Information concerning our Company and our programs may be posted on such platforms
and devices at any time. Information posted may be materially adverse to our interests, it may be inaccurate, and it may harm our performance
and prospects.
The
risk of damage or dilution of brand identity potentially increases during acquisitions, and this risk has increased since we have completed
the Acquisitions and may increase further as we are in the process of integration and expansion.
If
our partnerships are unable to maintain educational quality, we may be adversely affected.
Our
partnerships with institutions, such as universities, and other educational providers and their students are regularly assessed and classified
under the terms of applicable educational laws and regulations. If the partnerships or students receive lower scores from year to year
on any of their assessments, or if there is any drop in the acceptance rates of students into prestigious universities, we may be negatively
affected by perceptions of a decline in the educational quality of our content and Edtech platform, which could adversely affect our
reputation and, as a result, our operating results and financial condition.
There
is significant competition in the market segments that we serve, and we expect such competition to increase; we may not be able to compete
effectively.
Education
markets around the world are competitive and dynamic. We face varying degrees of competition from several discrete education providers
because our learning system integrates many of the elements of the education development and delivery process, including curriculum development,
teacher training and support, lesson planning, testing and assessment, and school performance and compliance management. We compete most
directly with companies that provide online curriculum and support services. Additionally, we expect increased competition from for-profit
post-secondary and supplementary education providers that have begun to offer virtual high school curriculum and services. In certain
jurisdictions and states where we currently serve virtual public schools, we expect intense competition from existing providers and new
entrants. Our competitors may adopt similar curriculum delivery, school support and marketing approaches, with different pricing and
service packages that may have greater appeal in the market. Both public and private not-for-profit institutions with whom we currently
or may in the future compete may have instructional and support resources superior to those in the for-profit sector, and public institutions
can offer substantially lower tuition prices or other advantages that we cannot match. If we are unable to successfully compete for new
business, acquire more companies, or maintain current levels of academic achievement and community interest, our revenue growth and operating
margins may decline. Price competition from our current and future competitors could also result in reduced revenues, reduced margins
or the failure of our product and service offerings to achieve or maintain more widespread market acceptance.
We
may also face direct competition from publishers of traditional educational materials that are substantially larger than we are and have
significantly greater financial, technical and marketing resources. As a result, they may be able to devote more resources to develop
products and services that are superior to our platform and technologies. We may not have the resources necessary to acquire or compete
with technologies being developed by our competitors, which may render our online delivery format less competitive or obsolete.
Our
future success will depend in large part on our ability to maintain a competitive position with our curriculum and our technology, as
well as our ability to increase capital expenditures to sustain the competitive position of our product. We cannot assure you that we
will have the financial resources, technical expertise, marketing, distribution or support capabilities to compete effectively.
Our
business and operations may be adversely affected by economic uncertainty and volatility in the financial markets, including as a result
of the military conflict in Ukraine.
Our
business and results of operations may be adversely affected by various factors that could cause economic uncertainty and volatility
in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the
financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions,
declines in consumer confidence and spending, and geopolitical instability, such as the military conflict in the Ukraine. We cannot at
this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may
negatively impact our business.
Our
business may be materially adversely affected by a general economic slowdown or recession.
Many
countries around the world have recently experienced reduced economic activity, increased unemployment, and substantial uncertainty about
their financial services markets and, in some cases, economic recession. These events may reduce the demand for our programs among students,
which could materially adversely affect our business, financial condition, results of operations and cash flows. These adverse economic
developments also may result in a reduction in the number of jobs available to our graduates and lower salaries being offered in connection
with available employment which, in turn, may result in declines in our placement and retention rates. Any general economic slowdown
or recession that disproportionately impacts the countries in which our companies and programs operate could have a material adverse
effect on our business, financial condition, results of operations and cash flows.
We
may be sued for infringement of the intellectual property rights of others, and such actions would be costly to defend, could require
us to pay damages and could limit our ability or increase our costs to use certain technologies in the future.
Companies
in the Internet, technology, education, curriculum and media industries own large numbers of patents, copyrights, trademarks and trade
secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights.
As we grow, the likelihood that we may be subject to such claims also increases. Regardless of the merits, intellectual property claims
are often time- consuming and expensive to litigate or settle. In addition, to the extent claims against us are successful, we may have
to pay substantial monetary damages or discontinue any of our products, services or practices that are found to be in violation of another
party’s rights. We also may have to seek a license and make royalty payments to continue offering our products and services or
following such practices, which may significantly increase our operating expenses.
We
cannot assure you that we will not be subject to liability claims for any inaccurate or inappropriate content in our training programs,
which could cause us to incur legal costs and damage our reputation.
We
develop the content for our training programs ourselves or through partnerships with third parties. We cannot assure you that there will
be no inaccurate or inappropriate materials included in our training programs or the materials we obtain from our third-party partners.
In addition, our mock examination questions designed internally based on our understanding of the relevant examination requirements may
be investigated by the regulatory authorities. Therefore, we may face civil, administrative or criminal liability if an individual or
corporate, governmental or other entity believes that the content of any of our training programs violate any laws, regulations or governmental
policies or infringes upon its legal rights. Even if such claim were not successful, defending it may cause us to incur substantial costs
including the time and attention of our management. Moreover, any accusation of inaccurate or inappropriate content could lead to significant
negative publicity, which could harm our reputation and future business prospects.
We
may be subject to legal liability resulting from the actions of third parties, including independent contractors and teachers, which
could cause us to incur substantial costs and damage our reputation.
We
may be subject, directly or indirectly, to legal claims associated with the actions of our independent contractors, teachers, and mentors.
In the event of accidents or injuries or other harm to students, we could face claims alleging that we were negligent, provided inadequate
supervision or were otherwise liable for their injuries. Additionally, we could face claims alleging that our independent curriculum
contractors or teachers infringed the intellectual property rights of third parties. A liability claim against us or any of our independent
contractors, teachers, or mentors could adversely affect our reputation, enrollment and revenues. Even if unsuccessful, such a claim
could create unfavorable publicity, cause us to incur substantial expenses and divert the time and attention of management.
We
may not have sufficient insurance to protect ourselves against substantial losses.
We
have insurance policies to provide coverage against certain potential risks, such as property damage and personal injury, as well as
director and officer insurance for our management team. However, we cannot guarantee that our insurance coverage will always be available
or will be sufficient to cover possible claims for these risks. In addition, there are certain types of risk that might not be covered
by our policies, such as war, acts of nature, force majeure or interruption of certain activities. Moreover, we might be obliged
to pay fines and other penalties in the event of delays in product delivery, and such penalties are not covered by our insurance policies.
Additionally, we may not be able to renew our current insurance policies under the same terms or at all. Risks not covered by our insurance
policies or the inability to renew policies on favorable terms or at all could adversely affect our business and financial condition.
Risks
Related to Our Business and Industry (Specific to Pre-IPO Group)
We
are a growing company with a limited operating history, and a history of operational losses. If we fail to achieve further marketplace
acceptance for our products and services, our business, financial condition and results of operations will be adversely affected.
We
began enrolling students on our Edtech platform in 2015. As a result, we have only a limited operating history upon which you can evaluate
our business and prospects. There can be no assurance that we will reduce our operational losses or achieve profitability as a group
in the near future, or that our products and services will achieve further marketplace acceptance. Our marketing efforts may not generate
a sufficient number of student enrollments to sustain our business plan; our capital and operating costs may exceed planned levels; and
we may be unable to develop and enhance our service offerings to meet the demands of our students and community to the extent that such
demands and preferences change. If we are not successful in managing our business and operations, our financial condition and results
of operations will be adversely affected.
Our
Edtech platform is technologically complex, and potential defects in our platforms or in updates to our platforms can be difficult or
even impossible to fix.
Our
Edtech platform is a technically complex product, and, when first introduced to new communities or when upgraded through new versions,
may contain software or hardware defects that are difficult to detect and correct. The existence of defects and delays in correcting
them can have adverse effects, such as, cancellation of subscriptions, delays in the receipt of payment, poor functioning of our platforms
and their content, failure to acquire new students, teachers, or mentors, or misuse of our platforms by third parties.
We
test new versions and upgrades to our Edtech platform, but we cannot ensure that all defects related to platform updates can be identified
before, or even after a new version of our platforms are made available. The correction of defects can be time-consuming, expensive and
difficult. Errors and security breaches of our products could expose us to product liability claims and damage our reputation, which
could have an adverse effect on our business, financial condition and results of operations.
System
disruptions, capacity constraints and vulnerability from security risks to our online computer networks could impact our ability to generate
revenues and damage our reputation, limiting our ability to attract and retain students.
The
performance and reliability of our technology infrastructure is critical to our reputation and ability to attract and retain students,
teachers, mentors, and our community. Any sustained system error or failure, or a sudden and significant increase in bandwidth usage,
could limit access to our learning system, and therefore, damage our ability to generate revenues. Our computer networks may also be
vulnerable to unauthorized access, computer hackers, computer viruses and other malware, and other security problems.
Moreover,
we host our products and serve our students, teachers, and mentors from a third-party data center facility, the security, facilities
management and communications infrastructure of which we do not control. While we are developing a risk mitigation plan, such a plan
may not be able to prevent a significant interruption in the operation of this facility or the loss of school and operational data due
to a natural disaster, fire, power interruption, act of terrorism or other unanticipated catastrophic event, or arising from other financial,
technical or operational difficulties encountered by our third-party vendor. Any such significant interruption, including one caused
by our failure to successfully expand or upgrade our systems or manage our transition to utilizing the expansions or upgrades, could
reduce our ability to manage our network and technological infrastructure and provide uninterrupted service, or be the occasion of loss
or theft of important customer data, any of which could result in liability, business interruption, lost sales, enrollment terminations
and reputational harm to us.
Our
current success and future growth depend on the continued acceptance of the Internet and the corresponding growth in users seeking educational
services on the Internet.
Our
business relies in part on the Internet for its success. A number of factors could inhibit the continued acceptance of the Internet,
or the commercial viability of the Internet’s material role in our business model, and adversely affect our profitability, including:
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Inadequate
Internet infrastructure; |
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Security
and privacy concerns; |
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The
unavailability of cost-effective Internet service and other technological factors; and |
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Changes
in U.S. or foreign government regulation of Internet use, which may relate to issues such as online privacy, copyrights, trademarks
and service marks, sales taxes, fair business practices, and requirements that online education institutions qualify to do business
as foreign corporations or be licensed in one or more jurisdictions where they have no physical location or other presence. |
If
Internet use decreases, if the number of Internet users seeking educational services on the Internet does not increase, or if we become
subject to material additional costs as a result of regulatory changes affecting online education businesses, our business may not grow
as planned.
We
are susceptible to the illegal or improper use of our content, Edtech and platform (whether from students, teachers, mentors, management
personnel and other employees, or third parties), or other forms of misconduct, which could expose us to liability and damage our business
and brand.
Our
content, Edtech and platform are susceptible to unauthorized use, software license violations, copyright violations and unauthorized
copying and distribution, theft, employee fraud and other similar infractions and violations. Because we do not have full control over
how even authorized users will use our online platforms to communicate, such platforms may be misused for improper, malicious, objectionable
or illegal purposes. Such occurrences (whether originating from students, teachers, mentors, management personnel and other employees,
or third parties) can harm our business and consequently negatively affect our operating results. We could be required to expend significant
additional resources to deter, police against and combat improper use of our content, Edtech and platform, and still may be unsuccessful
in preventing such occurrences or identifying those responsible for any such misuse. Any failure to adequately protect against any such
illegal or improper use of our content, Edtech and platform could expose us to liability or reputational harm and could have a material
adverse effect on our business, financial condition and results of operations.
Our
brand image, reputation, business and results of operations may also be adversely affected by other forms of illegal or improper activities
of our management personnel and other employees, such as intentionally failing to comply with government regulations, engaging in deceptive
business and marketing practices, improper use of personal or sensitive information, or violations of anticorruption or similar laws.
The precautions we take to prevent and detect such activities may not be effective in preventing or mitigating them. Even where such
activities are unrelated to our business or the services provided by our management personnel or other employees to us, they may harm
our brands and reputation.
We
may be unable to manage and adapt to changes in technology.
We
will need to respond to technological advances and emerging industry standards in a cost-effective and timely manner in order to remain
competitive. The need to respond to technological changes may require us to make substantial, unanticipated expenditures. There can be
no assurance that we will be able to respond successfully to technological change.
We
must monitor and protect our Internet domain names to preserve their value.
We
own a wide range of domain names including our Edtech platform, www.geniusu.com (information contained on, or available through,
such website does not constitute part of, and is not deemed incorporated by reference into, this Prospectus). Third parties may
acquire substantially similar domain names that decrease the value of our domain names and trademarks and other proprietary rights which
may hurt our business. The regulation of domain names in the United States and foreign countries is subject to change.
Governing
bodies could appoint additional domain name registrars or modify the requirements for holding domain names. Governing bodies could also
establish additional “top-level” domains, which are the portion of the Web address that appears to the right of the “dot,”
such as “com,” “gov,” or “org.” As a result, we may not maintain exclusive rights to all potentially
relevant domain names in the United States or in other countries in which we conduct business.
Increases
in labor costs, labor shortages, and any difficulties in attracting, motivating, and retaining well- qualified employees within the hospitality
industry could have an adverse effect on our business, financial condition, and results of operations for our resorts and cafes.
Labor
is a significant component in the cost of operating our operations. If we face labor shortages, particularly due to recent labor
shortages in the hospitality industry as a result of the pandemic, increased labor costs because of increased competition for employees,
higher employee turnover rates, inefficiency in scheduling our employees, increases in local minimum wage, or other employee benefits
costs (including costs associated with health insurance coverage), our operating expenses could increase and our growth could be negatively
impacted. Our success depends in part upon our ability to attract, motivate, and retain a sufficient number of well-qualified resort
and cafe operators and management personnel, as well as a sufficient number of other qualified employees, including customer service
and kitchen staff, to align with our expansion plans and multi-channel approach. Because of the busy nature of our restaurants, it is
critical that we have a high level of labor productivity and if we do not maintain high engagement or deployment in our restaurants (including
in new restaurants and in new markets), it could have an adverse effect on our business.
Risks
Related to Our Business and Industry (Specific to Acquisitions)
As
we have completed the Acquisitions, we may continue pursue other strategic acquisitions or investments. The failure of an acquisition
or investment (including but not limited to the Acquisitions) to be completed or to produce the anticipated results, or the inability
to fully integrate an acquired company, could harm our business.
We
may from time to time, as opportunities arise or economic conditions permit, acquire or invest in complementary companies or businesses
as part of our strategy to expand our operations, including through acquisitions or investments that may be material in size and/or of
strategic relevance. The success of an acquisition or investment will depend on our ability to make accurate assumptions regarding the
valuation, operations, growth potential, integration and other factors related to that business. We cannot assure you that our acquisitions
or investments will produce the results that we expect at the time we enter into or complete a given transaction.
Any
acquisition or investment involves a series of risks and challenges that could adversely affect our business, including the failure of
such acquisition to contribute to our commercial strategy or improve our image. We may be unable to generate the expected returns and
synergies on our investments. In addition, the amortization of acquired intangible assets could decrease our net profit and potential
dividends. We may face challenges in integrating acquired companies, which may result in the diversion of our capital and our management’s
attention from other business issues and opportunities. We may be unable to create and implement uniform and effective controls, procedures
and policies, and we may incur increased costs for integrating systems, people, distribution methods or operating procedures.
We
may also be unable to integrate technologies of acquired businesses or retain key customers, executives and staff of the businesses acquired.
In particular, we may face challenges in integrating staff working across different geographies and that may be accustomed to different
corporate cultures, which would result in strained relations among existing and new personnel. We could also face challenges in negotiating
favorable collective bargaining agreements with unions due to differences in the negotiating procedures used in different regions. Finally,
we may pursue acquisitions where we acquire a majority stake in such acquisition, but with significant minority investors, or we may
become minority investors in certain operations, wherein our ability to effectively control and manage the business may be limited. If
we are unable to manage growth through acquisitions, our business and financial condition could be materially adversely affected.
In
addition, in connection with any future acquisition, we may face liabilities for contingencies related to, among others, (1) legal and/or
administrative proceedings of the acquired company, including civil, regulatory, labor, tax, social security, environmental and intellectual
property proceedings, and (2) financial, reputational and technical problems including those related to accounting practices, disclosures
in financial statements and internal controls, as well as other regulatory issues. These contingencies may not have been identified prior
to the acquisition and may not be sufficiently indemnifiable under the terms of the relevant acquisition agreement, which could have
an adverse effect on our business and financial condition. Even if contingencies are indemnifiable under the relevant acquisition agreement,
the agreed levels of indemnity may not be sufficient to cover actual contingencies as they materialize.
The
continued success of our Acquisitions depends initially on the value of the local brands of each of the companies and how we integrate
those brands with Genius Group and GeniusU, which may be materially adversely affected by changes in current and prospective students’
perceptions post-acquisition.
Each
of our Acquisitions has worked hard to establish the value of their individual brands. A merger or acquisition is a significant event
in any company’s history, which may cause concern or trigger potentially negative commentary or criticism whether by staff members,
students or local communities. The perception of the changes and improvements we intend to implement with each Acquisition may have unintended
consequences which impact on the current brand value and reputation of each Acquisition. This may be materially adverse to our interests,
it may be inaccurate, and it may harm our performance, prospects and business.
Growing
the certified education courses offered by our Acquisitions could be difficult for us.
We
anticipate significant future growth from online courses we offer to students on GeniusU, integrating with our Acquisitions. The expansion
of our existing online programs, the creation of new online programs and the development of new fully online or hybrid programs may not
be accepted by students or our partners, or by government regulators or accreditation agencies. In addition, our efforts may be materially
adversely affected by increased competition in the online education market or because of problems with the performance or reliability
of our online program infrastructure. There is also increasing development of certified online programs by traditional schools and
universities, both in the public and private sectors, which may have more consumer acceptance than programs we develop, because of
lower pricing or greater perception of value of their degrees in the marketplace, which may materially adversely affect our business,
financial condition and results of operations.
Our
Acquisitions are subject to uncertain and varying laws and regulations, and any changes to these laws or regulations may materially adversely
affect our business, financial condition and results of operations.
Three
of our Acquisitions are regulated to varying degrees and in different ways in each of the countries in which we operate an institution:
Education Angels, E-Square and UAV have licenses, approvals, authorizations, or accreditations from various governmental authorities
and accrediting bodies. These licenses, approvals, authorizations, and accreditations must be renewed periodically, usually after an
evaluation of the institution by the relevant governmental authorities or accrediting bodies. These periodic evaluations could result
in limitations, restrictions, conditions, or withdrawal of such licenses, approvals, authorizations or accreditations, which could have
a material adverse effect on our business, financial condition and results of operations. In addition, once licensed, approved, authorized
or accredited, some of our institutions may need approvals for new campuses or to add new degree programs.
All
of these regulations and their applicable interpretations are subject to change based on changing rules and regulations over time in
each country where we operate. Changes in applicable regulations may cause a material adverse effect on our business, financial condition
and results of operations.
Regulatory
changes that affect the timing of government-sponsored student aid payments or receipt of government-sponsored financial aid could materially
adversely affect our liquidity.
Two
of our Acquisitions, Education Angels and UAV, receive funding from the New Zealand and US Government, respectively. Education Angels
receives funding from the New Zealand Government for 50% of educator fees based on approval by the New Zealand Ministry of Education.
Students at UAV may qualify for financial aid funding through state and federal agencies. The majority of financial aid available to
UAV students is provided by the Federal Government and referred to as Title IV Aid. This includes the Federal Pell Grant, Federal Supplemental
Educational Opportunity Grant (FSEOG), Federal Work-Study (FWS), Federal Direct Loan Program, and Parent Loans for Undergraduate Students
(PLUS). Also, students may be eligible to participate in institutional or private loan programs that enable students to contribute to
his/her education while in college, and the university is also eligible to participate in several state agency programs.
Should
the governments in these countries, or in the countries of future acquisitions, change regulations that impact the timing or receipt
of government-sponsored student aid, this could materially adversely affect our liquidity as well as our business and results of operations,
and in turn affect our enrolment numbers.
The
changing public perception and changes to government policies with respect to private schools may have a materially adverse impact on
our Acquisitions and our overall plans to expand in the early learning, primary school, secondary school and university markets.
The
views taken by students, parents and the government on private schools vary from country to country and change over time. China imposed
restrictions on education companies that operated private tuition centers and Edtech companies providing private tutors in 2021. This
included a broad ban on private companies that teach the Chinese school curriculum from making profits, raising capital or going public.
While China’s actions against private education institutions did not directly impact our Pre-IPO Group or Acquisitions, as less
than 1% of group revenues is generated from Chinese students, it is an indication of the negative impact a country can impose on private
education and there is a risk that other countries may follow a similar path. For example, the Indian government has expressed concern
about the rapid growth of for- profit, private education in the country. While this has not yet led to any restrictive regulations, it
has resulted in India’s largest private Edtech startups setting up a self-regulatory industry group to draw up a code of conduct
to present to the government.
In
the United States, the Biden Administration has indicated that it wants higher scrutiny of for-profit colleges and universities to ensure
higher standards are met in order to qualify for government funding. While there have not yet been any concrete actions taken
by the government in this regard, should such actions be taken and imposed, this may materially adversely affect the revenues of our
Acquisition, UAV, in the event the university is not able to meet any new standards imposed. Any other such restrictions imposed in the
future by governments in the countries where we plan to expand to with our Acquisitions, or any negative changes in public perception
towards for-profit education companies in contrast to non-profit schools may negatively affect our Acquisitions’ and Genius Group’s
business, financial condition and results of operation.
The
poor performance or reputation of other early learning schools or the industry as a whole could tarnish the reputation of our Acquisition,
Education Angels, which could have a negative impact on its business.
With
reference specifically to our Acquisition, Education Angels, the company operates in a sector which does not have the same level of oversight
as Primary, Secondary and Tertiary education. For example, in most countries, including the U.S., license requirements to operate a childcare
business vary from state to state, while education standards during early learning are relatively relaxed when compared to the accreditation
and other standards required of primary schools, high schools and universities.
Similarly,
while educators at primary school, high school and university must be qualified as faculty, the standards within early learning are more
relaxed, with some childcare workers or assistants in the industry having few qualifications. This may result in poor performance of
some early learning operators, or in the early learning industry as a whole suffering from a poor reputation, and this in turn my cause
a material adverse effect on Education Angels’ business and our ability to expand our early learning operations in certain countries
or states.
Changes
in the demand for childcare and workplace solutions, which may be negatively affected by demographic trends and economic conditions,
including unemployment rates, may affect our Acquisition, Education Angels.
The
target market for our Acquisition, Education Angels, is dual-income families or working single parents who are seeking an early learning
solution for their child that includes childcare. Different countries have different funding programs for early learning and childcare,
but in most cases the parents are required to pay for some or all childcare services. As a result, Education Angels is and will continue
to be dependent on this demographic segment to maintain and grow revenues. Changes in demographic trends, including the number of dual-income
or working single parent families in the workforce, inflation, personal disposable income and birth rates may impact the demand for Education
Angels’ services.
Further,
a deterioration of general economic conditions, including rising unemployment, may adversely impact the demand for our services due to
the tendency of out-of-work parents to diminish or discontinue utilization of our services. Such changes could materially and adversely
affect Education Angels’ business and operating results.
The
expansion of our Acquisition, Education Angels, into certain markets including the United States may be negatively impacted by increased
competition based on changes in government regulation and benefit programs.
Countries
from time-to-time change regulations with respect to childcare and early learning and while this may have a positive impact on
our Acquisition, Education Angels, it may also have a negative impact. For example, in the U.S., President Biden has recently proposed
publicly funded universal preschool for all three- and four-year-olds in partnerships with the states. The initial legislative drafts
of the President’s proposal for a new federally funded preschool program allow private, for-profit entities to be eligible for
participation, but do not mandate such participation. It is unclear how the proposed legislation will progress in the current political
and fiscal climate, or how the states would implement the programs. Public programs such as this have the ability to either expand or
shrink Education Angels’ ability to serve children in a country such as the U.S. The amount of public funding, the rates paid for
early education programs, our eligibility to be a provider and the terms and conditions of the programs could have either a positive
or negative effect on our business, financial condition and results of operations.
For
example, in the U.S., federal, state or local childcare and early education benefit programs relying primarily on subsidies in the form
of tuition assistance or tax credits could provide us with opportunities for expansion in new or existing markets. However, a federal,
state or local universal benefit such as preschool, if offered primarily or exclusively through public schools or non-profit entities,
could reduce the demand for private home-based education services and negatively impact the financial and operational model that we plan
to expand with Education Angels. If such programs were to significantly expand or our participation is reduced, it could have an adverse
effect on our business, financial condition or results of operations.
Our
Acquisition, E-Square, may be negatively affected by the economic and political conditions in South Africa.
Our
Acquisition, E-Square, operates in Port Elizabeth, South Africa, and relies on the ongoing economic health and political stability of
that country. In recent years South Africa has been affected by a weak economy and political instability. This deterioration in conditions
was compounded by the COVID-19 pandemic. The country is expecting to register economic growth of 1.1% for 2023. Such deterioration
of general economic conditions, including rising inflation and unemployment, may decrease demand for E-Square’s courses and services
as parents opt for lower cost alternatives. Such changes could materially and adversely affect E-Square’s business and operating
results.
Public
perception and regulatory changes in the primary school and secondary school systems in countries that E-Square may expand to may have
a materially adverse impact on the company.
The
primary school and second school systems in countries where we plan to expand the courses and programs of our Acquisition, E-Square,
are undergoing changes in public perception together with regulatory changes. For example, in the United Kingdom, government funding
of schools has dropped 8% in the last decade and public confidence in the high school exam system dropped during the COVID-19 Pandemic
after the government abolished all exams in 2020 and replaced them with teacher assessments.
In
August 2020 the government then used computer algorithms to reject 39% of teacher recommendations and downgrade student marks, and this
decision was in itself then overturned with the government reverting back to teacher assessments. Such mismanagement and the resulting
negative impact experienced by students and parents can lead to a negative perception and mistrust of the education system as a whole.
While
countries such as the United States may not have experienced mismanagement on the scale of the United Kingdom, there are signs that there
is increasing mistrust of the current primary school and high school system by parents, with discontent ranging from the conduct of school
boards and the policies of school districts to the content and the quality of education provided. The possible negative public perception
of the primary school and secondary school system as a whole can be seen as an opportunity for companies that can provide a superior
offering to parents and students, but it also can be a risk that may adversely affect E-Square’s ability to expand into markets
where all schools, including new entrants, are appealing to a skeptical market with a low level of trust.
Our
growth plans for our Acquisition, E-Square, and our plans to expand into the primary school and high school markets will be a complex
and lengthy process where future success is not assured.
We
believe that the growth of our Pre-IPO Group has been supported by our strategy of focusing on adult entrepreneur training where government
regulation and curriculum requirements are far more relaxed than in the primary school and high school sectors. We believe the main reason
that there has not been a well- known and well-branded new global curriculum developed and accepted internationally since the International
Baccalaureate system in 1968 is the complex combination of government regulations, accreditations and curriculum standards that must
be met across multiple countries, together with the varying expectations of parents, students, employers, colleges and universities as
to what these schools must deliver.
We
have a staged growth plan which we explain in the “Our Genius Curriculum” section in this Prospectus, in which we
plan to begin by providing E-Square’s courses as supplementary courses to the existing school system, delivered on the GeniusU
platform, and in which we view our aspiration of delivering our Genius Curriculum as a potential replacement option to the existing primary
school and high school system in countries we expand to, similar to how E-Square operates in South Africa, as a longer term goal. However,
this plan may be more complex and lengthier than we anticipate and based on the obstacles we face in the future as we expand globally
the future success of E-Square’s growth is not assured.
If
we cannot maintain student enrollments and maintain tuition levels in our Acquisition, UAV, the university’s results of operations
may be materially adversely affected.
Our
Acquisition, UAV, has historically been dependent on students from the Lancaster Valley and Greater Los Angeles area for enrolments.
We plan to expand on the student base by both attracting students globally to attend UAV and to deliver UAV’s courses on the GeniusU
platform. We are, however, planning for UAV to maintain its current student enrollment and tuition levels through the same methods it
has employed historically.
As
a result, our strategy for growth and profitability of UAV depends, in part, upon maintaining these historic levels. Attrition rates
are often due to factors outside our control. Students sometimes face financial, personal or family constraints that require them to
drop out of university. They also are affected by local economic and social problems. In addition, our ability to attract and retain
students to UAV may require us to discount tuition from published levels, and may prevent us from increasing tuition levels at a rate
consistent with inflation and increases in our costs.
Post
COVID-19 pandemic, in the financial year 2021 and 2022, UAV saw a decline in its revenue. If we are unable to control the rate of student
attrition, our overall enrollment levels are likely to decline or if we are unable to charge tuition rates that are both competitive
and cover our rising expenses, our business, financial condition, cash flows and results of operations may be materially adversely affected.
The
reputation of our Acquisition, UAV, may be negatively influenced by the actions of other for-profit and private universities.
In
recent years, there have been a number of regulatory investigations and civil litigation matters targeting post-secondary for-profit
education institutions in the United States. These investigations and lawsuits have alleged, among other things, deceptive trade practices,
false claims against the United States and noncompliance with state and DOE regulations. These allegations have attracted adverse media
coverage and have been the subject of federal and state legislative hearings and investigations in the United States and in other countries.
Allegations against the post-secondary for-profit and private education sectors may affect general public perceptions of for-profit and
private educational institutions, including UAV, in a negative manner. Adverse media coverage regarding other for-profit or private educational
institutions or regarding us directly or indirectly could damage our reputation, reduce student demand for our programs, materially adversely
affect our revenues and operating profit or result in increased regulatory scrutiny.
The
university and vocational college market is very competitive, and we may not be able to achieve our growth plans with UAV.
The
university and vocational college markets, both in the United States and around the world, are highly fragmented and are very competitive
and dynamic. Currently our Acquisition, UAV, competes with traditional public and private colleges and universities and other proprietary
institutions, including those that offer online professional-oriented programs. Many of these institutions are larger, more widely known
and have more established reputations than UAV. Some of our competitors in both the public and private sectors may have greater financial
and other resources than we have and have operated in their markets for many years.
We
also anticipate potential competition from Edtech companies that prioritize open access education to students at university or certification
level. A number of these providers have been formed recently to provide online curriculum from leading academics at little or no cost
to the student. If this new modality is successful, it could disrupt the economics of the current education model (both for-profit and
not-for-profit institutions). Other competitors may include large, well-capitalized companies that may pursue a strategy similar to ours
of acquiring or establishing for-profit institutions.
Public
institutions receive substantial government subsidies, and public and private not-for-profit institutions have access to government and
foundation grants, tax-deductible contributions and other financial resources generally not available to for-profit institutions. Accordingly,
public and private not-for-profit institutions may have instructional and support resources superior to those in the for-profit sector,
and public institutions can offer substantially lower tuition prices or other advantages that we cannot match.
Any
of these large, well-capitalized competitors may make it more difficult for us to expand UAV as part of our growth strategy. They may
also be able to charge lower tuitions or attract more students, which would adversely affect our growth and the profitability of UAV.
There is also an increased ability of traditional universities to offer online programs and we expect competition to increase as the
online market matures. This may create greater pricing or operating pressure on us, which could have a material adverse effect on UAV’s
enrollments, revenues and profit margins. We may not be able to compete successfully against current or future competitors and may face
competitive pressures that could have a material adverse effect on UAV’s business and the financial condition and results of operations
for UAV and the operations of Genius Group focused on the university sector.
If
the graduates of our Acquisition, UAV, are unable to obtain professional licenses or certifications required for employment in their
chosen fields of study, the university’s reputation may suffer and we may face declining enrollments and revenues or be subject
to student litigation.
UAV’s
students require or desire professional licenses or certifications after graduation to obtain employment in their chosen fields. Their
success in obtaining such qualifications depends on several factors, including the individual merits of the student, whether the institution
and the program were approved by the relevant government or by a professional association, whether the program from which the student
graduated meets all governmental requirements and whether the institution is accredited. If one or more governmental authorities refuses
to recognize UAV’s graduates for professional qualifications in the future based on factors relating to us or our programs, the
potential growth of our programs would be negatively affected, which could have a material adverse effect on our business, financial
condition and results of operations. In addition, we could be exposed to litigation that would force us to incur legal and other expenses
that could have a material adverse effect on our business, financial condition and results of operations.
If
the graduates of UAV do not meet possible future standards of “gainful employment”, this may negatively affect the university’s
reputation and access to government funding.
The
Biden Administration has recently expressed interest in reinstating the “Gainful Employment Rule” as a measure to hold universities
and colleges accountable for both the employment and earnings of graduating students. The Gainful Employment Rule was first issued in
2014 and was designed to ensure that career- education programs leave their graduates with debts that are affordable relative to their
actual incomes. It distinguishes between programs that provide affordable training that leads to well-paying jobs and those that do not,
based on the debt-to-income ratios of their graduates.
This
rule was rescinded by the previous US administration in 2019. The Biden Administration has proposed to reimpose the rule as a measure
by which the government may assess whether a university or college qualifies for federal funding. While no specifics have yet been agreed
or proposed, if such a rule was imposed, it would require all higher education institutions, including UAV, to provide the government
with information on completion rates, debt and other trends by program, with the possibility that government funding may become restricted
should thresholds not be met. In the event that UAV were to fall below any threshold set, this may negatively affect the university’s
reputation or ability to access government funding, which in term could have a material adverse effect on UAV’s business, financial
conditions and results of operation.
Growing
the online academic programs of UAV on GeniusU could be difficult for us.
After
the acquisition of UAV, we anticipate a higher future growth from online courses we offer to students from the second half of 2023. The
expansion of our existing online programs, the creation of new online programs and the development of new fully online or hybrid programs
may not be accepted by students or employers, or by government regulators or accreditation agencies. In addition, our efforts may be
materially adversely affected by increased competition in the online education market or because of problems with the performance or
reliability of our online program infrastructure. There is also increasing development of online programs by traditional universities,
both in the public and private sectors, which may have more consumer acceptance than programs we develop, because of lower pricing or
greater perception of value of their degrees in the marketplace, which may materially adversely affect our business, financial condition
and results of operations.
If
for-profit universities and colleges, which offer online education alternatives different from ours, perform poorly, it could tarnish
the reputation of online education as a whole, which could impair UAV’s ability to grow its business.
For-profit
universities, many of which provide course offerings predominantly online, are under intense regulatory and other scrutiny, which has
led to media attention that has sometimes portrayed that sector in an unflattering light. Some for-profit online school operators have
been subject to governmental investigations alleging the misuse of public funds, financial irregularities, and failure to achieve positive
outcomes for students, including the inability to obtain employment in their fields.
These
allegations have attracted significant adverse media coverage and have prompted legislative hearings and regulatory responses. These
investigations have focused on specific companies and individuals, and even entire industries in the case of recruiting practices by
for-profit higher education companies. Even though we believe we can educate students and partners on our unique differences and culture
that sets us apart from these companies, this negative media attention may nevertheless add to skepticism about online higher education
generally, including our solutions.
The
precise impact of these negative public perceptions on our current and future business is difficult to discern. If these few situations,
or any additional misconduct, cause all Edtech and online learning programs to be viewed by the public or policymakers unfavorably, we
may find it difficult to grow UAV or attract additional students for UAV’s programs. In addition, this perception could serve as
the impetus for more restrictive legislation, which could limit our future business opportunities. Moreover, allegations of abuse of
federal financial aid funds and other statutory violations against for-profit higher education companies could negatively impact our
opportunity to succeed due to increased regulation and decreased demand. Any of these factors could negatively impact our ability to
grow UAV and the university and vocational college segment of our business.
Our
growth plans for UAV and our plans to expand into the university and vocational college market in the United States and globally is a
complex and lengthy process, exposing us to risks inherent in international growth.
One
element of our growth strategy for UAV is to expand our international operations and establish a worldwide student base. We cannot guarantee
that our expansion efforts into international markets will be successful. The challenges in expanding the UAV model include the complexity
of converting elements of UAV’s degree courses and certification courses into a suitable form on the GeniusU Edtech platform, the
need to gain accreditation and licenses in the various states and countries where this is required, and our ability to attract enough
suitably qualified faculty to deliver the courses both online and on campus.
We
have a staged growth plan for UAV which we explain in the “Our Genius Curriculum” section in this Prospectus, in which
we aim to grow gradually within the university and college sector through a gradual, staged process to ensure we overcome these challenges
effectively as we grow. However, this plan may be more complex and lengthier than we anticipate and based on the obstacles we face in
the future as we expand globally the future success of UAV’s growth is not assured.
The
course content of our Acquisition, PIN, requires ongoing updating based on the current government regulations and market conditions of
the property market.
The
course content delivered by the Pre-IPO Group has historically been focused on entrepreneur skills, and while the courses are refreshed
annually, the majority of the leadership, sales, marketing, team development and financial management skills that are taught remain relevant
from one year to the next. Our Acquisition, PIN, has thrived by running courses and events where students can learn the most current
strategies that property investors are applying effectively to build their property portfolio. These strategies tend to be more dynamic
based on changing market trends, interest rates, financing opportunities and changes in government policies, incentives and restrictions.
While
this has historically been an opportunity for PIN, as its locally based city event model led by experienced property investors has enabled
it to deliver more relevant, up-to-date training and information than nationally delivered property investing courses, this requirement
to continually update and localize course content is a risk to the growth of PIN. If the company fails to innovate or maintain its relevance
in its course content, this may negatively affect the company’s financial conditions and results of operation.
The
wide range of differences between the property markets in different countries may make it challenging for PIN to achieve its global expansion
plan.
While
PIN has an online student base that is in 52 countries, it has historically operated its events and city-based investor communities only
in the United Kingdom. This has been partly due to its focus on the United Kingdom market, and partly due to the complexities of providing
specific, practical market knowledge of the property markets in different countries. Our plan is to expand PIN’s locally based
model to countries throughout the world with our GeniusU Edtech platform and global community. This plan is dependent on us replicating
PIN’s success in attracting locally based property investors and professionals who are willing to share their expertise, experience
and opportunities in the countries we expand to. This may be more complex or take more time than we anticipate, which in turn may negatively
affect our expansion plans and our results of operation.
The
reputation of PIN may be negatively influenced by the actions of other property investing training companies and courses.
In
recent years, there have been a number of regulatory investigations and civil litigation matters targeting unethical or unprofessional
training companies or individuals providing advice on property investing or property trading. These have occurred in the United Kingdom,
the United States and other countries.
These
investigations and lawsuits have alleged, among other things, deceptive trade practices, false claims and unregulated financial advice.
These allegations have attracted adverse media coverage and have been the subject of federal and state legislative hearings and investigations
in the United States and in other countries. Allegations against this investment education sector and the actions of certain companies
in this sector may affect general public perceptions towards the sector in a negative manner. Adverse media coverage regarding other
training companies or regarding PIN directly or indirectly could damage our reputation, reduce student demand for our programs, materially
adversely affect our revenues and operating profit or result in increased regulatory scrutiny.
Change
of users behavior post Covid may impact our ability to continue and gain interest around our generated content at a level during Covid, which might translate to lower number of users and revenue.
Revealed
Films generates multiple content films during the year, and sells them to specific audiences. Possible change of those user behaviors, post Covid, who spend less time in front of digital media, might impact Revealed film’s ability to continue and generate interest
around its newly published content which will translate to lower number of users and revenue. The possible decline in revenue may also
reduce the planned investment in new content that supports our lifelong learning curriculum.
Taxing
authorities may successfully assert that we have not properly collected or remitted, or in the future should collect or remit, sales
and use, gross receipts, value added, or similar taxes, or employment, payroll, or withholding taxes, and may successfully impose additional
obligations on us, and any such assessments, obligations, or inaccuracies could adversely affect our business, financial condition, and
results of operations.
The
application of non-income, or indirect, taxes, such as sales and use tax, value-added tax, goods and services tax, business tax, and
gross receipt tax, to businesses like ours is an evolving issue. Significant judgment is required on an ongoing basis to evaluate applicable
tax obligations, and as a result, amounts recorded are estimates and are subject to adjustments. In many cases, the ultimate tax determination
is uncertain because it is not clear how new and existing statutes might apply to our business. In addition, governments are looking
for ways to increase revenue, which has resulted in discussions about tax reform and other legislative action to increase tax revenue,
including through indirect taxes. Such taxes could adversely affect our financial condition and results of operations. We are subject
to indirect taxes, such as sales, use, value-added, and goods and services taxes, in the United States and other foreign jurisdictions,
and we do not collect and remit indirect taxes in all jurisdictions in which we operate on the basis that such indirect taxes are not
applicable to us. Certain jurisdictions in which we do not collect and remit such taxes may assert that such taxes are applicable, which
could result in tax assessments, including penalties and interest, and we may be required to collect such taxes in the future. A successful
assertion by one or more tax authorities requiring us to collect taxes in jurisdictions in which we do not currently do so or to collect
additional taxes in a jurisdiction in which we currently collect taxes could result in substantial tax liabilities, including taxes on
past sales, as well as penalties and interest, could discourage the use of our platform, could increase the cost for consumers using
our platform, or could otherwise harm our business, financial condition, and results of operations. Further, even when we are collecting
taxes and remitting them to the appropriate authorities, we may fail to accurately calculate, collect, report, and remit such taxes.
Additionally, one or more states, localities, or other taxing jurisdictions may seek to impose additional reporting, record-keeping,
or indirect tax collection obligations on businesses like ours. For example, taxing authorities in the United States and other countries
have identified ecommerce platforms as a means to calculate, collect, and remit indirect taxes for transactions taking place over the
internet, and are considering related legislation. As a result of these and other factors, the ultimate amount of tax obligations owed
may differ from the amounts recorded in our financial statements and any such difference may adversely affect our results of operations
in future periods in which we change our estimates of our tax obligations or in which the ultimate tax outcome is determined.
Risks
Related to Investing in a Foreign Private Issuer or a Singapore Company
As
a foreign private issuer, we are permitted to follow certain home country corporate governance practices in lieu of certain requirements
under the NYSE American listing standards. This may afford less protection to holders of our ordinary shares than U.S. regulations.
As
a foreign private issuer whose ordinary shares are listed on the NYSE American, we are permitted to follow certain home country corporate
governance practices in lieu of certain requirements under the NYSE American listing standards. A foreign private issuer must disclose
in its Prospectus filed with the SEC each requirement under the NYSE American listing standards with which it does not comply,
followed by a description of its applicable home country practice. Our home country practices in Singapore may afford less protection
to holders of our ordinary shares. We rely on exemptions available under the NYSE American listing standards to a foreign private issuer
and follow our home country practices in the future, and as a result, you may not be provided with the benefits of certain corporate
governance requirements of the NYSE American listing standards. We currently rely on such an exemption with respect to our quorum requirement
for shareholder meetings, such that we will not be in compliance with the NYSE American’s standard of a quorum of at least 33 1∕3%
of shares issued and outstanding and entitled to vote.
As
a foreign private issuer, we are not subject to U.S. proxy rules and are subject to Exchange Act reporting obligations that, to some
extent, are more lenient and less detailed than those of a U.S. issuer.
We
report under the Exchange Act as a foreign private issuer. Because we qualify as a foreign private issuer under the Exchange Act, we
are exempt from certain provisions of the Exchange Act that are applicable to U.S. public companies, including: the sections of
the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange
Act; the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability
for insiders who profit from trades made in a short period of time; and the rules under the Exchange Act requiring the filing with the
SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K,
upon the occurrence of specified significant events. In addition, we will not be required to provide as detailed disclosure as a U.S.
registrant, particularly in the area of executive compensation. It is possible that some investors may not be as interested in investing
in our ordinary shares as the securities of a U.S. registrant that is required to provide more frequent and detailed disclosure in certain
areas, which could adversely affect our share price.
We
may lose our foreign private issuer status, which would then require us to comply with the Exchange Act’s domestic reporting regime
and cause us to incur additional legal, accounting and other expenses.
In
order to maintain our current status as a foreign private issuer, either (1) a majority of our ordinary shares must be either directly
or indirectly owned of record by non-residents of the United States or (2) (a) a majority of our executive officers or directors must
not be U.S. citizens or residents, (b) more than 50 percent of our assets cannot be located in the United States and (c) our business
must be administered principally outside the United States. If we lost this status, we would be required to comply with the Exchange
Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements
for foreign private issuers, including, but not limited to preparing our financial statements under GAAP. We may also be required to
make changes in our corporate governance practices in accordance with various SEC rules and the NYSE American listing standards.
The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable
to a U.S. domestic issuer may be higher than the cost we would incur as a foreign private issuer. As a result, we expect that a loss
of foreign private issuer status would increase our legal and financial compliance costs. We also expect that if we were required to
comply with the rules and regulations applicable to U.S. domestic issuers, it would make it more difficult and expensive for us to obtain
director and officer liability insurance. These rules and regulations could also make it more difficult for us to attract and retain
qualified Board members.
We
are a Singapore incorporated company and it may be difficult to enforce a judgment of U.S. courts for civil liabilities under U.S. federal
securities laws against us, our directors or officers in Singapore.
We
are incorporated under the laws of the Republic of Singapore, and certain of our directors are residents outside the United States. Moreover,
a significant portion of our consolidated assets are located outside of the United States. Although we are incorporated outside the United
States, we have agreed to accept service of process in the United States through our agent designated for that purpose. Nevertheless,
because a majority of the consolidated assets owned by us are located outside of the United States, any judgment obtained in the United
States against us may not be enforceable within the United States.
There
is no treaty in force between the United States and Singapore providing for the reciprocal recognition and enforcement of judgments in
civil and commercial matters and a final judgment for the payment of money rendered by any federal or state court in the United States
based on civil liability, whether or not predicated solely upon the federal securities laws, would, therefore, not be automatically enforceable
in Singapore. There is uncertainty as to whether judgments of courts in the United States based upon the civil liability of the federal
securities laws of the United States would be recognized or enforceable in Singapore. In addition, holders of book-entry interests in
our shares (for example, where such shareholders hold our shares indirectly through the Depository Trust Company) will be required to
be registered shareholders as reflected in our register of members in order to have standing to bring a shareholder action and, if successful,
to enforce a foreign judgment against us, our directors or our executive officers in the Singapore courts.
The
administrative process of becoming a registered shareholder could result in delays prejudicial to any legal proceedings or enforcement
action. Consequently, it may be difficult for investors to enforce against us, our directors or our officers in Singapore judgments obtained
in the United States which are predicated upon the civil liability provisions of the federal securities laws of the United States.
We
are incorporated in Singapore and our shareholders may have more difficulty in protecting their interests than they would as shareholders
of a corporation incorporated in the United States.
Our
corporate affairs are governed by our constitution and by the laws governing companies incorporated in Singapore. The rights of our shareholders
and the responsibilities of our Board members under Singapore law may be different from those applicable to a corporation incorporated
in the United States in material respects. Principal shareholders of Singapore companies do not owe fiduciary duties to minority shareholders,
as compared, for example, to controlling shareholders in corporations incorporated in Delaware. Our public shareholders may have more
difficulty in protecting their interests in connection with actions taken by our management, our Board members or our principal shareholders
than they would as shareholders of a corporation incorporated in the United States.
In
addition, only persons who are registered as shareholders in our register of members are recognized under Singapore law as shareholders
of our Company. Only registered shareholders have legal standing to institute shareholder actions against us or otherwise seek to enforce
their rights as shareholders. Investors in our shares who are not specifically registered as shareholders in our register of members
(for example, where such shareholders hold shares indirectly through the Depository Trust Company) are required to become registered
as shareholders in our register of members in order to institute or enforce any legal proceedings or claims against us, our directors
or our executive officers relating to shareholder rights. Holders of book-entry interests in our shares may become registered shareholders
by exchanging their book-entry interests in our shares for certificated shares and being registered in our register of members. Such
process could result in administrative delays which may be prejudicial to any legal proceeding or enforcement action.
We
are subject to the laws of Singapore, which differ in certain material respects from the laws of the United States.
As
a company incorporated under the laws of the Republic of Singapore, we are required to comply with the laws of Singapore, certain of
which are capable of extra-territorial application, as well as our constitution. In particular, we are required to comply with certain
provisions of the SFA, which prohibit certain forms of market conduct and information disclosures, and impose criminal and civil penalties
on corporations, directors and officers in respect of any breach of such provisions. In addition, the Singapore Code on Take-overs and
Mergers (the “Singapore Take-over Code”), specifies, among other things, certain circumstances in which a general offer is
to be made upon a change in control of a Singapore-incorporated public company, and further specifies the manner and price at which voluntary
and mandatory general offers are to be made.
The
laws of Singapore and of the United States differ in certain significant respects. The rights of our shareholders and the obligations
of our directors and officers under Singapore law may be different from those applicable to a company incorporated in the State of Delaware
in material respects, and our shareholders may have more difficulty and less clarity in protecting their interests in connection with
actions taken by our management, members of our board of directors or our controlling shareholders than would otherwise apply to a company
incorporated in the State of Delaware. See “Comparison of Shareholder Rights” for a discussion of certain differences between
Singapore and Delaware corporation law.
In
addition, the application of Singapore law, in particular, the Companies Act 1967 of Singapore (the “Singapore Companies Act”),
may, in certain circumstances, impose more restrictions on us, our shareholders, directors and officers than would otherwise be applicable
to a company incorporated in the State of Delaware. For example, the Singapore Companies Act requires a director to act with a reasonable
degree of diligence in the discharge of the duties of his office and, in certain circumstances, imposes criminal liability for specified
contraventions of particular statutory requirements or prohibitions. In addition, pursuant to the provisions of the Singapore Companies
Act, shareholders holding 10% or more of the total number of paid-up shares as at the date of the deposit carrying the right of voting
at general meetings (disregarding paid-up shares held as treasury shares) may by depositing a requisition, require our directors to convene
an extraordinary general meeting. If our directors do not within 21 days after the date of deposit of the requisition proceed to convene
a meeting, the requisitioning shareholders, or any of them representing more than 50% of the total voting rights represented of all of
them, may proceed to convene such meeting, and we will be liable for the reasonable expenses incurred by such requisitioning shareholders.
We are also required by the Singapore Companies Act to deduct corresponding amounts from fees or other remuneration payable by us to
such of the directors as are in default.
Singapore
take-over laws contain provisions that may vary from those in other jurisdictions.
The
Singapore Take-over Code applies to, among others, corporations with a primary listing of their equity securities in Singapore. While
the Singapore Take-over Code is drafted with, among others, listed public companies in mind, unlisted public companies with more than
50 (fifty) shareholders and net tangible assets of S$5.0 million or more, must also observe the letter and spirit of the general principles
and rules of the Singapore Take-over Code, wherever this is possible and appropriate. Public companies with a primary listing overseas
may apply to Securities Industry Council (“SIC”) to waive the application of the Singapore Take-over Code. As at the date
of this Prospectus, no application has been made to SIC to waive the application of the Singapore Take-over Code in relation to
us.
In
this regard, the Singapore Take-over Code contains certain provisions that may possibly delay, deter or prevent a future take-over or
change in control of us. Under the Singapore Take-over Code, except with the consent of the SIC, any person acquiring an interest, whether
by a series of transactions over a period of time or not, either on his own or together with parties acting in concert with him, in 30%
or more of our voting shares is required to extend a take-over offer for all remaining voting shares in accordance with the procedural
and other requirements under the Singapore Take-over Code. Except with the consent of the SIC, such a take-over offer is also required
to be made if a person holding between 30% and 50% (both inclusive) of our voting shares, either on his own or together with parties
acting in concert with him, acquires additional voting shares representing more than 1% of our voting shares in any six-month period.
While the Singapore Take-over Code seeks to ensure an equality of treatment among shareholders in take-over or merger situations, its
provisions could substantially impede the ability of our shareholders to benefit from a change of control and, as a result, may adversely
affect the market price of our ordinary shares and the ability to realize any benefits from a potential change of control.
Subject
to the general authority to allot and issue new ordinary shares provided by our shareholders, the Singapore Companies Act and our constitution,
our directors may allot and issue new ordinary shares on terms and conditions and for such purposes as may be determined by our Board
in its sole discretion.
Under
Singapore law, we may only allot and issue new shares with the prior approval of our shareholders in a general meeting. Subject to the
general authority to allot and issue new ordinary shares provided by our shareholders, the provisions of the Singapore Companies Act
and our constitution, we may allot and issue new ordinary shares on such terms and conditions and for such purposes as may be determined
by our Board in its sole discretion. Any additional issuances of new ordinary shares may dilute our shareholders’ percentage ownership
interests in our ordinary shares and/or adversely impact the market price of our ordinary shares.
We
may be or become a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. Holders.
The
rules governing passive foreign investment companies (“PFICs”) can have adverse effects for U.S. federal income tax purposes.
The tests for determining PFIC status for a taxable year depend upon the relative values of certain categories of assets and the relative
amounts of certain kinds of income. The determination of whether we are a PFIC, which must be made annually after the close of each taxable
year, depends on the particular facts and circumstances (such as the valuation of our assets, including goodwill and other intangible
assets) and may also be affected by the application of the PFIC rules, which are subject to differing interpretations. The fair market
value of our assets is expected to relate, in part, to (a) the market price of our ordinary shares and (b) the composition of our income
and assets, which will be affected by how, and how quickly, we spend any cash that is raised in any financing transaction. Moreover,
our ability to earn specific types of income that we currently treat as non-passive for purposes of the PFIC rules is uncertain with
respect to future years. Because the value of our assets for purposes of determining PFIC status will depend in part on the market price
of our ordinary shares, which may fluctuate significantly. We do not expect to be a PFIC for our current taxable year or in the foreseeable
future. However, there can be no assurance that we will not be considered a PFIC for any taxable year.
If
we are a PFIC, a U.S. Holder (defined below) would be subject to adverse U.S. federal income tax consequences, such as ineligibility
for any preferred tax rates on capital gains or on actual or deemed dividends, interest charges on certain taxes treated as deferred,
and additional reporting requirements under U.S. federal income tax laws and regulations. A U.S. Holder may in certain circumstances
mitigate adverse tax consequences of the PFIC rules by filing an election to treat the PFIC as a qualified electing fund (“QEF”)
or, if shares of the PFIC are “marketable stock” for purposes of the PFIC rules, by making a mark-to- market election with
respect to the shares of the PFIC. We do not intend to comply with the reporting requirements necessary to permit U.S. Holders to elect
to treat us as a QEF. If a U.S. Holder makes a mark- to-market election with respect to its ordinary shares, the U.S. Holder is in its
U.S. federal taxable income an amount reflecting any year end increase in the value of its ordinary shares. For purposes of this discussion,
a “U.S. Holder” is a beneficial owner of ordinary shares that is for U.S. federal income tax purposes: (i) an individual
who is a citizen or resident of the United States; (ii) a corporation (or other entity taxable as a corporation for U.S. federal income
tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; (iii) an
estate the income of which is subject to U.S. federal income taxation regardless of its source; or (iv) a trust (a) if a court within
the U.S. can exercise primary supervision over its administration, and one or more U.S. persons have the authority to control all of
the substantial decisions of that trust, or (b) that was in existence on August 20, 1996, and validly elected under applicable Treasury
Regulations to continue to be treated as a domestic trust.
Investors
should consult their own tax advisors regarding all aspects of the application of the PFIC rules to the ordinary shares.
Singapore
taxes may differ from the tax laws of other jurisdictions.
Prospective
investors should consult their tax advisors concerning the overall tax consequences of purchasing, owning and disposing of our shares.
Singapore tax law may differ from the tax laws of other jurisdictions, including the United States.
Tax
authorities could challenge the allocation of income and deductions among our subsidiaries, which could increase our overall tax liability.
We
are organized in Singapore, and we currently have subsidiaries in the United States, United Kingdom, New Zealand, South Africa, and Indonesia.
As we grow our business, we expect to conduct increased operations through our subsidiaries in various jurisdictions. If two or more
affiliated companies are located in different jurisdictions, the tax laws or regulations of each country generally will require transactions
between those affiliated companies to be conducted on terms consistent with those between unrelated companies dealing at arm’s
length, and appropriate documentation generally must be maintained to support the transfer prices. We maintain our transfer pricing policies
to be compliant with applicable transfer pricing laws, but our transfer pricing procedures are not binding on applicable tax authorities.
If
tax authorities were to successfully challenge our transfer pricing, there could be an increase in our overall tax liability, which could
adversely affect our financial condition, results of operations and cash flows. In addition, the tax laws in the jurisdictions in which
we operate are subject to differing interpretations.
Tax
authorities may challenge our tax positions, and if successful, such challenges could increase our overall tax liability. In addition,
the tax laws in the jurisdictions in which we operate are subject to change. We cannot predict the timing or content of such potential
changes, and such changes could increase our overall tax liability, which could adversely affect our financial condition, results of
operations and cash flows.
Risks
Related to Ownership of Ordinary Shares and Convertible Note Raise
In
the future, our ability to raise additional capital to expand our operations and invest in our business may be limited, and our failure
to raise additional capital, if required, could impair our business.
While
we currently anticipate that our available funds will be sufficient to meet our cash needs for at least the next 12 months, we may need
or elect to seek additional financing at any time. Our ability to obtain financing will depend on, among other things, our development
efforts, business plans, operating performance and condition of the capital markets at the time we seek financing. If we need or elect
to raise additional funds, we may not be able to obtain additional debt or equity financing on favorable terms, if at all. If we raise
additional equity financing, our shareholders may experience significant dilution of their ownership interests and the per-share value
of our ordinary shares could decline. If we engage in additional debt financing, we may be required to accept terms that further restrict
our ability to incur additional indebtedness and force us to maintain specified liquidity or other ratios and limit the operating flexibility
of our business. If we need additional capital and cannot raise it on acceptable terms, we may not be able to, among other things:
|
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Fund
our operating capital requirements as we grow; |
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Continue
to grow by acquiring companies; |
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Retain
the leadership team and staff required; |
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Repay
our liabilities as they come due; and |
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Make
the necessary investments in our Edtech platform. |
The
requirement that we repay the Convertible Note and interest thereon in cash under certain circumstances, and the restrictive covenants
contained in the Convertible Note, could adversely affect our business plan, liquidity, financial condition, and results of operations.
We may be required to repay the Convertible Note
and interest thereon in cash, if we do not meet certain equity conditions as set forth in the Convertible Note (including minimum price
and volume thresholds) or in certain other circumstances. For example, we will be required to repay the outstanding principal balance
and accrued but unpaid interest, along with a premium, upon the occurrence of a Change of Control (as defined in the Convertible Note).
In addition, the Convertible Note contains restrictive covenants, including financial covenants. These obligations and covenants
could have important consequences on our business. In particular, they could:
|
● |
require
us to dedicate a substantial portion of our cash flow from operations to payments on the Convertible Note; |
|
|
|
|
● |
limit,
among other things, our ability to borrow additional funds and otherwise raise additional capital, and our ability to conduct acquisitions,
joint ventures or similar arrangements, as a result of our obligations to make such payments and comply with the restrictive covenants
in the Convertible Note; |
|
|
|
|
● |
limit
our flexibility in planning for, or reacting to, changes in our businesses and the industries in which we operate; |
|
|
|
|
● |
increase
our vulnerability to general adverse economic and industry conditions; and |
|
|
|
|
● |
place
us at a competitive disadvantage compared to our competitors that have lower fixed costs. |
The
debt service requirements of any other outstanding indebtedness or preferred stock we incur or issue in the future, as well as the restrictive
covenants contained in the governing documents for any such indebtedness, could intensify these risks.
In
the event we are required to repay the Convertible Note in cash, we may seek to refinance the remaining balance, by either refinancing
with the holder of the Convertible Note, by raising sufficient funds through a sale of equity or debt securities or by obtaining a credit
facility. No assurances can be given that we will be successful in making the required payments under the Convertible Note, or in refinancing
our obligations on favorable terms, or at all. Should we decide to refinance, it could be dilutive to shareholders.
If
we are unable to make the required cash payments, there could be a default under the Convertible Note. In such event, or if a default
otherwise occurs under the Convertible Note, including as a result of our failure to comply with the financial or other covenants contained
therein, the holder of the Convertible Note will be able to elect to redeem the Convertible Note for cash equal to 115% of the then-outstanding
principal amount of the Convertible Note (or such lesser principal amount accelerated by the holder) plus accrued and unpaid interest
thereon, or to convert the Convertible Note into ordinary shares at a conversion price equal to the lowest of (i) the applicable Conversion
Price as in effect on the applicable Conversion Date, (ii) 85% of the VWAP of the ordinary shares as of the trading day immediately preceding
the delivery or deemed delivery of the applicable Conversion Notice, (iii) 85% of the VWAP of the ordinary shares as of the trading day
of the delivery or deemed delivery of the applicable Conversion Notice and (iv) 85% of the price computed as the quotient of (I) the
sum of the VWAP of the ordinary shares for each of the three trading days with the lowest VWAP of the ordinary shares during the 20 consecutive
trading day period ending and including the trading day immediately preceding the delivery or deemed delivery of the applicable Conversion
Notice, divided by three.
Our
assets and the assets of certain of our subsidiaries have been pledged as security for our obligations under the Convertible Note, and
our default with respect to those obligations could result in the transfer of our assets to our creditor. Such a transfer could have
a material adverse effect on our business, capital, financial condition, results of operations, cash flows and prospects.
The
convertible note is a senior secured obligation of the Company secured by a lien on all assets of the Company and certain of our subsidiaries.
In the event of a default by the Company with respect to its obligations under the Convertible Note, we or our subsidiaries may be obligated
to transfer some of our assets to our creditor. Such a transfer could have a material adverse effect on our business, capital, financial
condition, results of operations, cash flows and prospects.
A
significant portion of our total outstanding shares may be sold into the public market in the near future, which could cause the market
price of our ordinary shares to drop significantly, even if our business is doing well.
The
price of our ordinary shares could decline if there are substantial sales of our ordinary shares, particularly sales by our directors,
executive officers and significant shareholders, or if there is a large number of shares of our ordinary shares available for sale. All
of the ordinary shares sold in our IPO are currently available for sale in the public market. Substantially all of our remaining outstanding
ordinary shares are currently restricted from resale as a result of market standoff and “lock-up” agreements.
The
market price of our ordinary shares could decline as a result of the sale of a substantial number of ordinary shares in the public market
or the perception in the market that the holders of a large number of shares intend to sell their shares.
Our
shareholders will experience significant dilution as a result of any conversion of the convertible note.
As
a result of any future conversion of the Convertible Note, our shareholders will experience significant dilution. In addition,
if we elect to pay monthly installment payments under the Convertible Note in our ordinary shares, we may be required to issue a substantial
number of shares to the holder of the Convertible Note. The Convertible Note is convertible, at the holder’s option, into our ordinary
shares, initially at a fixed conversion price of $5.17, subject to adjustment for stock dividends, stock splits, anti-dilution and other
customary adjustment events (without taking into account the limitations on the conversion of the Convertible Note as described elsewhere
in this prospectus). The number of ordinary shares to be issued may be substantially greater, if the Convertible Note is converted into
ordinary shares following and during the continuation of an Event of Default (as defined in the Convertible Note) at the alternate conversion
price as described elsewhere in this prospectus. In such cases, the number of shares issued will be based on the lowest conversion price
in accordance with a formula determined based upon 85% of the volume weighted average of the market price of our ordinary shares during
certain measuring periods. We cannot predict the market price of our ordinary shares at any future date, and therefore, we are unable
to accurately forecast or predict the total amount of shares that ultimately may be issued under the Convertible Note. The Convertible
Note likely will be converted only at times when it is economically beneficially for the holder to do so, and we are entitled to pay
interest in shares and make installment conversions only at a price per share that is at a discount to the then current market price.
In any event, the issuance of these shares will dilute our other equity holders, which could cause the price of our ordinary shares to
decline.
If
securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they
change their recommendations regarding our ordinary shares adversely, our share price and/or trading volume could decline.
The
trading market for our ordinary shares will be influenced by the research and reports that industry or securities analysts may publish
about us, our business, our market or our competitors. Securities and industry analysts do not currently, and may never, publish research
on us. If no securities or industry analysts commence coverage of our Company, our share price and trading volume would likely be negatively
impacted. If any of the analysts who may cover us adversely change their recommendation regarding our shares, or provide more favorable
relative recommendations about our competitors, our share price would likely decline. If any of the analysts who may cover us were to
cease coverage or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause
our share price or trading volume to decline.
We
may not pay dividends on our ordinary shares in the future and, consequently, your ability to achieve a return on your investment will
depend on appreciation in the price of our ordinary shares.
We
do not currently expect to pay cash dividends on our ordinary shares. Any future dividend payments are within the absolute discretion
of our Board and will depend on, among other things, our results of operations, working capital requirements, capital expenditure requirements,
financial condition, level of indebtedness, contractual restrictions with respect to payment of dividends, business opportunities, anticipated
cash needs, provisions of applicable law and other factors that our Board may deem relevant. Consequently, your ability to achieve a
return on your investment will depend on appreciation in the price of our ordinary shares.
We
currently report our financial results under IFRS, which differs in certain significant respects from U.S. GAAP.
Currently
we report our financial statements under IFRS. There have been and there may in the future be certain significant differences between
IFRS and U.S. GAAP, including differences related to revenue recognition, share-based compensation expense, income tax and earnings per
share. As a result, our financial information and reported earnings for historical or future periods could be significantly different
if they were prepared in accordance with U.S. GAAP. In addition, we do not intend to provide a reconciliation between IFRS and U.S. GAAP
unless it is required under applicable law. As a result, you may not be able to meaningfully compare our financial statements under IFRS
with those companies that prepare financial statements under U.S. GAAP.
We
are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more
difficult to compare our performance with other public companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth
companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the
Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden
parachute payments not previously approved. As a result, our shareholders may not have access to certain information they may deem important.
We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including
if the market value of our ordinary shares held by non-affiliates exceeds $700 million as of any December 31 before that time, in which
case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find
our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result
of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less
active trading market for our securities and the trading prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards.
The
JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to
non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition
period, which means that when a standard is issued or revised and it has different application dates for public or private companies,
we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging
growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences
in accountant standards used.
We
incur significantly increased costs and devote substantial management time as a result of operating as a public company.
As
a public company, we incur significant legal, accounting, and other expenses that we did not incur as a private company. For example,
we are subject to the reporting requirements of the Exchange Act and are required to comply with the applicable requirements of the Sarbanes-Oxley
Act and the Dodd-Frank Act, as well as rules and regulations subsequently implemented by the SEC, NYSE American including
the establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Compliance
with these requirements increases our legal and financial compliance costs and makes some activities more time consuming and costly.
The
Exchange Act requires, among other things, that we file annual and current reports with respect to our business and results of operations.
We incur significant expenses and devote substantial management effort toward ensuring compliance with the auditor attestation requirements
of Section 404 of the Sarbanes- Oxley Act, which will increase when we are no longer an “emerging growth company,” as defined
by the JOBS Act. We will need to hire additional accounting and financial staff with appropriate public company experience and technical
accounting knowledge. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company
or the timing of such costs. As a result, management’s attention may be diverted from other business concerns, which could adversely
affect our business and results of operations.
In
addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for
public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations
and standards are subject to varying interpretations, in many cases due to their lack of specificity, and as a result, their application
in practice may evolve over time as regulatory and governing bodies provide new guidance. These factors could result in continuing uncertainty
regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We will continue
to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and
administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.
If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies
due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us, and our
business could be adversely affected.
As
a result of disclosure of information as a public company, our business and financial condition have become more visible, which may result
in threatened or actual litigation, including by competitors and other third parties. If the claims are successful, our business operations
and financial results could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these
claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business
operations and financial results. These factors could also make it more difficult for us to attract and retain qualified colleagues,
executive officers and Board members.
Operating
as a public company makes it more difficult and more expensive for us to obtain director and officer liability insurance on the terms
that we would like. As a result, it may be more difficult for us to attract and retain qualified people to serve on our Board, our Board
committees or as executive officers.
If
we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately
report our financial condition, results of operations or cash flows, which may adversely affect investor confidence.
The
Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure
controls and procedures. We are required, under SOX 404, to perform system and process evaluations and testing of internal controls over
financial reporting to allow management to report annually on the effectiveness of internal control over financial reporting. This assessment
requires disclosure of any material weaknesses in our internal control over financial reporting identified by management. SOX 404 also
generally requires an attestation from our independent registered public accounting firm on the effectiveness of internal control over
financial reporting. However, as long as we remain an emerging growth company (“EGC”), we intend to take advantage of the
exemption permitting it not to comply with the independent registered public accounting firm attestation requirement.
At
the time when we are no longer an EGC, our independent registered public accounting firm may issue a report that is adverse in the event
it is not satisfied with the level at which we control are documented, designed or operating. Remediation efforts may not enable us to
avoid a material weakness in the future.
Compliance
with SOX 404 requires the incurrence of substantial accounting expense and consumes significant management efforts. We may not be able
to complete evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify
one or more material weaknesses in internal control over financial reporting, we will be unable to assert that our internal control over
financial reporting is effective. We cannot assure you that there will not be material weaknesses or significant deficiencies in our
internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely
inhibit its ability to accurately report financial condition, results of operations or cash flows. If we are unable to conclude that
internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a
material weakness or significant deficiency in internal control over financial reporting, it could lose investor confidence in the accuracy
and completeness of our financial reports, the market price of our ordinary shares could decline, and we could be subject to sanctions
or investigations by the NYSE American, the SEC or other regulatory authorities. Failure to remedy any material weakness in
internal control over financial reporting, or to implement or maintain other effective control systems required of public companies,
could also restrict future access to the capital markets. The Company has reported the material weakness in the amended audited report
as of December 31, 2022.
If
we are not able to comply with the applicable continued listing requirements or standards of the NYSE American, the NYSE
American could delist our ordinary shares.
Our ordinary shares are listed on the NYSE American.
In order to maintain that listing, we must satisfy minimum financial and other continued listing requirements and standards, including
those regarding director independence and independent committee requirements, minimum shareholders’ equity, minimum share price,
and certain corporate governance requirements. There can be no assurances that we will be able to comply with the applicable listing
standards. If the NYSE American were to delist our ordinary shares, it would be more difficult for our shareholders to dispose of our
ordinary shares and more difficult to obtain accurate price quotations on our ordinary shares. Our ability to issue additional securities
for financing or other purposes, or otherwise to arrange for any financing we may need in the future, may also be materially and adversely
affected if our ordinary shares are not listed on a national securities exchange.
Risks
Related to this Offering and Ownership of Ordinary Shares
In
the future, our ability to raise additional capital to expand our operations and invest in our business may be limited, and our failure
to raise additional capital, if required, could impair our business.
We
may need or elect to seek, additional financing at any time. Our ability to obtain financing will depend on, among other things, our
development efforts, business plans, operating performance and condition of the capital markets at the time we seek financing. If we
need or elect to raise additional funds, we may not be able to obtain additional debt or equity financing on favorable terms, if at all.
If we raise additional equity financing, our shareholders may experience significant dilution of their ownership interests and the per-share
value of our ordinary shares could decline. If we engage in additional debt financing, we may be required to accept terms that further
restrict our ability to incur additional indebtedness and force us to maintain specified liquidity or other ratios and limit the operating
flexibility of our business. If we need additional capital and cannot raise it on acceptable terms, we may not be able to, among other
things:
|
➢ |
Fund
our operating capital requirements as we grow; |
|
➢ |
Continue
to grow by acquiring companies; |
|
➢ |
Retain
the leadership team and staff required; |
|
➢ |
Repay
our liabilities as they come due; and |
|
➢ |
Make
the necessary investments in our Edtech platform. |
Our
share price may be volatile, and the market price of our ordinary shares after this offering may drop below the price you pay.
Market
prices for securities of newly-public companies have historically been particularly volatile in response to various factors, some of
which are beyond our control. As a result of this volatility, you may not be able to sell your ordinary shares (including ordinary
shares issuable upon exercise of any warrants sold in this offering) at or above the public offering price in this offering.
Some of the factors that may cause the market price for our ordinary shares to fluctuate include:
|
➢ |
Actual
or anticipated fluctuations in our key operating metrics, financial condition and operating results; |
|
➢ |
Loss
of current long-term contracts; |
|
➢ |
Actual
or anticipated changes in our growth rate; |
|
➢ |
Competitors
developing more advanced technology attracting our customers; |
|
➢ |
Our
announcement of actual results for a fiscal period that are lower than projected or expected or our announcement of revenue or earnings
guidance that is lower than expected; |
|
➢ |
Changes
in estimates of our financial results or recommendations by securities analysts; |
|
➢ |
Changes
in market valuations of similar companies; |
|
➢ |
Changes
in our capital structure, such as future issuances of securities or the incurrence of debt; |
|
➢ |
Announcements
by us or our competitors of significant products or services, contracts, acquisitions or strategic alliances; |
|
➢ |
Regulatory
developments in Singapore, the United States or other countries; |
|
➢ |
Actual
or threatened litigation involving us or our industry; |
|
➢ |
Additions
or departures of key personnel; |
|
➢ |
General
trends in the education industry as a whole; |
|
➢ |
Share
price and volume fluctuations attributable to inconsistent trading volume levels of our shares; |
|
➢ |
Further
issuances of ordinary shares by us; |
|
➢ |
Sales
or ordinary shares by our shareholders; |
|
➢ |
Repurchases
of ordinary shares; and |
|
➢ |
Changes
in general economic, industry and market conditions. |
In
addition, the stock market in general, and the market for education companies in particular, has experienced extreme price and volume
fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. These fluctuations may
be even more pronounced in the trading market for our shares shortly following this offering. If the market price of our ordinary shares
after this offering does not exceed the offering price, you may not realize any return on your investment in us and may lose some or
all of your investment. Securities class action litigation has often been instituted against companies following periods of volatility
in the overall market and in the market price of a company’s securities. This litigation, if instituted against us, could result
in very substantial costs, divert our management’s attention and resources, and harm our business, operating results and financial
condition. In addition, recent fluctuations in the financial and capital markets have resulted in volatility in securities prices.
We
have broad discretion over the use of proceeds we receive in this offering and may not apply the proceeds in ways that increase the value
of your investment.
Our
management will have broad discretion in the application of the net proceeds from this offering and, as a result, you will have to rely
upon the judgment of our management with respect to the use of these proceeds. Our management may spend a portion or all of the net proceeds
in ways that not all shareholders approve of or that may not yield a favorable return. The failure by our management to apply these funds
effectively could harm our business.
Purchasers
of securities in this offering will experience immediate and substantial dilution in the net tangible book value of their investment.
The
offering price of securities in this offering will be substantially higher than the pro forma as adjusted net tangible book value
per share (as of June 30, 2023) of our outstanding ordinary shares immediately after this offering. Therefore, if you purchase
securities in this offering, you will incur immediate dilution of $1.53 in the as adjusted net tangible book value per
share from the price you paid based on the public offering price. In addition, following the completion of this offering, purchasers
of ordinary shares in this offering will have contributed 6% of the total consideration paid by our shareholders to acquire our
ordinary shares but will own 24% of our outstanding ordinary shares.
If
securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they
change their recommendations regarding our ordinary shares adversely, our share price and/or trading volume could decline.
The
trading market for our ordinary shares will be influenced by the research and reports that industry or securities analysts may publish
about us, our business, our market or our competitors. Securities and industry analysts do not currently, and may never, publish research
on us. If no securities or industry analysts commence coverage of our Company, our share price and trading volume would likely be negatively
impacted. If any of the analysts who may cover us adversely change their recommendation regarding our shares, or provide more favorable
relative recommendations about our competitors, our share price would likely decline. If any of the analysts who may cover us were to
cease coverage or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause
our share price or trading volume to decline.
Management
will have broad discretion as to the use of the net proceeds from this offering, and may not use the proceeds effectively.
Our
management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways
that do not improve our results of operations or enhance the value of our ordinary shares. For example, management could invest the proceeds
in assets that do not produce attractive returns or to make acquisitions of properties or businesses that do not prove to be attractive
or otherwise are unsuccessful. Conversely, management may not be able to identify and complete investments or acquisitions. Our failure
to apply these funds effectively could have a material adverse effect on our business, financial condition and results of operations
and cause the price of our shares to decline.
This
is a best efforts offering, no minimum number of securities or amount of proceeds is required to be sold, and we may not raise the amount
of capital we believe is required for our business plans.
The
placement agent has agreed to use its reasonable best efforts to solicit offers to purchase the securities in this offering. The placement
agent has no obligation to buy any of the securities from us or to arrange for the purchase or sale of any specific number or dollar
amount of the securities. There is no required minimum number of securities or amount of proceeds that must be sold as a condition to
completion of this offering. Because there is no minimum offering amount required as a condition to the closing of this offering, the
actual offering amount, placement agent fees and proceeds to us are not presently determinable and may be substantially less than the
maximum amounts set forth above. We may sell fewer than all of the securities offered hereby, which may significantly reduce the amount
of proceeds received by us, and investors in this offering will not receive a refund in the event that we do not sell an amount of securities
sufficient to fund our business plans. Thus, we may not raise the amount of capital we believe is required for our operations in the
short-term and may need to raise additional funds, which may not be available or available on terms acceptable to us.
A
large number of shares issued in this offering may be sold in the market following this offering, which may depress the market price
of our shares.
As
of December 27, 2023, there were 73,873,784 ordinary shares outstanding. All of our issued and outstanding shares, including
the shares issued in this offering and issuable upon exercise of the Series 2024-A warrants and the Series 2024-C warrants and
the pre-funded Series 2024-B warrants may be sold in the market following this offering and will be freely tradeable, except for any
shares held by our “affiliates,” as that term is defined in Rule 144 under the Securities Act of 1933, as amended (the “Securities
Act”).
Sales
of substantial amounts of our ordinary shares in the public market after this offering, or the perception that such sales will occur,
could depress the market price of our ordinary shares. Sales of a substantial number of shares of our ordinary shares in the public market
following this offering could cause the market price of our ordinary shares to decline. If there are more shares of ordinary shares offered
for sale than buyers are willing to purchase, then the market price of our ordinary shares may decline to a market price at which buyers
are willing to purchase the offered shares of ordinary shares and sellers remain willing to sell the shares.
Each
of our directors and executive officers will enter into a lock-up agreement in connection with this offering, which will restrict their
sales of our ordinary shares for a period of 90 days after the closing date of this offering, subject to certain exceptions. The placement
agent may, in its sole discretion and at any time or from time to time before the termination of the period, release all or any portion
of the securities subject to lock-up agreements. These lock-up agreements affect approximately 1,434,616 shares of our ordinary shares
currently outstanding. Sales of stock by any of our executive officers or directors could have a material adverse effect on the trading
price of our ordinary shares.
The
Series 2024-A warrants and Series 2024-C warrants and the pre-funded Series 2024-B warrants issued in this offering may not have
any value.
The
Series 2024-A warrants will be exercisable commencing on the date of issuance and will expire on the five-year anniversary of the date
of issuance at an exercise price of $0.35 per share. The Series 2024-C warrants will be exercisable commencing on the date of
issuance and will expire on the 18-month anniversary of the date of issuance at an exercise price of $0.35 per share. The pre-funded
Series 2024-B warrants will be exercisable commencing on the date of issuance and will expire when exercised in full, at an exercise
price of $0.0001 per share. The public offering price of the pre-funded Series 2024-B warrants will be pre-paid, except for a
nominal exercise price of $0.0001 per share, upon issuance of the pre-funded Series 2024-B warrants and, consequently, no additional
payment or other consideration (other than the nominal exercise price of $0.0001 per share) will be required to be delivered to us by
the holder upon exercise. In the event our ordinary shares price does not exceed the exercise price of the Series 2024-A warrants or
the Series 2024-C during the period when such warrants are exercisable, such warrants may not have any value. In the event our ordinary
shares do not exceed the exercise price of the prefunded Series 2024-B warrants, which is $0.0001 per share issued in this offering during
the period when such warrants are exercisable, such prefunded Series 2024-B warrants may not have any value.
Holders
of our ordinary shares may not be permitted to exercise warrants that they hold on account of a beneficial ownership limitations.
The
Series 2024-A warrants and the Series 2024-C warrants and the pre-funded Series 2024-B warrants being offered hereby will prohibit
a holder from exercising its warrants if doing so would result in such holder beneficially owning more than 4.99% (or, at the election
of the holder prior to the date of issuance, 9.99%), of our ordinary shares. Any holder may increase or decrease this beneficial ownership
limitation to any other percentage not in excess of 9.99% upon notice to us, provided that, in the case of an increase of such beneficial
ownership limitation, such notice shall not be effective until 61 days following notice to us. As a result, you may not be able to exercise
your warrants for shares of our ordinary shares at a time when it would be financially beneficial for you to do so.
There
is no public market for the Series 2024-A warrants and the Series 2024-C warrants or the pre-funded Series 2024-B warrants being
offered by us in this offering.
There
is no established public trading market for the Series 2024-A warrants or Series 2024-C warrants to purchase shares of our ordinary
shares or the pre-funded Series 2024-B warrants to purchase shares of our ordinary shares being offered by us in this offering, and we
do not expect a market to develop. In addition, we do not intend to apply to list the Series 2024-A warrants or the Series 2024-C
warrants or the pre-funded Series 2024-B warrants on any national securities exchange or other trading system. Without an established
market, the liquidity of the Series 2024-A warrants or the Series 2024-C warrants and the pre-funded Series 2024-B warrants may
be extremely limited or non-existent.
Except
as set forth in the applicable Series 2024-A warrant or the Series-C warrant or the pre-funded Series 2024-B warrant, holders
of our warrants will have no rights as ordinary shareholders until such holders exercise their warrants and acquire our ordinary share.
Until
you acquire shares of our ordinary share upon exercise of your Series 2024-A warrant or Series 2024-C warrant or pre-funded
Series 2024-B warrants, you will have no rights with respect to the shares of our ordinary share underlying such warrants, except
for those rights set forth in the Series 2024-A warrants or Series 2024-C warrants or pre-funded Series 2024-B warrants.
Upon exercise of your warrants, you will be entitled to exercise the rights of an ordinary shareholder only as to matters for which the
record date occurs after the exercise date.
A
potential violation of section 5 of the Securities Act may arise if the interpretation or enforcement of the law and regulations regarding
NFTs change.
If
the interpretation or enforcement of the law and regulations regarding NFTs change or if it is deemed by a regulatory body or court of
competent jurisdiction were to conclude that we erroneously concluded that our NFTs are not securities, we could be potentially deemed
to be in violation of Section 5 of the Securities Act of 1933, as amended. A violation of Section 5 would carry the possible following
consequences: (i) civil penalties for monetary damages; (ii) disgorgement of any profits from issuance of the NFTs; and (iii) criminal
penalties of up to five-year term of sentence
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements that reflect our current expectations and views of future events. The forward-looking
statements are contained principally in the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and “Regulation.”
Known and unknown risks, uncertainties and other factors, including those listed under “Risk Factors,” may cause our actual
results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.
You
can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,”
“anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,”
“is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking
statements largely on our current expectations and projections about future events that we believe may affect our financial condition,
results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:
➢
Our future business development, financial condition and results of operations;
➢
Our ability to continue to make acquisitions and to successfully integrate and operate acquired businesses;
➢
Our expectations regarding demand for and market acceptance of our marketplace’s products and services;
➢
Our ability to implement our business strategy and expand our portfolio of products and services;
➢
Our ability to adapt to technological changes in the educational sector;
➢
The development and expansion of our global education network and the effect of new technology applications in the educational services
industry;
➢
Our ability to continue attracting and retaining new students, teachers, Mentors, and partners;
➢
Our ability to maintain the academic quality of our programs;
➢
The availability of qualified personnel and the ability to retain such personnel;
➢
Government interventions in education industry programs, that affect the economic or tax regime, the collection of tuition fees or the
regulatory framework applicable to educational institutions;
➢
Our expectations regarding our businesses base of investors;
➢
Changes in consumer demands and preferences and technological advances, and our ability to innovate to respond to such changes;
➢
Our compliance with, and changes to, governmental laws, regulations and tax matters that apply to us and our industry;
➢
Health crises, including due to pandemics such as the COVID-19 pandemic and government measures taken in response thereto;
➢
Our goals and strategies;
➢
Our plans to invest in our business;
➢Our
relationships with our partners;
➢
Competition in our industry;
➢
We are incorporated in Singapore, and our shareholders may have more difficulty protecting their interests than they would as shareholders
of a corporation incorporated in the United States; and
➢
Other risk factors discussed under “Risk Factors.”
These
forward-looking statements are subject to various and significant risks and uncertainties, including those which are beyond our control.
Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be
found to be incorrect. The forward-looking statements made in this prospectus relate only to events or information as of the date on
which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly
any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements
are made or to reflect the occurrence of unanticipated events. You should thoroughly read this prospectus and the documents that we refer
to herein with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify
all of our forward-looking statements by these cautionary statements. We disclaim any obligation to update our forward-looking statements,
except as required by law. This prospectus contains certain data and information that we obtained from various government and private
publications, including industry data and information from the World Economic Forum Schools of the Future Report and industry statistics
from education market intelligence firm, HolonIQ. Statistical data in these publications also include projections based on a number of
assumptions.
In
addition, the new and rapidly changing nature of the credit and marketplace lending industry results in significant uncertainties for
any projections or estimates relating to the growth prospects or future condition of our industry. Furthermore, if any one or more of
the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these
assumptions. You should not place undue reliance on these forward-looking statements.
USE
OF PROCEEDS
At
the public offering price per unit, we estimate
that the net proceeds to us from the sale of our Series 1 units and Series 2 units, if any, in this offering will be approximately
$6,416,250 after deducting estimated placement agent’s discounts and commissions and estimated offering expenses payable
by us. Each $1.00 increase (decrease) in the public offering price will increase (decrease) the net proceeds to us from this offering
by approximately $2,180,000, assuming the number of units offered by us, as set forth on the cover page of this prospectus,
remains the same and after deducting estimated placement agent’s discounts and commissions and estimated offering expenses payable
by us. Similarly, each increase (decrease) of 100,000 ordinary shares offered by us would increase (decrease) the net proceeds to us
from this offering by approximately $32,375, assuming the public offering price remains the same and after deducting estimated
placement agent’s discounts and commissions and estimated offering expenses payable by us. The as adjusted information discussed
above is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined
at pricing.
We
intend to use the net proceed we receive from the offering for general corporate purposes, including working capital, operating
expenses, debt repayment and to support acquisitions:
| - | Debt
repayment (of approximately $2.2 million to Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B) |
| - | Working
capital (approximate $0.8 million payment to Boustead Securities LLC (“Boustead”)) |
| - | Acquisition |
| - | Product
and marketing team |
The
foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds
of this offering. Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering.
If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in
this prospectus. See “Risk Factors.”
Pending
use of proceeds from this offering, we intend to invest the proceeds in short-term, interest-bearing, investment-grade instruments, or
hold as cash.
DIVIDEND
POLICY
We
currently anticipate that we will retain any future earnings for the operation and expansion of our business. Accordingly, we do not
currently anticipate declaring or paying any cash dividends on our ordinary shares for the foreseeable future. Any future determination
relating to our dividend policy will be made at the discretion of our Board and will depend on then existing conditions. We may, by ordinary
resolution, declare dividends at a general meeting of shareholders, but we are restricted from paying dividends in excess of the amount
recommended by our Board. Pursuant to Singapore law, no dividend may be paid except out of our profits.
CAPITALIZATION
The
following tables sets forth our cash and cash equivalents and our total capitalization as of June 30, 2023 as follows:
➢
On an actual basis for the companies within the Group at June 30, 2023;
➢
On a pro forma as adjusted basis including the companies that the Group acquired during first half of 2023, as if they were a part of
the Group for the first half of 2023, further adjusted to reflect the sale of 23,571,429 ordinary shares (or pre-funded
warrants in lieu thereof) in this offering, at the public offering price of $0.35 per ordinary share (or pre-funded
warrant in lieu of ordinary shares) and associated warrants, after deducting the placement agent’s discounts and commissions
and estimated offering expenses payable by us.
The
adjustments reflected below are subject to change and are based upon available information and certain assumptions that we believe are
reasonable. Total shareholders’ equity and total capitalization following the completion of this offering are subject to adjustment
based on the actual offering price and other terms of this offering determined at pricing. You should read this capitalization table
in conjunction with “Use of Proceeds,” “Summary Consolidated Financial Data,” “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes
appearing elsewhere in this prospectus.
| |
June 30, 2023 (USD) | |
| |
Actual | | |
Pro forma As Adjusted | |
Cash and cash equivalents | |
| 2,624,432 | | |
| 9,040,682 | |
Capitalization: | |
| | | |
| | |
Long-term debt: | |
| 549,621 | | |
| 549,621 | |
Shareholders’ equity: | |
| 112,317,721 | | |
| 118,733,971 | |
50,900,057 ordinary shares issued and outstanding on an actual basis, 97,445,213 ordinary shares
issued and outstanding on a pro forma basis | |
| | | |
| | |
Accumulated other comprehensive income (loss) | |
| — | | |
| - | |
Reserve | |
| (33,697,262 | ) | |
| (33,697,262 | |
Accumulated deficit | |
| (79,150,182 | ) | |
| (79,150,182 | |
Non-controlling interest | |
| 6,669,508 | | |
| 6,669,508 | |
Total shareholders’ equity | |
| 6,139,785 | | |
| 12,556,035 | |
Total capitalization | |
| 6,689,406 | | |
| 13,105,656 | |
Each
$1.00 increase (decrease) in the public offering price per unit will increase (decrease) the amount of total assets by approximately
$21,803,571 and total capitalization on a pro forma as adjusted basis by approximately $21,803,571, assuming the number
of units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated placement
agent’s discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of
ordinary shares we are offering. Each increase (decrease) of 100,000 ordinary shares offered by us would increase (decrease) the amount
of total assets by approximately $32,375 and total capitalization on a pro forma as adjusted basis by approximately $32,375,
assuming the public offering price remains the same, and after deducting estimated placement agent’s discounts and commissions
and estimated offering expenses payable by us.
The
number of ordinary shares outstanding as of December 27, 2023 is 73,873,784 and excludes:
| ● | 2,516,581
management
and employee share options issued and reserved. |
| ● | Any
further conversion from the convertible debt issuance or any outstanding warrants. |
DILUTION
If
you invest in our ordinary shares, your interest will be immediately diluted $1.53 per ordinary share, representing the difference
between the price paid by investors in this offering based on the public offering price per unit of $0.35 and our as adjusted
net tangible book value per ordinary share of $(0.65). Dilution results from the fact that the public offering price per unit
is substantially in excess of the as adjusted book value per ordinary share attributable to the existing shareholders of our
presently outstanding ordinary shares.
Our
net tangible book value of the Company as of June 30, 2023 was $(53,303,839) or $(1.05) per ordinary share. Net tangible
book value represents the amount of our total consolidated tangible assets, less the amount of our total consolidated liabilities. Total
tangible assets are calculated as total assets minus goodwill, intangible assets and right of use asset, and the total tangible liability
is calculated as total liability.
The
total shares outstanding as of June 30, 2023 were 50,900,057. The as adjusted total shares outstanding following this offering will
be 97,445,213.
Without
taking into account any other changes in net tangible book value after June 30, 2023, other than to give effect to (i) the sale of the
ordinary shares (or pre-funded warrants in lieu thereof) offered in this offering at the public offering price of $0.35
per ordinary share, and (ii) the deduction of the placement agent’s discounts and commissions and estimated offering expenses payable
by us, our as adjusted net tangible book value as of June 30, 2023 would have been $(46,887,589), or $(0.48) per ordinary
share. This represents an immediate increase in as adjusted net tangible book value of $0.57 per ordinary share to the existing
shareholders and an immediate dilution in as adjusted net tangible book value of $1.53 per ordinary share to investors purchasing
our ordinary shares in this offering. The following table illustrates such dilution:
| |
Per Ordinary
Share | |
| |
($) | |
Public offering price per unit | |
$ | 0.35 | |
Net tangible book value up | |
$ | (1.05 | ) |
As adjusted increase (decrease) in net tangible book value per share | |
$ | 0.57 | |
As adjusted net tangible book value per share after giving effect to this offering | |
$ | (0.48 | ) |
As adjusted dilution per share to investors participating in this offering | |
$ | 1.53 | |
As
adjusted net tangible book value as of June 30, 2023 is calculated as follows:
Total assets | |
$ | 81,818,117 | |
Less: | |
| | |
Intangible assets, net | |
$ | 15,421,531 | |
Operating lease right-of-use asset | |
$ | 12,344,687 | |
Goodwill | |
$ | 31,677,406 | |
Total intangible assets | |
$ | 59,443,624 | |
Total tangible assets | |
$ | 22,374,493 | |
Less: Total liabilities | |
$ | 69,262,082 | |
As adjusted net tangible book value | |
$ | (46,887,589 | ) |
Each
$1.00 increase (decrease) in the public offering price per unit will increase (decrease) our as adjusted net tangible book value
per share by $0.35 per share and decrease (increase) the dilution to new investors by $0.65 per share, assuming the number
of units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting placement agent’s
discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of units
we are offering. Each increase (decrease) of 100,000 units offered by us would increase (decrease) the as adjusted net tangible
book value per share by approximately $32,375 per share assuming the number of units offered by the Company, as set forth
on the cover page of this prospectus, remains the same and after deducting placement agent’s discounts and commissions and estimated
offering expenses payable by us, and decrease (increase) the dilution per share to new investors by approximately $(0.00) per share.
The as adjusted information discussed above is illustrative only and will be adjusted based on the actual public offering price and other
terms of this offering determined at pricing.
The
following table summarizes, on an as adjusted basis as of June 30, 2023 the differences between existing shareholders
and the new investors with respect to the number of ordinary shares purchased from us in this offering, the total consideration paid
and the average price per ordinary share paid before deducting the placement agent’s discounts and commissions and estimated offering
expenses.
| |
Ordinary
Units Purchased | | |
Total
Consideration | | |
Average Price
Per Ordinary | |
| |
Number | | |
Percent | | |
Amount | | |
Percent | | |
Share | |
Existing shareholders
(Issued) | |
| 73,873,784 | | |
| 76 | % | |
$ | 127,116,569 | | |
| 94 | % | |
$ | 1.72 | |
New investors | |
| 23,571,429 | | |
| 24 | % | |
| 8,250,000 | | |
| 6 | % | |
| 0.35 | |
Total | |
| 97,445,213 | | |
| 100 | % | |
| 135,366,569 | | |
| 100 | % | |
| 1.39 | |
The
as adjusted information discussed above is illustrative only. Our net tangible book value following the completion of this
offering is subject to adjustment based on the actual public offering price of our ordinary shares and other terms of this offering
determined at pricing.
The
number of ordinary shares outstanding as of December 27, 2023 is 73,873,784 and excludes:
| ● | 2,516,581
management
and employee share options issued and reserved. |
| ● | Any
further conversion from the convertible debt issuance or any outstanding warrants. |
➢
To the extent that additional options or other securities are issued under our equity incentive plans, or we issue additional shares
of ordinary shares in the future, there will be further dilution to investors participating in this offering. In addition, we may choose
to raise additional capital through the sale of equity or convertible debt securities due to market conditions or strategic considerations
even if we believe we have sufficient funds for our current or future operating plans. To the extent we issue additional ordinary shares
or other equity or convertible debt securities in the future, there will be further dilution to investors participating in this offering.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In
this section “we,” “us” and “our” refer to Genius Group Limited. You should read the following discussion
and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes
included elsewhere in this Prospectus. The following discussion is based on our financial information prepared in accordance with the
IFRS, as issued by the International Accounting Standards Board, or IASB, which may differ in material respects from generally accepted
accounting principles in other jurisdictions, including U.S. generally accepted accounting principles, or GAAP. This discussion and other
parts of this Prospectus contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives,
expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors
that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this Prospectus
titled “Item 3.D. Risk Factors.” References to the number of shares or options issued by Genius Group Limited in this section
shall be to the number of shares or options issued at June 30, 2023.
Please
refer to the glossary of terms provided at the beginning of this Prospectus for aid in understanding the entities, acquisitions,
products, services and certain other concepts referred to in the management’s discussion and analysis presented herein.
A.
Operating Results
Overview
We
believe that we are a world leading entrepreneur Edtech and education group. Our mission is to disrupt the current education model with
a student-centered, lifelong learning curriculum that prepares students with the leadership, entrepreneurial and life skills to succeed
in today’s market.
To
help achieve our mission, we have completed an IPO on NYSE American, on April 14, 2022 and then dual listed the Company on Upstream on
April 6, 2023. On September 19, 2023, Genius Group. Ltd. publicly announced that it has commenced the process to delist its securities
from Upstream, which process was completed on September 29, 2023. This decision was made due to complex securities regulations arising
from the dual listing on Upstream and NYSE and de minimis use of Upstream by GNS shareholders). We have also raised follow on Convertible
Note in September 2022. We grew from a Pre-IPO Group of four companies to a post IPO Group of nine companies, once the five Acquisitions
closed.
Our
Pre-IPO Group includes our holding company, Genius Group Ltd, our Edtech platform, GeniusU Ltd, and two companies that were acquired:
Entrepreneurs Institute in 2019 and Entrepreneur Resorts in 2020 (spin-off completed on October 2, 2023).
The
entrepreneur education system of our Pre-IPO Group has been delivered virtually and in-person, in multiple languages, locally and globally
mainly via our GeniusU Edtech platform to adults seeking to grow their entrepreneur and leadership skills. Our partners and community
are global with an average of 8,900 new students joining our GeniusU platform each week in 2022. Our City Leaders have been conducting
our events (physically or virtually) in over 100 cities and over 2,500+ faculty members have been operating their microschools using
our online tools.
We
are now expanding our education system to age groups beyond our adult audience, to children and young adults. The five Acquisitions are
our first step towards this. They include: Education Angels, which provides early learning in New Zealand for children from early stage
5 years old; E-Square, which provides primary and secondary school education in South Africa; University of Antelope Valley, which provides
vocational certifications and university degrees in California, USA; Property Investors Network, which provides property investment courses
and events in England, UK; and Revealed Films, a media production company that specializes in multi-part documentaries.
Our
plan is to combine their education programs with our current education programs and Edtech platform as part of one lifelong learning
system, and we have selected these acquisitions because they already share aspects of our Genius Curriculum and our focus on entrepreneur
education.
Our
financial growth model is based on a combination of four main factors:
|
1. |
Growth
by acquisition of education companies that add valuable courses, content, accreditation, campuses, faculty and students to our Group. |
|
2. |
Growth
of our Edtech platform GeniusU as a result of converting the content, accreditation, faculty and students of our acquisition companies
into online courses that can be delivered globally. |
|
3. |
Additional
growth of GeniusU, with its digital curriculum and global student base, via wholly- owned curriculum, hosting partners, and their
content. |
|
4. |
Accelerated
growth of each of our companies within the Group, as a result of expanding the Edtech business model within each company and gaining
the benefit of the AI, digital marketing, customer intelligence and global community that GeniusU provides. |
To
provide an accurate discussion and analysis of financial condition and results of operation, the financial reports provided and discussed
below are grouped in the following sections:
Financials
for the Pre-IPO Group including acquisitions from the acquisition date: Unaudited financials provided for the six months
June 30, 2023 and 2022, including the acquisitions company from the date of acquisition.
Pro
forma financials for Genius Group (The full Group including the Pre-IPO Group and the Acquisitions): Unaudited pro forma financials
provided for the six months ended June 30, 2023 for the full Group, including all the Acquisition companies and excluding
Entrepreneur Resorts Ltd, as if they were operating as one during these periods.
The
Impact of the COVID-19 Pandemic on Operations
Our
financial results should also be read in light of the impact of the COVID-19 pandemic which had its impact mainly in 2020 and 2021. In
2021 the pandemic disrupted the global economy. This negatively impacted large populations including people and businesses that may be
directly or indirectly involved with the operation of our Company, products, and services.
Our
response to these challenges was to cut costs, obtain landlord support where relevant and redeploy staff members where possible. At some
properties, closure created opportunities for maintenance and renovation activities, as well as staff training. This enabled us to reopen
efficiently when allowed. During 2021 all of our campus venues in Entrepreneur Resorts began to reopen in line with easing of pandemic
restrictions and revenue increased to $4.6 million in 2022 from $3.1 million in 2021.
While
campus revenue was negatively impacted in the Pre-IPO Group, online revenue has been positively impacted. Education revenue grew by 160%
from $5.2 million in 2021 to $13.5 million in 2022 as more people worked from home or in a hybrid office model. This has been due to
the continued growth of the courses and students on GeniusU, together with the growth in faculty and partners who have chosen GeniusU
as the platform where they are marketing and delivering courses. At the end of 2022 the Pre-IPO Group had 13,005 partners compared to
10,217 at the end of 2021.
The
five Acquisitions were also impacted by COVID-19.
The
University of Antelope Valley was directly impacted by the coronavirus outbreak (COVID- 19). In March 2020, UAV received approval for
total of $1,613,796 grants through the Higher Education Emergency Relief Fund (HEERF) under the Cares Act. In May 2020, UAV received
approval for a $1,136,120 note payable through the Paycheck Protection Program (PPP) under the Cares Act. This note was forgiven in November
2020, and the forgiveness was recorded as other income in 2021. The UAV campus closed from March 2020 to September 2021; all UAV revenue
became digital education revenue and all faculty and students proceeded with their courses online. The result of this is that the UAV
faculty and staff have experienced the effectiveness that online delivery can have, and we believe this will support our post-acquisition
integration and expansion plan, as we create and deliver UAV’s first online certification and degree programs on GeniusU.
Property
Investors Network was impacted by the COVID-19 outbreak as the business model had previously been designed to operate investor education
events in-person at venues. However, the company adapted and took the opportunity to transform the model to a digital online operation.
Programs such as PIN meetings, events, workshops and accelerators were switched to an online format which resulted in increased revenue
and margins for the company in the first half of 2021Our post- acquisition plan is to continue to expand on this digital revenue model
supplemented by in-person local meetings connected to course content and connections on our GeniusU Edtech platform.
In
2020 E-Square ceased all in-person classes in South Africa for its students in response to COVID-19. However, as all course work at E-Square
is already conducted online using the student’s smart phones, the move to fully online courses took place without any loss of students
or revenues. Based on our post- IPO plans, we believe E-Square will benefit from the anticipated shift towards increased online education.
Similar to UAV, E-Square reopened its campus in Port Elizabeth, South Africa in September 2021 and has moved its digital revenue back
to in-person revenue. Also similar to UAV, the school’s experience with digital delivery has prepared the staff and faculty for
our post- acquisition integration and expansion plan in which we plan to expand E-Square’s most popular courses online.
Education
Angels, a New Zealand based home childcare and education company, was able to maintain its model of delivering its education digitally
to its in-home educators throughout COVID-19 restrictions and this model continues as restrictions in New Zealand are lifted.
Revealed
Films, a Delaware based Film Production Company, was able to run its operations and launch films to deliver to the digital audience throughout
the COVID-19 restrictions and this model did not have an impact even after the restrictions are lifted in the United States.
We
believe that the positive impact that the COVID-19 pandemic has had on the shift towards online education is reflected in the two companies
in the group that are currently focused on using our Edtech platform and delivering online courses.
We
expect this trend towards online education to be a long-term shift, and based on our post-IPO plans for each of the Acquisitions to digitize
and distribute their courses online via GeniusU, we believe this will have a net positive impact. The pro forma revenue of the Group
including the Acquisitions and excluding Entrepreneur Resorts Ltd reduced to $8.9 million in the six months ended
June 30, 2023, compared to $12.5 million in the first half of 2022. We anticipate that the percentage of education
revenue generated by the Group will rise as we expect the growth rate of the digital revenue segment generated by the Group continues
to exceed the in-person education.
Key
Factors Affecting Our Results of Operations
We
believe there are several important factors that have impacted and that we expect will impact or will continue to impact our financial
performance and results of operations, including:
|
☐ |
Growth
in our student and partner numbers on GeniusU: We measure the number of students and partners that join our GeniusU platform and
the ongoing growth in these numbers is critical to our financial success. We intend to continue to grow our student and partner numbers
through a combination of our digital marketing activity, our global partnerships and our acquisitions. If our investment in these
areas does not generate the expected revenue growth, then our operations and financial results could be adversely impacted. |
|
|
|
|
☐ |
Development
of technology on our GeniusU Edtech platform: We are investing in improving the functionality and user experience of our GeniusU
Edtech platform. This includes investing in personalizing the experience for each student and partner with the use of A.I., and in
utilizing the data that we collect on each student and partner to deliver this experience. We believe that successful execution of
our technology strategy will lead to wide adoption of our Edtech platform. Any delays in commercialization of our technology or decreases
in the expected market demand for our platform could adversely impact our operations and financial results. |
|
|
|
|
☐ |
Global
adoption of our Genius Curriculum: We intend to continue to expand the courses and products in our Genius Curriculum on a global
basis. We intend to hire additional resources in sales, marketing and administration in order to develop the market for our Genius
Curriculum, engage in sales activities and establish other commercial capabilities to serve the needs our students and partners.
If our investment in our Genius Curriculum does not generate expected revenue growth, then our operations and financial results could
be adversely impacted. |
|
|
|
|
☐ |
Integration
of our Acquisitions: The success of our Acquisitions is dependent on our ability to integrate each of them effectively into our group.
We are focusing on the integration of common functions, including our management systems, data systems, financial reporting and digital
marketing practices, as well as integrating content, technology and payment processes on our GeniusU Edtech platform. This may require
increased investment to our normal operations, including the hiring of new personnel and increase in our system integration costs. |
|
|
|
|
☐ |
Success
in attracting further acquisitions: We intend for our future growth to be generated from a combination of our organic growth and
growth through acquisitions. We intend to make further acquisitions that are complementary to our existing curriculum and technology
and, where appropriate, to hire additional resources to support the growth and integration of these acquisitions. If we are not successful
in attracting and integrating these future acquisitions, then our operations and financial results could be adversely impacted. |
While
each of these areas present significant opportunities for us, they also pose significant risks and challenges that we must address. See
the section of this Prospectus titled “Item 3.D. Risk Factors” for more information.
Components
of our Operating Results
Revenue
Our
revenue is derived from education and campus segments.
Education
is further split into digital and in-person. Our most significant growth opportunities are in the digital education stream, and our model
allows us to scale with both organic growth and growth through acquisitions.
Campus
revenue includes food, beverage and accommodation. This is derived from both our students who are undertaking our courses, and from non-student
customers.
Cost
of Revenue
For
the education revenue segment, cost of revenue consists mainly of digital marketing and faculty costs. Our courses include content developed
in-house and content developed, and usually delivered, by other faculty. We pay commissions or content fees to external faculty. Cost
of revenue for this segment also includes transaction processing fees and amortization of the capital cost of the technology platform.
For
the campus revenue segment, cost of revenue includes food & beverage, delivery costs, accommodation costs, promotional discounts,
transaction processing fees, and depreciation and amortization of right-of-use assets, buildings and equipment that directly relate to
the earning of revenue.
General
and Administrative
General
and administrative expenses primarily comprise employee compensation and benefits for functions such as finance, accounting, analytics,
legal, human resources, consulting fees, and other costs including facility and equipment costs, directors’ and officers’
liability insurance, director fees, and maintenance of the technology platform.
Key
Business Metrics and Non-IFRS Financial Measures
We
monitor the key business metrics and Non-IFRS financial measure set forth below to help us evaluate our business and growth trends, set
growth targets and budgets, and measure the effectiveness of our sales and marketing efforts. These key business metrics and Non-IFRS
financial measures are presented for supplemental informational purposes only, are not a substitute for IFRS financial measures, and
may differ from similarly titled metrics or measures presented by other companies. A reconciliation of each Non-IFRS financial measure
to the most directly comparable IFRS financial measure is provided in the “Non-IFRS Financial Measures - Adjusted EBITDA”
section of this Prospectus.
Key
Business Metrics
Please
refer to the tables under “Key Business Metrics” for data relating to the two segments of the Pre-IPO Group, and the Acquisitions,
for the six months ended June 30, 2023, and 2022.
These
metrics have been used to measure and grow the Pre-IPO Group, with Education Segment metrics (related primarily to GeniusU Ltd, including
Entrepreneurs Institute’s activity) and Campus Segment metrics (related to Entrepreneur Resorts). The same metrics used to measure
the Group’s Education Segment will be used to measure the Acquisitions. The reason that we are choosing the same metrics is related
to our plan to convert our Acquisitions into a similar “freemium” model by which we measure GeniusU, in which students and
partners join the platform for free and then over time a percentage of them upgrade to paid courses, products and certifications. The
Acquisitions have previously measured students and financial data without necessarily focusing on cost per student or revenue per student.
This
“freemium” model is now common with online gaming companies and social networks, as it enables users to trial the value of
the content and community before committing to paying for additional value. In traditional education, this is not yet a commonly adopted
model, and students at many schools, universities or training institutions are generally expected to commit to payment before experiencing
the course or education pathway.
More
recently, Edtech companies have introduced a “freemium” model into the education industry. We have found at GeniusU that
by focusing on this model, attracting students into free courses and then building a community and content that encourages them to stay
and for a percentage to upgrade to paid courses, it results in the following benefits:
|
➢ |
Our
Group can scale far more rapidly with students joining for free online than by relying on an enrolment sales team (which is what
most schools and universities rely on). |
|
➢ |
We
attract free students at a much lower marketing cost per student, and as they experience our community and courses they refer their
family, friends and colleagues to join. |
|
➢ |
The
heightened activity and scale of this approach in turn attracts more partners and faculty who join the platform, who in turn attract
more students. |
|
➢ |
This
network effect enables us to deliver courses to a much wider and more global student body than we could with a tradition enrolment
process. |
We
believe that as we continue to focus on this approach, we will find effective ways to reduce the marketing cost per student, increase
the conversion rate and increase the annual revenue per student and lifetime value per student. By applying this same conversion model
to our Acquisitions after completion of the acquisitions, we also believe they will benefit from attracting increased student numbers
and increased partners and faculty delivering their courses globally.
We
also believe that the “freemium” model will lead to a higher quality of free courses as well as paid courses in our curriculum,
as the strength of our student retention and conversion rates will be more dependent on the students experiencing a high enough quality
of course content and a relevant enough personalized pathway to want to upgrade to higher-priced courses as a part time or full-time
student than it will on the strength of an enrolment team.
For
further details on our conversion model for students and partners, refer to the “Our Conversion Model” section in this Prospectus.
For further details on the courses, we plan to introduce for each of the Acquisitions to introduce the “freemium”
model, refer to the “Our Courses, Products and Services” section.
The
Acquisitions have previously measured students and financial data without focusing on cost per student or revenue per student, however
we have provided these measures together with all the following Key Business Metrics in the Key Business Metrics for the purpose of providing
a company-by-company comparison, and our plan is to be measuring and improving these Key Business Metrics as we convert our Acquisitions
into the “freemium” model.
The
methods used for calculating the operating data presented are consistent and the same for all businesses in the Group including the Pre-IPO
Companies and the Acquisitions.
Number
of Students and Users
Number
of Students and Users
| |
Total | |
Six months ended June 30, 2023 | |
| 5,365,626 | |
Year
ended December 31, 2022 | |
| 4,450,852 | |
Year
ended December 31, 2021 | |
| 2,825,628 | |
Number
of Free Students and Users
| |
Total | |
Six months ended June 30, 2023 | |
| 5,186,477 | |
Year
ended December 31, 2022 | |
| 4,278,933 | |
Year
ended December 31, 2021 | |
| 2,768,530 | |
Number
of Customers (Paying Students and Users)
| |
Total | |
Six months ended June 30, 2023 | |
| 179,149 | |
Year
ended December 31, 2022 | |
| 171,919 | |
Year
ended December 31, 2021 | |
| 72,422 | |
The
Number of Students, Number of Free Students, and Number of Paying Students are the total numbers for each at the end of the year. For
purposes of determining the Number of Students, we treat each student account that registers with a unique email as a student and adjust
for any cancellations. This number is then divided into the Number of Paying Students, who have made one or more purchases, and the Number
of Free Students, who are utilizing our free courses and products without making a purchase. We believe that these numbers are an important
indicator of the growth of our business and future revenue trends.
Two
companies, GeniusU Ltd and PIN follow a “freemium” model, explained in the section “Business — Our Conversion
Model” below. This explains their high number of total students and paying students. These are also the two companies with free
students.
GeniusU
Ltd grew total students by 17% in 2022 and a further 15% in the first half of 2023 to 3,340,077 total
students on an annualized basis, with paying students growing by 15% in 2022 and a further 15% in the first half
of 2023 to 45,038 paying students on an annualized basis. We have seen consistent growth in the number of students
on GeniusU year-on-year within the range of 10% to 20% per year. This growth is primarily due to three factors: Organic growth through
word-of mouth and referrals; partners and our acquisitions attracting new students; and direct growth from paid digital advertising.
We have historically spent a low amount on advertising as we have relied on word-of-mouth referrals and partners. Our marketing spend
has been at less than 10% of revenue for the Pre-IPO Group and pro forma revenue for the Group including Acquisitions.
PIN
increased total students by 5% in 2022 and a further 14% in the first half of 2023 to 176,146 total
students on an annualized basis, with paying students growing by 121% in 2022 and a further 3% in the
first half of 2023 to 68,822 paying students on an annualized basis. PIN has also been following a steady growth, with
a spike in 2020 during the pandemic as more individuals in the United Kingdom began seeking out financial education and investment education.
Following
the completion of the acquisitions, in 2023, we have begun tracking the number of free students as we introduce free courses and our
student conversion model to the three Pre-IPO Companies that have a more traditional education model. Currently these three companies
rely on enrolment directly into a full-time paid service or course, and as a result they have much lower student numbers at present.
UAV
had 415 students in the first half of 2023 compared to 489 in 2022. UAV doesn’t offer any free courses
and all the students tracked are paying students. The decrease in 2023 is mainly due to the fact that enrollments are higher
in the second half of the year. RF added 1,848,228 new users and 64,190 customers to the group total in 2023.
E-Square had 407 students in the first half of 2023 and 387 of which are paid students compared to 602 total
students and 391 paid students in 2022. Education Angels total students in the first half of 2023 were 353 compared
to 194 students in 2022.
Overall,
pro forma numbers for the Group including the Acquisitions reflect a 21% growth in total students and users in the first half
of 2023 compared to 2022, with paying students growing by 4% in the first half of 2023 to 179,149 paying
students. We believe these numbers represent a consistent organic growth with a relatively low marketing spend.
The
Number of Partners is the total number of partners at the end of the year. For purposes of determining our Number of Partners, we treat
each partner account who registers as a partner with an ability to earn on our platform as a partner. We believe that the Number of Partners
is an important indicator of the growth of our business and future revenue trends.
GeniusU’s
partners represent all our partners including our community partners and our faculty, whereas the partners in UAV and Education Angels
represent the number of faculty members, and partners in PIN represent the city hosts. We plan to increase the number of partners in
all group companies in 2023 and the integration of the companies with GeniusU and our Genius Curriculum.
The
number of partners in GeniusU grew 2% in the first half of 2023. We expect a growth of 5% to 10% in partners each
year. Tracking and managing our partner is a balance between growth and maintaining quality, as the quality of each partner’s courses
and quality of training are important factors as they go through their certification process.
At
the end of June 2023, the Acquisitions added 1,777 to the group total. UAV has 209 partners and faculty size, PIN has 134
active affiliates and partners, Education Angels works with 127 partners, ESQ has 45 partners and faculty and RF has
1,262 partners.
Overall,
pro forma numbers for the Group including the Acquisitions reflect a 1% growth in total partners in 2023. We see this key
measure as a measure of the scalability in the delivery of the Genius Curriculum, as each partner attracts their own students to GeniusU
and as partners are joining from all parts of the world, we are able to overcome the two largest bottlenecks to the growth of most education
companies: location and teachers.
Number
of Partners
Number
of Partners
| |
Total | |
Six months ended June 30, 2023 | |
| 14,942 | |
Year
ended December 31, 2022 | |
| 14,760 | |
Year
ended December 31, 2021 | |
| 11,414 | |
Operating
Results
Results
for the Six Months ended June 30, 2023 compared to the Six months ended June 30, 2022
The
below discussion and analysis are for the six months ended June 30, 2023 unaudited financials compared to the six months ended June 30,
2022 unaudited financials of the Pre-IPO Group (Genius Group Ltd, GeniusU Ltd, Entrepreneurs Institute, and Entrepreneur Resorts). For
simplicity, any reference to the year 2023 is with reference to the 6 months financials as of and for the period ended June 30, 2023,
and any reference to the year 2022 is with reference to the 6 months financials as of and for the period ended June 30, 2022.
Discussion
and analysis are also included for the first half of 2023 pro forma financials for Genius Group compared to first half of 2022, including
the consolidated financials for the Pre-IPO Group, and the financials of the Acquisitions and excluding spin off entity, Entrepreneur
Resorts Ltd.
For
clarity, each section below has separate paragraphs with discussion and analysis for the Group audited financials, and discussion and
analysis for the Genius Group unaudited pro forma financials (including the Acquisitions).
Revenue:
Our unaudited Group revenues increased from $5.3 million in 2022 to $11.8 million in the first half year ended June 30, 2023. This
was driven by an increase in Education Revenue of 161% from $3.4 million to $8.9 million and increase in campus revenue by 50% from $1.9
million in 2022 to $2.8 million in 2023.
The
$8.9 million in pro forma total revenue was the combination of $1.3 million in revenue from the Pre-IPO Group, and $7.6 million in revenue
from the Acquisitions. Acquisition revenue further breaks down to the following: University of Antelope Valley, $3.1 million in revenue
(35% of total); Property Investors Network, $1.9 million in revenue (21% of total); Education Angels, $0.5 million in revenue (6% of
total); E-Square, $0.3 million in revenue (3% of total) and Revealed Films, $1.6 million in revenue (18% of total).
Our
two main revenue segments are Education Revenue and Campus Revenue. Education Revenue consists of Digital Education Revenue, where the
courses are delivered virtually on GeniusU, and In-Person Education Revenue, where the courses are delivered to our students with the
aid of our faculty in-person. Digital Education Revenue also includes Revealed Films docuseries sales and their third-party affiliate
sales commissions. Campus Revenue consists of revenue we generate from our locations through accommodation, food and beverage charges.
The
following table shows the breakdown of this revenue into segments for both Genius Group and the audited Group:
| |
Genius Group | | |
Genius Group
Derived from unaudited | |
| |
Pro forma | | |
Financials | |
| |
Six months Ended | | |
Six months Ended | |
| |
June 30, | | |
June 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
(USD 000’s) | | |
(USD 000’s) | | |
(USD 000’s) | | |
(USD 000’s) | |
Digital Education Revenue | |
| 4,990 | | |
| 8,036 | | |
| 4,990 | | |
| 3,282 | |
In-Person Education Revenue | |
| 3,972 | | |
| 4,546 | | |
| 3,972 | | |
| 170 | |
Total Education Revenue | |
| 8,962 | | |
| 12,582 | | |
| 8,962 | | |
| 3,452 | |
Campus Revenue | |
| - | | |
| - | | |
| 2,834 | | |
| 1,891 | |
Total Revenue | |
| 8,962 | | |
| 12,582 | | |
| 11,796 | | |
| 5,343 | |
Pro
forma revenue is derived by reducing the financial impact of spin off of Entrepreneur Resorts Ltd and adding back acquisition financials
for the period prior to acquisition date.
Included
in the pro-forma revenue for six months ended June 2023, the acquisitions of UAV generated revenue of $3.1 million compared to $3.88
million for first half of 2022. The reduction reflects the impact of the COVID-19 pandemic on on-campus learning, and the delayed effect
of transitioning to online learning. The campus returned to full operations since September 2021, however, the student enrollment remained
affected due to travel restrictions and global market conditions. PIN’s revenue was $1.97 million compared to $1.35 million in
first half of 2022. PIN was not able to re-commence operating successful physical events which resulted in decreased revenue. Education
Angels revenue was $0.55 million as compared to $0.5 million in first half of 2022, E-Square revenue was $0.3 million compared to $0.34
million for first half of 2022 and Revealed Films reported revenue of $1.64 million in first half of 2023 compared to $3.6 million in
first half of 2022. The RF revenue decrease was related to lower films released and lower third-party affiliate sales in 2023. ERL Revenue
of $2.8 million and $1.9 million for 2023 and 2022 respectively is excluded from the pro-forma financials.
Cost
of Revenue: The Group’s cost of revenue was $5.59 million in first half of 2023 with $6.2
million in gross profit, giving us a 52.58% gross margin, compared to $3.11 million in first half of
2022 with $2.23 million in gross profit. Our cost of revenue declined in percentage terms in 2023 as a result of improved results from
our campus business and the acquisitions which has a higher gross margin.
Genius
Group’s pro forma cost of revenue in first half of 2023 was $4.63 million, delivering a gross profit of $4.3 million and a 48.32%
gross margin, compared to 2022 pro forma cost of revenue which was $5.6 million, delivering a gross profit of $6.9 million and
a 57.15% gross margin. By owning the majority of our own curriculum and courses across all companies and acquisitions, we are focused
on maintaining a low cost of content and a high gross margin. The cost of revenue that we do incur is mainly our customer acquisition
costs and our faculty costs.
For
the six months ended June 30, 2023, UAV had $1.9 million in direct cost with 39% gross margin compared to $2.2 million in direct
cost with a 59% gross margin in first half of 2022 on proforma basis. The increase in cost of sales was mainly due to the campus returning
to full operation in 2022. PIN had $0.9 million in direct cost with 56% gross margin for the six months ended June 30, 2023, compared
to $0.8 million in direct cost with a 41% gross margin in first half of 2022. The increase in cost of sales was mainly due to a return
to holding physical events which failed to generate the desired revenue. Education Angels had a $0.2 million direct cost with a 56% gross
margin for the half year ended June 30, 2023, compared to $0.16 million in direct costs with a 67% margin in first half of 2022. E-Square
had $0.2 million in direct costs with 42% gross margin for the half year ended June 30, 2023 and historically E-Square has included all
costs in overhead and did not report any direct costs. For the half year ended June 30, 2023, Revealed Films had a $0.8 million in direct
cost with $0.8 million in gross profit delivering 49% gross margin.
UAV’s,
Education Angel, and E-Square direct costs are largely faculty, teacher and course costs, and they have historically spent a minimal
amount on marketing, whereas PIN’s cost is made up largely of digital marketing, commission and event costs. Through the first
half of the fiscal year ending December 31, 2023, with the exception of PIN, none of the Acquisitions were yet implementing any of the
growth strategies utilized by the Pre-IPO Group. We expect cost of revenue to decrease as we synchronize and rationalize the process
and gross margins to increase as revenues grow, as we apply our marketing and partner costs to grow these companies.
Operating
Expenses: The Group had operating expense of $15.36 million in the first half of 2023 compared
to $5.2 million in first half of 2022. Approximately 60% of our operating expense is our staff costs, with the remaining in development
costs, marketing, rental, legal and general expenses. The increase in our operating expenses is the result of the growth in our operations,
acquisition of companies, legal and professional expenses in our listed company. As with our cost of goods sold, historically we have
been managing our overhead to maintain a sustainable growth rate, in order that additional funds raised may be invested largely in acquisitions.
Genius
Group’s pro forma operating expenses were $13.75 million for the six months ended June 30, 2023.
Of
our Acquisitions, in the six months ended June 30, 2023 and 2022, UAV had $2.8 million in operating expenses, compared to $2.7m in 2022,
PIN had $0.9 million for the half year ended June 30, 2023, compared to $0.7 million in 2022, Education Angels had $0.4 million for the
half year ended June 30, 2023, compared to $0.3 million in 2022, E-Square had $0.14 million for the half year ended June 30, 2023, compared
to $0.3 million in 2022 and RF had $2.4 million in first half of 2022 compared to $2.6 million in 2022.
Additional
Income: Additional Income was $0.06 million for the half year ended June 30, 2023 compared to $0.03 million in 2022. Genius Group’s
pro forma additional income was $0.02 for the six months ended June 30, 2023
Additional
Expenses: The Group also had $2 million in other expenses in the first half year ended June 30, 2023 compared to $0.5 million in
2022. The increase was due mainly due to interest expense of $1.9 million.
Genius
Group’s pro forma other expenses were $1.9 million for the six months ended June 30, 2023.
Results
for the Year ended December 31, 2022 compared to the Year ended December 31, 2021
The
below discussion and analysis are for the 2022 audited financials compared to the 2021 audited financials of the Pre-IPO Group (Genius
Group Ltd, GeniusU Ltd, Entrepreneurs Institute, and Entrepreneur Resorts). For simplicity, any reference to the year 2022 is with reference
to the 12 months financials as of and for the year ended December 31, 2022, and any reference to the year 2021 is with reference to the
12 months financials as of and for the year ended December 31, 2021.
Discussion
and analysis are also included for the 2022 pro forma financials for Genius Group compared to 2021, including the consolidated audited
financials for the Pre-IPO Group, and the financials of the Acquisitions and excluding spin off entity, Entrepreneur Resorts Ltd.
For
clarity, each section below has separate paragraphs with discussion and analysis for the Group audited financials, and discussion and
analysis for the Genius Group unaudited pro forma financials (including the Acquisitions).
Revenue:
The $23.5 million in pro forma total revenue was the combination of $4.8 million in revenue from the Pre-IPO Group,
and $18.6 million in revenue from the Acquisitions. Acquisition revenue further breaks down to the following: University of Antelope
Valley, $8.1 million in revenue (35% of total); Property Investors Network, $3.0 million in revenue (13% of total); Education
Angels, $0.9 million in revenue (4% of total); E-Square, $0.6 million in revenue (3% of total) and Revealed Films, $5.9
million in revenue (25% of total).
Our
two main revenue segments are Education Revenue and Campus Revenue. Education Revenue consists of Digital Education Revenue, where the
courses are delivered virtually on GeniusU, and In-Person Education Revenue, where the courses are delivered to our students with the
aid of our faculty in-person. Digital Education Revenue also includes Revealed Films docuseries sales and their third-party affiliate
sales commissions. Campus Revenue consists of revenue we generate from our locations through accommodation, food and beverage charges.
Our
audited Group revenues increased from $8.3 million in 2021 to $18.2 million in the fiscal year ended December 31, 2022. This was driven
by an increase in Education Revenue of 161% from $5.2 million to $13.6 million and increase in campus revenue by 50% from $3.1 million
in 2021 to $4.6 million in 2022.
The
following table shows the breakdown of this revenue into segments for both Genius Group and the audited Group:
|
|
Genius Group |
|
|
Genius Group |
|
|
|
Pro forma |
|
|
Derived from
Audited Financials |
|
|
|
Year Ended |
|
|
Year Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
(USD 000’s) |
|
|
(USD 000’s) |
|
|
(USD 000’s) |
|
|
(USD 000’s) |
|
Digital Education Revenue |
|
|
13,772 |
|
|
|
10,286 |
|
|
|
8,012 |
|
|
|
5,194 |
|
In-Person Education Revenue |
|
|
9,654 |
|
|
|
10,699 |
|
|
|
5,544 |
|
|
|
0 |
|
Total Education Revenue |
|
|
23,426 |
|
|
|
20,985 |
|
|
|
13,556 |
|
|
|
5,194 |
|
Campus Revenue |
|
|
44 |
|
|
|
- |
|
|
|
4,638 |
|
|
|
3,101 |
|
Total Revenue |
|
|
23,470 |
|
|
|
20,985 |
|
|
|
18,194 |
|
|
|
8,295 |
|
Pro forma revenue is derived by reducing the
financial impact of spin off of Entrepreneur Resorts Ltd and adding back acquisition financials for the period prior to acquisition date.
Included
in the pro-forma revenue for 2022, the acquisitions of UAV generated revenue of $8.1 million compared to $9.0 million for 2021. The reduction
reflects the impact of the COVID-19 pandemic on on-campus learning, and the delayed effect of transitioning to online learning. The campus
returned to full operations since September 2021, however, the student enrollment remained affected due to travel restrictions and global
market conditions. PIN’s revenue was $3.0 million compared to $5.1 million in 2021. PIN was not able to re-commence operating successful
physical events which resulted in decreased revenue. Education Angels revenue was $0.9 million for both 2022 and 2021, E-Square revenue
was $0.6 million compared to $0.7 million for 2021 and Revealed Films reported revenue of $5.9 million in 2022 compared to $13.4 million
in 2021. The RF revenue decrease was related to lower films released and lower third-party affiliate sales in 2022. ERL Revenue of
$4.7 million and $3.1 for 2022 and 2021 respectively is excluded from the pro-forma financials.
Cost
of Revenue: The Group’s cost of revenue was $9.6 million in 2022 with $8.6 million gross profit, for a 47% gross margin. The
Group’s cost of revenue was $5.5 million in 2021 with $2.8 million in gross profit, for a 33% gross margin. Our cost of revenue
decreased in percentage terms to revenue in 2022 as a result of acquisition expense synergies and the inclusion of higher gross margin
acquisitions.
Genius
Group’s pro forma cost of revenue in the fiscal year ended December 31, 2022 was $10.6 million, delivering a gross profit
of $12.9 million and a 55% gross margin. By owning the majority of our own curriculum and courses across all companies
and acquisitions, we are focused on maintaining a low cost of content and a high gross margin. The cost of revenue that we do incur is
mainly our customer acquisition costs and our faculty costs.
For
the fiscal year ended December 31, 2022, on a pro-forma basis, UAV had $3.9 million in direct cost with 52% gross margin compared to
$3.5 million in direct cost with a 61% gross margin in 2021. The increase in cost of sales was mainly due to the campus returning to
full operation in 2022. PIN had $1.4 million in direct cost with 53% gross margin for the year ended December 31, 2022, compared to $1.9
million in direct cost with a 63% gross margin in 2021. The increase in cost of sales was mainly due to a return to holding physical
events which failed to generate the desired revenue. Education Angels had a $0.4 million direct cost with a 60% gross margin for the
year ended December 31, 2022, compared to $0.5 million in direct costs with a 51% margin in 2021. E-Square had $0.3 million in direct
costs with 53% gross margin for the year ended December 31, 2022 and historically E-Square has included all costs in overhead and did
not report any direct costs. For the year ended December 31, 2022, Revealed Films had a $1.9 million in direct cost with $4.0 million
in gross profit delivering 68% gross margin.
UAV’s,
Education Angel, and E-Square direct costs are largely faculty, teacher and course costs, and they have historically spent a minimal
amount on marketing, whereas PIN’s cost is made up largely of digital marketing, commission and event costs. During the fiscal
year ended December 31, 2022, with the exception of PIN, none of the Acquisitions were yet implementing any of the growth strategies
utilized by the Pre-IPO Group. We expect cost of revenue to decrease as we synchronize and rationalize the process and gross margins
to increase as revenues grow, as we apply our marketing and partner costs to grow these companies.
Operating
Expenses: The Group had operating expenses of $50.5 million in the fiscal year ended December 31, 2022 compared to $7.3 million 2021.
Approximately 56% of our operating expense is due to impairment loss on goodwill of $28.2 million and most of the remaining 44% is due
to General and Administrative expenses. The administrative expenses include cost for our staff costs, professional and consulting fees,
development costs, marketing, rental and general expenses. The increase in our operating expenses is the result of the growth in our
operations, the expansion of our curriculum and IPO, legal and listing expenses.
Genius
Group’s pro forma operating expenses were $45.3 million for the fiscal year ended December 31, 2022.
Of
our Acquisitions, on a pro-forma basis in the fiscal year ended December 31, 2022, UAV had $18.2 million in operating expenses compared
to $7.2 million in 2021, PIN had $7.7 million for the year ended December 31, 2022, compared to $1.3 million in 2021, Education Angels
had $0.7 million for the year ended December 31, 2022, compared to $0.5 million in 2021, E-Square had $2.8 million for the year ended
December 31, 2022, compared to $0.6 million in 2021 and RF had $4.2 million in 2022 compared to $6.3 million in 2021. For UAV, the increase
in operating expenses is due mainly to the impairment loss of $11.2 million and administrative expenses increased due to campus returning
to full operation since September. In the case of PIN, the increase in operating expenses is mainly due to impairment expenses of $5.8
million and administrative expenses increased due to the shift from physical event costs to digital courses and PIN’s online strategy.
For ESQ, the increase is mainly due to impairment expenses of $2.3. For RF, the decrease in cost is mainly due to lower revenues.
Additional
Income: Additional Income was $0.4 million for the fiscal year ended December 31, 2022 compared to nil 2021. Genius Group’s
pro forma additional income was $1 million for the fiscal year ended December 31, 2022. In 2022, UAV
recorded $0.8 million benefit from the write off of a loan from the prior owners compared to $1.2 million in additional income for forgiveness
of a note payable through the Paycheck Protection Program (PPP) under the Cares Act in 2021.
Additional
Expenses: The Group also had $15.2 million in other expenses in the fiscal year ended December 31, 2022 compared to $0.5 million
in 2021. The increase was due mainly to change in the fair value of contingent consideration of $13.8 million and interest expense of
$1.3 million. Genius Group’s pro forma other expenses were $14.8 million for the fiscal year ended December 31, 2022.
Recent
Accounting Pronouncements Implemented
Amendments
to IFRS 3 Reference to the Conceptual Framework Relating to |
|
|
|
|
|
Business
Combinations |
|
January
1, 2022 |
|
|
|
Amendments
to IAS 37 Onerous Contracts – Cost of Fulfilling a Contract |
|
January
1, 2022 |
|
|
|
Annual
Improvements to IFRS Standards 2018-2021 |
|
January
1, 2022 |
|
|
|
Amendments
to IAS 16 Property, Plant and Equipment – Proceeds before Intended Use |
|
January
1, 2022 |
The
Company’s adoption of the standards above had no material impact on the consolidated financial statements in the year of initial
application.
B.
Liquidity and Capital Resources
Our
principal sources of liquidity are our cash and cash equivalents, short term investments, and cash generated from financing activities.
Cash and cash equivalents and short-term investments consist mostly of cash on deposit with banks. As of June 30, 2023, we had cash and
cash equivalents of $2.6 million maintained at various financial institutions. We have funded our operations primarily through cash
flows from operations, and have raised capital for the purpose of business acquisitions and development of the technology platform.
We
will repatriate cash from our subsidiaries by repayment of intercompany balances where in existence until exhausted, and otherwise by
way of dividends. Any repatriation of cash in the form of a taxable payment, such as a dividend distribution, would generally be tax
exempt in Singapore or otherwise taxable at the Singapore standard corporate tax rate, which is currently 17%.
In
April 2022, the Company completed its Initial Public Offering and listing on the New York Stock Exchange. Total gross proceeds from the
IPO was $22.5 million and was used to pay the IPO expenses, acquisition payouts and the growth of the business. Further in September
2022, the Company closed the follow-on round for $17.0 million.
We
believe our existing cash and cash equivalents, short term investments, and the cash flow we generate from our operations will not be
sufficient to meet our working capital and capital expenditure needs and other liquidity requirements for the next 12 months. However, our
future capital requirements may be materially different than those currently planned in our budgeting and forecasting activities and
depend on many factors, including our rate of revenue growth, the timing and extent of spending on content and research and development,
the expansion of our sales and marketing activities, the timing of new product introductions, market acceptance of our products, our continued international expansion, the acquisition of other companies, competitive factors,
and overall economic conditions, globally. To the extent that current and anticipated future sources of liquidity are insufficient to
fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional
equity would result in additional dilution to our shareholders, while the incurrence of debt financing would result in debt service obligations.
Such debt instruments also could introduce covenants that might restrict our operations.
Cash
Flow
Group
— Consolidated Statement of Cash Flows Data:
| |
For the half year ended | | |
For the year ended | |
| |
June 30, 2023 | | |
December 31, 2022 | |
| |
(USD) | | |
(USD) | |
Net Cash Used in Operating Activities | |
| (8,534,705 | ) | |
| (8,236,431 | ) |
Net Cash Used in Investing Activities | |
| (2,752,801 | ) | |
| (10,089,489 | ) |
Net Cash Provided by Financing Activities | |
| 8,841,547 | | |
| 21,943,461 | |
As
of June 30, 2023, the Group had cash and cash equivalents of $2.6 million maintained at various financial institutions. We have funded
our operations primarily through cash flows from operations, and have raised capital for the purpose of business acquisitions and development
of the technology platform.
Half
Year Ended June 30, 2023 Compared to Year Ended December 31, 2022
Operating
Activities:
Operating
activities used $8.5 million of cash in first half of 2023. The cash flow from operating activities primarily came from $10.8 million
of net loss after tax, adjusted for $3.5 million of non-cash items, and an increase in working capital of $1.26 million.
Operating
activities used $8.2 million of cash in 2022.
Investing
Activities
Our
main capital investing activities have consisted of the acquisition of existing businesses and development cost of our technology education
platform. We estimate that our ongoing capital requirements will be dictated by market opportunities for acquisition in the education
and hospitality sectors, and the rate of development of the Edtech platform. Net cash used in investing activities was $2.7 million in
first half of 2023 compared to $10.09 million in 2022.
The
major reason for the decrease in 2022 was due to cash consideration of $8.8 million paid for five acquisitions and $0.7 million of costs
for technology platform development in 2022.
Financing
Activities:
Net
cash provided by financing activities was $8.8 million in 2023 compared to $21.9 million in 2022.
In
first half of June 30, 2023, the Company received the balance $9 million from convertible debt issuance 2022. Between January 1, 2022
and December 31, 2022, the Company raised $17.3 million net cash from IPO, $4.2 million from convertible note issuance and $2.7 million
from equity issuance for GeniusU and Genius Group
Indebtedness
Convertible
Debt
During
the year ended 2019, Entrepreneur Resorts issued 36-month convertible loans in the principal amount of $2,256,178 which bear interest
at rates between 10% to 12% per annum, payable monthly, quarterly, annually or at maturity depending upon the convertible note (the “2019
Convertible Notes).
During
the year ended December 31, 2020, Genius Group Ltd issued 36-month convertible loans in the principal amount of $1,819,145 which
bear interest at rates between 10% to 12% per annum, payable quarterly, annually or at maturity depending upon the convertible note (the
“2019 Convertible Notes”). The convertible notes are convertible at the end of the term at the market price.
During
the year ended 2022, Genius Group Ltd entered into a Securities Purchase Agreement to issue convertible loan in the principal amount
of $18,130,000 in face amount of a senior secured convertible note purchased for $17,000,000 by the selling shareholder or its
affiliates or assigns in a transaction that closed on August 26, 2022, which is convertible into our ordinary shares at an initial
fixed price of $5.17, subject to adjustment for stock dividends, stock splits, anti-dilution and other customary adjustment events.
The ordinary shares issuable upon conversion of the convertible note are being registered and will be sold pursuant to this
prospectus by the selling shareholder. In addition, subject to the satisfaction of equity conditions, we may, at our election, make
monthly principal amortization payments in our ordinary shares. If we elect to make amortization payments in ordinary shares, such
ordinary shares will be valued at the lowest of (x) the fixed conversion price, (y) 90% of the volume weighted average price of our
ordinary shares on the trading day preceding the amortization payment date and (z) 90% of the average of the three lowest volume
weighted average prices for our ordinary shares during the 20 trading days preceding the amortization payment date. This
convertible loan has been paid in full as of the date of this prospectus. Effective as of June 23, 2023, the Company issued a warrant to purchase
650,000 ordinary shares with a five year term and a per share strike price of $0.69 to a placement agent in regards to an August 2022
private placement.
During the first half of 2023, the Company converted
$6,147,954 of aggregate outstanding principal and $846,345 of accrued interest to issue 23,046,941 ordinary shares which includes 13.0
million ordinary shares relating to the redemption of convertible notes due for the period from January 2023 to March 2023. During July
and Aug 2023, the Company further converted total consideration of $11,032,540 to issue 22,192,694 ordinary shares.
During
the fiscal year ended December 31, 2021, the Company and holders of 2019 Convertible Notes in the aggregate principal amount of $47,884
and $229 of accrued interest were converted into 13,487 Entrepreneur Resorts Ltd ordinary shares and 1,003 GeniusU Ltd ordinary
shares pursuant to conversion offers extended by Genius Group Ltd. and GeniusU Ltd at exercise prices equal to the fair value of Entrepreneur
Resorts Ltd and GeniusU Ltd ordinary share at the time of conversion. The Company recorded the conversions by reclassifying the carrying
value of the 2019 Convertible Notes to equity.
During
the year ended December 31, 2022, the Company and holder of 2019 Convertible Notes in the aggregate amount of $503,311 was repaid and
$4,454 along with the accrued interest of $18 were converted to into 743 Genius Group shares pursuant to conversion offer extended by
Genius Group Ltd.
During
the fiscal year ended December 31, 2021, the Company and holders of 2020 Convertible Notes in the aggregate principal amount of $161,500
and $6,170 of accrued interest were converted into 13,306 GeniusU Ltd ordinary shares pursuant to conversion offers extended by Genius
Group Ltd and GeniusU Ltd at exercise prices equal to the fair value of a GeniusU Ltd ordinary share at the time of conversion. The Company
recorded the conversions by reclassifying the carrying value of the 2020 Convertible Notes to equity.
During
the fiscal year ended December 31, 2022, the Company and holder of 2020 Convertible Notes in the agreement amount of $6,000 was repaid
and $221,000 along with the accrued interest of $3,764 were converted into 37,463 Genius Group shares pursuant to conversion offer extended
by Genius Group Ltd.
During
the fiscal year ended December 31, 2022, the Company and holder of 2022 Convertible Note converted aggregate amount of $707,306 including
the accrued interest of $235,146 into the equity of Genius Group based on the share price calculated as per the agreement. The Company
issued 1,515,891 Genius Group Shares to fulfill the conversion request.
On
July 26, 2023, Genius Group Ltd. (the “Company”) executed and delivered a bridge note with an accredited investor
in the face amount of $3.2 million, which has a $200,000 original issue discount. Pursuant to the bridge note, $1,000,000 shall be delivered
to a bank account identified by the Company upon closing and the Company shall keep $2,000,000 of the Loan Proceeds on deposit in a blocked
account subject to an account control agreement with the investor. The proceeds held in the blocked account may be released at the investor’s
discretion on each of August 24, 2023 and September 24, 2023. The maturity date of the bridge note is the earlier of November 24, 2023
and the date of entry into definitive documentation or funding of a Subsequent Financing. Simultaneously with the execution of the bride
note, the Company’s entered into an amendment agreement with investor with respect to the original note with the accredited investor
issued on August 26, 2022, and due February 26, 2025 (“Note”) was reverted to its original terms prior to the amendments
previously announced on March 28, 2023, with certain modifications permitting the Company to consummate its previously announced spin
off and future financings pursuant to a registration statement to be filed in conjunction therewith. The investor and the Company agree
to that the investor may accelerate monthly installment payments under the Note with respect to current and future monthly installments
in accordance with Section 8(e) of the Note, provided that Holder agrees that it will no longer accelerate any Installment Amount pursuant
to Section 8(e) of the Note as amended by this Amendment following the earlier to occur of (A) the date that the Company consummates
a public offering of its Ordinary Shares, or units comprised of Ordinary Shares and warrants to purchase its Ordinary Shares, which results
in aggregate Net Proceeds to the Company equal to at least 130% of the sum of (x) the entire outstanding Conversion Amount of the Notes
and (y) the entire outstanding principal balance of the Bridge Loan (such sum of (x) and (y), the “Aggregate Debt”) measured
as of the Trading Day prior to the consummation of such public offering and (B) such time that the Aggregate Debt is less than $4,000,000
(all capitalized terms used and not defined herein are used as defined in the Note).
Other
credit facilities
In
September of 2019, the Company obtained lines of credit in the aggregate amount of S$400,000 (approximately $296,912 at the 2019 exchange
rate) for working capital and business expansions requirements in Wealth Dynamics Pte Ltd, which the Company drew down on in full. Loans
in the amount of S$100,000 (approximately $74,228 at the 2019 exchange rate) shall be repaid over 36 monthly installments including both
principal and the respective accrued interest. Interest on such principal shall bear at a rate of 8% per annum plus a margin of 0.88%,
subject to adjustment. The Company has the option to prepay the loan before its maturity date, subject to a fee of 6.88% if paid within
twelve months from the drawdown date. Loans in the amount of S$300,000 (approximately $222,684 at the 2019 exchange rate) shall be repaid
over 60 monthly installments including both principal and the respective accrued interest. Interest on such principal shall bear at a
rate of 6.25% per annum, subject to adjustment. The loans are secured by personal guarantees of the Director. During the year ended December
31, 2022, the Company repaid an aggregate of S$98,589, approximately $72,492 at the 2022 exchange rate (2021 — S$91,063 approximately
$67,220 at the 2021 exchange rate) of principal plus the respective accrued interest.
Education
Angels has obtained line of credit for working capital requirement in 2020, 2021 and 2022. The outstanding principal as at June 30,
2023 is as follows -
Loan
Type | |
Start
Date | | |
Loan
Amount | | |
Tenure | | |
Interest
Rate | | |
Outstanding
As of June 30, 2023 | |
IRD
Loan | |
| 2020 | | |
$ | 20,063 | | |
| 60
Months | | |
| 3.25 | % | |
$ | 13,164 | |
Juke
NWN765 | |
| 2021 | | |
$ | 19,679 | | |
| 36
Months | | |
| 1.30 | % | |
$ | 9,031 | |
Qashqai
NWN767 | |
| 2021 | | |
$ | 22,258 | | |
| 36
Months | | |
| 1.20 | % | |
$ | 10,161 | |
Qashqai
NWN766 | |
| 2022 | | |
$ | 22,258 | | |
| 36
Months | | |
| 1.20 | % | |
$ | 10,161 | |
Mastermind
Principles and Property Investors Network has obtained line of credit for the working capital requirement in 2020 and 2022. The outstanding
principal amount as of June 30, 2023 is as follows -
Loan Type | |
Start Date | | |
Loan Amount | | |
Tenure | | |
Interest Rate | | |
Outstanding As of June 30, 2023 | |
Lloyds CBIL (MPL) | |
| 2020 | | |
$ | 239,540 | | |
| 60
Months | | |
| 2.8 | % | |
$ | 150,642 | |
Funding Circle Loan (MPL) | |
| 2022 | | |
$ | 380,804 | | |
| 48
Months | | |
| 9.30 | % | |
$ | 272,356 | |
The Funding Circle (PIN) | |
| 2022 | | |
$ | 116,054 | | |
| 48
Months | | |
| 9.30 | % | |
$ | 82,319 | |
Lloyds Bounceback Loan (PIN) | |
| 2022 | | |
$ | 51,378 | | |
| 72
months | | |
| 2.5 | % | |
$ | 36,823 | |
Contractual
Obligations and Commitments
Our
principal commitments consist of obligations under operating leases. The following table sets forth the principal commitments as of June
30, 2023:
Within one year | |
$ | 1,702,541 | |
Two to five years | |
| 6,144,383 | |
Thereafter | |
| 16,280,925 | |
| |
| 24,127,849 | |
Less: finance charges component | |
| (11,365,196 | ) |
| |
$ | 12,762,653 | |
The
material terms of these agreements are as follows:
Tau
Game Lodge Pty Ltd (lodge) — The lease period is December 1, 1994 to November 30, 2034. The Company is currently in negotiations
to extend the term of the lease to November 30, 2047. The rental is made up of a fixed amount which increases by 10% on each anniversary
during the term of the lease and a variable amount being 8% of turnover. As of June 30, 2023, the lease commitment for the fixed amount
for the following one year totaled $73,749. The lease is related to spin-off entity, Entrepreneur Resorts Limited.
Tau
Game Lodge Pty Ltd (office) — The lease period is February 1, 2020 to January 31, 2023. The basic rental amount increases by 8%
on each anniversary during the term of the lease. In January 2023, the new lease agreement was entered for the period February 1, 2023
to January 31, 2024. As of June 30, 2023, the lease commitment for the following one year totaled $10,534. The lease is related to spin-off
entity, Entrepreneur Resorts Limited.
Matla
Game Lodge Pty Ltd — The lease period is February 1, 1997 to January 31, 2096. The rental is made up of a fixed amount which increases
by 6% on each anniversary during the term of the lease. As of June 30, 2023, the lease commitment for the following one year totaled
$9,374. The lease is related to spin-off entity, Entrepreneur Resorts Limited.
Genius
Central Singapore Pte Ltd — The lease period is October 1, 2019 to September 30, 2022 which was renewed for additional 3 years
to September 30, 2025. The operating lease amount is made up of fixed rent which does not change for the term of the lease and percentage
rent which is calculated as 15% of turnover. As of June 30, 2023, the fixed rent commitment for the following one year totaled $409,064.
The lease is related to spin-off entity, Entrepreneur Resorts Limited.
University
of Antelope Valley Inc leases its campus. The lease period is August 2022 to August 2034. The rental is made up of a fixed amount which
increases by 3% on each anniversary during the term of the lease. As of June 30, 2023, the lease commitment for the following one year
totaled $1,198,920.
C.
Research and Development, Patents and licenses, etc.
For
a discussion of our intellectual property, see the sections of this Prospectus titled “Intellectual Property”.
D.
Trend Information
Other
than as disclosed elsewhere in this Prospectus, we are not aware of any trends, uncertainties, demands, commitments or events
that are reasonably likely to have a material adverse effect on our net revenues, income from continuing operations, profitability, liquidity
or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results
or financial conditions. For more information, see the sections of this Prospectus titled “Business Overview,”
“Operating Results,” and “Liquidity and Capital Resources.”
E.
Critical Accounting Estimates
Our
consolidated financial statements are prepared in accordance with IFRS as issued by the IASB. The preparation of our consolidated financial
statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities,
costs and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates
on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent
from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates
under different assumptions or conditions.
While
our significant accounting policies are described in more detail in our consolidated financial statements appearing elsewhere in this
Prospectus, we believe that the following accounting policies are those most critical to the judgments and estimates used in the
preparation of our consolidated financial statements.
Revenue
Recognition
Revenue
is recognized when the product is delivered or the service is completed without further obligation, or upon sale in the case of products
or services for which the terms and conditions do not allow for cancellation or refund. Revenue in advance is recognized as a liability
until the service obligation is fulfilled.
Share-based
Compensation
For
service-based awards, compensation expense is measured at the grant date based on the fair value of the award and is recognized on a
straight-line basis over the requisite service period, which is typically the vesting period.
Business
Combinations
We
record our acquisitions under the acquisition method of accounting in accordance with IFRS 3, except for common control business combinations
as discussed below. This accounting policy is applied consistently to similar transactions. Under this method most of the assets acquired
and liabilities assumed are initially recorded at their respective fair values and any excess purchase price is reflected as goodwill.
We utilize management estimates and, in some instances, independent third-party valuation firms to assist in determining the fair values
of assets acquired, liabilities assumed and contingent consideration, if any. Such estimates and valuations require us to make significant
assumptions, including projections of future events and operating performance.
The
fair value of customer relationships, trade names/trademarks, patents, licenses, brand, human capital, and intellectual property acquired
in our business combinations are determined using various valuation methods, based on a number of significant assumptions.
Common
control business combinations are outside the scope of IFRS 3. The Company has elected to account for common control business combinations
using the book value method. This accounting policy is applied consistently to similar transactions. The Company’s policy is to
present the financial statements for the pre-acquisition period to include the results of the common control entity, as if the acquisition
had taken place at the beginning of the earliest period presented. On the acquisition date, the Company records any difference between
the acquisition consideration and the book value of net assets at that date against reserves under Stockholders’ Equity.
Lease
Agreements
Pursuant
to IAS 17, a lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership.
A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.
For leases classified as finance leases, the property is capitalized as leasehold property and is depreciated over the lease term. Leased
assets are depreciated over the shorter of their expected useful lives and the lease term.
Finance
leases are recognized as assets and liabilities in the consolidated statement of financial position at amounts equal to the fair value
of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included
in the consolidated balance sheet as a finance lease obligation.
The
discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease. The lease
payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each
period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.
Operating
lease payments are recognized as an expense on a straight-line basis over the lease term. The difference between the amounts recognized
as an expense and the contractual payments are recognized as an operating lease asset. This liability is not discounted. Any contingent
rents are expensed in the period they are incurred.
The
Company adopted IFRS 16, Leases (“IFRS 16’) on January 1, 2019.
Goodwill
Impairment
We
are required to assess our goodwill for impairment at least annually for each cash generating unit (“CGU”) that carries goodwill.
Goodwill is allocated to CGUs and tested for impairment at least annually, either as part of testing of individual CGUs if there is an
indicator of impairment, or as a separate test if there is no indicator of impairment. Or of impairment. For impairment testing purposes,
goodwill is allocated to those CGUs or groups of CGUs that are expected to benefit from the synergies of the combination even if no other
assets or liabilities of the acquiree are assigned to that CGU. The allocation is determined as at the date of acquisition. Goodwill
is impaired if the carrying amount of the CGUs to which it is allocated exceeds the recoverable amount (the higher of fair value and
value in use) of the CGUs. An impairment loss is the excess of an asset’s CGU carrying amount over its recoverable amount.
Emerging
Growth Company and Foreign Private Issuer Status
We
qualify as an “emerging growth company” as defined in the JOBS Act. An emerging growth company may take advantage of specified
reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
|
1. |
to
the extent that we no longer qualify as a foreign private issuer, (i) reduced disclosure obligations regarding executive compensation
in our periodic reports and proxy statements and (ii) exemptions from the requirement to hold a non-binding advisory vote on executive
compensation, including golden parachute compensation; |
|
2. |
an
exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to
the Sarbanes-Oxley Act of 2002; and |
|
3. |
an
exemption from compliance with the requirement that the PCAOB has adopted regarding a supplement to the auditor’s report providing
additional information about the audit and the financial statements. |
We
may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We
would cease to be an emerging growth company upon the earliest to occur of: (i) the last day of the fiscal year in which we have total
annual gross revenues of $1.07 billion or more; (ii) the date on which we have issued more than $1.0 billion in nonconvertible debt during
the previous three years; (iii) the date on which we are deemed to be a large accelerated filer under the rules of the SEC; or (iv) the
last day of the fiscal year following the fifth anniversary of the closing of the Merger. We may choose to take advantage of some but
not all of these exemptions.
In
addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those
standards apply to private companies. The Company has elected not to opt out of such extended transition period, which means that when
a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth
company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. Further, even after we
no longer qualify as an emerging growth company, we may qualify as a “smaller reporting company,” which would allow us to
take advantage of many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements.
We
are also a “foreign private issuer.” Even after we no longer qualify as an emerging growth company, as long as we qualify
as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable
to U.S. domestic public companies, including:
|
● |
the
sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations with respect to a security registered
under the Exchange Act; |
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|
|
● |
the
requirement to comply with Regulation FD, which requires selective disclosure of material information; |
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● |
the
sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability
for insiders who profit from trades made in a short period of time; and |
|
|
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● |
the
rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and
other specified information, or current reports on Form 8-K upon the occurrence of specified significant events. |
We
may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We would cease to be a foreign private
issuer at such time as more than 50% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances
applies: (i) the majority of our executive officers or directors are U.S. citizens or residents; (ii) more than 50% of our assets are
located in the United States; or (iii) our business is administered principally in the United States.
Off-balance
sheet arrangements
As
of June 30, 2023, we do not have transactions with unconsolidated entities, such as entities often referred to as structured finance
or special purpose entities, whereby we have financial guarantees, subordinated retained interests, derivative instruments, or other
contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligation under a variable
interest in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to us.
Quantitative
and Qualitative Disclosures About Market Risk
Interest
Rate Risk
Interest
rate fluctuations, primarily due to the uncertain future behavior of markets, may have a material impact on the financial results of
a company. Given the fact that the Company has no outstanding bank borrowings or loans, we believe we have not been exposed to material
risks due to changes in market interest rates. However, we cannot provide assurance that we will not be exposed to material risks due
to changes in market interest rate in the future.
Foreign
Exchange Risk
The
functional currency of our operating subsidiary is SGD, and therefore our operations are exposed to foreign exchange rate fluctuations.
Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly
changes in the SGD to the U.S. dollar.
Our
financial results should also be read in light of the impact of the COVID-19 pandemic which had its impact mainly in 2020 and 2021. In
2021 the pandemic disrupted the global economy. This negatively impacted large populations including people and businesses that may be
directly or indirectly involved with the operation of our Company, products, and services.
Our
response to these challenges was to cut costs, obtain landlord support where relevant and redeploy staff members where possible. At some
properties, closure created opportunities for maintenance and renovation activities, as well as staff training. This enabled us to reopen
efficiently when allowed. During 2021 all of our campus venues in Entrepreneur Resorts began to reopen in line with easing of pandemic
restrictions and revenue increased to $4.6 million in 2022 from $3.1 million in 2021.
While
campus revenue was negatively impacted in the Pre-IPO Group, online revenue has been positively impacted. Education revenue grew by 160%
from $5.2 million in 2021 to $13.5 million in 2022 as more people worked from home or in a hybrid office model. This has been due to
the continued growth of the courses and students on GeniusU, together with the growth in faculty and partners who have chosen GeniusU
as the platform where they are marketing and delivering courses. At the end of 2022 the Pre-IPO Group had 13,005 partners compared to
10,217 at the end of 2021.
The
five Acquisitions were also impacted by COVID-19.
The
University of Antelope Valley was directly impacted by the coronavirus outbreak (COVID- 19). In March 2020, UAV received approval for
total of $1,613,796 grants through the Higher Education Emergency Relief Fund (HEERF) under the Cares Act. In May 2020, UAV received
approval for a $1,136,120 note payable through the Paycheck Protection Program (PPP) under the Cares Act. This note was forgiven in November
2020, and the forgiveness was recorded as other income in 2021. The UAV campus closed from March 2020 to September 2021; all UAV revenue
became digital education revenue and all faculty and students proceeded with their courses online. The result of this is that the UAV
faculty and staff have experienced the effectiveness that online delivery can have, and we believe this will support our post-acquisition
integration and expansion plan, as we create and deliver UAV’s first online certification and degree programs on GeniusU.
Property
Investors Network was impacted by the COVID-19 outbreak as the business model had previously been designed to operate investor education
events in-person at venues. However, the company adapted and took the opportunity to transform the model to a digital online operation.
Programs such as PIN meetings, events, workshops and accelerators were switched to an online format which resulted in increased revenue
and margins for the company in the first half of 2021Our post- acquisition plan is to continue to expand on this digital revenue model
supplemented by in-person local meetings connected to course content and connections on our GeniusU Edtech platform.
In
2020 E-Square ceased all in-person classes in South Africa for its students in response to COVID-19. However, as all course work at E-Square
is already conducted online using the student’s smart phones, the move to fully online courses took place without any loss of students
or revenues. Based on our post- IPO plans, we believe E-Square will benefit from the anticipated shift towards increased online education.
Similar to UAV, E-Square reopened its campus in Port Elizabeth, South Africa in September 2021 and has moved its digital revenue back
to in-person revenue. Also similar to UAV, the school’s experience with digital delivery has prepared the staff and faculty for
our post- acquisition integration and expansion plan in which we plan to expand E-Square’s most popular courses online.
Education
Angels, a New Zealand based home childcare and education company, was able to maintain its model of delivering its education digitally
to its in-home educators throughout COVID-19 restrictions and this model continues as restrictions in New Zealand are lifted.
Revealed
Films, a Delaware based Film Production Company, was able to run its operations and launch films to deliver to the digital audience throughout
the COVID-19 restrictions and this model did not have an impact even after the restrictions are lifted in the United States.
We
believe that the positive impact that the COVID-19 pandemic has had on the shift towards online education is reflected in the two companies
in the group that are currently focused on using our Edtech platform and delivering online courses.
We
expect this trend towards online education to be a long-term shift, and based on our post-IPO plans for each of the Acquisitions to digitize
and distribute their courses online via GeniusU, we believe this will have a net positive impact. The pro forma digital revenue of the
Group including the Acquisitions reduced to $5 million in the six months ended June 30, 2023, compared to $8 million
in 2022. We anticipate that the percentage of education revenue generated by the Group will rise as the growth rate of the digital
revenue segment generated by the Group continues to exceed the in-person education.
BUSINESS
History
and development of the Company.
Our
Company
We
believe that we are a world leading entrepreneur Edtech and education group based on student numbers with a student base of 3.34
million on GeniusU at the end of June 2023. Our mission is to disrupt the current education model with a student-centered, lifelong
learning curriculum that prepares students with the leadership, entrepreneurial and life skills to succeed in today’s market.
To
help achieve our mission, we have completed an IPO on NYSE American, on April 14, 2022. We have also raised follow on Convertible Note
in September 2022. We grew from a Pre-IPO Group of four companies to a post IPO Group of nine companies,
once the five Acquisitions closed.
Our
Pre-IPO Group includes our holding company, Genius Group Ltd, our Edtech platform, GeniusU Ltd, and two companies that were acquired:
Entrepreneurs Institute in 2019 and Entrepreneur Resorts in 2020 (spin-off completed on October 2, 2023).
The
entrepreneur education system of our Pre-IPO Group has been delivered virtually and in-person, in multiple languages, locally and globally
mainly via our GeniusU Edtech platform to adults seeking to grow their entrepreneur and leadership skills. Our partners and community
are global with an average of 8,900 new students joining our GeniusU platform each week in 2023. Our City Leaders have
been conducting our events (physically or virtually) in over 100 cities and over 2,500+ faculty members have been operating their microschools
using our online tools.
We
are now expanding our education system to age groups beyond our adult audience, to children and young adults. The five Acquisitions are
our first step towards this. They include: Education Angels, which provides early learning in New Zealand for children from 0-5 years
old; E-Square, which provides primary and secondary school education in South Africa; University of Antelope Valley, which provides vocational
certifications and university degrees in California, USA; Property Investors Network, which provides property investment courses and
events in England, UK; and Revealed Films, a media production company that specializes in multi-part documentaries.
Our
plan is to combine their education programs with our current education programs and Edtech platform as part of one lifelong learning
system, and we have selected these acquisitions because they already share aspects of our Genius Curriculum and our focus on entrepreneur
education.
The
five Acquisitions have added $7.6 million in revenue to the Group in the six months ended June 30, 2023, which represents
85% of the $8.9 million pro forma Group revenue during this period, while the Pre-IPO Group generated $1.3 million.
For the year ended December 31, 2022, the five Acquisitions have added $18.6 million in revenue to the Group, which represents 79%
of the $23.5 million pro forma Group revenue during this period, while the Pre-IPO Group generated $4.9 million.
In
coming years, we plan to continue the growth of our Group through a combination of organic growth of our Edtech platform together with
the acquisition of various education companies that we believe provide complementary programs that can be added to our Genius Curriculum.
This Prospectus provides details of both our acquisition strategy together with our plans to integrate these Acquisitions together
with future acquisitions into our Edtech platform, “entrepreneur education” vision, Genius Curriculum and “freemium”
student and partner conversion models.
We
define “entrepreneur education” as personalized discovery-based learning that leads to higher levels of self-awareness, self-mastery
and self-expression. We believe this in turn develops leadership and entrepreneurial skills through which students can independently
create value and “create a job” rather than being dependent on a system in which they need to “get a job”. We
believe these skills can be nurtured from an early age.
We
also believe these skills can be learned at any age, enabling adults to reskill and upskill themselves. We describe our Genius Curriculum,
together with the philosophy, principles, learning methodology, course content and delivery of our curriculum in the “Our Genius
Curriculum” section below.
We
believe one of the industry’s most in need of disruption and upgrading is the global education and training industry, which education
market intelligence firm HolonIQ forecasts to grow to $10 trillion in size by 2030. The 2020 World Economic Forum “Schools of the
Future” report highlights the urgent need for a more relevant curriculum to prepare students and adults for the future. We believe
that the COVID-19 crisis has put an additional spotlight on the urgent need for an updated education system that is both high-tech and
high-touch.
We
have built our Pre-IPO Group of entrepreneur education companies to date through organic growth and acquisitions, with a focus on adding
value to each company through GeniusU, which we are developing to provide AI-driven personal recommendations and guidance for each student.
Our growth has been internally funded from our entrepreneur community. Our IPO and the Convertible Note Raise was part of our plan in
providing liquidity and a market to our existing and future shareholders, while providing funds to support our growth plan.
On
our Edtech platform, GeniusU, we are developing our Genie AI virtual assistant to give each student a personalized learning path at every
stage of their education, with an intention for this to be delivered at every age from early age to 100 years old.
Currently,
our system begins by identifying the preferences and level of each of our adult students, who can then connect with other students, mentors
and faculty members based on their talents, passions and driving purpose. Students and mentors then progress through challenge-based
microschools, with credits and digital points able to be earned. GeniusU includes personal profiles for students to present themselves,
dashboards to measure progress, their learning and earning metrics, communication circles to connect with other students and mentors,
and a full range of continually upgraded learning modalities and assessment tools to suit each student, delivered by a combination of
global and local faculty.
With
our planned integration of additional age groups, beginning with our five Acquisitions, we now plan to extend our offering within our
system so that early age to 5 year old students can learn their natural way to learn and play, 6 to 12 year old students can build their
life leadership and entrepreneurial skills, 13 to 21 year old students can learn how to start their business, join our global mentorship
program with a small business or learn key vocational skills in our camps and competitions, and the over 21 year old students take our
courses and receive mentorship for every level of business from startup to large corporations seeking an entrepreneurial edge.
We
are developing this curriculum as a supplement to the existing education system, and in time we aspire to create a fully accredited replacement
to the traditional U.S. school and university pathway.
We
have grown and will continue to grow through a combination of organic growth and acquisitions. Our organic growth is a result of attracting
our students to the courses on our Edtech platform, and attracting partners and faculty who market and deliver the courses. These courses
include our own wholly owned curriculum together with courses that our partners and faculty add to our curriculum.
We
also partnered and intend to continue to partner with and, where appropriate, acquire companies that have courses, faculty and communities
that we believe provide a valuable addition to our Group. We plan to add their courses to GeniusU, providing a full lifelong learning
pathway that can be accessed by our community globally, with the direction of our Genie AI and with the support of our global and local
faculty. We plan to continue this strategy of acquiring companies and then adding value to them by combining them in one Edtech platform
and curriculum, which to date has enabled us to maintain 50%+ year-on-year growth (on non-preforms basis)
As
of December 31, 2022, overall partnership revenues contribute 16% towards the revenue of the Education company, with the remaining 84%
of revenue from our fully owned courses and curriculum. We have seen an increase in partners globally year on year and our partner growth
in 2022 was 24% from 2021. As of the date of this Prospectus, we have over 1,400 events, courses and products listed on our digital
platform; partners earn commissions as a result of sales processed through our platform. Due to the number of faculty and partners, together
with the number of courses and products delivered on our platform, there is no one partner or product that makes up more than 5% of our
revenues.
We
are following a fifteen-year growth plan:
In
phase one, from 2015 to 2020, our focus has been attracting adult entrepreneurs to use our entrepreneur education tools and proving our
Edtech business model in countries around the world. The result of this phase is the Pre-IPO Group presented in this Prospectus.
In phase two, from 2020 to 2025, our goal is to integrate our education tools into the existing education system through licenses, partnerships
and acquisitions, with our aspiration for our entrepreneur education programs and Edtech platform becoming the programs and platform
of choice by schools, colleges, universities and companies in our target markets. The IPO and the Acquisitions are the first steps in
this phase.
In
phase three, from 2025 to 2030, our goal is to have developed a full curriculum accredited and receiving funding from government bodies
in the U.S., the U.K., Europe, Asia and Australasia and seen as a viable alternative by students, parents, partner schools and companies
around the world to the existing education options.
History
and Corporate Structure
The
origins of Genius Group began in 2002 when Singapore-based entrepreneur, Roger James Hamilton created the Wealth Dynamics system as a
personality profiling tool for entrepreneurs to discover their strengths and weaknesses, and build an entrepreneurial team. Over the
next decade the popularity of the tool led to Roger growing Wealth Dynamics into a global company with country licenses around the world
and a community of over 250,000 entrepreneurs by 2012.
Through
the global financial crisis that commenced in 2008 it became clear to Roger Hamilton, our Chief Executive Officer, and the senior management
team of Wealth Dynamics that the number of entrepreneurs and small business owners around the world was growing dramatically and in need
of a training system to reduce the number of business failures. According to data from the U.S. Bureau of Labor Statistics, about 20%
of U.S. small businesses fail within the first year. By the end of their fifth year, roughly 50% have faltered. After 10 years, only
around a third of businesses have survived.
From
2012 to 2015, Genius Group developed a number of initiatives under the Entrepreneurs Institute brand. This included the Global Entrepreneur
Summit and Entrepreneur Fast Track Event series, which we believe is now the largest entrepreneur seminar series hosted in 18 countries
annually. It also included Talent Dynamics, a corporate version of Wealth Dynamics used by large multinationals, and a full entrepreneur
system to grow from startup to the first million dollars in revenue called “The Millionaire Masterplan” which became a New
York Times bestselling book in 2014.
During
this period, Roger Hamilton also became the founding Chairman of the Green School in Bali. The Green School attracted global attention
as a new model of schooling with its environmental and student- centered approach to learning. It won the inaugural “Greenest School
in the World” award from the Center for Green Schools at the U.S. Green Building Council, and became a global case study for new
models of schooling. It is used as the first example of 21st century schooling in the World Economic Forum’s 2020 white
paper on The Future of Schools. The need for an education revolution based on a global, scalable high-tech, high-touch model led to the
launch of GeniusU as an Edtech solution in 2015.
From
2015 to 2017, GeniusU grew rapidly from 313,000 students in the first year to 736,000 students by the third year. During this time,
Entrepreneurs Institute had continued to grow and a third company under Roger Hamilton’s majority ownership, Entrepreneur Resorts
Limited, had been established to expand on the successful and profitable model of providing entrepreneur retreats and co-working spaces
in paradise. In August 2017, Entrepreneur Resorts consummated its initial public offering on the Seychelles TropX stock exchange, now
the MERJ stock exchange, raising $3 million and acquiring Tau Game Lodge, a South African Safari Lodge to add to Entrepreneur Resorts’
property portfolio. The portfolio at that time also included Vision Villas, a Bali-based entrepreneur resort and Genius Cafe, a Bali-based
entrepreneur beach club.
At
the end of 2018, the one company in the Group was GeniusU Pte Ltd, which changed its name to Genius Group Ltd. This was in its third
full year of operation as an Edtech company. Genius Group Ltd had grown in its first three years to 1.2 million students with revenues
of $4.8 million and net loss of $0.5 million in 2018. Total assets at the end of 2018 were $1.7 million, total liabilities were $2.1
million and total shareholders’ deficit was $(0.4) million.
At
the end of 2019, Genius Group had grown to include Genius Group Ltd, GeniusU Ltd and Entrepreneurs Institute, with GeniusU Ltd formed
as the new Edtech company and Entrepreneurs Institute acquired as part of the Group. Combined revenues in 2019 of the Pre-IPO Group,
which includes Entrepreneur Resorts, acquired in August 2020, were $9.9 million, net loss before tax was $(1.1) million after
eliminations and Adjusted EBITDA was $1.2 million. Total assets at the end of 2019 were $17.6 million, total liabilities were $12.2 million
and total shareholders’ equity was $5.3 million. Our revenue growth from $4.8 million in 2018 to $9.9 million in 2019, represents
a 106% year-on-year increase, with 15% organic growth and 91% growth from acquisition. These four companies make up the Pre-IPO Group,
and audited financials of this Pre-IPO Group are provided below for both 2019 and 2020 as they were under common control prior to the
acquisitions.
At
the end of 2020, Genius Group had entered into agreements to secure the four Acquisitions: Education Angels, E-Square, Property Investors
Network and University of Antelope Valley. All the four acquisitions closed after the IPO in 2022. and therefore all four are currently
part of our consolidated audited results for the period after acquisition to the year end. We have provided pro forma accounts in this
filing that include both the Pre-IPO Group and the five Acquisitions for 2022 for the full year.
In
2020, during the pandemic, the Pre-IPO Group saw an 11% growth in its digital education revenue, 2% growth in its total education revenue.
During the year Entrepreneur Resorts had a 55% revenue decline as it closed its locations in Singapore, South Africa and Bali, Indonesia,
resulting in $7.6 million in revenue, $3.5 million in gross profit, ($3.1) million in net loss and $(0.1) million in Adjusted EBITDA
for the Pre-IPO Group in 2020.
Our
revenue decreased from $9.9 million in 2019 to $7.6 million in 2020, a reduction of 23%. This was largely due to the effect of the COVID-19
pandemic on Entrepreneur Resorts, as discussed elsewhere in this Prospectus.
At
the end of 2021, we continued to grow the Group without completing any new acquisitions. Based on audited financials, combined
revenues in the fiscal year ended December 31, 2021 were $8.3 million, with $2.8 million in gross profit, ($4.2)
million in operating loss, ($4.6) million in net loss and $0.3 million in Adjusted EBITDA.
The
pro forma revenue including the four acquisition and excluding ERL was $21.0 million. The pro forma revenue was the
combination of $5.2 million in revenue from the Pre-IPO Group, and $15.8 million in pro forma revenue from the Acquisitions. This
further breaks down to the following revenue from each Acquisition: University of Antelope Valley, $9.0 million revenue (43% of
total), with a further $1.1 million of other income from government grants not included in this total; Property Investors Network, $5.1
million revenue (24% of total); Education Angels, $0.9 million revenue (5% of total); and E-Square, $0.7 million (3% of
total).
The
two main revenue segments of the Pre-IPO Group are made up of education revenue and campus revenue.
Our
education revenue is the combined revenue of Genius Group Ltd, GeniusU Ltd and Entrepreneurs Institute. This decreased from $5.6 million
in 2020 to $5.2 million in the fiscal year ended December 31, 2021.
Our
campus revenue is the revenue of Entrepreneur Resorts Ltd. This increased from $2.0 million in 2020 to $3.1 million in the fiscal year
ended December 31, 2021 as our campus venues began to reopen in line with easing of pandemic restrictions.
At
the end of 2022, we continued to grow the Group and acquired US based film production company Revealed Films in October 2022. Also,
we closed the remaining four Acquisitions that were contingent to our IPO. Based on pro forma financials and including the five acquisitions
and excluding Entrepreneur Resorts Ltd, combined revenues in the fiscal year ended December 31, 2022 were $23.5 million,
with $12.9 million in gross profit, ($32.2) million in operating loss from the continued business operations and
($6.9) million in Adjusted EBITDA.
The
$23.5 million in pro forma revenue was the combination of $4.8 million in revenue from the Pre-IPO Group excluding Entrepreneur
Resorts Ltd, and $18.6 million in revenue from the Acquisitions.
The
two main revenue segments of the Group are made up of education revenue and campus revenue.
Our
education revenue on the audited financials grew from $5.2 million in 2021 to $13.6 million in the fiscal year ended December 31, 2022.
Our
campus revenue is the revenue of Entrepreneur Resorts Ltd. This increased from $3.1 million in 2021 to $4.6 million in the fiscal year
ended December 31, 2022 as our campus venues began to reopen in line with easing of pandemic restrictions. The campus revenue is excluded
from the pro forma financials.
When
combined with the revenue of the Acquisitions, of which 100% is education revenue, our pro forma education revenue for the Group was
$23.5 million in 2022.
At
the end of six months ended June 30, 2023, based on pro forma financials and including the five acquisitions and excluding Entrepreneur
Resorts Ltd, combined revenues in the fiscal year ended June 30, 2023 were $8.9 million, with $4.3 million in gross profit, ($9.4) million
in operating loss from the continued business operations and ($7.6) million in Adjusted EBITDA.
The
$8.9 million in pro forma revenue was the combination of $1.3 million in revenue from the Pre-IPO Group excluding Entrepreneur Resorts
Ltd, and $7.6 million in revenue from the Acquisitions.
The
two main revenue segments of the Group are made up of education revenue and campus revenue.
Our
education revenue on the audited financials grew from $3.4 million in first half of 2022 to $8.9 million in the six months ended June
30, 2023.
Our
campus revenue is the revenue of Entrepreneur Resorts Ltd. This increased from $1.9 million in first half of 2022 to $2.8 million in
the six months ended June 30, 2023 as our campus venues began to reopen in line with easing of pandemic restrictions. The campus revenue
is excluded from the pro forma financials.
When
combined with the revenue of the Acquisitions, of which 100% is education revenue, our pro forma education revenue for the Group was
$8.9 million in first half of 2023.
We
use Adjusted EBITDA, a non-IFRS measure, in various places in this Prospectus, as described in the “Non-IFRS Financial Measures
— Adjusted EBITDA” section above.
B.
Business Overview
Our
Mission
Our
mission is to develop an entrepreneur education system that prepares students for the 21st century. We believe that the current
global education system is in need of a more relevant, upgraded, student-centered curriculum that is both high-tech and high-touch. We
believe that such a curriculum can be a force for good. As Nelson Mandela said, “Education is the most powerful weapon which you
can use to change the world.”
Today,
we believe that it is the entrepreneurs of the world who have the greatest power to trigger change. We see Genius Group as the global
community where the entrepreneur movement meets.
For
students who may struggle with the current test-focused, classroom-based, one-size-fits-all system most common in current schooling,
our mission is to provide the option of a personalized, passion-focused, purpose-based, flexible system that enables them to design a
life that enables them to ignite their own genius, and where earning and learning become a lifelong activity.
For
parents who we believe feel trapped in a system where they are limited in flexibility of location, teachers, subjects and standards,
our mission is to provide a truly global system that can be accessed online, anytime, with their choice of location, teachers, mentors,
subjects and pathways that best suit their children, their family and their personal circumstances, while connecting to the recognized
accreditations for their children to succeed.
For
teachers who we believe feel underappreciated and underpaid, our mission is to provide a global platform that recognizes and rewards
thought leaders for the best content, courses, microschools and microdegrees, enabling the best coursework to grow globally.
For
schools and colleges that are under-resourced and struggle to keep up with the increasing demands of changing global economics and
an uncertain future of work, our mission is to provide a cutting-edge curriculum to enable them to prepare their students effectively
to get jobs and create jobs as well as learn key life skills in partnership with our global community.
For
companies that have a challenge in finding students that have the adequate leadership and technical skills to be employable, our
mission is to provide company-sponsored programs that ensure a ready stream of employable students and leaders, operating globally and
constantly upgraded to the needs of the times.
For
governments that are under pressure to deliver an effective education with employable students with various limitations on how rapidly
they can innovate within the existing system, especially given the current state of the education system due to the COVID-19 pandemic,
our mission is to provide a viable alternative to the current system in partnership with the leading education institutions, business
leaders and organizations seeking to solve the same issues.
Our
Genius Curriculum
In
direct response to the many challenges of the current education system, we are designing a comprehensive curriculum that fosters lifelong
personal and professional learning. By initially creating an adult-based curriculum to supplement existing education, we are laying the
groundwork for an ambitious, fully accredited alternative to the traditional U.S. school and university pathways. Our aim is to offer
a progressive entrepreneurial education from primary, secondary, university, vocational, and ongoing education.
Our
Entrepreneur Education Vision
We
define “entrepreneur education” as a personalized, discovery-based learning experience that cultivates greater self-awareness,
self-mastery, and self-expression. By developing leadership and entrepreneurial skills, students are empowered to independently create
value and “create a job” rather than relying on a system in which they must “get a job.” We believe these skills
and competencies can be nurtured from an early age and can be acquired at any stage in life, allowing adults to reskill and upskill as
needed.
With
our vision of a global education system rooted in our entrepreneurial philosophy, we are committed to delivering personalized, discovery-based
learning at all ages. Our Pre-IPO Group companies and acquisitions share this vision and have been working diligently to realize it.
In the following sections, we explore the commonalities and differences among these companies and provide a detailed overview of our
groundbreaking Genius Curriculum.
The
Genius Curriculum is an innovative blend of our Entrepreneurial Education Vision, 8 “Education 4.0” Pillars, Genius Learning
Methodology, 10 Genius Principles, C.L.E.A.R. Philosophy, and a diverse range of Courses, Products, and Services. Each of our Pre-IPO
Group companies and acquisitions incorporates specific aspects of these elements, with plans to integrate further components as we unify
their education systems within the Genius Curriculum. The subsequent sections elaborate on each element, along with our integration plans
for each company.
The
8 “Education 4.0” Pillars
We
recognize that individuals, from students to employees, freelancers, and startup founders, seek to learn how to be entrepreneurial and
“create a job” instead of needing to “get a job.” The current education system and online courses often fail
to provide a reliable, recognized curriculum to support this goal. The World Economic Forum’s white paper on the need for a 21st-century
education system, published in January 2020, highlights this problem.
The
report identifies eight crucial characteristics of learning content and experiences that define high-quality learning in the Fourth Industrial
Revolution, known as “Education 4.0.” These eight pillars also form the foundation of our entrepreneurial education curriculum:
|
1. |
Global
citizenship skills: Focus on building awareness about the wider world, sustainability, and active participation in the global community. |
|
|
|
|
2. |
Innovation
and creativity skills: Foster skills required for innovation, including complex problem-solving, analytical thinking, creativity,
and systems analysis. |
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|
3. |
Technology
skills: Develop digital skills, including programming, digital responsibility, and the effective use of technology. |
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4. |
Interpersonal
skills: Enhance interpersonal emotional intelligence, including empathy, cooperation, negotiation, leadership, and social awareness. |
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5. |
Personalized
and self-paced learning: Transition from standardized learning to a system tailored to each learner’s unique needs, allowing
for individual progression at their own pace. |
|
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6. |
Accessible
and inclusive learning: Ensure learning is available to everyone, moving from confined access to school buildings to a universally
inclusive system. |
|
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|
7. |
Problem-based
and collaborative learning: Shift from process-based to project- and problem-based content delivery, emphasizing peer collaboration
and better reflecting the future of work. |
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8. |
Lifelong
and student-driven learning: Transition from a system with diminishing learning and skills to one where everyone continuously improves
existing skills and acquires new ones based on individual needs. |
The
Green School in Bali, where Genius Group Ltd’s Founder and CEO, Roger James Hamilton, served as the founding Chairman of the Board,
was the first school recognized by the World Economic Forum as practicing these eight characteristics. The Genius Curriculum has since
evolved, differentiating itself from traditional schooling through its student-based and personalized approach, 21st-century leadership
skills focus, collaborative environment, challenge-based structure, accelerated learning, global flexibility, tech-based content, and
multiple mentors per challenge.
With
over 3.34 million students across 20,345 cities utilizing the curriculum in various settings, Genius Group delivers a comprehensive
entrepreneurial education system in high demand. The curriculum is adopted by leading companies and schools worldwide, with campuses
ranging from schools to colleges, resorts, and co-working offices. Our Edtech platform, GeniusU, hosts over 500 local and online events
and microdegrees.
Our
Genius Learning Methodology
Many
learning methodologies are based on “Pedagogy,” our Genius Learning Methodology is rooted in “Andragogy.” This
distinction is essential, as our acquisitions share a similar learning methodology or possess the potential to adopt it based on our
post-acquisition growth plans. The definitions of these terms are:
Pedagogy:
Derived from the Greek words paid (child) and ago (guide), this term refers to the science and practice of teaching and guiding a child
to achieve specific outcomes in their education.
Andragogy:
Derived from the Greek words andras (man) and ago (guide), this term refers to the science and practice of how adults (and children)
develop self-directed learning to guide their own development.
Andragogy
is a common practice for both children and adults when learning computer games, new internet applications, sports, musical instruments,
languages, or entrepreneurial skills through “learning by doing.” Our Genius Learning Methodology is based on ten Genius
Principles
We
believe we are attracting and retaining the level of students and partners because they see high value as much from how they are learning
as what they are learning. Our Acquisitions are also practicing some of these principles to varying degrees. Following the completion
of our acquisitions, we plan to enhance the student experience in each of our Acquisitions by introducing these principles into these
companies. Below is a brief explanation of each of these ten principles.
Our
Genius Learning Methodology
Our
10 Genius Principles
|
1. |
Personalized
Learning: Our curriculum is designed to ignite each student’s unique genius by tailoring it to their individual talents,
passions, and purpose. GeniusU utilizes an AI-powered “Genie” to serve as a personal mentor, guiding students towards
the most suitable courses, mentors, and opportunities for their personal journey. Assessments, such as the Genius Test and Passion
Test, provide insights for personalized recommendations. |
|
2. |
Challenge
Based Courses: To increase engagement, our courses incorporate gamification, with rewards and prizes for competition. All live
education on GeniusU features a challenge component, fostering an environment where students learn from each other’s submissions. |
|
3. |
Impact
Focused Learning: Our courses are purpose-driven, with students defining their future vision early in their chosen pathway. Aligning
learning with global citizenship and personal purpose allows students to easily connect with mentors and opportunities that match
their objectives. |
|
4. |
Positive
Credit System: Students earn digital credits called GEMs (Genius Entrepreneur Merits) for actions taken during their learning
journey. These GEMs can be redeemed for discounts on further education, increasing student engagement and community contributions. |
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5. |
Global
Classroom: We foster engagement by connecting students and faculty from various countries in a single learning environment. A
combination of video tuition, global mentors, local hosts, and individual mentors creates an enriching, diverse educational experience. |
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6. |
Leading
Learners: GeniusU incorporates a rating and recognition system to showcase top students, mentors, and courses. This community-led
approach helps keep our education system relevant and up-to-date in rapidly changing times. |
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7. |
Decentralized
System: Our growth is driven by the interests of our students and the energy of our partners, resulting in a continuously evolving
Genius Curriculum. This approach rewards the most innovative partners and faculty for introducing successful new courses and products. |
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8. |
Inclusive
Entry: By offering free entry-level courses on GeniusU, we provide inclusive access to education for all. Students can progress
to higher level programs by achieving minimum proficiency levels with the support of mentors when needed. |
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9. |
Life
and Leadership Skills: In addition to academic skills, our curriculum emphasizes life and leadership skills, such as entrepreneurship,
financial literacy, communication, and technology. We plan to introduce these skills in our Acquisitions to further enrich their
educational offerings. |
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10. |
Lifelong
Learning: We encourage students to embark on a lifelong learning journey with Genius Group, providing access to a structured
pathway for continuous growth. This fosters long-term relationships with students and supports their ongoing personal and professional
development. |
Our
C.L.E.A.R. Philosophy
An
important additional element in our learning methodology is our “C.L.E.A.R. Philosophy”. This is in reference to how we have
designed GeniusU and Genie to focus on five daily actions that we recommend students to take. These five actions and sections within
GeniusU are Connect, Learn, Earn, Act and Review, and they form the acronym C.L.E.A.R.
Students
earn GEMs by engaging in each of the five areas of our “C.L.E.A.R. Philosophy,” and our partners and faculty utilize these
areas to create customized circles, courses, and products on GeniusU. Upon completion of the Acquisitions, we will integrate our “C.L.E.A.R.
Philosophy” and structure with the acquired entities, merging our learning methodology with the content being taught.
We
believe that mastering these five areas is crucial for self-directed learning, as it offers the necessary framework for relevant and
contextual learning often missing in traditional education:
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CONNECT:
We encourage students to connect with mentors, peers, and communities aligned with their passions and purpose. GeniusU courses
and products feature circles, which are online groups with discussions, course access, and knowledge libraries for student support.
Genie recommends daily connection actions, while students can explore the Connect Page for suitable circles, students, mentors, and
companies. |
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LEARN:
Once connected, students should engage in learning within their circles or with selected partners or mentors. Genie suggests
daily learning actions based on ongoing or new courses, and students can browse the Learn Page for assessments, courses, events,
and articles. |
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EARN:
We recommend students earn GEMs or financial rewards using their expanded network and knowledge. This could involve writing reviews,
networking, or sharing insights. Students can also explore the Earn Page for employment opportunities, partnerships, memberships,
and certifications. |
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ACT:
Students should apply their learning in real-world situations. GeniusU serves as an active ecosystem where leaders, entrepreneurs,
and business owners seek talent, partners, or investors. Genie recommends actions based on individual students, and they can explore
the Act Page for joint venture or investment opportunities and challenges to join. |
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REVIEW:
Finally, students should assess the outcomes of the previous four steps, embodying our philosophy of learning by doing, with
continuous testing, measuring, and reviewing. Genie suggests items to review based on the student’s engagement, and they can
explore the Review Page to revisit previous C.L.E.A.R. steps. |
Enhancing
the data mining and artificial intelligence capabilities of our Genie AI is a primary focus, as is integrating the courses and communities
of our partners, faculty, and Acquisitions into our C.L.E.A.R. Philosophy.
Our
Companies, Present and Future
Prior
to their acquisitions, the Pre-IPO Group companies all shared a common vision of an entrepreneur education system based on our definition
personalized discovery-based learning leading to higher levels of self-awareness, self-mastery and self-expression, which in turn could
develop leadership and entrepreneurial skills enabling students to independently create value and “create a job” rather than
being dependent on a system in which they need to “get a job”. Our Acquisitions share a similar vision.
While
the companies have a shared vision, the Pre-IPO Group companies had various common aspects of our Genius Curriculum’s 8 pillars,
our Genius learning Methodology, our 10 Genius Principles, our C.L.E.A.R. Philosophy as described above, while having differing courses,
products and services. The Acquisition companies also share common aspects of our Genius Curriculum as described above, and also have
differing course, products and services as described in the section below.
Based
on these commonalities and differences, below is a summary of the present state and future plans of these aspects of the Genius Curriculum
within each of our Group companies:
GENIUSU
LTD: As the Edtech Platform, GeniusU is designed with our Genius Curriculum in mind and has been developed to provide our students
and partners a consistent experience of all aspects of the Genius Curriculum. Entrepreneurs Institute, training company with entrepreneur
content improved after becoming a part of Genius Group and transfer of its courses onto GeniusU. Our plan is to continue to develop and
deliver this experience with respect to our Genius Curriculum in the following ways:
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Entrepreneur
Education Vision: Based on our definition of “entrepreneur education” as personalized discovery-based learning that
leads to higher levels of self-awareness, self-mastery and self-expression, our course builders and certifications on GeniusU are
designed to ensure the courses delivered include these aspects of personalized discovery-based learning. This is explained in more
detail in the “Our Courses, Products and Services” section below. |
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8
“Education 4.0” Pillars: The combination of a global classroom, online delivery and personalized mentoring in challenge-based
courses ensures all 8 of the “Education 4.0” pillars described above are practiced and experienced by both our students
and our partners. |
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Genius
Learning Methodology: The combination of the quizzes, personalized learning profiles and personalized course recommendations
provided by our AI Genie ensure students can follow a personalized discover-based learning path based on “andragogy”
rather than a prescriptive “pedagogy”. Our plan is for the students of our Acquisitions to have similar tools to follow
their own personalized discover-based learning path. |
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10
Genius Principles: GeniusU has been designed with all 10 Principles in mind. For example, Personalized Learning is designed into
the student experience with our AI Genie, our microschool courses are designed as challenge-based courses, and our tests and reports
are designed to question and measure impact focused learning. We plan to continue to develop the technology and measure the success
of GeniusU by the extent to which it achieves these 10 principles. |
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C.L.E.A.R.
Philosophy: GeniusU has also been designed to direct and reward students to practice our C.L.E.A.R. Philosophy of learning through
doing, with each course having actions to take for a student to connect, learn, earn, act and review, and for these actions to be
rewarded with our GEM credit system. We plan to ensure the course delivered on GeniusU and by our Genius Group companies also align
to this philosophy, through the design of their courses to include direction and reward for all five aspects. |
ENTREPRENEUR
RESORTS: Entrepreneur Resorts has a different revenue model from the education companies in the Group, and it complements the education
companies by providing location-based campuses that link local mentors and partners to local students while hosting courses delivered
via GeniusU and generating income from food, drink and accommodation. By providing venues for the delivery of Genius Group courses, the
company practices the same elements of the Genius Curriculum.
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Entrepreneur
Education Vision: As with Entrepreneurs Institute, prior to acquisition Entrepreneur Resorts also shared a similar entrepreneur
education vision to GeniusU, but limited to each venue’s location. After the acquisition, Entrepreneur Resorts is expanding
on that vision with partners and course content growing via GeniusU. |
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8
“Education 4.0” Pillars: Entrepreneur Resorts was originally established to provide venues for Entrepreneurs Institute,
and so shared the same focus on developing skills in some of the “Education 4.0” pillars, including global citizenship,
creativity, technology, interpersonal skills, and included collaborative and personalized learning. It also did not address the pillars
of accessible and lifelong learning. After the acquisition, the company was challenged by government restrictions during the COVID-19
pandemic. As our venues have been reopening, the company has plans to address these pillars as it has expanded its course calendar
in the different venues. |
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Genius
Learning Methodology: The students who attend courses at Entrepreneur Resorts venues do develop their own personalized discovery-based
learning path based on “andragogy”. Since the acquisition, the growth of students, partners and courses on GeniusU has
enabled the company’s venues to grow its reputation in delivering discovery-based and challenge-based courses. |
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10
Genius Principles: Entrepreneur Resorts was also similar to Entrepreneurs Institute in the Genius Principles it was following
prior to acquisition, including personalized learning, challenge- based courses, global classroom, leading learners and leadership
skills. Also similar to Entrepreneurs Institute, after the acquisition, the company also now has the tools to introduce the Genius
Principles of a positive credit system, decentralized system, inclusive entry and a lifelong learning pathway, with plans to include
these, post-pandemic. |
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C.L.E.A.R.
Philosophy: Entrepreneur Resorts also focused on the first two elements of the C.L.E.A.R. Philosophy, connecting and learning,
in its events prior to the acquisition. Now that the venues will be hosting more courses and conferences delivered partly on GeniusU
and partly with in-person faculty partners and community partners, the company plans to introduce the other elements of the CL.E.A.R.
Philosophy. |
EDUCATION
ANGELS: While it may appear unusual for an early learning company’s curriculum to be seen as entrepreneurial, based on our
definition of Entrepreneur Education being personalized discovery- based learning, we see Education Angels’ curriculum as being
entrepreneurial in nature. The original founder of Entrepreneurs Institute was inspired by Green School’s entrepreneurial approach
to education in a similar way to Genius Group Ltd.’s CEO Roger Hamilton, and has been a long-term student and partner of
Genius Group Ltd, utilizing the following elements of the Genius Curriculum in the development of the Education Angels’ current
curriculum:
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Entrepreneur
Education Vision: Education Angels shares a similar vision of equipping parents and young children with early learning tools
and programs to create a personalized, discovery- based learning experience for both parents and their children. Our plan is to expand
on this vision through the additional adult and family programs we will be introducing, that provide each family member with a relevant,
personalized learning path. |
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➢ |
8
“Education 4.0” Pillars: Education Angels was established to provide an “Education 4.0” learning system
for young children. The programs and courses that they deliver, together with the personalized delivery of in-home childcare and
education professionals, are designed to foster growth in all 8 of the “Education 4.0” pillars. We have completed the
acquisition of Education Angels and are scaling the Education Angels programs as explained in the “Courses, Products and Services”
section below. |
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➢ |
Genius
Learning Methodology: The Education Angels system is based on the “Andragogy” methodology of self-directed learning
and “learning by doing”, with educators beginning with the personal character, traits and passions of the parents and
children, and providing a learning environment for the children to learn through interaction and discovery. We plan to extend this
“Andragogy” approach by introducing the gamification elements explained within our 10 Genius Principles, and by providing
parents and teachers with our tools on GeniusU. |
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➢ |
10
Genius Principles: As Education Angels has developed within one country with a traditional enrolment model and in-home education
delivery, it has been limited in the Genius Principles it has been practicing, with 2 of the 10 Genius Principles being part of its
current learning system: Personalized learning and life skills. Our plan is to integrate the other Genius Principles into the Education
Angels system as we introduce parent courses and online quizzes and courses with GEM rewards globally. |
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C.L.E.A.R.
Philosophy: Education Angels has also not been utilizing the C.L.E.A.R. philosophy. We plan to begin to integrate the C.L.E.A.R.
philosophy post-acquisition by integrating it with our planned parent courses as detailed below. |
E-SQUARE:
E-Square was established to deliver an entrepreneurial education for primary school and secondary school students, with opportunities
for them to launch their own companies and learn technology and vocational skills. Their stated mission is: “To produce self-motivated
individuals who are ready to compete in a global business or Corporate Environment or even better becoming self-motivated successful
Entrepreneurs. The company and its team were referred to Genius Group Ltd by our entrepreneur community in South Africa as a recommended
addition to our Genius Curriculum, and this led to the current acquisition. E-Square already shares various elements of the Genius Curriculum:
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Entrepreneur
Education Vision: E-Square shares a similar vision of empowering students to learn through a personalized, discovery-based process
where they gain the entrepreneurial, vocational and leadership skills to be able to “create a job” instead of “get
a job”. Their mobile based online system enables teachers to manage personalized learning pathways for each student whether
they are in class or learning remotely. After the acquisition is closed, we plan to expand this system through GeniusU to
the families in our global community who want their children to follow a similar system as part of their primary or secondary school
education. We believe that the combination of E-Square’s current tools, together with our GeniusU platform and our shared vision,
will enable us to reach children and primary and secondary school level globally. |
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8
“Education 4.0” Pillars: E-Square has used the 8 “Education 4.0” pillars as a framework for the development
of their curriculum and the courses they deliver to their students. This means all 8 pillars are already integrated into their curriculum:
Global citizenship, innovation, technology and interpersonal skills; Personalized, accessible, collaborative and student-driven learning.
We plan to expand the lifelong learning aspect by providing high school students with a pathway to further learning either through
university or through apprenticeship within our global entrepreneur community. |
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Genius
Learning Methodology: While primary and secondary school require a level of pedagogy in order for students to pass the standardized
tests required to achieve a high school diploma, E-Square is also practicing a degree of self-directed and self-paced learning by
providing students with options they can choose from that are relevant to their passions and path. In this way, they have already
introduced a degree of discovery-based learning principles of andragogy to combine with the current pedagogy. We plan to expand these
discovery-based options with the courses and personalized learning tools we will deliver on GeniusU. These will also include credits
towards their education, together with multiple exits from high school, including university, vocational training or starting a business.
We believe this will result in an increasingly personalized, gamified and discovery-based approach to our Genius curriculum for school
students. |
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10
Genius Principles: Similar to Education Angels, E-Square has been following a limited number of the Genius Principles, and also
plans to embrace them all post-acquisition. The current Genius Principles they do practice include leadership skills, personalized
learning, and impact focused learning. |
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C.L.E.A.R.
Philosophy: E-Square has also not currently been utilizing the C.L.E.A.R. philosophy. We plan to begin to integrate the C.L.E.A.R.
philosophy post-acquisition as we add E-Square courses on GeniusU. |
University
of Antelope Valley: UAV was originally established by two entrepreneurs to provide vocational training in the medical field. This
has since developed into an accredited university offering both vocational certifications and academic degree programs while maintaining
a vision of entrepreneurial education where the end goal is not graduation, but creating productive leaders within the community. UAV
already share the following aspects of the Genius Curriculum:
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Entrepreneur
Education Vision: UAV’s mission statement reads “The University of Antelope Valley offers higher education that enables
students to achieve their academic, career, and personal goals, thereby allowing them to become valuable assets to their communities.”
The university shares Genius Group Ltd.’s entrepreneur education vision and the faculty and staff are ready to implement the
various elements of the Genius Curriculum post-acquisition. These elements are detailed below, and they include expanding on our
common vision of personalized, self-directed education through the courses and programs we plan to introduce, including the student-led
courses, summits and festivals detailed in the “Courses, Products and Services” section below. |
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8
“Education 4.0” Pillars: UAV has not been practicing all 8 “Education 4.0” pillars, mainly as their focus
in recent years has been in achieving the benchmarks necessary for a U.S. university to compete with other traditional education.
This includes ensuring high pass marks in academic courses and achieving the metrics set by accrediting bodies. Some of these pillars
have been introduced by the staff, including innovation and technology skills and collaborative learning. Post- acquisition, we plan
to integrate the other “Education 4.0” pillars into UAV’s courses with a focus on the first courses being integrated
on GeniusU. |
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Genius
Learning Methodology: UAV has been following more of a pedagogical approach in the delivery of its certification and degree programs,
whereby students are required to follow the same course content towards standardized testing. However, UAV also attracts students
as a result of its student-led learning and experiences, including its sports and extra-curricular programs, and corporate partnerships
and placements. Our plan is to introduce to UAV students a more andragogical approach in which they can take free or paid courses
outside of or additional to a full-time degree program as part of their learning journey, with these courses adding to their education
credits, with each student using GeniusU to deliver a more personalized, gamified, engaging learning journey using the 10 Genius
Principles and C.L.E.A.R. philosophy. |
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10
Genius Principles: UAV is currently not following the 10 genius principles. We plan to integrate the genius principles together
with the programs we plan to run at UAV and the UAV courses we host on GeniusU. |
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C.L.E.A.R.
Philosophy: UAV has also not been following the C.L.E.A.R. philosophy, with a more traditional approach to education. We plan
to add the C.L.E.A.R. philosophy with all UAV students utilizing the tools on GeniusU for their development of self-awareness, self-mastery
and self- expression. |
Property
Investors Network: PIN is similar to Entrepreneurs Institute in its focus on adult learning and in a way it has already adopted most
of the elements in the Genius Curriculum. The founder of PIN is a long- term student of Genius Group Ltd and has grown his company using
the education methodology, principles and philosophy. Below are the aspects of the Genius Curriculum that PIN currently shares:
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Entrepreneur
Education Vision: PIN shares an entrepreneur education vision similar to that of GeniusU, but as with Entrepreneurs Institute,
PIN is currently limited in scale by the delivery of training in-person or with a limited faculty. We have completed the acquisition
and integration of PIN and are expanding PIN with this vision in a similar way to Entrepreneurs Institute, attracting new students
and partners from around the world via GeniusU. |
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8
“Education 4.0” Pillars: The training courses delivered develop skills in some of the “Education 4.0”
pillars, including global citizenship, creativity, technology, interpersonal skills, together with collaborative and personalized
learning. However, as it currently focuses at adult learners, it did not address the pillars of accessible and lifelong learning.
After the acquisition, we plan to expand PIN’s course offerings on GeniusU to deliver on all 8 “Education 4.0”
pillars. |
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Genius
Learning Methodology: Students in PIN currently used GeniusU’s tools and products to develop their own personalized discovery-based
learning path based on “andragogy”. We have completed the acquisition of PIN and are planning to expand the PIN courses
on GeniusU to develop more effective personalized, scalable learning paths. |
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10
Genius Principles: PIN is currently following the same Genius Principles that Entrepreneurs Institute did prior to acquisition.
These include personalized learning, challenge-based courses, global classroom, leading learners and leadership skills. We have completed
the acquisition of PIN and are planning to introduce the additional principles of a positive credit system, decentralized system,
inclusive entry and a lifelong learning pathway with the tools available on GeniusU. |
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C.L.E.A.R.
Philosophy: PIN already follows the C.L.E.A.R. philosophy today, with students rewarded for connecting, learning, earning, acting
and reviewing. This is in the form of challenges, awards and rewards. We are developing PIN’s use of our C.L.E.A.R. philosophy
further as we integrate all of PIN’s courses and events on GeniusU. |
Revealed
Films: RF is focused on adult learning through Documentaries and Docuseries that span a wide array of topics. These topics help our
students navigate their beliefs and expand their knowledge by interviewing experts and educators that may have perspectives that differ
from conventional thinking. The founders of RF have been long-term students of Genius Group Ltd and have grown their company using the
education methodology, principles and philosophy. Below are the aspects of the Genius Curriculum that RF currently shares:
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Entrepreneur
Education Vision: RF shares an entrepreneur education vision similar to that of GeniusU, However, RF topics though by traditional
media may be polarizing, can give a fresh perspective to see various sides of topics and different paths to success. We have completed
the acquisition of RF and are expanding Genius Films with this vision to grow our student base with experts and educators in their
respective fields. |
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8
“Education 4.0” Pillars: RF has not been practicing all 8 “Education 4.0” pillars. To date, RF has practiced
Global citizens skills to build awareness about the wider world, sustainability, and active participation in the global community.
In addition, interpersonal skills: that when applied with the philosophy of being a lifelong learner, enhance interpersonal emotional
intelligence, including empathy, cooperation, negotiation, leadership, and social awareness. As RF continues to be integrated into
Genius, the remaining pillars will be brought into the culture to enhance course offerings. |
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Genius
Learning Methodology: Students in RF will gain access to GeniusU’s tools and products to develop their own personalized
discovery-based learning path based on “andragogy”. We have completed the acquisition of RF and are planning to expand
the RF courses on GeniusU to develop more effective personalized, scalable learning paths. |
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10
Genius Principles: RF is currently additional Genius Principles post the acquisition. Currently, RF practices global classroom,
inclusive entry, and lifelong learning. We have completed the acquisition of RF and are planning to introduce the additional principles
of a positive credit system, decentralized system, inclusive entry and a lifelong learning pathway with the tools available on GeniusU. |
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C.L.E.A.R.
Philosophy: RF follows aspects of the C.L.E.A.R. philosophy today, with students rewarded for connecting, learning, and reviewing.
This is in the form of access to projects, awards and rewards. We are developing RF’s use of our C.L.E.A.R. philosophy further
as we integrate key RF projects and events on GeniusU. |
While
each company in the Group shared varying aspects of the Genius Curriculum, post-acquisition, we have integrated each company in a way,
they share a common vision, methodology, pillars, principles and philosophy as our courses, products and services evolve.
Our
Courses, Products and Services
We
are developing a comprehensive entrepreneurial education curriculum, complete with a suite of tools for student learning and faculty
earning. Our Acquisitions have been chosen for their focus on preparing individuals to “create a job” rather than “get
a job,” achieved through nurturing student-driven learning in early years and developing vocational, technology, and entrepreneurial
skills in later years. We have integrated, and will continue to integrate, these courses into our Genius curriculum and GeniusU Edtech
platform, along with our principles and C.L.E.A.R. philosophy.
Our
product range is divided into six stages of education, with each stage offering four product groups. Three groups cater to students at
varying time and cost commitments, while the fourth group targets partners, training them to join as community partners or faculty members:
FREE
COURSES: Most students begin with a free course, utilizing our “freemium” model. They can learn for free, build their
learning profile, connect with circles, and receive guidance from our AI Genie. Examples of free courses include:
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Assessments:
5 to 30-minute online quizzes providing insights into personality or progress. |
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Masterclasses:
60-minute to 4-hour live or recorded webinars teaching specific skills or solving problems. |
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Workshops:
3 to 4-hour live or recorded webinars with facilitated interaction, delivering specific outcomes or previewing paid courses. |
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Microcourses:
3 to 5-day competitions, combining masterclasses with submissions and awards. |
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Microdegrees:
Pre-recorded online courses offering a sample of paid course content. |
PAID
COURSES: Students can opt to purchase one-off paid courses, ranging in cost from $15 to $5,000. Examples of paid courses include:
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Events:
Paid live digital, in-person, or hybrid events such as training courses or global summits, priced between $15 and $1,500. |
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Workshops:
60-minute to 2-day live or recorded workshops or mentorships, with faculty interaction and specific outcomes, priced between $100
and $3,000. |
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Microschools:
5 to 90-day challenge-based education modules combining digital and in-person elements, with submissions, awards, and GEM credits
for completion, priced between $1,000 and $5,000. |
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Products:
GeniusU’s online store offers additional educational products, including books, video courses, and in-person sessions that
partners can add to provide a comprehensive educational offering to their students. |
DIPLOMA
COURSES: The third step that a number of our students take is a diploma course that spans over one or more years. These range from
$1,000 to $30,000 per year. Examples of our diploma courses include:
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Memberships:
We host membership programs on GeniusU for our own companies and for our partners. These are delivered through a mix of digital,
live and in-person. They provide monthly training, connection and information for the members who join, with prices ranging from
$1,000 to $20,000 per year. |
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Diploma
Certificates: Further to our Acquisitions we are adding vocational certifications to our product range, and we plan to extend
this to primary and high school diploma programs. These will be delivered through a mix of digital, live and in-person. Prices range
from $2,500 to $10,000 per year. |
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Degree
Certificates: Further to our acquisition of UAV we are also adding bachelor’s and master’s degree certificates to
our product range. These will be delivered through a mix of digital, live and in-person. Prices range from $2,500 to $30,000 per
year. |
MENTOR
RESOURCES: Most of our 14,700+ partners began or participated as students before joining our partner community. We have two partner
pathways which work together at each stage of education: Community partners who host events, courses and venues, creating their own training
center or school in their local area; and Faculty partners who deliver the events and courses. Partners and faculty pay for mentor resources
in order to be trained, certified, learn best practices from other mentors and access our partner tools and dashboards on GeniusU. mentor
resources range from $1,500 to a percentage of their revenues which can range from 2.5% to 30% of revenues. Examples of our mentor resources
include:
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Certifications:
Our online certifications enable community partners and faculty to be trained to grow student communities or to deliver one or
more of the courses above. These certifications include mentor tools to add the courses above to GeniusU, attract and grow student
and partner communities, take payment and track their activity with ready-made dashboards. These range from entry level certifications
to advanced certifications. Prices range from $1,500 to over $35,000 per year for the initial certification and annual re-certification. |
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Sponsorships:
Partners have the option to sponsor various programs, including our global summits and courses, and provide prizes and awards
as part of our education challenges. Prices range from $1,500 to $50,000. |
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Licenses:
Partners also have options to license the use of various education models as they build their education business on GeniusU.
For example, venue partners pay between 2.5% to 5% of revenue when operating their campus venues. Community Partners and Faculty
also pay a platform fee of between 5% to 30% for products they sell on GeniusU. |
In
the following section are the courses, products and services currently offered by the Pre-IPO Group and the Acquisitions, together with
our plans on how we will be developing these products together with new products following the completion of the acquisitions.
Our
Courses, Products and Services
We
are developing a life-long Genius curriculum together with a full suite of tools for students to learn (at every age and ability level)
and for faculty to earn on GeniusU, divided in the following stages:
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PREP
- 0 to7 years old: Our Acquisition, Education Angels, provides education services to this stage of education. With $0.9 million
in 2022 revenue and 194 paying students in 2022, this represents 4% of our pro forma Group revenue and 1% of our total paying
students in 2022. |
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PRIMARY
- 6 to 14 years old: Our Acquisition, E-Square, provides courses and a full primary school program to this stage of education.
With $0.3 million in 2022 revenue and 171 paying students at primary school level, this represents less than 1% of our pro forma
Group revenue and less than 1% of our total paying students in 2022 in our primary school offering. |
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SECONDARY
- 12 to 18 years old: Our Acquisition, E-Square, also provides courses and a full secondary school program to this stage of education.
With $0.3 million in 2022 revenue and 220 paying students at secondary school level, this also represents less than 1% of our pro
forma Group revenue and less than 1% of our total paying students in 2022 in our primary school offering. Between primary and secondary
school levels combined, E-Square had $0.6 million in 2022 revenue and 391 paying students, representing approximately 2% of our pro
forma Group revenue and 2% of our paying students, currently making our offering to school students the smallest and newest contributor
to the Group. |
|
➢ |
APPRENTICE
- 16 to 22 years old: Our Acquisition, UAV, provides vocational certifications and degree level programs to this stage of education.
With $8.1 million in 2022 revenue and 489 paying students, this represents 35% of our pro forma Group revenue and 1% of our
total paying students in 2022. |
|
➢ |
ENTREPRENEUR
- 16 to 80 years old: Our Pre-IPO Group Edtech company, GeniusU and entrepreneur education company, Entrepreneurs Institute,
has been providing courses and products to adult learners. With $4.9 million in 2022 education revenue, 3.1 million students and
43,136 paying students, this represents 21% of our pro forma Group revenue and 25% of our total paying students in 2022. Our
Acquisition, PIN, also provides courses and products to adult learners. With $3.0 million in 2022, 164,712 students and 67,987 paying
students, this represents 13% of our pro forma Group revenue and 40% of our total paying students in 2022. When combined,
this education stage represents 34% of pro forma Group revenue and 65% of our paying students in 2022. Post- IPO, as we develop
the other stages in our curriculum, we plan for the percentage of revenue and students from this stage will fall as the percentage
of revenue and students in the other stages increase. |
|
➢ |
MENTOR
- 18 to 100+ years old: Currently GeniusU provides mentor certifications for partners who build their education businesses on
our Edtech platform. While Entrepreneurs Institute and PIN are both utilizing GeniusU to grow their mentors, our plan is for the
other Acquisitions to also attract, train and grow their faculty through GeniusU. |
|
➢ |
ENTREPRENEUR
RESORTS - All Ages: Our Pre-IPO Group company, Entrepreneurs Institute, operates a campus model in the form of resorts, cafes
and coworking spaces, and has plans to grow these campuses by connecting local partners with our global community, Genius Curriculum
and GeniusU platform. It delivers revenue from accommodation, food and beverage. ERL revenue in 2022 was $4.7 million. We have
spun-off Entrepreneur resorts and focus on our core business, education. |
Prior
to the IPO and completion of the Acquisitions, PIN was the only Acquisition to be actively using the GeniusU Edtech platform and our
global community to grow its business. We plan to integrate Education Angels, E-Square, UAV and RF to expand the process for their courses
to be added to GeniusU and our Genius Curriculum. We have provided further details below on the current courses, products and services
provided by each of these companies at each stage of learning, and we are integrating and expanding each company’s offering with
GeniusU and our Genius Curriculum.
PREP
— 0 to 7 years old
We
are introducing our early learning program for parents and children up to seven years old with the acquisition of Education Angels. Until
this acquisition, our impact on early learning was limited to the events and courses that our parent-focused faculty hosted on GeniusU,
our Genius School Certifications, and the work that our Genius Educators had conducted with parents in early learning. Below is a list
of Prep products delivered in 2022, and our planned post-acquisition Prep product range in 2023:
|
➢ |
Understanding
your Young Genius FREE – 1-week micro course to discover one’s child’s natural born Genius and promote
positive learning environment to grow their self-awareness, confidence and growing social competence. |
|
➢ |
The
Early Years Last Forever Microschool – 2-week micro school where parents can learn why the early years are so important
and what they can do to best support their child. This course is to understand the child’s unique temperament and setting realistic
expectations for the child. How to support each temperament type so that parents can grow its child’s ability to self-regulate
and minimize challenging behaviors, growing their self-awareness and self-esteem. |
|
➢ |
Angel
Guide Certification – This is a course for parents or adults that would like to work with preschool children. The course
teaches how to guide children to a greater understanding of themselves. It includes the Early Years Last Forever program and includes
strategies to support and grow children’s social and emotional wellbeing and to teach self-regulation, promote autonomy and
grow children’s self-awareness and self-esteem. |
PRIMARY
— 6 to 14 years old, and SECONDARY — 12 to 18 years old
“Genius
School” is the brand we use within GeniusU to encompass all our programs for children and students up to high school graduation.
Prior to the acquisition of E-Square, Genius Group’s programs for primary and secondary school students were focused on the development
of our Genius School assessments, camps and certifications.
Below
is a list of Primary products delivered in 2022, and our post-acquisition Prep product range in 2023:
|
➢ |
The
Early Years Last Forever Microschool – Two-week micro school |
|
➢ |
Teen
Genius Quiz – Quiz for students to discover its Genius. |
|
➢ |
Passion
Test – Test for students to learn how to align its life with its passions. |
|
➢ |
Purpose
Test – Test for students to discover their true ‘why’ and learn the key steps to align their life (and learning)
to their deepest meaning and motivation. |
|
➢ |
Teen
Money Challenge - In this challenge, students will learn that it is not about how much you earn, but what you do with what you
earn that makes the difference. |
|
➢ |
Teen
Dynamics Profile Test - Profile and debrief, or family dynamics profiling and debriefing with one of our Genius Educators. |
|
➢ |
Teen
Dynamics Discovery call – One-hour virtual call to understand the student’s natural strengths, the smartest
and easiest way that students learn and develop a personalized learning pathway that will help them navigate the schoolwork minefield. |
|
➢ |
Genius
School Micro Camp – Two-day Genius Camps, which are sponsored by companies and hosted by schools or virtually, for students
to gain insights into their talents, passions and purpose. |
|
➢ |
Teen
Quest – Two-week microschool to help students develop higher-order, design thinking and future ready skills to sustain
their lifelong learning journey. |
|
➢ |
Young
Entrepreneur Academy - Two-week virtual program to help students build a business and learn leadership and entrepreneur skills
used by the world’s top entrepreneurs, as well as connect to a global community of like-minded young leaders. |
|
➢ |
Young
Entrepreneur Membership – Annual membership to access all Student Skills Microschools and scholarships and sponsorships
to support certain students. |
APPRENTICE
— 16 to 22 years old
We
have established the University of Antelope Valley (UAV) as our global center for curriculum development, with a long-term aspiration
to expand the campus to include innovation labs, accelerator camps and courses delivered for all education stages of our lifelong learning
curriculum.
The
acquisition of University of Antelope Valley is our first step towards integrating vocational certificate level and university degree
level courses into our curriculum.
The
University of Antelope Valley was originally established as a medical and vocational college and received regional university accreditation
with the Western Association of Schools and Colleges (WSCUC) in 2016. Its focus on growing entrepreneurial and employment opportunities
for its students is a core part of its culture and mission. We believe this gives the university a strong fit with Genius Group’s
culture and mission. The University currently offers certificate level, bachelor’s level and master’s level degree courses
in subjects ranging from Business Management, Healthcare Management and Sports Management through to Psychology, Communications and Education.
Details of all courses and accreditations are provided in the “Further Company Information” section below.
In
2024, we plan to extend our education festivals and host a MedTech festival, Greentech festival and Spaeth festival at UAV in
Lancaster, with the support of industry sponsors and the Lancaster City Council. We plan for attendance to be both in-person and broadcast
live via GeniusU, and to combine a free Microcourse challenge, startup competition, paid virtual summit and paid four-week Microschool.
We
also plan to offer a series of additional paid Microschools in management, entrepreneurship and education with credits towards full certificate
and degree programs, as a trial prior to enrolling for the diploma courses at UAV. Below is a list of courses delivered in 2022, and
our post-acquisition Prep product range in 2023 and 2024:
|
➢ |
Passion
Test – Test for students to learn how to align its life with its passions. |
|
➢ |
Purpose
Test – Test for students to discover their true ‘why’ and learn the key steps to align their life (and learning)
to their deepest meaning and motivation. |
|
➢ |
Genius
Wealth Dynamics or Talent Dynamics test – The Genius Wealth Dynamics or Talent Dynamics test is the world’s leading
profiling tool for intra & entrepreneurs. This test is designed to help students find out which of the eight wealth profiles
is their natural path. |
|
➢ |
Basic
CPR and Life Saving – Course to know the basics of life saving skills |
|
➢ |
Genius
Summit – Course to learn how to attract new customers, maximize profits and increase impact. |
|
➢ |
Associate
in business – Certificate level, bachelor’s level and master’s level degree courses in subjects ranging from
Business Management, Healthcare Management and Sports Management through to Psychology, Communications and Education. |
|
➢ |
Certificate
in Medical billing and coding – Medical Billing specialists ensure that patient records are accurate and that charges are
properly submitted. The program introduces topics such as HIPAA, billing procedures, and claim processing. Graduates are prepared
for entry level positions such as billing clerks and claims processors. |
|
➢ |
Medical
Assistant certificate – Medical assistants work directly with patients and assist in their care and well-being. This program
helps students develop relevant skills and gain real-world experience. |
|
➢ |
Culinary
Arts and Restaurant Management certificate – A certificate in culinary arts and restaurant management opens doors to careers
in food service. Students study food preparation, menu planning and safety in a modern kitchen environment. Graduates are prepared
for entry level employment as prep cooks, cooks, sous chefs, restaurant managers or chef. |
|
➢ |
Bachelor
of Science is Psychology – The program is designed to help build a solid foundation into the cognitive and affective processes
that underlie human development and behavior. Students will study the application of psychological principles in both social and
professional environments and learn the biological and behavioral aspects of psychology. Students will explore the influence gender
and culture has on the psychology of individuals and groups. |
|
➢ |
Criminal
Justice Degree – This program provides a broad review of the Criminal Justice system as well as a basic awareness of social
and behavioral sciences. The upper-level courses include a focused study of the criminal justice system including principles of investigation,
forensic specialties, and homeland security. Graduates are prepared for entry-level employment or career advancement in such professions
as law enforcement, corrections, immigration, security services, and similar types of employment. |
|
➢ |
Bachelor
in Health and Fitness – This major provides students the knowledge, skills, and abilities to develop and conduct health
and fitness programs in commercial, corporate, public, and private settings such as personal training and athletic performance facilities. |
|
➢ |
Next
generation of Masters in Education – Our online MSED has the blend of a traditional graduate degree with lectures from
incredible global experts in igniting the Genius in every student. In addition, a trip to Bali (Indonesia) to learn how to humanize
and personalize learning, create self-aware young Genius’s, realize the true potential in our new generations, future ready
education for future ready skills. |
|
➢ |
Next
generation of Master of Business Administration (MBA) – Our online MBA has the blend of a traditional graduate business
degree with lectures from incredible global experts in Entrepreneurship, Leadership, and wealth accumulation such as Property, Crypto,
& Stock. In addition, a trip to Bali (Indonesia) to develop students’ vision, wealth, health, energy, relationships and
social impact. |
|
➢ |
Additional
Master’s Degree – 12-to-24-month certified Masters from California Business School with innovative content
from top entrepreneur and investment leaders. |
ENTREPRENEUR
— 16 to 80 years old
Prior
to the acquisition of Entrepreneurs Institute, all of the courses and products offered on GeniusU were added, promoted and delivered
on GeniusU by our partners. With the acquisition of Entrepreneurs Institute, the entrepreneur courses and products developed and owned
by Entrepreneurs Institute came under the ownership by Genius Group and these courses and products have become fully integrated into
our Genius Curriculum and GeniusU. With the acquisition of Property Investors Network (PIN), PIN’s courses and products will be
integrated in a similar way. The courses and products of these two companies, together with the courses and products marketed and delivered
by our partners on GeniusU, form the product range for the students at the “Entrepreneur” stage of our Genius Curriculum.
Prior to the Pre-Acquisitions, over 70% of the education revenue of the Pre-IPO Group was derived from this stage.
While
students up to university graduation age progress through a series of grades and levels similar in name to the current Pre-K to 12 grades
and four university grades, our adult learning is divided into nine levels that relate to the nine levels of entrepreneurship. This is
a proprietary system called Impact Dynamics, originally owned by Entrepreneurs Institute and now owned by Genius Group Ltd, that has
proven to be one of the greatest attractions to our entrepreneur students as it provides specific steps to take in order to move from
one level to the next on their entrepreneur journey.
These
levels are Infrared (In debt, seeking financial and leadership literacy), Red (Seeking a pathway to self- sufficiency), Orange (Capable
of creating a job and delivering value to others), Yellow (Capable of attracting resources, a team and launching a startup), Green (Proficient
at growing a high-performing team), Blue (Understanding how to attract and grow capital), Indigo (Able to lead and direct trust within
a market), Violet (Trusted by others to lead societal change) and Ultraviolet (At a level to marshal global change).
The
products and programs that were previously owned by Entrepreneurs Institute and are now owned by Genius Group Ltd and delivered by GeniusU
include the Wealth Dynamics Profiling System, which has been taken by over 600,000 entrepreneurs around the world, the annual Global
Entrepreneur Festival (which in 2020 was attended by 20,000 entrepreneurs online over a five day entrepreneur challenge, a two day Global
Entrepreneur Summit that included a preview of the Top 10 Trends in the coming Digital Decade, and a week- long series of workshops),
the one week Wealth Dynamics Masters Retreat (which enables business teams to plan out their coming year together, guided by mentors),
the three day Impact Investor Retreat (which provides investors with the latest strategies and market insights), the one day Entrepreneur
5.0 Workshop (which gives an insight into the Japanese vision of the coming “Society 5.0” high-tech society and the future
of jobs) and the one day Entrepreneur Fast Track Workshop (which provide an overview of the Genius curriculum and provides each participant
with an assessment of their entrepreneur profile and entrepreneur level).
GeniusU
also runs monthly evening events called Entrepreneur Socials hosted by City Leaders in cities around the world, which we believe provides
the tools and templates for faculty to run their own in-person events and courses that add a high-touch, local element to the high-tech,
global delivery on GeniusU. All the bookings and management of these various in-person events and programs, together with the pre-event
and post-event activity, takes place on GeniusU.
Property
Investors Network follows a similar model to Entrepreneurs Institute, and runs monthly evening events called PIN meetings hosted by PIN
hosts in cities across the United Kingdom, specifically for property investors to share their knowledge, opportunities and listen to
experienced investors who explain the details of their recent transactions. Both our entrepreneur and investor network have approximately
fifty events per month, and we plan to grow this number as many of our students follow a natural path to become our partners and faculty.
PIN
currently offers a range of free courses, paid courses and full time diploma courses. They have built mentor resources for City Leaders,
but not for faculty members. We have completed the acquisition of PIN and are expanding the free and paid courses, together with mentor
resources, in the first steps to integrate and digitize PIN’s offerings and to scale them globally.
Now
that the acquisition of PIN has been completed, our plan is to integrate PIN’s courses and community into our Genius Curriculum
with a plan that includes:
|
➢ |
Launching
the free Investor Genius Test and a series of free Investor Masterclasses, similar to the free Entrepreneur Masterclass series which
contribute to the 8,900 new students joining GeniusU on average each week in 2023. |
|
➢ |
Launch
of the Wealth Dynamics for Investors assessment, together with a series of paid Property Investing Workshops and microschools on
GeniusU. |
|
➢ |
Migration
of PIN’s current City Hosts, city investor communities and monthly events to GeniusU, and expansion of PIN’s City Host
model in the UK to cities around the world. |
|
➢ |
Launch
of certifications on GeniusU for community partners and faculty to deliver PIN’s courses and events globally. |
|
➢ |
Expansion
of PIN’s current property summit and membership model with country partners to a global model, replicating the current model
in different countries and languages. |
Below
is a list of the main Entrepreneur products delivered in 2021 and 2022, and our post-acquisition Entrepreneur product range in 2023 and
2024:
Free
Courses: In 2023, GeniusU grew its community of free students primarily through free assessments and free masterclasses and microcourses.
The assessments were delivered digitally, with results linking to each student’s learning profile on GeniusU, and the free courses
were delivered by our partners and faculty. In 2022, a total of over 1,000 different free education courses and products covering a wide
range of subjects and skills were offered on GeniusU. PIN also conducted free courses similar to those hosted on GeniusU, resulting also
in an intake of free students. In 2023, we offered a new assessments such as the Entrepreneur Genius Test and Investor Genius
Test, together with an expansion in our free Entrepreneur and Investor Masterclasses, while also integrating PIN’s courses into
GeniusU, our Genius Curriculum and Genius learning methodology. The main online assessments we will offer include:
|
➢ |
The
Genius Test: Our most popular test identifies which of four personality types best fits the student, giving them guidance on
their natural path in learning, earning, leading and connecting. |
|
➢ |
The
Passion Test: In partnership with Chris and Janet Attwood, the authors of the New York Times Bestseller ‘The Passion Test’,
this test identifies the students’ top five passions and guidance on aligning their learning, earning and environment to the
activities and actions they are most passionate about. |
|
➢ |
The
Purpose Test: This test identifies which of 17 global goals the student is most aligned to, and enables them to connect with
other students, mentors and companies on GeniusU that share the same purpose. |
|
➢ |
The
Entrepreneur Quiz: This quiz identifies each student’s learning goals, level of entrepreneur expertise and level of leadership,
size of business or investment portfolio. This in turn enables our Genie AI to guide them most effectively in their first steps on
their personalized learning journey on GeniusU. |
|
➢ |
The
Impact Test: This test identifies which level of complexity the student’s enterprise is at out of 7 levels, from 1 customer
to 1 million customers, and as a result it guides the challenges, opportunities and solutions to navigate through their specific
level of enterprise. |
|
➢ |
The
Wealth Spectrum: This test identifies which of 9 financial literacy levels the student is at, what the greatest challenges and
solutions are at their level and what the next steps are to master the level. |
|
➢ |
The
Entrepreneur Genius Test: This is a new test we plan to launch that tailors the Genius Test questions and results specifically
towards students looking to start or grow a business. |
|
➢ |
The
Investor Genius Test: This is a new test we plan to launch that tailors the Genius Test questions and results specifically towards
students looking to build an investment portfolio. |
|
➢ |
Entrepreneur
Dynamics – This is the No.1 agile leadership system for entrepreneurs. This Microdegree takes students through each step
of Entrepreneur Dynamics, and how to apply the agile leadership principles in the system to their company and in their team. |
|
➢ |
Millionaire
Master Plan – Students learn which of the nine levels of the wealth spectrum they are currently at, and how understanding
this master plan is critical to knowing the next step students will need to take in their entrepreneurial journey. |
|
➢ |
5
Day $50K Global Education Challenge – Students join Roger James Hamilton, futurist, entrepreneur and founder of Genius
Group, Daniel Priestly, founder of DENT global and best-selling author and speaker, as they host the Global Education Challenge and
reset, restructure and launch their Education 5.0 and Community 5.0 plan to navigate and strive in the digital decade. |
|
➢ |
5
day $50k Global Entrepreneur Challenge – Students learn 5 steps in 5 days to build their own digital business. |
|
➢ |
2020
Ready Accelerator – Course that get students ready for the decade from 2020 to 2030 by growing their insight, income and
impacts. |
|
➢ |
Partner
like a pro with GeniusU – In this Microdegree students learn how to make the most of their Mentor level membership by using
the higher-level features of GeniusU to enhance their presence, grow their community, create unique content and generate revenues. |
|
➢ |
Health
Dynamics Microdegree – System that links students health, wealth and happiness. |
|
➢ |
Genius
Entrepreneur Membership (GEM) – Microdegree for students that want to generate additional income on the side or create
an affiliate marketing business. |
|
➢ |
How
to build a fortune through cryptocurrencies – Students learn how to trade cryptocurrencies. |
|
➢ |
Unveiled:
Protect Your Finances from the Hidden Threats – In this masterclass students learn how to generate between 5% - 35% return
based on the different investment strategies. |
|
➢ |
Successful
Real Estate Investing – Students learn how to buy real estate at wholesale prices making a profit from the day they buy
and gain instant equity. |
|
➢ |
Wealth
Creation Summit – Virtual Summit on how to create 4 additional streams of income from 4 top wealth creation specialists. |
Paid
Courses: In 2021 and 2022, GeniusU hosted over 400 paid courses and products covering a wide range of subjects and skills. These
range from $15 to $5,000. As mentors can build paid events, microcourses, microdegrees and microschools on GeniusU, new courses and products
are added daily. Mentors also market and deliver paid courses developed by other mentors once they are certified to do so. In 2023, the
paid courses that relate directly to the courses offered as part of the Entrepreneurs Institute product range and PIN product range included:
|
➢ |
Entrepreneur
Socials and PIN Meetings: Monthly, local meetings which connect event hosts and City Leaders with their local entrepreneur and
investor communities, with guest speaker and network sessions, with attendees connecting before, during and after via GeniusU. |
|
➢ |
Wealth
Dynamics Test: This test identifies for each test taker which of the 8 entrepreneur profiles is their most natural path, and
as a result what are the most effective ways to create value, start a business, build a team and develop an entrepreneurial success
strategy. |
|
➢ |
Wealth
Dynamics Test for Investors: This will be a new test which is a version of the Wealth Dynamics Test tailored to Investors. It
identifies which of the 8 investor profiles and strategies the test taker is best suited for. |
|
➢ |
Talent
Dynamics Test: This test is a version of the Wealth Dynamics Test tailored to leaders and teams in corporations. It identifies
the strengths and weaknesses within a team, and the talents within each member. |
|
➢ |
Entrepreneur
5.0 Workshop Series: A series of 12 one-day workshops covering key entrepreneur and business building tools, including the Impact
Test, Wealth Dynamics, Talent Dynamics and the Wealth Spectrum. |
|
➢ |
PIN
Investor Summits: Two annual investor summits hosted by PIN held in-person and online: Property Magic Live and Strategy Implementation
Live. |
|
➢ |
Entrepreneur
5.0 Microschool Series: A series of 8 four-week microschools conducted throughout the year building key entrepreneur skills with
the latest technology, with microschools in leadership, marketing, sales, product, community, investing, cash flow and tech. |
|
➢ |
Investor
5.0 Microschool Series: A series of 8 four-week microschools conducted throughout the year building key investing skills with
the latest technology, with microschools in financial literacy, financial instruments, portfolio planning, angel investing, stock
market investing, stock market investing, cryptocurrencies and property investing. |
|
➢ |
Wealth
Dynamics Masters: An intensive one-week microschool conducted twice a year, guiding founders, CEOs and executive leadership teams
in their annual planning and long-term planning for their enterprise as it scales. This is delivered through a mix of digital and
live, with students joining globally in three time zones and competing for the award of top business plan at the end of the week. |
Diploma
Courses: In 2021, GeniusU hosted over 50 annual memberships and mentorships. These range from $1,500 to $30,000. In 2022, the annual
courses that relate directly to the courses offered as part of the Entrepreneurs Institute product range and PIN product range include:
|
➢ |
Genius
Entrepreneur Mastermind: A 12-month membership program for entrepreneurs to join a global community and access monthly skills-based
sessions with seasoned entrepreneurs and mentors sharing their experiences. This is delivered online and globally on different time
zones. |
|
➢ |
Crystal
Circle Mentoring: A 12-month mentoring program for entrepreneurs at startup level, scale up level and investor level, to receive
guidance and support on building their business from a team of mentors with a monthly, quarterly and annual or review, group sessions
and one-to-one sessions. This is based on the business building tools based on Impact Dynamics and Wealth Dynamics. |
|
➢ |
Property
Investor Mastermind: A 12-month mentoring program hosted by PIN for experienced property investors to receive training, connections,
opportunities in a global network of property investors, with facilitation and mentoring. |
|
➢ |
Entrepreneur
Dynamics Report - Online quiz to learn which of the eight natural entrepreneur paths students are best studied for, the role
models to follow and team to build |
|
➢ |
Global
Summit Series: Lifelong Learning Summit (March); Impact Investor Summit (June); Global Entrepreneur Summit (September); Global
Impact Summit (December) |
|
➢ |
Leadership
5.0 Microschool – A 4-week accelerator program that covers learning over four weeks, four subjects: Digital Strategy,
Super Teams, Exponential Growth and Financing, together with how to put a full Leadership 5.0 Plan together |
|
➢ |
Genius
Entrepreneur Metaversity – A 12-month mastermind and metaversity for entrepreneurs with expert mentors, skills workshops
and global opportunities. |
|
➢ |
Community
5.0 Microschool – A 4-week accelerator program that covers learning over four weeks, four subjects: Community Building
Strategies, Community Engagement and Growth, A.I. tools for Community Management, together with how to put a full Community 5.0 Plan
together |
|
➢ |
Health
Dynamics Consultant – Course for entrepreneurs that need a fully developed health system that integrates with their existing
business that can take your clients on a personalized pathway to health using proven systems. |
|
➢ |
Entrepreneur
Dynamics Masters - 5-day virtual master’s program for students to build their business plan and compete for $50k
in prizes, with world class mentors |
|
➢ |
Entrepreneur
Circle Mentoring – 12-month mentoring program for founders, CEO s and executives to build your business. At start
up, scale up and corporate group level. |
|
➢ |
Digital
Entrepreneur MBA - 12-month certified MBA from California School of Business. Cutting edge content from top entrepreneurs
and thought leaders. |
|
➢ |
Investor
Dynamics Report - Online quiz for students to learn which of the eight natural investor paths they are best suited for, the role
models to follow and team to build. |
|
➢ |
Genius
Investor Network - 12-month mastermind and metaversity for investors, with expert mentors, skills workshops and global
investment strategies. |
|
➢ |
Property
Mastermind Accelerator - Virtual intensive workshop for investors seeking to aggressively build out their property portfolio
over the next twelve months. |
|
➢ |
Investor
Dynamics Masters - 5-day virtual master’s program for students to build their ideal portfolio and compete for $50,000
in prizes, with world class mentors. |
|
➢ |
Investor
Circle Mentoring – 12-month mentoring program for investors in shares, crypto and property. At beginner, intermediate
and advanced level. |
|
➢ |
Digital
Investor MBA - 12-month certified MBA from California Business School. Cutting edge content from top investment thought
leaders. |
Partnership
Opportunities
|
➢ |
Faculty
Level 1 MENTOR – Partners can be part of our faculty and the go-to mentor for their own chosen niche or industry to build
an education business and drive revenue of $40,000 to $150,000 per annum. |
|
➢ |
Faculty
Level 2 LEAD MENTOR – Partners can be part of our lead faculty and build their mentoring business with GeniusU’s
support to build an education business and drive revenue of $150,000 to $300,000 per annum. |
|
➢ |
Faculty
Level 3 CURRICULUM PARTNER – Partners can create content for our Genius curriculum as our curriculum partner to build their
education business and drive revenue between $300,000 and $2,000,000 per annum. |
|
➢ |
Genius
Partner – Partners can integrate their product range into GeniusU with our full Partner Portal following the Genius Formula. |
Community
Partners
|
➢ |
Community
Level 1 CITY HOST– Partners can host city events and be the go-to event host for their city and community. |
|
➢ |
Event
Partner – Partners can join as an Event Partner for our four Global Summits |
|
➢ |
Community
Level 2 CITY LEADER – Partners can lead events in their city as a city leader to build their community business |
|
➢ |
Community
Level 3 TRANSLATION PARTNER– Partners can join as a translation partner to translate content for our Genius Curriculum |
|
➢ |
Community
Level 4 COUNTRY PARTNER – Partners can build a full education business as a country partner with their own faculty team
and community partners. |
|
➢ |
PIN
Host Partnership – Being a PIN host is for students that have achieved property investment success and are looking to grow
their investments and build their credibility in their locality. We provide all the training for them to host their own PIN events. |
Mentor
Resources: In 2021 and 2022, GeniusU launched its certification builder, for partners and mentors to add their own certifications
to build and train their partner community. This has led to a growth in the number of certifications on GeniusU. These certifications
range from $1,500 to $32,000. In 2023, the paid certification relating directly to the courses offered as part of the Entrepreneurs Institute
product range and PIN product range included:
Entrepreneurs
Institute: Entrepreneurs Institute has a global network of community partners and faculty partners, following the framework explained
in the “Mentor” section below. Mentors can join as community partners with training and certification at the following levels:
|
➢ |
Level
One: Event Host – Training and license to host Entrepreneur Socials and Wealth Dynamics, Talent Dynamics and Impact Dynamics
events. Training on event marketing and management. |
|
➢ |
Level
Two: City Leader – Training and license to host events, courses and larger summits and workshops in a city. Training on
course marketing, management and community building. |
|
➢ |
Level
Three: Venue Partner – Training and support to launch a Genius Café, Genius Central or Genius Resort to operate
as a local campus venue. |
Mentors
can join as faculty partners with training and certification at the following levels:
|
➢ |
Level
One: Flow Consultant – Training and license to use the Wealth Dynamics, Talent Dynamics and Impact Dynamics tool set within
their training courses. Training on assessment debriefs. |
|
➢ |
Level
Two: Performance Consultant – Training and license to use the Wealth Dynamics, Talent Dynamics and Impact Dynamics tool
set within their training courses. Training on building a customer pathway and delivering workshops and diploma courses. |
|
➢ |
Level
Three: Product Partner – Training at Level One and Level Two. License to co-create content for specific industries or languages
utilizing the Wealth Dynamics, Talent Dynamics and Impact Dynamics tools. |
Property
Investors Network: In 2023 replicated the above partner framework with the same levels and price points, to build the communities
and courses for PIN globally, starting with the U.S.
By
taking these steps to integrate PIN’s product range, partner community and student community in a similar process to the steps
taken to integrate Entrepreneurs Institute’s education community into GeniusU and our Genius Curriculum, we believe we are proving
a model that is equally attractive to other educators and their communities, opening the door to future acquisition opportunities.
In
addition to the courses and products offered on GeniusU, the platform has three tiers of membership. Member level is free and gives access
to the platform and community. Citizen level is a paid annual membership which provides the student with additional learning dashboards,
ability to earn credits and graduate, with student rates on all courses. Mentor level is a paid annual membership which enables a student
to become a part of the faculty and to create their own courses and products, with additional dashboards to track their students’
activities. More details on the mentor level are provided below.
MENTOR
— 18 to 100+ years old
We
have found that a natural progression in the learning process is to want to pass the knowledge on to others. In the traditional education
system this is challenging, as the academic system is directed towards research and graduate degrees, with university lecturers and faculty
requiring a masters or doctorate in order to be able to teach. This can be a missed opportunity for students to learn vital real-world
experience from mentors who have developed skills in their area of vocational expertise but who have not had the interest or inclination
to take the academic path to qualify as a teacher. We have grown more than 14,700 partners and 2,500 faculty through the natural path
students have taken to rise to a mentor level within our community. GeniusU mentors have the ability to earn on the platform, either
as a regional partner (as an event host, City Leader or country partner), or as a faculty member (as a mentor, instructor or curriculum
partner). Each of these positions come with an annual license fee, a percentage of revenue and certification courses to ensure our partner
community and faculty reaches a level of proficiency within our network.
Mentors
also receive ratings from their students, as do their courses and products, ensuring that students are always learning from the faculty
and courses that are most relevant and ensuring that the curriculum is always staying updated and relevant. While teachers in the traditional
education system are limited by their class size, the impact they can have and the amount they can earn, our GeniusU platform and global
community enables our best mentors to reach a global audience and we have many examples of faculty and partners who have built multi-million-dollar
education businesses as a result of our system.
An
important component to GeniusU and our Genius Curriculum is the modular nature of the courses, which enable partners and mentors to build
and launch new modules, and the progression path from one level to the next, which enables students to map and track their own personalized
pathway.
We
have designed the partner pathway using the same methodology, with two distinct partner types and three levels of partnership, training
and certification. Most of our partners and all of our Acquisitions are following this same methodology when building their partner pathway.
The two partner types and three partner levels are:
Community
Partner: Primarily interested in either hosting events, courses, schools and building a learning community, while inviting Faculty
Partners to deliver the courses, Community Partners earn between 10% to 30% of revenues in commissions from the courses they host. The
three partner levels for Community Partners are:
|
➢ |
Level
One: Event Host – An annual license and training to build a community and host events. We also use the term ‘Event
Sponsor’ for companies who support the events with sponsorship in the form of funding or support. |
|
➢ |
Level
Two: City Leader – An annual license and training to develop a community and school. |
|
➢ |
Level
Three: Country Leader – An annual license to develop a network of schools. |
Faculty
Partner: Primarily interested in educating their students and delivering either their own courses or the courses they are certified
or licensed to deliver, Faculty Partners each between 10% and 70% of revenues in commissions for the courses they create or deliver.
The three partner levels for Faculty Partners are:
|
➢ |
Level
One: Mentor – An annual license and training to deliver a specific set of courses. |
|
➢ |
Level
Two: Lead Mentor – An annual license to training to build an education business based on a specific set of courses. |
|
➢ |
Level
Three: Product Partner – An annual license to co-create content for different industries or countries. We also use the
term ‘Genius Partner’ to refer to Product Partners who have built their education business into revenues over $1 million. |
We
have found the benefit of building this modular approach is that it enables us to grow both our student base and our faculty network
to cater to both the demand and supply for the courses on GeniusU.
ENTREPRENEUR
RESORTS — All Ages
In
addition to our college and university model, we have developed a series of location-based models that provide learning in environments
very different from a traditional classroom or seminar room. Entrepreneur Resorts provide venues for our workshops and retreats, while
also being a meeting place for our global community of students and entrepreneurs. All venues have a similar range of products and services,
which include accommodation packages, our Genius Cafe menu of healthy food and drinks, and a full event schedule including accelerator
programs and camps.
Our
venues include: Vision Villa Resort, a 15-room spa resort in Bali; Tau Game Lodge, a 30-room safari lodge in South Africa; Matla Lodge,
a 7-room high-end private lodge neighboring Tau; Genius Cafe, a beach club and cafe in Bali; and Genius Central, a cafe, bar and event
space in Singapore. Each venue has catering, event and conference facilities. For further details on the three campus venue models in
Entrepreneur Resorts, refer to the “Additional Company Information — Entrepreneur Resorts” section below.
We
spun off Entrepreneur Resorts in 2023 to focus on our core business – education.
ANNUAL
CALENDAR AND EVENTS — All Ages
We
believe that we are building a full life-long learning curriculum with 33 levels over 6 stages covering Prep, Primary, Secondary, Apprentice,
Entrepreneur and Mentor. All of our courses and curriculum at each level follow an annual calendar with four quarters. Within each quarter
we conduct a quarterly certification at each level with two monthly microschools per quarter together with practical application within
projects and businesses.
As
part of our curriculum, students earn learning credits called Genius Entrepreneur Merits (GEMs) throughout each quarter, and these
go towards their diplomas. Students graduate from one level to the next by achieving the necessary academic and practical credits at
each level. The GEMs they earn act as a digital credit which they can use to either purchase additional courses, products, mentoring
or to retake the level they are on in the event they fail to pass it.
Our
Conversion Model
We
have grown GeniusU to 3.11 million students as at December 31, 2022 through a “freemium” model by which students and partners
join the platform for free and then over time a percentage of them upgrade to paid courses, products and certifications.
This
“freemium” model is now common with online gaming companies and social networks, as it enables users to trial the value of
the content and community before committing to paying for additional value. In traditional education, this is not yet a commonly adopted
model, and students at many schools, universities or training institutions are generally expected to commit to payment before experiencing
the course or education pathway.
The
pathway our students on GeniusU follow is illustrated in the following graphic:
More
recently, Edtech companies, including the companies in the “Our Competition” section below, have introduced a “freemium”
model into the education industry. We have found at GeniusU that by focusing on this model, attracting students into free courses and
then building a community and content that encourages them to stay and for a percentage to upgrade to paid courses, it results in the
following benefits:
➢
Our Group can scale far more rapidly with students joining for free online than by relying on an enrolment sales team (which is what
most schools and universities rely on).
➢
We attract free students at a much lower marketing cost per student, and as they experience our community and courses they refer their
family, friends and colleagues to join.
➢
The heightened activity and scale of this approach in turn attracts more partners and faculty who join the platform, who in turn attract
more students.
➢
This network effect enables us to deliver courses to a much wider and more global student body than we could with a tradition enrolment
process.
We
believe that as we continue to focus on this approach, we will find effective ways to reduce the marketing cost per student, increase
the conversion rate and increase the annual revenue per student and lifetime value per student. By applying this same conversion model
to our Acquisitions, we also believe they will benefit from attracting increased student numbers and increased partners and faculty delivering
their courses globally.
We
also believe that the “freemium” model will lead to a higher quality of free courses as well as paid courses in our curriculum,
as the strength of our student retention and conversion rates will be more dependent on the students experiencing a high enough quality
of course content and a relevant enough personalized pathway to want to upgrade to higher priced courses as a part time or full-time
student than it will on the strength of an enrolment team.
Our
Student Conversion Model: Of the 3.34 million students on GeniusU as at June 30, 2023, 3.29 million were free students
and 45,038 were paying students. In the first half of 2023, GeniusU attracted 232,042 new students and 1,902
new paying students, representing a 1% conversion rate. While some students join through word-of-mouth or referral, students
also join through our direct marketing spend via Google and Facebook. We track our monthly student intake, acquisition cost and activity
over the first 12 months and 24 months, and measure their average spending over these periods.
From
our main student marketing activity for the period from January 2019 to December 2021, every $1,000 in marketing cost delivered 7,703
new visitors and 1,326 new free students who registered on GeniusU as a result of this marketing. From these free students, we saw just
over 1% convert to paying students, generating $1,860 in revenue in the first 12 months as they purchase their first courses or events,
and $20,501 in revenue in the first 24 months as they upgrade to higher priced courses and diploma programs. This equates to a $0.76
marketing cost per student and $15.46 revenue per student within 24 months.
These
calculations for the marketing cost per student, 12-month revenue per student and 24-month revenue per student, together with the calculations
for our partner conversion model below, have been calculated specifically for GeniusU, as we have sufficient data for such calculations.
Our plan is to measure and track these measures for each Acquisition as we apply this conversion model to each company.
Our
intention is to be able to accurately measure the average lifetime value of our students. However, we do not yet have enough years of
history to have an accurate measure of the average length of time that our students will remain with us for, or how much they will spend
with us during their lifetime with us. For this reason, we have not yet included lifetime value metrics in our Operating Data in this
Prospectus, but we plan to do so in the future.
We
have also not included the 24-month revenue per student metric in our Operating Data as it is a relatively new measure for which we do
not have multiple years of data. However, this year we are tracking this metric together with revenue numbers for 36 months, and will
be introducing this data into our Operating Data in the future for all our companies.
There
are additional metrics shown in the graphic above which we have also not included in the Operating Data table in this Prospectus,
including the marketing cost per free student or annual revenue per free student in our Operating Data. This is because the Acquisitions
do not yet follow a freemium model with the exception of Property Investors Network, and so these metrics are not yet relevant to these
companies. Once the acquisitions are completed, we will be introducing free courses and personalized student pathways for each of the
Acquisitions on GeniusU and we will then be tracking these metrics together with conversion rates. Based on our growth plans, which are
provided in more details below, our goal is for the introduction of the freemium model to result in an increase in student numbers and
a decrease in the marketing cost per paying student for each of the Acquisitions.
Our
Partner Conversion Model: In the same way that we will be introducing our Student Conversion Model to our Acquisitions, we will also
be introducing our Partner Conversion Model. This will enable each Acquisition company to connect with the 14,700+ partners and 2,500+
faculty currently in our Group, and will enable them to attract new partners and faculty on GeniusU. As a result, we will be delivering
their courses globally with the students and partners we attract.
Most
of our partners on GeniusU begin as students, and then choose to join our faculty or partnership program. We also run marketing campaigns
to attract faculty members and partners to GeniusU. At the end of June 2023, we had 13,165 partners on the platform. We
track our monthly partner intake, acquisition cost and activity in a similar way to how we track our students, and in the last two years
we have measured the revenue they generate for GeniusU in their first 12 months and 24 months.
For
our main partner marketing activity for the period from January 2019 to December 2021, every $1,000 in marketing cost delivered 1,540
new visitors and 38 new faculty and partners on GeniusU as a result of this marketing. From these partners, we also saw just over 1%
pay for certification courses on GeniusU, generating $46,702 in partner revenue for GeniusU in the first 24 months. We also saw these
partners attract an additional 1,520 new students during this period. This equates to a $26 marketing cost per partner and $1,229 revenue
per partner within 24 months.
As
discussed in the Student Conversion Model section above, there are metrics included in the graphics that are not yet included in our
Operating Data Table, including the 24 Month Revenue per partner and the Return on Ad Spend (ROAS). These have not yet been included
for the same reasons, but we plan to include them in the future together with a calculation of Partner Lifetime Value, once we have accurate
metrics over a long enough time frame for all companies.
A
primary focus for us is to improve on our student and partner conversion rates both through optimizing our Edtech platform, and by combining
our student and partner conversion models with our acquisitions to lower our acquisition costs and increase our lifetime value. Below
we explain how we aim to achieve this for each company in the Group.
Our
Four-Step Growth Model
With
each of the companies in the Group, we are following a four-step model of acquisition, integration, digitization and distribution:
Acquisition:
By acquiring the company we are able to combine each company’s courses and products into our curriculum, and to tailor them
to the needs of our global community. We believe this will increase the lifetime value of our students.
Integration:
By integrating each company’s courses and products on our GeniusU Edtech platform, and by connecting our student and partner
conversion model to each company’s products, we aim to reduce the student and partner acquisition cost for each level of our curriculum.
Digitization:
By digitizing the courses and products for online delivery, we aim to scale each company’s product offerings globally.
Distribution:
By providing the courses in modular form, with the opportunity for partners and faculty to participate in marketing and facilitating
the delivery of each company’s courses and products in the countries and cities where we have our Genius communities. Please see
in the “Partnership Strategy” section below details of the different partnership types for our various companies.
We
have seen the effectiveness of this four-step growth model in the Pre-IPO Companies:
Entrepreneurs
Institute
Prior
to acquisition, Entrepreneurs Institute was delivering in-person events and mentoring to entrepreneurs. It was limited in its ability
to grow through typical bottlenecks faced by schools and training companies: Student attendance was limited to where events and courses
were held, course sizes were limited to venue space available and the number of courses was limited to the number of faculty members
who could teach.
Following
acquisition, Entrepreneurs Institute courses and products were fully integrated into GeniusU. Students were able to join from anywhere
at any time, courses were digitized to be delivered part-recorded and part-facilitated, and faculty were able to join and get certified
to deliver the courses from anywhere around the world.
The
model that we used to acquire, integrate, digitize and distribute the courses and certifications for Entrepreneurs Institute is the model
we are now repeating for the Acquisitions. The conversion of Entrepreneurs Institute from an event-based training company to a freemium
Edtech model has resulted in the following outcomes:
|
➢ |
The
development of the Genius Test, the Passion Test and the Purpose Test into free online tests has increased student intake from an
average rate of less than 50 new students per week to over 2,000 students per week as of December 31, 2022. |
|
➢ |
The
migration of in-person events to online summits has increased event registrations from less than 1,000 attendees per year to over
20,000 attendees per year as of December 31, 2022. |
|
➢ |
The
digitization of trainer certification to online certification has resulted in over 1,000 faculty members being certified as Flow
Consultants and Performance Consultants globally. |
|
➢ |
The
modular, digital format of the Entrepreneurs Institute courses on GeniusU together with our partnership strategy has attracted Country
Partners translating and delivering them in Japanese, Chinese, Thai, Mongolian, Spanish, French, Swedish, Polish and Czech. It has
also attracted over 50 City Leaders who are hosting regular events and online communities while marketing Entrepreneurs Institute
products and courses in their cities. |
Entrepreneur
Resorts
Prior
to acquisition, Entrepreneur Resorts was already working in partnership with GeniusU to provide venues for GeniusU’s faculty and
students, with revenue generated from accommodation and food & beverage. Traditionally in education and training companies, venue
hire and catering costs are a large part of student spend and often a high cost of sale for these companies. Following acquisition, Genius
Group gains the benefit of these additional revenue streams for GeniusU students who attend courses, events and retreats at our Entrepreneur
Resorts campuses. GeniusU also gains the benefit of an ongoing source of new students from each campus. In turn, Entrepreneur Resorts
has benefited from the acquisition with the following outcomes:
|
➢ |
Entrepreneur
Resorts hosted GeniusU events and courses live at its venues, including hosting the Global Entrepreneurs Summit, Global Investors
Summit and Global Educators Summit, and the 2020 series of Microschools. This attracted new visitors to its venues in Singapore and
Indonesia. |
|
➢ |
The
resorts in South Africa and Bali received bookings from GeniusU partners and faculty for courses and retreats, including the Impact
Investor Retreat, Wealth Dynamics Masters and Young Entrepreneurs Academy. |
|
➢ |
Venue
partners from GeniusU’s partner community have applied to launch new campus venues in countries around the world including
Japan, Australia, Greece and England. In addition, city hosts and City Leaders in various countries are presently seeking venue partners
to work with in order to launch campus venues in their city. This is resulting in community-led efforts to bring our courses and
curriculum to cities at a local level. |
We
have spun-off Entrepreneur Resorts and focus on our core business, education.
Education
Angels
Prior
to the completion of the acquisition, Education Angels’ revenues had been limited to delivering its home childcare and education
program in New Zealand. We are now integrating Education Angels’ parenting courses, educator certification on GeniusU. This will
enable us to provide to our global community of students and partners an education offering for parents of children up to 5 years old,
while linking our conversion model to Education Angel’s products.
We
believe this integration with Education Angels’ updated product range and GeniusU’s student and partner conversion model
to include the following benefits:
|
➢ |
By
launching the Young Genius Test, Parent Genius Test and Parenting microdegrees based on Education Angels’ education principles
and programs, we will grow the global intake of parents with children up to 5 years old joining our free education products and courses. |
|
➢ |
By
launching online certifications on GeniusU for Angel Guides and Angel Educators, we will attract partners and faculty around the
world who will be using Education Angels’ education tools and courses via GeniusU. |
|
➢ |
By
integrating Education Angels’ early learning courses into our curriculum and partner pathway, we will attract a similar growth
in community partners for Education Angels as we have seen for Entrepreneurs Institute. This includes in country partners, where
we have already attracted partners for our Genius School courses and certifications in Australia, New Zealand, Thailand, England
and the United States. |
E-Square
Education
Prior
to the completion of the acquisition, E-Square Education’s revenues had been limited to delivering its primary school, secondary
school and vocational college offerings in South Africa. Following the acquisition of E-Square Education, we plan to integrate E-Square
Education’s individual courses, Microsoft certifications and full year-by-year primary and secondary school curriculum on GeniusU.
This will enable us to provide to our global community of students and partners an education offering for parents of children up to high
school diploma and vocational certification level, while linking our conversion model to E-Square Education’s courses.
We
believe this integration of online versions of E-Square’s courses and teaching methodology with GeniusU’s student and partner
conversion model will result in the following benefits:
|
➢ |
After
the integration is successful, E-Square’s most popular courses with our Genius School curriculum on GeniusU, we will grow the
global intake of parents and students our free education products and courses suited for primary school and secondary school. |
|
➢ |
By
extending our Genius School online certifications on GeniusU for Genius Guides and Genius Educators to include facilitating and teaching
E-Square courses, including Microsoft certifications, we will attract partners and faculty around the world who will be able to deliver
this expanded offering via GeniusU. This can further be extended into a teacher pathway leading to teacher certification and up to
a master’s degree in education at the University of Antelope Valley. |
|
➢ |
With
the integration of E-Square’s teaching methodology, where students meet in person or virtually and track all their learning
on their mobile phones while being supervised by a group of faculty members, into our GeniusU platform. This will enable us to provide
our faculty with the option of teaching courses to students at all ages either online, via virtual live microschools, or in person
with a small group, or at one of our campus venues with a large group. This flexibility in delivery for both faculty and students
is an important part of our vision for our Genius curriculum. |
University
of Antelope Valley
Prior
to the completion of the acquisition, UAV’s revenues had been limited to delivering its certifications and degree programs to the
students who physically enroll at their location in Lancaster, California. Following the acquisition of UAV, we are integrating UAV’s
various certification and degree programs on GeniusU. This will enable us to provide to our global community of students and partners
an education offering at college and university level, while linking our conversion model to UAV’s courses.
We
believe this integration of UAV’s most relevant courses with GeniusU’s global community and student and partner conversion
model will result in the following benefits:
|
➢ |
By
providing free courses and low-cost certifications delivered with UAV’s faculty and course content, we plan to grow a strong
community of students globally experiencing UAV’s programs, with the option to progress to paid diploma courses either online
or on campus in UAV. In time, we also plan to make UAV’s courses available via our certified faculty and campus venues around
the world. |
|
➢ |
As
we have explained in our Curriculum section earlier in this Prospectus, we are extending our popular Education Festival model
to high demand industries including Fintech, Edtech, Medtech, Greentech and Spacetech. We plan to utilize the university campus at
UAV to deliver live portions of the summits, microschools and microcamps related to this model, which can then be either attended
live in Lancaster, virtually on GeniusU or in a city circle with our community partners. |
|
➢ |
By
integrating UAV’s business and medical certifications and degrees into our Genius curriculum we can develop concentrations
in high demand areas including entrepreneurship, education, technology and health, together with a focus towards high demand industries
including those mentioned above. |
Property
Investors Network
Prior
to the completion of the acquisition, PIN’s revenues had been limited to delivering its events and education programs to property
investors in England. We are now integrating PIN’s event model and property investment education programs on GeniusU. PIN’s
model and bottlenecks to growth are very similar to those faced by Entrepreneurs Institute prior to Genius Group’s acquisition.
As the acquisition of PIN has been consummated, PIN’s growth is expected to grow in a similar way, with students being able to
join from anywhere at any time, PIN courses will be digitized to be delivered part-recorded and part-facilitated, and faculty will be
able to join and get certified to deliver the courses from anywhere around the world.
We
believe this integration of PIN’s community, events and courses with GeniusU’s student and partner conversion model will
result in the following benefits:
|
➢ |
By
launching the Investor Genius Test together with free courses, we will grow the global intake of students interested in PIN’s
courses, including financial literacy and property investing. |
|
➢ |
PIN
already has a successful Event Host model in the United Kingdom, with 50 Event Hosts managing monthly events for the property investor
communities in their cities. By extending this model to cities globally and migrating their event management system to GeniusU, we
plan to scale what has proven to be a successful model in the UK to other countries where students are seeking a like-minded community
and an effective education in property investing. |
|
➢ |
By
integrating PIN’s current course offerings to other countries around the world via GeniusU, and providing certifications for
faculty members to facilitate and guide students in this education, we believe we can scale PIN’s model in a similar way to
how we are scaling Entrepreneurs Institute’s courses. |
Revealed
Films
Prior
to the completion of the acquisition, RF’s revenues had been limited to producing documentaries and docuseries. We plan to integrate
RF’s film format model as a medium on GeniusU. As the acquisition of RF has been completed, RF’s growth is expected from
additional projects and developing new curriculum on GeniusU. RF’s courses will be digitized to be delivered part-recorded and
part-facilitated, and faculty will be able to join and get certified to deliver the courses from anywhere around the world.
We
believe this integration of RF’s viewers and community, events and courses with GeniusU’s student and partner conversion
model will result in the following benefits:
|
➢ |
By
launching the Investor Genius Test together with free courses, we will grow the global intake of students interested in additional
courses, topics ranging from property investing to Education. |
|
➢ |
RF
already has a successful Studio model, films are digitized for online delivery. |
|
➢ |
By
integrating RF’s content, it can be distributed to other countries around the world via GeniusU, and providing certifications
for students. |
For
further details on the different student courses our partnership certifications that we are running, please refer to the Curriculum section
of this Prospectus.
Our
Market
Overview
While
historically the education and training market has been seen as separate markets, more recently they have been combined into one global
education market. The entire pre-school, school, tertiary, adult education and corporate training market are one collective marketplace
that is being disrupted by Edtech, new technologies, such as AI, and advances in the science and psychology of learning.
According
to HolonIQ, the global education market is set to reach at least $10 trillion by 2030 as population growth in developing markets fuels
a massive expansion and technology drives unprecedented re-skilling and up-skilling in developed economies. This is from the current
market size of $2.5 trillion. It estimates that in the next decade the global education section will see an additional 350 million post-secondary
graduates and nearly 800 million more K-12 graduates than today. We believe that Asia and Africa are the driving force behind the expansion.
HolonIQ further states that the world will need to add 1.5 million teachers per year on average, approaching 100 million in total in
order to keep pace with the unprecedented changes ahead in education around the world.
Alongside
the growth of the education industry, Edtech companies are also growing rapidly. In 2021, a record $20.1 billion of funding was raised
by Edtech companies globally, representing a 34% increase on 2020 according to BrightEye Ventures EdTech report alone. However, we believe
that only few are focusing on creating a brand-new curriculum, and that none are focusing on creating a 21st century curriculum
that is student-centered and entrepreneurial in the way that the above-referenced World Economic Forum white paper has articulated. We
believe that most are providing courses delivering skills- based training or vocational training or serving as digital platforms for
existing institutions and their existing curriculum — which simply means delivering an outdated education system faster and cheaper.
Market
Trends
Company-Funded
Education
We
believe that company-funded education market is growing rapidly, with the growth of Edtech companies Guild Education and BetterUp, which
receive corporate funding to up-skill employees with degrees, certifications and mentoring.
This
goes beyond the traditional corporate training market towards partnerships with the education sector for employees to receive courses,
mentoring, certifications and degrees that are delivered online and during office hours. In 2021 and 2022, companies including Go1, eLearning
Brothers and Degreed all experienced significant growth in this market.
As
the unemployment crisis, skills gap, student debt crisis, and the number of unemployed school leavers and graduates continues to grow,
this trend of companies paying for a more effective education system to up- skill their workforce and prospective recruits will continue
to grow.
Self-Funded
Entrepreneur Education
We
believe that the education market has traditionally led to one of two pathways. Either to further academia or to potential employment.
Education does not prepare students for the increasingly viable third option, starting a business. According to McKinsey, 20-30% of the
U.S. and EU workforce is already involved in the gig economy — where they are self-employed or outside of traditional employment.
That already accounts for 165 million workers in the U.S. and EU alone.
Based
on the gig economy continuing to grow at current rates, MBO reports that more than 50% of the U.S. workforce were expected to
be in the gig economy by 2023. Every worker that chooses to find ways to generate their own income is seeking education on the best strategies
to achieve this.
We believe that self-funded lifelong education has
become a significant growth sector in the midst of the COVID-19 pandemic, with Edtech market leaders Coursera, Masterclass and Udemy targeting
this market. All three platforms provide online skills-based courses, certifications and in Coursera’s case up to undergraduate
degree level.
This second trend, like the first, represents a major
growth in adult education. It is through these first two trends that Genius Group has achieved the growth rate that it has as the first
phase of our growth strategy. However, we have taken a blended approach to Edtech to earn a larger part of the education market than pure
Edtech companies can. According to Holon IQ, Edtech is growing at 16.3% annually and will grow 2.5x from 2019 to 2025, reaching $404 billion
in total global expenditure. Impressive as the growth is, Edtech and digital expenditure will still only make up 5.2% of the $7.3 trillion
global education market in 2025.
Licensed Certifications
A third fast-growing trend is the growth in licensed
certifications and degrees in partnership with the leading institutions and universities. We believe that most of the traditional colleges
and universities are aware that their business model is being disrupted. However, most do not have the leadership or technology to compete
with the fast-growth Edtech companies that are disrupting their industry. As a result, most are willing to enter into partnerships to
have their existing certifications delivered online on a licensed basis.
This Online Program Management model (OPM) is growing
into a $7.7 billion market by 2025. As explained by HolonIQ in their February 2019 report “The Anatomy of an OPM and a $7.7B Market
in 2025”: “Online degrees are one of the fastest growing areas of higher education. OPM providers help universities build,
recruit for and deliver online programs. Revenue share is the dominant model with fee for service and hybrid relationships growing. 60+
operators in a $3B+ market growing at 17%.”
There are 60+ Edtech companies competing in this space,
with Coursera and edX being the largest. However, there are also private universities throughout Asia that are also licensing degrees
from universities and then delivering these degrees locally at a fraction of the cost of attending the university itself. We have already
built a strong revenue stream by offering certifications and our growth strategy includes partnering with the top institutions to provide
relevant certifications and degrees via GeniusU and our locations.
Global, Digital Schooling
In addition to the three trends above, which are impacting
the education system above primary, middle and secondary school, we believe that the entire schooling system is also being disrupted by
the shift to more online learning. The COVID-19 pandemic has accelerated this disruption.
The four largest Edtech companies in the world today,
BYJU in India, and Yuanfudao, Zuoyebang and VIPKid in China are all online tutoring apps to supplement student learning.
This growth to digital schooling is taking place alongside
a surge in homeschooling, as parents discover the benefits and ease of educating their children from home. A recent Forbes article reported
“The number of children being homeschooled has more than doubled in five years, and in some areas has risen by more than 700%.”
Genius Group is benefiting from this growth as it
expands its pre-school, primary school, middle school and high school programs, together with our virtual camps.
Microschools, Learning Pods and Blended Learning
Models
Microschools, learning pods and blended learning are
the three buzz phrases that are growing virally in 2021 and 2022. Microschools are schools that are based around a teacher instead of
a location or classroom, where each microschool may have only five or ten students. Learning pods are home-based groups of students who
are following a particular class or curriculum online while gathering together for social learning. Blended learning is the combination
of both online and offline learning to get the best of both worlds.
We see the future of work and education as being a
spectrum of options which can be personalized to suit each person’s work style and learning style. We believe the trend will continue
to move towards a blended approach where it will be just as important to have high-tech as well as high-touch options for faculty and
students to choose from. This will mean that not only will the current local school and classroom model become less popular amongst the
options available, but the purely online Edtech companies will need to either compete or partner with the companies that deliver a more
blended approach.
Personalized and AI driven education
A recent World Economic Forum article titled “How
technology will transform learning in the COVID-19 era” sums up the future of education as: AI + community = future of learning.
It goes on to say “All of us have a fundamental
need to belong, learn and share. We need meaningful communities, because they are force multipliers. They make learning fun and create
a peer-to-peer accountability mechanism that shapes a culture of learning. AI enables personalization at scale. Only by combining both
AI and communities will higher education be relevant and prepare students for the adventures of the Fourth Industrial Revolution.”
While there is general agreement that personalized
education is needed, and that artificial intelligence can help us to deliver it, the two unique competitive advantages that we believe
we have in leading in this area is that we have built a global community who are already experiencing their virtual personal assistance
“Genie” on GeniusU, and they are willingly providing us with the data from personality assessments and progress assessments
that enable us to deliver relevant recommendations to get them to where they want to go. This leads to our tagline: “You don’t
need to know every step. You just need to know the right step to take right now.”
We believe that while harnessing the first trends
mentioned above help us to maintain our growth rate in the next five years, artificial intelligence and personalized learning will disrupt
and transform the education industry. The era of one-size-fits-all education will end and be replaced by the school of one.
Our Competitive Strengths
Our Edtech Platform
Our GeniusU platform has grown over the last five
years to be the backbone that connects all the companies in the Group. Each student has their own profile page with their photo, details,
talents, passions and purpose (test results, groups, connections, attendances). Each has their own dashboard to track their learning,
and access to all the microschools, microdegrees and products globally.
For students, GeniusU operates as a combination of
a learning management system, a social network and a productivity tool, giving them simple ways to up-skill themselves in specific areas
while also giving them tools to assess their progress, track their financials and find their team.
For faculty and partners, GeniusU operates as an “Amazon
for Entrepreneurs” where they can set up shop and operate their microschool or training company on our platform. They can list their
courses and products, manage their community, receive payments globally and pay out to partners and track all their data. As with Amazon,
the rankings of all faculty and programs by students ensures the best and most trusted programs always rise to the top.
We believe that this combination provides us with
a powerful network effect where the more students we attract, the more faculty we attract, and the more faculty we attract, the more students
we attract. In our niche of entrepreneur education, we believe that we have not yet seen any competitor who has come close to matching
our scale globally.
Our Curriculum
We believe that we are offering a unique entrepreneur
education curriculum that solves a global need. We own what we believe is one of the world’s most widely used range of entrepreneur
assessment tools including Wealth Dynamics, Talent Dynamics, the Impact Test, the Genius Test, the Passion Test and the Purpose Test based
on the number of tests taken. These have been taken by over one million entrepreneurs globally, and they enable us to provide personalized
education pathways tailored to each individual student.
The combined products of our nine companies deliver
a full lifelong learning curriculum that we are developing into a full global curriculum.
Our Team
We have breadth and depth of strength in our global
team. Our Board members have experience and skills in building and listing companies, with eight international initial public offerings
between them and over $2 billion in capital value created. Our management team has extensive experience in managing and mentoring entrepreneurs
and entrepreneurial teams, with our teams based globally in Singapore, Australia, New Zealand, Japan, Indonesia, India, South Africa,
the U.K., Portugal, Poland, Ukraine, the U.S. and Canada.
We believe that our 2,500+ faculty are leading entrepreneur
teachers, trainers and mentors around the world with their own schools and training organizations established often before joining our
faculty. Our 14,700+ partners are strong advocates for our courses and programs, ensuring a broad base of growth opportunities. As hundreds
of investors who have funded our growth to date, many of our faculty and partners began as students before becoming our supporters. We
believe that this breadth and depth of leadership gives us an ongoing leadership position in our field.
Our Niche
Our niche focus on entrepreneur education has enabled
us to build what we believe to be a strong position within the global market, based on the 3.1 million students that our Pre-IPO Group
has attracted as at December 31, 2022. The challenge for many education and Edtech companies is that they need to overcome the regulatory
hurdles of their country’s education system or the operational hurdles of needing to build partnerships or clients one-by-one. By
beginning in the entrepreneur education niche, we have attracted decision makers virally who are willing to invest in their own education
and based on the Return on Investment (ROI) they receive from our courses and training, they return for more and refer us to others, building
both lifetime value and vitality.
The majority of the fast-growth education and Edtech
companies are focused on a specific country, whether the U.S., China or India, or on a particular niche, whether primary, secondary, tertiary
or adult education. As a result, they are limited in market size or in their share of the education spend of their students. With our
chosen niche, we believe we will be able to capitalize on the growing entrepreneur movement together with the growing demand for a relevant,
21st century education system, towards our aspiration of delivering a lifelong curriculum.
Our Venture Builder Structure
Our structure has enabled us to create a high-value,
high-growth environment in which each company can be valued effectively relative to its peers, while also increasing the value of each
Group company by the level of digital marketing, data intelligence and global growth it can immediately deliver to each new company.
Each education company within the Group can also maintain
its focus and maximize its value as high- growth profit centers within the Group. The leadership, metrics and management required to manage
each resort or cafe separately is different to that required for each of our college or training companies. The combination of our leadership,
with our modular structure, and our ongoing education programs which all our staff participate in, has led to a robust, scalable growth
model where we operate effectively more as a group than one entity.
Our Blended Approach
We believe that the two fastest growing industry trends
in education are company-funded education and self- funded education. GeniusU is uniquely placed in these two fast-growing trends. We
attract both the company- funded education sector and the self-funded education sector, and we do this across 200 countries. We believe
that we are also the only platform that has its own lifelong entrepreneur education curriculum, and that provides a global community for
entrepreneurs and qualifies for government funding via our partners. Genius Group is an ecosystem with its own curriculum and an Edtech
company at its center. This enables us to combine high-tech and high-touch solutions both through partnerships and our own companies.
We already deliver a spectrum of options, from fully
online courses and certifications, to faculty-led microschools, to city-based learning pods, to in-home tuition, to on-site campuses.
Credits earned in any one of these models are fully transferable and collectively accounted for, wherever and whenever they learn. This
enables any faculty member or student to switch models as their circumstances or preferences change, and it enables us to grow our community
while evolving and adapting to our students’ preferences.
This blended approach, together with our acquisition
strategy, also gives us direct access to government education funding in the various countries where we are expanding.
Our Community
The result of our growth to date has been a global
community in which each microschool is attended by students from an average of 20 to 30 different countries. The scale and diversity of
our student population, which has grown to 3.1 million students, is one of our greatest strengths. The success stories that come from
our community is as much from the connections that are made and opportunities shared as from the courses and learning.
We have seen companies grow from startup to multi-million-dollar
successes. Examples include companies such as Wealth Migrate, CrowdProperty, WebinarVet and Bank to the Future, all of which were birthed
at Genius Group courses and accelerators. Three of the companies that we have acquired, Education Angels, E-Square and Property Investors
Network, all experienced significant growth as a result of our courses. We have seen children go into partnership with their parents on
businesses and investments. We have seen couples form and get married. While the traditional education system sees bonds break when students
graduate, Genius Group has no alumni, as our students remain students for life and with that longevity comes a level of loyalty that we
experience daily.
Our Data and Systems
From the beginning we were aware that the key to personalization
was in the quality of our personal data. Our goal has been to go beyond learning, and to transform education into a hospitality industry.
We believe that the experience of too many students is that they do not feel like a valued customer in the education process. To achieve
our goal, we focused on a robust, scalable data management and intelligence system.
Salesforce currently provides our underlying Customer
Relationship Management (CRM) system to which we have connected our GeniusU platform.
We have shared best practices in our data management
and connected all our customer data including personal preferences, financial transactions, learning progress, community connections and
all correspondence and conversations among GeniusU, Salesforce and our main social media platforms, including LinkedIn, Facebook and Google.
All our data is cloud-based and dashboard-driven,
empowering our management, our partners and all our customers to manage and track their progress and update their data.
Our First Mover Advantage
Having started this journey five years ago, and with
most of our operations taking place initially outside of the U.S. and China, we believe that we have not attracted any notable competitors
or imitators in our niche. This has enabled us to grow quietly and through word of mouth to the point where we now believe that we have
strong momentum with a first mover advantage.
In certain instances, companies that considered competing
with us came to us instead to partner with us. While we can expect competition in the future, this critical mass and ongoing momentum
is an important focus for us.
Our Agile Structure
A relatively hidden competitive strength is the agile
leadership structure we have developed as part of our course curriculum over the last five years. We train entrepreneurial companies to
develop cross-functional teams organized around discreet, profitable projects on a quarterly basis and this system “Entrepreneur
Dynamic” is the leadership equivalent of scrum methodology for engineering teams.
Each team member is self-directed, rewriting their
job description every quarter as a “personal compass” and every team is accountable for their performance and learning on
a global “flight deck.”
This system not only enables us to scale rapidly,
but also to acquire and align companies rapidly into a highly effective, decentralized leadership and learning structure. All our staff
attend the same microschools and courses as our community, and as a result each is learning self-directed, entrepreneurial skills on their
own personalized path. We see this strength as not only one that will enable us to scale through the next ten years as we grow Genius
Group, but also in the way we are using a similar agile, learning structure to replace the more traditional hierarchical structure in
the education system.
Our Strategy
Our Three-Phase Strategy
We believe that our three-phase strategy to disrupt
the education industry is simple:
|
1. |
Educate entrepreneurs; |
|
2. |
Expand to schools and colleges; and |
|
3. |
Establish a full curriculum. |
In our first phase, from 2015 to 2020, we have been
focused on entrepreneurs who are willing to self-fund their education. This has enabled us to grow globally and to self-fund our growth
with the same entrepreneurs that we have been educating.
We have begun our second phase, from 2020 to 2025,
with the acquisition of a series of education-based companies already serving the pre-school, primary and secondary school markets. We
are also running Genius School programs with many of our entrepreneur students enrolling their children in them.
And our goal is to gather enough partnerships and
licensing agreements with schools, colleges and universities that gain the benefit of our GeniusU platform and global community in this
phase to then move to our third phase, from 2025 to 2030, when we aim to have our curriculum accredited in the U.S. and the U.K. as an
alternative to the existing Cambridge and K-12 curriculums. This third phase is an aspirational goal and is not assured, as it is dependent
on the success of our second phase, and dependent on us succeeding in getting accreditation from the accrediting bodies in the relevant
countries.
Our intention is to be able to deliver a more effective,
engaging, relevant and flexible education system at a third of the current price of education.
Our Blended Edtech Strategy
We are focused on acquiring companies that are leading
the way in 21st century education, and then accelerating the speed, size and scale of these companies by connecting their courses,
faculty and reach to GeniusU. This increases their enrollments through our digital marketing, increases their capacity to deliver through
global, ongoing faculty certifications and increases their retention through personalized education pathways.
Acquisition Strategy
In 2024, we will be looking to engage with fewer
acquisitions on a larger scale ($50M-$100M), that either bring complementary product to our GU platform, or technology solutions (Augmented
Reality/Virtual Reality) to be incorporated with our product offering, or core expertise related to our core competency digital marketing
and community build up.
We have organized all learning within Genius Group
into core curriculum and certified curriculum. These are similar to the distinction between required and elective courses at college.
Our core curriculum is the most important courses
which we see as being required elements of our curriculum at the primary, secondary, post-secondary and adult education levels. Our strategy
is to acquire the companies that are delivering the courses we see as being part of the core curriculum, in order that Genius Group opens
all intellectual property in our core curriculum.
Certified curriculum, on the other hand, are the optional
courses and programs that we recommend students take at each level of their progress. This is delivered by our partners on our GeniusU
platform or at microschools, venues, events and retreats listed on GeniusU on a revenue share basis.
Our acquisition strategy is not only to acquire content
to supplement our core curriculum, but also industry certifications and government accreditation and funding that our acquisition companies
have earned over time. The purpose of acquiring education with courses that have earned certifications and accreditations is in order
that our students can eventually:
|
1. |
Obtain industry-recognized certifications as part of our Genius Curriculum that can enable them to be recognized within their chosen career whether they choose to start their own business or take a job with companies operating in the industry. We are initially focused on high growth industries where there is a demand from both employers and students for an entrepreneurial mindset together with industry- specific skills. These include Edtech, Medtech, Fintech, Greentech and Spacetech. |
|
2. |
Obtain government-recognized accreditation at primary school, high school, college and university level, so that over time our Genius Curriculum can progress from a supplement to the traditional education system to a replacement of it. We are initially focused on developing a fully accredited pathway recognized in the U.S., as such a system is also in demand by overseas students who seek, for example, a U.S. high school diploma or U.S. university degree. |
|
3. |
Obtain funding where available to bring down the cost burden of their education. This may take the form of government funding such as in the case of Education Angels or UAV, or industry funding or corporate sponsorship of vocational certifications. |
For details of the course certifications and accreditations
that our Acquisitions currently hold, please refer to the “Further Company Information” section below.
We believe that we have a strong acquisition and integration
team to ensure that each acquisition is able to align rapidly with the culture and leadership systems of the Group. The number of entrepreneurs
and companies that we have in our community also gives us a strong deal flow and talent flow so that we do not have to cold call for the
right opportunities for acquisitions.
Partnership Strategy
For our certified curriculum, we attract partners
by making it profitable and simple for them to join Genius Group. GeniusU has a partner dashboard that enables each partner to track their
revenues and we pay out weekly for all earnings through the platform. We categorize partners into marketing partners, who receive 10%
to 20% of all course and product fees on GeniusU for marketing the courses, faculty members, who earn 30% to 50% for delivering the courses,
and program providers who earn a 10% license fee for their content, marketed and taught by others.
We host certification courses on GeniusU, which enables
partners to get trained and certified as marketing partners, faculty members or program providers, and our partners create their own certification
programs on GeniusU to grow their own faculty and partner community globally.
With the exception of Property Investors
Network, which has attracted City Hosts to manage local events in a similar way to GeniusU, the other companies in the Group including
the Acquisitions do not currently have a systemized plan to attract faculty partners or community partners, and the partners they do
have are largely accrediting bodies and government institutions. These have been covered elsewhere in this Prospectus. Our plan
is to introduce our partner certification process and conversion model to each of the five Acquisitions, as covered above in the ‘Our
Genius Curriculum’, ‘Our Conversion Model’ and ‘Our Four-Step Growth Model’ sections of this Prospectus.
Decentralized Curriculum
A critical network strategy in our growth is the design
of our decentralized curriculum. The largest challenge of creating an education curriculum is how quickly it becomes outdated. We believe
that most of the current education systems have centralized curriculum design departments. In today’s fast changing world, a centralized
system quickly becomes a bottleneck.
We have designed a decentralized system not dissimilar
to Apple’s App Store. Courses, microdegrees, microschools and certifications are posted by our program providers and faculty. These
are both assessed by our team and rated by faculty and students, ensuring that the best courses rise to the top of GeniusU.
As a result of this, our curriculum will constantly
improve as we grow, and the best program providers and faculty and we believe will earn exponentially more for the best courses. Students
also contribute to an ever- improving system, sharing their coursework and entering our challenges and rewards with their presentations,
plans and results, which then become part of the GeniusU library.
We believe that this decentralized curriculum that
we grow in value as we grow in scale is a key strategy that will attract an ever-increasing number of partners and potential acquisitions
to our platform.
Our Global Team
As of June 30, 2023, the Genius Group
team included over 475 full-time staff and 14,700+ partners with teams, locations and offices divided across three geographic
regions: NASA, EMEA and APAC. Our teams operate from over 40 cities in U.S., South America, Europe, Africa, Asia, New Zealand and Australia.
Our Competition
We see ourselves as an entrepreneur Edtech and education
company. Edtech companies are companies that combine education and technology together to enhance the process of teaching, learning or
both. They typically have the ability to rapidly scale and grow as a technology company. We define entrepreneur Edtech, as an Edtech company
focusing specifically on an entrepreneur curriculum. We define an entrepreneur curriculum as a course of study that teaches an individual
to ‘create a job’ by connecting and delivering value to others in a role aligned to their passions and purpose (either as
an employee, contractor, freelancer or business owner) rather than teaching them how to ‘get a job’ by searching for job positions
in the employment market.
The organizations that deliver such curriculums fall
into two main categories. The first are entrepreneur camps, accelerators and business schools which normally cater to 1,000 students or
less per year. Examples of this range from startup accelerators such as Y Combinator to academic institutions such as Stanford Graduate
School of Business. The second are entrepreneur networks that often provide forms of mentorship and training within their membership.
Two of the largest examples of this are the Entrepreneurs Organization (EO) which has 15,600 members and StartUp Grind which has 3.5 million
members. These have a mix of free and paid-for memberships.
We believe that our student base of 3.34
million students at the end of June 2023, which grew by approximately 445,000 new students in 2022 and further by 232,000
in the first half of 2023, makes us a “world leading entrepreneur Edtech and education group” in comparison to these
organization based on student numbers. While we believe that there are no global companies directly competing with us to develop a uniquely
entrepreneurial curriculum, there are comparable companies building an Edtech platform to provide alternatives or complements to the
traditional education system, and also comparable education companies that are growing via acquisition. Such competition includes:
BYJU: Currently one of the highest-valued Edtech
companies, Byju was valued at $22 billion in March 2022. BYJU is an India-based education company with a similar freemium model as GeniusU,
but with a focus on mathematics and science for primary and secondary school students. As of April 2023, the company disclosed that it
had over 150 million users. It has a similar growth model, making acquisitions and integrating new acquisitions on its platform.
Coursera: The leading Edtech company in the
U.S, Coursera is an online program manager for a range of universities, enabling students to take university courses online. The platform
has approximately 5,500 courses and over 118 million learners. It listed on the New York Stock Exchange in March 2021 and had a market
capitalization of approximately $1.63 billion, as at April 12, 2023. Unlike GeniusU or BYJU it does not create or deliver its own curriculum.
Udemy: A U.S.-based Edtech company with approximately
59 million students, Udemy has grown via its approximate 70,000 instructors who provide courses and certifications to their students.
The platform has a total of approximately 200,000 courses. However, it focuses on adult learning and does not provide an alternative to
the current schooling system, or a global community for students to connect and collaborate. It listed on NASDAQ in October 2021 and has
a current market capitalization of approximately $1.29 billion, as at April 12, 2023.
Udacity: A U.S.-based Edtech company that is
focused more on tech-based vocational training courses with over 160,000 students, Udacity is another Edtech company that we believe has
proven that there is a strong need for vocational nanodegrees supported by large tech companies. Udacity also offers a freemium model
giving students an opportunity to enroll for free and pay after one month of access.
LinkedIn Learning: LinkedIn purchased the Edtech
company Lynda for $1.5 billion, and LinkedIn was subsequently purchased by Microsoft for $26.2 billion. Similar to GeniusU, Microsoft
combined a social network with online courses, but focused mainly on technical and professional courses, with a flat monthly subscription
rate. Like Udemy and Udacity, its focus is on professional adult learning.
Guild Education: Another billion-dollar Edtech
startup, valued at over $4.4 billion in June 2022, Guild Education provides courses and degrees funded by companies for its employees.
Together with similar Edtech companies like BetterUp and Degreed, it is focused on up-skilling employees who are already in a job, with
its education and mentoring funded by its employer as an additional benefit.
China East Education: China East Education
is the first of a series of recent China-based listed companies which are focused on vocational education, which has also included China
Education Group, New Oriental Education and China Online Education Group. China East Education’s initial public offering in 2019
raised $625 million and was the largest in the world, underlining the current growth in vocational education. It has a valuation of approximately
$8.2 billion as of April 12, 2023.
Our Technology
Overview
We believe that Edtech will expand beyond the specific
activity of learning, to the application of that learning. We have seen this within GeniusU where engagement is much higher when students
can use the same environment in which they are learning to connect to others, share their learning, find team members and opportunities,
and run their learning projects and challenges on the platform.
As described below, we believe our technology connects
three tech sectors, Edtech, social media and productivity tools, and can be seen in the features that GeniusU provides to our students
and faculty.
Edtech. Faculty and education partners post
their courses on GeniusU, which are then organized and recommended based on student rankings. Students take the courses and receive credits
based on both the student rankings and recommendations from their AI-driven Genie.
Social Media. All faculty and education companies
have their own personal profile pages on GeniusU and receive both recommendations and ratings from students. Students connect with mentors,
team members and partners around the world with their own profiles, with the ability to post comments in social circles linked to each
course, send personal messages and search for the mentors, team members and partners most aligned to their purpose, passion, talents and
interests.
Productivity Tools. Faculty and education partners
have a full suite of productivity tools to run their business on GeniusU, from posting courses and products to marketing their courses,
running their courses, hosting their events, building their community, receiving payments, distributing commissions and tracking their
students’ progress. Students also receive a full suite of productivity tools with their own dashboard to track their learning, manage
their learning, find their mentors and teams and find the right opportunities to pursue.
Gamified Learning
GeniusU is designed to make learning engaging and
fun, with students undertaking challenge-based learning projects. Microdegrees are pre-designed online courses that include interactive
video, exercises and assessments in which students can track their learning, earn credits, leave comments, rate the courses and connect
with our faculty. Microschools are online courses conducted in real-time over one-week, two-week and four-week periods in which students
start and complete the courses together, sharing their assignments and final work with each other and competing for awards and prizes
if they choose to. Students earn credits called Genius GEMs for contributions they make to the platform, including credits for making
connections, posting messages, leaving testimonials and taking microdegrees and microschools.
Digital Credit System
GeniusU also has its own digital credit system: GEMs
operate as an education credits and reward system on the platform. GEMs are earned in the same way as credits are earned towards High
School diplomas and University degrees. They operate like a loyalty program where GEMs earned can be used to purchase additional courses,
mentoring or resources on GeniusU, or used to retake courses.
Artificial Intelligence
GeniusU currently has a virtual assistant, Genie,
to recommend the best courses, connections and actions for each student. We have released our next iteration of Genie with Chat GPT4,
an AI-driven virtual guide that each student can personalize and grow to become their learning assistant for life. The first stage of
this is completed with the development of Genie as a chatbot, and in 2023 are investing in the underlying data intelligence and AI platform
of GeniusU in collaboration with Open.AI to develop Genie into a personalized Intelligent Virtual Assistant (IVA) with conversational
AI, providing each student and partner with personalized advice and feedback based on their talents, passions, purpose and goals. We are
using GPT-4 as our AI engine to build the intelligence of our Genie AI, and plan to integrate with EinsteinGPT developed by our CRM provider,
Salesforce, to segment, target and predict the next steps of our students.
Augmented Reality and Virtual Reality
We are also developing augmented reality with locational
tracking, where entrepreneur students can connect with each other at our venues and events, directly connecting with the most useful mentors,
community members and opportunities in their area. We believe that there is potential for virtual reality for immersive education and
the ability for students to join microschools and programs virtually in the coming decade. Our goal is for our community, faculty and
curriculum to be able to upgrade to new technologies like augmented reality and virtual reality as they become commercially viable.
We believe the three-dimensional virtual world of
the Metaverse will replace the two-dimensional environment of the Internet in popularity, and we are planning to migrate our community
into virtual learning environments as they evolve. We are planning to use the Unity Engine to develop GeniusU into a virtual world. The
Unity Engine is the leading virtual world engine for mobile apps, and is the engine used by PokemonGo for their popular augmented reality
game and by Meta in the development of their virtual reality platform.
Instant Translation
Our curriculum and content on GeniusU are already
translated into Japanese, Chinese, Thai, Spanish, French, Polish and Czech. We are developing GeniusU to enable instant translation for
both curriculum and communication. This will mean students in most countries will have access to our global faculty and curriculum on
GeniusU in the future, enabling our students to learn and our faculty to mentor across multiple countries and languages.
Data Intelligence
We capture data on all students and faculty with their
permission to provide personalized pathways for their learning and teaching. This includes all personal details and social media, assessment
results, learning steps, enrollment, and purchase and payment history, along with connections, attendance and activity on GeniusU. Our
GeniusU platform is linked to Salesforce as our CRM and Stripe as our payment platform, enabling us to build a powerful data-driven approach
to recommend the best connections, courses and learning steps for each student to take along with the tools for faculty members to attract
and engage their students.
Our Intellectual Property
Genius Group Ltd has registered “GeniusU”,
“Genius School”, “Entrepreneurs Institute”, “Talent Dynamics” and “Wealth Dynamics” figurative
trademarks with the Intellectual Office of Singapore using Nice Classification, an international classification of goods and services
applied for the registration of trademarks.
Property Investors Network has registered “PIN”
figurative trademark, “Property Mastermind” word trademark and “Mastermind Accelerator” word trademark with the
Intellectual Property Office Trademark Registry of Great Britain and Northern Island.
All the above-mentioned trademarks are in the process
of registration by the World Intellectual Organization (“WIPO”) for the territory of United States of America and European
Union. The WIPO is a conglomerate of partner nations throughout the world, and a trademark that is registered with the organization is
known as a WIPO trademark. The purpose of this international trademark is to protect intellectual property on a global level.
All other companies within the Group have not registered
any trademarks.
Community
Our community on GeniusU Platform includes
over 3.34 million students across 20,345 cities and 191 countries, meeting online and in over 500 events, with over 8,900
new students joining every week. Our faculty consists of over 2,500 mentors and certified trainers delivering online and in person education
as part of a multi-year curriculum to build entrepreneurial expertise. These include world famous entrepreneurs and New York Times bestselling
thought leaders.
Our community is an important part of our company,
as students return at each stage of their entrepreneurial journey to make new connections and pursue new opportunities as well as to learn
new things. As the value of their experience increases as they bring their teams and partners with them, there is a high level of referral
and word-of-mouth.
We have regional leaders that provide local mentoring
and community connection in their countries and cities, using our GeniusU platform in their local area. We divide our global activity
into three regions, each spanning eight time zones and collectively covering all twenty-four time zones. This means our curriculum is
open 24/7, and at any time of day there are students learning on GeniusU.
The three regions are: APAC (Asia Pacific,
North Asia and Australia); EMEA (Europe, Middle East and Africa); and NASA (North America and South America). Our community is fairly
evenly divided between these three regions. We track the location of approximately 75% of our students and mentors, and they are spread
across the three regions for the period ending June 30, 2023 as follows:
| |
Students | | |
Paying Students | |
APAC | |
| 840,421 | | |
| 13,000 | |
EMEA | |
| 739,080 | | |
| 13,648 | |
NASA | |
| 480,296 | | |
| 11,975 | |
Not Tracked | |
| 1,280,280 | | |
| 6,417 | |
Total | |
| 3,440,077 | | |
| 45,040 | |
Culture
We have developed a strong culture within our team,
partners, faculty and community. This culture is based on six core principles that are practiced and recognized throughout the organization.
They are the primary focus and first point of discussion on our quarterly company meetings and are the subject of our monthly Genius Shine
Awards, in which team members nominate fellow team members based on them practicing our “Genius Values”: global, entrepreneurial;
natural; inspiring; unique; and smart.
The way in which we educate our team, partners and
community about our culture, enables us to align and lead our team remotely, to maintain a high level of trust with our partners and community,
and integrate new acquisitions effectively into our global family.
Our focus on educating entrepreneurs to “create
a job” instead of “getting a job” extends to our own team and partners, where we have an ongoing focus on developing
each of our team, partners, faculty and community and to the next level of their own entrepreneurial journey. This has led to students
becoming mentors, mentors becoming partners, partners becoming team members and team members becoming students. We believe that it has
also led to a strong investor community as our students and mentors improve their own financial success and choose to reinvest part of
this success back into Genius Group.
This strength in our culture provides an ongoing deal
flow, talent flow and resource flow that enables the Group to develop from the ongoing growth of our community.
Sales and Marketing
We believe that a key factor in our consistent growth
has been our sales and marketing approach. We follow a quarterly schedule of promotions in which cross-functional teams focus on revenue
and profit targets related to their product range and customer base, with a sales and marketing approach which is supported by a combination
of five routes to market.
Digital Marketing
We believe that we have strong digital marketing expertise,
which enables us to take the courses of our partners and acquisition companies, turn them into digital courses, and scale their reach
to students around the world. We track students in four categories:
|
1. |
Our followers are potential students who are paying us attention by following our free content on social media and by visiting our free course pages and videos. We track our followers via cookies and retarget them with relevant content until they become members. |
|
2. |
Our members are free students who are paying us time by registering on GeniusU for a free account and accessing our curriculum, community and free learning tools. We personalize content and engage with our members until they become prospects. |
|
3. |
Our prospects are potential paying students who have experienced our free courses and are visiting a course enrollment page or booking a free discovery call with our faculty with a view to enrolling in a paid course. We invest additional time and attention to prospects until they become paying students. |
|
4. |
Our paying students who are paying us money. |
We believe that this digital marketing approach gives
us scalable unit metrics with an average cost of acquisition per new student of $1 and a revenue per new student of $15. Our average cost
of acquisition per paying customer is $254 and our average revenue per paying customer is $1,002, giving us a 4x return on marketing spend.
Affiliate Marketing
We have a strong community of partners
and faculty who promote our courses and programs, and earn affiliate marketing fees for new enrollments and upgrades. We have over 14,700+
partners as of the date of this Prospectus who earn commissions via GeniusU. Our commissions are paid for different components
of the student journey, with up to 20% paid for marketing referrals, 10% paid for the enrollment process, 30% paid for delivery and 10%
paid for content.
As a result, partners can choose one or more parts
of the process to be rewarded for, from the marketing, to the sale, to the training, to their content. This leads to teams in which everyone
contributes in the area where they are strongest. This also enables educators who have strong content to connect with partners with strong
communities such that both sides benefit financially.
Referral Marketing
While many education and Edtech companies
rely on their marketing and enrollment teams to attract new students, we have the added benefit of viral products to deliver referrals
and word-of-mouth. Our free assessments such as the Genius Test, Passion Test and Purpose Test attract over 8,900 new students
weekly who take the tests to discover more about themselves, and then they encourage their teams and peers to take the tests and connect
on GeniusU, where they then find personalized paths for their learning.
Our freemium model enables new students to experience
GeniusU and the Genius Curriculum for free, and our product pathway then enables them to take affordable steps into our courses and certifications.
This creates a network effect where everyone is able to progress seamlessly at a level which works for them, and invite others in to join
them at each level.
Locational Marketing
Our global network of local City Leaders and faculty
members has led to the word of mouth offline to be even greater than the referrals online. Many students first hear about our Company
from friends and colleagues at local meet-ups and through a connection with a mentor or student.
We believe that this high-tech, high-touch structure
of an enhanced real-world learning environment with a digital layer being the future of education, which will be further enhanced as we
develop our augmented reality and virtual assistant tools on GeniusU. We believe that all of our acquisition companies achieved early
success through local marketing, and with the addition of our digital tools each is now scaling their local marketing globally through
local microschools, learning pods, faculty, event hosts and partners.
Repeat Purchases and Upgrades
A large portion of our revenue comes from returning
students and students progressing to the next level of their learning. While we believe that most education institutions have a limited
lifespan per student, Genius Group has a curriculum that a student can follow from early learning through to adult learning. By also having
a seamless continuum between learning, earning and teaching, many of our faculty began as students and have now progressed on to teaching
others. We believe that this “learning for life” model gives us a high lifetime value per student with strong retention and
repeat business.
Customer Service
We believe that modern education has operated largely
as a basic service, largely regulated by governments and delivered at low cost and low service levels, while being high-priced and compulsory.
We see the opportunity for disruption in transforming education into a model more aligned to the hospitality industry, with high levels
of customer service and satisfaction.
This customer service is reflected in the personalized
pathways, rapid response rates, personal mentorship and proactive community management we provide globally. Our local and global teams
are trained to deliver a high quality of advice and service. Each leadership team shares a student story on our weekly global team meeting,
keeping the customer experience and the forefront. The high level of service we provide in our entrepreneur resorts and cafes is extended
to our colleges and microschools, and this is a large part of what brings students back consistently to our community.
Employees
As at June 30, 2023 we have 475
employees and contractors, with 17 in Genius Group Ltd, 47 in GeniusU Ltd, 182 within Entrepreneur Resorts Ltd,
114 in University of Antelope Valley, 26 in Property Investors Network, 37 in E-Squared Education, 21 in Education
Angels and 31 in Revealed Films. We operate as one global team with regional leadership, and we established a remote working culture
prior to the COVID-19 crisis, which put us in a strong position to manage through the crisis without any major change to our management
process.
By illustration, our main leadership team works from
Singapore, Australia, New Zealand, Indonesia, South Africa, England, Portugal, Poland and the United States. Our accounts team operates
from Australia and our development team works from India, Ukraine and Poland. Our campus teams are based in Indonesia, Singapore and South
Africa.
While we see our fully employed team continue to grow,
when our 573 employees are put in context of our 14,700+ partners, we see our talent acquisition strategy to be equally focused between
the growth and development of our full-time team and growth and development of our partners and faculty.
Legal Proceedings
From time to time, we may be subject
to litigation and arbitration claims incidental to its business. Such claims may not be covered by our insurance coverage, and even if
they are, if claims against our business are successful, they may exceed the limits of applicable insurance coverage.
Further Company Information
The information in this business section has been
written to include details on each of the Pre-IPO Group companies and Acquisition companies in the context of our Group structure and
growth strategy as a whole. This section provides further material or relevant details on each company specific to each company.
Genius Group Ltd
Genius Group Ltd refers specifically
to the holding company, Genius Group Limited, the Singapore public limited company which owns the other companies in the Group. Prior
to a corporate name change in August 2019, it was known as GeniusU Pte Ltd.
Genius Group Ltd is the holding company that is listed on NYSE American. It is currently a Singapore public limited company that, following the various completed acquisitions
and completed funding rounds.
Genius Group Ltd.’s head office
is in Singapore, at the location of Singapore Genius Central. The company has 17 staff including the Genius Group board and management.
The primary activities of Genius Group are: Setting the overall strategic direction of the Group; oversight on the operational and financial
management of each company in the Group; overseeing growth opportunities, mergers and acquisitions; managing financing activities and
investor relations; and ensuring all Group companies are aligned to our mission and culture. The company provides strategic management,
accounting, legal and human resources services to the companies within the Group.
Genius Group Ltd.’s revenues are
derived from management fees it receives from each Group company. These range from 2.5% to 5.0% of revenues. These revenues have been
eliminated in our audited accounts of the Pre-IPO Group. In the fiscal year ended December 31, 2021, Pre-IPO Group revenues were $8.3
million. In the fiscal year ended December 31, 2022, the audited financial revenue was $18.2 million and the pro forma revenue
was $23.5 million. In the six months ended June 30, 2023, the unaudited revenue was $11.8 million and the pro forma revenue was $9.0
million.
We plan to continue to grow Genius Group Ltd as the
holding company for the Group in line with the growth of the Group, with a focus on strategy, acquisitions, financing, compliance and
investor relations.
GeniusU Ltd
GeniusU Ltd is one of the four companies
in the Pre-IPO Group. The company formed in August 2019 under the corporate name GeniusU Pte Ltd, and subsequently converted to a public
company, GeniusU Ltd in May 2021 (as distinct from its parent Genius Group Ltd, the current Group holding company, which until August
2019 used the name GeniusU Pte Ltd).
GeniusU Ltd is 96.55% owned by Genius Group Ltd. It
operates as the Edtech company within Genius Group, providing the technology that enables us to grow our acquisitions as Edtech companies
with its Edtech platform, AI digital assistant, personalized learning and global community.
The company manages all design, development, data,
content, community and commerce related to our Edtech platform. This is what we believe gives Genius Group its competitive edge, as each
student and faculty member is able to use the tools on GeniusU to design their own personalized path and access the courses and content
of all our acquisition companies from anywhere in the world.
It also has its head office in Singapore,
at the same location as Genius Group Ltd. The company has 47 staff, consisting of teams in management, marketing, sales, product,
engineering, community, partnerships and operations. This team operates virtually and while team members are in countries around the
world, they are based primarily in Singapore, Australia, South Africa, India, Ukraine, U.K and U.S.A.
GeniusU Ltd generates revenue from education programs
hosted on GeniusU by our partners together with revenue from education programs that form our entrepreneur curriculum. The six other companies
in the Group benefit from GeniusU’s ability to integrate, digitize and distribute their education programs across different age
groups, and the Group in turn benefits from increasing the lifetime value and spend of each student by providing a lifelong learning pathway.
GeniusU’s Ltd.’s revenues
are combined in the Pre-IPO Group revenues. These revenues make up 99% of the education revenue segment and 100% of the digital education
revenue segment of the Pre-IPO Group in 2021. In 2021, the Pre-IPO Group’s education revenue segment was $5.2 million. In 2022,
the GeniusU’s revenue was $4.9 million, this accounted for 21% of the pro forma revenue for the Group. In first half of 2023,
revenue was $1.4 million representing 15% of the pro forma revenue.
As with the other companies in the Group, GeniusU
Ltd can raise capital directly to help fund the development of the platform. In the fiscal year ended December 31, 2022, GeniusU Ltd raised
a total of $2.7 million through an issue of ordinary shares. These were raised directly from our investor community at a final share price
that valued GeniusU Ltd at $250 million.
We plan to continue to grow GeniusU as the growth
engine for the Group with a focus on integrating, digitizing and distributing education content from our partners and acquisition companies,
while developing our community, platform, technology and AI capabilities.
Entrepreneurs Institute
Entrepreneurs Institute is the trading name for Wealth
Dynamics Pte Ltd, a Singapore-based private limited company and one of the companies in the Pre-IPO Group. Entrepreneurs Institute is
one of the four companies in the Pre-IPO Group.
In August 2019, Genius Group Ltd acquired Entrepreneurs
Institute for $8 million. The company owns and develops the entrepreneur education curriculum and tools in the Group, used by many of
the leading fast- growth high-tech companies in the world.
Entrepreneurs Institute historically generated revenue
from education programs and tools included under the Wealth Dynamics, Talent Dynamics and Impact Dynamics brands. It also ran the Global
Entrepreneur Summit series in Asia, Australia, Africa, Europe and the U.S., and was the first company to bring its community of entrepreneurs
onto the GeniusU Edtech platform.
Prior to the acquisition, Genius Group Ltd received
10% to 30% of Entrepreneurs Institute’s revenue as a platform fee. Following the acquisition of Entrepreneurs Institute, all products
have been converted to digital offerings on GeniusU, and all revenues and costs of Entrepreneurs Institute have subsequently been absorbed
into GeniusU Ltd, with 100% of revenue becoming Edtech platform revenue in 2020. All team members of Entrepreneurs Institute also joined
the GeniusU team in 2020.
The growing community within Entrepreneurs Institute
has provided a test bed for GeniusU to grow and to now attract other educators to follow a similar model for global expansion. The loyalty
of entrepreneurs within the community is demonstrated by examples of going from startup to high-growth, initial public offering, and exit
over the last 20 years, and now supporting the creation of the Genius Group curriculum for their own children.
Entrepreneurs Institute’s revenue is now included
in GeniusU’s revenues. These revenues make up 99% of the education revenue segment and 100% of the digital education revenue segment
of the Pre-IPO Group as explained in the GeniusU Ltd section above.
Entrepreneur Resorts
Entrepreneur Resorts Limited is one of
the four companies in the Pre-IPO Group. The company is a Seychelles public listed company on the Seychelles Merj Stock Exchange (Ticker:
ERL) and uplisted on Upstream on September 25, 2023. Entrepreneur Resorts was acquired by Genius Group in August 2020. The
company in turn wholly owns and operates five subsidiary companies: Entrepreneur Resorts Pte Ltd (Singapore); Genius Central Singapore
Pte Ltd, Vision Villa Resorts Pte Ltd (Indonesia); Tau Game Lodge (South Africa); and Matla Game Lodge (South Africa).
In August 2020, Genius Group Ltd
acquired 98% of the shares of Entrepreneur Resorts and its subsidiaries for $31 million, with Entrepreneur Resorts shareholders swapping
their shares for $31 million of Genius Group Ltd shares.
The company currently owns and operates venues in
three countries: Singapore, with 43 staff; Indonesia, with 81 staff; and South Africa, with 90 staff. In Singapore, it owns Genius Central,
an entrepreneur co- working hub, bar, restaurant and event space. In Bali, Indonesia, it owns Vision Villa Retreat and Genius Café,
an entrepreneur beach club. In South Africa, it owns Tau Game Lodge and Matla Lodge, both safari lodges on the Madikwe Game Reserve. Each
venue operates as a local campus for events and courses that take place on GeniusU. When GeniusU hosts global summits, accelerator programs
and microschools live, they are also attended by groups at our campus venues, who then spend extra on food and beverage, accommodation
and additional courses.
In the fiscal year ended December 31,
2021, revenues were $3.1 million. This accounted for 37% of the revenue for the Group. In the fiscal year ended December 31, 2022, the
revenue was $4.7 million. In the first half of 2023, the revenue was $2.8 million.
During 2020, we divided our campus venues into the
following three models: Our café model, our central model and our resort model. We then developed the operating systems and training
systems during the COVID-19 pandemic to be able to expand the three models via licensing to venue partners post-pandemic.
Entrepreneur Resorts was spun-off from the
Group as of October 2, 2023 and the financials are adjusted for in the pro forma calculation.
Our Genius Café Model: Our Genius Café
model is based on our Genius Café in Sanur. This is a 141-seat beach-front venue on Sanur Beach, Bali, with the land leased on
an annual renewable basis with Mercure Hotel. The café offers healthy food, drinks, networking events, education courses and co-working
for Bali’s entrepreneur community. It has developed a reputation as one of the top destinations for entrepreneurs in Bali and is
currently ranked No.3 out of 431 restaurants in Sanur.
Our Genius Central Model: Our Genius Central
model is based on our Genius Central in Singapore. This is a 177-seat bar, restaurant, education and co-working space for entrepreneurs
in Far East Square, in the center of Singapore’s business district. The venue serves as a city campus for our education programs,
and despite opening in March 2020 just as the COVID-19 pandemic began, it is gaining a reputation as a key destination for entrepreneurs
in Singapore to meet and attend events.
Our Genius Resort Model: Our Genius Resort
model is based on our three resort locations. Vision Villa Resort in Bali, based in Gianyar on the East Coast of Bali next to the Bali
Safari Park, has 17 guest rooms, a conference center, spa and a Genius Café on site. Tau Game Lodge, in Madikwe Game Reserve in
South Africa, has 30 guest rooms, a conference center, spa and daily safari drives. Matla Game Lodge, adjacent to Tau, is a Private Members’
lodge with 7 guest rooms and is managed by the same team that manages Tau. These venues have been hosting to GeniusU events and retreats,
and our post-pandemic plan is to build a calendar of workshops and retreats that enable our students to attend our education programs
in our resort locations.
During 2020, the Café model operated at 20%
capacity with 37,185 orders and $342,238 revenue. The Central Model operated at 24% capacity with 36,182 orders and $500,629 revenue.
The resort model operated at 26% capacity with 8,538 room nights and $1,172,699 revenue. In total, the locations operated at 24% capacity
as a result of COVID-19.
In the meantime, we have utilized the additional time
we have had during 2020 to develop our license model to attract venue partners to launch additional venues. We have created three models
based on our café model, central model and resort model. In each model, venue partners pay $32,000 for initial training and consulting,
in which we support the setup of the campus venue with setup support, brand guidelines, interior design review, construction support and
pre-opening inspection. The venue partner then pays 4% of net sales on an ongoing basis as a royalty fee, and 4% of net sales on an ongoing
basis for marketing and use of the GeniusU platform to manage their community and operations.
Since launching the license model in 2021, we have
attracted venue partners in Australia, Japan, England, Greece and South Africa. Our plan is to continue to grow Entrepreneur Resorts via
our license model, in order to provide a campus venue model for our community partners who seek a GeniusU campus in their city or location.
Education Angels
Education Angels is one of the five Acquisitions.
The company is a New Zealand-based home childcare and education company. Genius Group Ltd entered into an agreement to purchase Education
Angels in November 2020 and completed the acquisition in April, 2022 for a purchase price of $1.9 million. The company has a model to
train childcare professionals as educators for children from 0-5 years old, developing 21st century play and discovery skills as the first
step in the Genius School curriculum. We plan to expand this model globally via our Edtech platform, with home educators certified on
GeniusU.
The company generates revenue from parents of young
children from 0-5 years old paying for an Education Angels’ trained educator to both educate and care for their child. Educators
within a region can provide education and care for up to 4 children at a time and are supervised by trained teachers. Education Angels
is required to be approved by the NZ Ministry of Education (MOE) in order to operate and receive government funding. Education Angels
is approved by the MOE and 50% of Education Angels’ Educator fees are paid for by the NZ Government.
In 2020 the company had 630 home educated
students and revenue was $1.1 million. In the fiscal year ended December 31, 2021, revenues were $0.9 million. In the fiscal year ended
December 31, 2022, revenue were $0.9 million. This accounted for 4% of the pro forma revenue for the Group. In the first half of 2023,
revenue was $0.6 million representing 6% of the pro forma revenue.
Education Angels has its head office
in Wellington, New Zealand. The company has 21 staff and educators based throughout New Zealand. For details of the current and
future product range of Education Angels, please see the “Our Genius Curriculum” section above. For details of our growth
plans for Education Angels, please see the “Our Four-Step Growth Plan” above.
E-Square
E-Square is one of the five Acquisitions. E-Square
is an entrepreneur education campus in South Africa, providing a full range of programs from pre-primary through primary school, secondary
school and vocational college. Genius Group Ltd entered into an agreement to purchase E-Square in November 2020 and completed the acquisition
in May, 2022 for a purchase price of $3.8 million.
In 2020 E-Square had 546 students and
revenue of $0.8 million. In the fiscal year ended December 31, 2021, revenue was $0.7 million. In the fiscal year ended December
31, 2022, revenue was $0.6 million. This accounted for 2% of the pro forma revenue for the Group. In the first half of 2023,
revenue was $0.3 million representing 3% of the pro forma revenue.
E-Square generates revenue from students attending
their pre-primary, primary and secondary schools, together with their vocational college. Prior to the pandemic, E-Square developed their
education system into a hybrid model where students attended classes while completing assignments online on their smart phones. As a result,
students can attend teacher-led classes both in person and virtually. When the pandemic resulted in school closures in South Africa, E-Square
was able to continue its operations online without undue disruption.
E-Square’s school curriculum is focused on building
vocational and entrepreneurial skills, and its schools are approved by the South Africa Department of Education. It is also a certified
Microsoft Training Partner and has developed interactive technology courses for students online.
E-Square has its campus in Nelson Mandela
Bay Square, Port Elizabeth, South Africa. The school has 37 staff and in 2020 the school had 169 primary school students, 209
secondary school students, 90 matric school students and 78 students in vocational training.
We plan to integrate E-Square’s offering globally
through courses, camps and delivery of a full primary school and high school curriculum, and our goal is to integrate E-Square’s
innovative approach and courses with GeniusU’s Edtech platform and curriculum in order to be accessible to our global community.
We are also expanding our faculty, partnerships and campuses so that primary and high school students can receive their education and
high school diploma online, via guided home schooling or via our campuses and partner schools. For details of the current and future product
range of Education Angels, please see the “Our Genius Curriculum” section above. For details of our growth plans for Education
Angels, please see the “Our Four-Step Growth Plan” above.
University of Antelope Valley
University of Antelope Valley (UAV) is
one of the five Acquisitions. UAV is an accredited university based on a 10-acre campus in Lancaster, California. It offers career-focused
on-campus and online programs at the master’s, bachelor’s and associate degree level, as well as certificate and continuing
education programs in several high-demand sectors. In August 2022, Genius Group Ltd completed the acquisition of University of
Antelope Valley for $14.5 million of purchase consideration, with a top up consideration paid based on the performance of UAV in 2022,
2023 and 2024.
In the fiscal year ended December 31,
2020, UAV had revenues of $10.1 million revenue. In the fiscal year ended December 31, 2021, revenue was $9.0 million. In the
fiscal year ended December 31, 2022, revenue was $8.1 million. This accounted for 35% of the pro forma revenue for the Group.
In the first half of 2023, revenue was $3.1 million representing 35% of the pro forma revenue. Of the student intake over the
last three years, 50% were between 18 and 24 years old, 28% were between 25 and 30 years old, 14% were between 31 and 39 years old, and
8% were over 40 years old.
UAV has its campus in Lancaster, California, USA.
The campus includes lecture rooms, labs, student accommodation, a student center, restaurant, bar, indoor multi-purpose sports complex
and administration offices. The university has 165 staff and in 2020 had 3,100 students attending career-focused programs at the master’s,
bachelor’s, and associate Degree-level, as well as Certificate Programs and Continuing Education Courses in the sectors of psychology,
business management, hospitality management, education, criminal justice, and sports management, healthcare management, EMS, nursing,
electrical engineering, and career training in culinary arts, emergency care technician, fire science, medical assistant, paramedic, pharmacy
technician, vocational nursing.
Since its inception, the University also has a history
of collaborations with industry partners, including the City of Lancaster and the City of Palmdale, Lockheed Martin, Multiple Local Law
Enforcement Agencies, Boeing, The Los Angeles County Fire Department, and Antelope Valley Hospital, to name a few. These long-term partnerships
have made UAV a preferred destination campus for students seeking high-quality employer-approved programs. As a result of this premium
brand reputation, over 40% of the students who attend UAV receive permanent employment opportunities during their externships.
UAV is approved for Title IV federal loans, grants
and other federal, state and private financial aid. It is also SEVIS-approved for qualified international students.
The University of Antelope Valley was directly impacted
by the coronavirus outbreak (COVID-19). On January 31, 2020, U.S. Health and Human Services Secretary declared a public health emergency
for the United States. In response to COVID-19, the University of Antelope Valley temporarily halted significant portions of its operations.
University of Antelope Valley reported a decline in revenue of 16% in 2020; however, cost reduction measures and government support assisted
in minimizing the impact and the company reported an increase in net profit after tax of 406%. In March 2020, the Institution received
approval for total of $1,613,796 grants through the Higher Education Emergency Relief Fund (HEERF) under the Coronavirus Aid, Relief and
Economic Security Act (Cares Act). In May 2020, the Institution received approval for a $1,136,120 note payable through the Paycheck Protection
Program (PPP) under the Coronavirus Aid, Relief and Economic Security Act (Cares Act). This note was forgiven in November 2020, and the
forgiveness was recorded as accrued other income during the fiscal year ended December 31, 2021.
UAV Courses
UAV currently runs the following certificate programs,
associate degree programs, bachelor’s degree programs and master’s degree programs. Programs range from $13,000 to $30,000
in tuition fees per year, and programs are from one year to three years in duration. The following are the programs UAV currently offers:
|
➢ |
Certifications in: Culinary Arts & Restaurant Management, Emergency Medical Technician, Massage Therapy, Medical Assistant, Medical Billing & Coding, Paramedic, Pharmacy Technician, Professional Baking & Pastry, and Vocational Nursing. |
|
➢ |
Associate Degrees in: Allied Health, Business Management, Criminal Justice, Fire Science, Health & Fitness, Healthcare Management, Hospitality Management and Paramedic Science. |
|
➢ |
Bachelor’s Degrees in: Business Management, Communication, Criminal Justice, Electrical Engineering, Health Fitness Specialist, Healthcare Management, Hospitality Management, Psychology and Sports Management |
|
➢ |
Master’s Degrees in: Business Administration, Criminal Justice and Education. |
A key aspect regarding UAV’s WASC approved programs
is that UAV can establish new courses or “concentrations” based on its current approved programs by modifying elements of
the programs without additional approvals needed. For example, UAV can add a ‘concentration’ of ‘international marketing’
to its current WASC approved course, Master’s in Business Administration, and immediately establish a new ‘approved’
course entitled, “Master’s in Business Administration — Entrepreneurship,” without needing additional approval
from WASC. This can be replicated for all of the current bachelor’s and master’s degree programs that have been approved by
WASC that UAV currently offers, both on-ground and online.
UAV Accreditations
UAV currently has accreditations with the following
organizations and accrediting bodies:
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WASC (WASC Senior College & University Commission — WSCUC): The WASC Senior College and University Commission is a regional accrediting agency serving a diverse membership of public and private higher education institutions throughout California, Hawaii, and the Pacific as well as a limited number of institutions outside the U.S. The WASC Senior College and University Commission (WSCUC) is recognized by the U.S. Department of Education as certifying institutional eligibility for federal funding in a number of programs, including student access to federal financial aid. |
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US Department of State for the International Exchange Programs (I-20 SEVP- F1 Visa): Student and Exchange Visitor Program (SEVP) certification allows institutions to issue Forms I-20, “Certificate of Eligibility for non-immigrant Student Status,” to prospective international students after admitting them for a course of study. Prospective international students then use the Form I-20 to apply for a visa to enter the United States. |
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Commission on Accreditation of Allied Health Education Programs (CAAHEP): The Commission on Accreditation of Allied Health Education Programs is the largest programmatic accreditor of the health sciences professions. In collaboration with its Committees on Accreditation, CAAHEP reviews and accredits over 2100 individual education programs in 32 health science occupations. CAAHEP accredited programs are assessed on an ongoing basis to assure that they meet the Standards and Guidelines of each profession. CAAHEP is recognized by the Council for Higher Education Accreditation (CHEA). CAAHEP is also a member of the Association of Specialized & Professional Accreditors (ASPA). |
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Bureau for Private Postsecondary Education (BPPE): The Bureau protects students and consumers through the oversight of California’s private post-secondary educational institutions by conducting qualitative reviews of educational programs and operating standards, proactively combating unlicensed activity, impartially resolving student and consumer complaints, and conducting outreach. |
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Emergency Medical Services Agency — Los Angeles County (EMS): The EMS Agency is responsible for planning, implementing, monitoring, and evaluating the local EMS system. This includes establishing policies, addressing the financial aspects of system operation, and making provisions for collection, analysis, and dissemination of EMS related data. Also, the EMS Agency is responsible for establishing operational policies and procedures; designating EMS base hospitals and specialty care centers, such as trauma centers; developing guidelines, standards and protocols for patient treatment and transfer; implementing a prehospital ALS program; certifying and accrediting prehospital medical care personnel; and approving EMS personnel training programs. |
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Commission on Accreditation for Prehospital Continuing Education (CAPCE): CAPCE Accredited certificates of attendance provide EMS professionals with the documentation required for maintaining their EMS license and/or NREMT certification. |
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Board of Vocational Nursing & Psychiatric Technicians (BVNPT): The mission of the California Board of Vocational Nursing and Psychiatric Technicians (Board) is to protect the public. Public protection is paramount to the Board and its highest priority in exercising its licensing, regulatory, and disciplinary functions. |
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California Board of Registered Nursing (BRN): The Board of Registered Nursing protects and advocates for the health and safety of the public by ensuring the highest quality registered nurses in the state of California. |
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US Department of Veterans Affairs (VA): VA education benefits help Veterans, service members, and their qualified family members with needs like paying college tuition, finding the right school or training program, and getting career counseling. |
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Council for Higher Education Accreditation (CHEA): The Council for Higher Education Accreditation (CHEA) is a United States organization of degree- granting colleges and universities. It identifies its purpose as providing national advocacy for self-regulation of academic quality through accreditation in order to certify the quality of higher education accrediting organizations, including regional, faith-based, private, career, and programmatic accrediting organizations. The organization has approximately 3,000 academic institutions as members and currently recognizes approximately 60 accrediting organizations. CHEA is based in Washington, DC. |
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National Association of Intercollegiate Athletics (NAIA): The National Association of Intercollegiate Athletics (NAIA), headquartered in Kansas City, Mo., is a governing body of small athletics programs that are dedicated to character-driven intercollegiate athletics. Since 1937, the NAIA has administered programs dedicated to championships in balance with the overall college educational experience. Each year more than 77,000 NAIA student-athletes have the opportunity to play college sports, earn over $800 million in scholarships, and compete for a chance to participate in 27 national championships. |
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California Commission on Teacher Credentialing: University of Antelope Valley is seeking initial institutional approval by the California Commission on Teacher Credentialing. This approval would allow the University of Antelope Valley to sponsor educator preparation programs in California. Interested parties are invited to submit comments that may help to inform the Commission of substantive issues regarding this institution. |
UAV Student Funding
Prior to enrolling at UAV, all students are encouraged
to explore the availability of financial aid funding through state and federal agencies. The majority of financial aid available to students
is provided by the Federal Government and referred to as Title IV Aid. This includes the Federal Pell Grant, Federal Supplemental Educational
Opportunity Grant (FSEOG), Federal Work-Study (FWS), Federal Direct Loan Program, and Parent Loans for Undergraduate Students (PLUS).
Also, students may be eligible to participate in institutional or private loan programs that enable students to contribute to his/her
education while in college. The university is also eligible to participate in several state agency programs.
UAV Growth Plan
We have provided details on how we plan to integrate
and expand UAV’s product offering as part of our Genius Curriculum in the sections “Our Genius Curriculum” and “Our
Four-Step Growth Plan” above.
In addition, we plan to expand UAV’s growth
in courses and student numbers in Lancaster. As part of the acquisition process, WSCUC’s Structural Change Committee conducted a
review of the acquisition from March to May 2021. This included interviews with owners, management, faculty and students, together with
review of our transition plan and growth plans for UAV. WSCUC approved the acquisition based on these interviews and plans, and below
are highlighted elements.
Property Investors Network
Property Investors Network (PIN) is one of the five
Acquisitions. PIN refers to Property Investors Network Ltd combined with its sister company Mastermind Principles Limited, a United Kingdom
(“U.K.”) private limited company. PIN is a U.K.-based company that provides investment education through its fifty city chapters
and monthly events in England, held both virtually and in-person. We believe that PIN is the largest property investor network in England
based on student numbers, with almost 164,000 students, of which 76,700 are free students and 67,987 are paying students. On November
30, 2020, Genius Group Ltd signed a definitive agreement to acquire 100% of the voting equity interest of Property Investors Network Ltd
and Mastermind Principles Limited for purchase consideration of $29.7 million and completed the acquisition in April, 2022.
PIN has a digital education and event model for investor
education that Genius Group plans to expand globally via its Edtech platform.
In 2020 PIN had revenue of $4.6 million.
In the fiscal year ended December 31, 2021, revenue was $5.1 million. In the fiscal year ended December 31, 2022, revenue was
$3 million. This continued to account for 13% of the pro forma revenue for the Group. In the first half of 2023, revenue was $2.0
million representing 22% of the pro forma revenue.
PIN’s students join PIN online or via the fifty
city chapters managed by PIN City Hosts. Each City Host is an active property investor and each monthly event is attended by property
investors in the local area, where they learn from guest speakers and share opportunities.
PIN generates revenues from event and membership fees,
and from members purchasing property, education courses and mentorship. These include two-day summits, six-week microcourses and twelve-month
mentorships. During the pandemic all events and programs became completely virtual, and revenues saw an increase.
We are integrating to expand PIN’s city host
model globally, to integrate it with GeniusU’s own City Leader model and to manage all PIN’s events and community on the GeniusU
Edtech platform. We also are extending PIN’s courses and certification programs to grow its faculty globally, and to integrate its
financial literacy, investment literacy and business communication courses in our high school and university programs. We see these skills
as being important parts of our global curriculum. For details of the current and future product range of PIN, please see the “Our
Genius Curriculum” section above. For details of our growth plans for PIN, please see the “Our Four-Step Growth Plan”
above.
Revealed Films
Revealed Films is one of the five Acquisitions. The
company is a Delaware based Film Production Company. Genius Group Ltd entered into an agreement to purchase Revealed Films on October
3, 2022 for a purchase price anticipated to be approximately $20.4 million with earnout and claw back payments in 2023, 2024 and 2025
that are contingent on meeting certain revenue and profitability criteria. The company is a film production company based in Utah that
launches three to four docu-series per year covering topics such as wealth building, health and nutrition, medical issues, religion, and
political matters. The acquisition will enable Genius Group to enhance and supplement its always-evolving curriculum with high-quality
entrepreneurial education videos.
Revealed Films Inc. was founded in 2017 by award-winning
filmmaker and television producer Jeff Hays and wellness and business expert Patrick Gentempo.
In 2022 the company had 36 staff working
as an employee and contractor and the revenues were $5.9 million. This accounted for 25% of the pro forma revenue for the Group. In
the first half of 2023, revenue was $1.6 million representing 18% of the pro forma revenue.
Revealed has its head office in Utah, United States.
The company’s staff is based throughout the United States. For details of the current and future product range of Revealed Films
please see the “Our Genius Curriculum” section above. For details of our growth plans for Revealed Films, please see the “Our
Four-Step Growth Plan” above.
Regulation
Our adult education and training are conducted globally
without the need to comply with any particular education regulations. Our school and university operations do need to comply with education
regulations in various countries. The following discussion summarizes the most significant laws, rules and regulations that affect our
operations in the following countries:
Early Learning Regulation in New Zealand, related
to Education Angels
Education Angels is required to be approved by the
NZ Ministry of Education (MOE) in order to operate and receive government funding. Education Angels is approved by the MOE and 50% of
Education Angels’ Educator fees are paid for by the NZ Government. The Education and Training Act 2020 and the Education (Early
Childhood Services) Regulations 2008 are the regulations that must be met by services in order for them to hold a license and to receive
government funding. The standards we are monitored on and are required to meet include:
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Delivery of the New Zealand national curricular framework |
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Compliance with the Health and Safety standards, governance and premises standards of the regulations. |
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An excellent quality of staff-child interaction |
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Interesting learning resources and programs that engage children |
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Engagement and effective communication with families and communities |
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Positive home learning environments that reinforce learning |
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Maintaining the specific number of qualified teachers and persons responsible. |
As is common with many countries, New Zealand does
not require early learning educators to be qualified. However, in order to receive funding, licensed home-based services require one or
more coordinators with a recognized early childhood education (ECE) teach qualification and a current practicing certificate.
Education Angels is currently meeting all requirements
in order to maintain its MOE approval.
Expansion of Education Angels to new countries will
require similar MOE or DOE approvals in each country in order for the company and parents to benefit from government financing.
School Regulation in South Africa, related to
E-Square
The South African Constitution permits anyone to establish
private school, on the basis that the school may not discriminate on the basis of race and it must offer education of a quality not inferior
to comparable public schools. All private schools must be registered with the Department of Education (DOE) in accordance with the South
African Schools Act (SASA), 1996. A private school may not operate unless it is registered with the education department of the province
in which it is situation. In the case of E-Square, this is Port Elisabeth, South Africa.
Certain provinces have additional requirements to
be met in order to qualify for potential local government funding options. However, given the challenges and potential unreliability in
these options, E-Square does not currently receive local government funding, and all education is funded by students and their parents.
University Regulation in the U.S. relevant to
UAV
UAV is subject to extensive regulation by the U.S.
Department of Education (DOE) and Western Association of Schools and Colleges, Senior College and University Commission (WASC). The regulations,
standards and policies of these agencies cover UAV’s educational programs, facilities, instructional and administrative staff, administrative
procedures, marketing, recruiting, finances, results of operations and financial condition.
As an institution of higher education that grants
degrees and certificates, UAV is required to be authorized by WASC. In addition, in order to participate in the federal programs of student
financial assistance for our students, UAV must be accredited by an accrediting commission recognized by the DOE. Accreditation is a non-governmental
process through which an institution submits to qualitative review by an organization of peer institutions, based on the standards of
the accrediting commission and the stated aims and purposes of the institution. The Higher Education Act requires accrediting commissions
recognized by the DOE to review and monitor many aspects of an institution’s operations and to take appropriate action if the institution
fails to meet the accrediting commission’s standards.
UAV’s operations are also subject
to regulation by the DOE due to our participation in federal student financial aid programs under Title IV of the Higher Education Act,
which we refer to in this Prospectus as the Title IV programs. The Title IV programs include educational loans with below-market
interest rates that are guaranteed by the federal government in the event of a student’s default on repaying the loan, and also
grant programs for students with demonstrated financial need. To participate in the Title IV programs, a school must receive and maintain
authorization by the appropriate state education agency or agencies, be accredited by an accrediting commission recognized by the DOE,
and be certified as an eligible institution by the DOE.
UAV is currently in good standing with WASC and a
WASC reaffirmation process was completed in 2021. It is a routine approval process that is conducted by WASC every 6, 8 or 10 years after
initial accreditation. It is a year-long process which was completed by November 2021 at the WASC Commission. All BA and MA degree programs
at UAV are approved for both in-person and online delivery. In addition, UAV requires and has secured the additional accreditations and
approvals from the following approval bodies in order to deliver our education programs:
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U.S. Department of State for the International Exchange Programs (I-20 SEVP — F1 Visa) |
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Commission on Accreditation of Allied Health Education Programs |
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Bureau for Private Postsecondary Education |
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California Board of Registered Nursing |
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U.S. Department of Veterans Affairs |
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Council for Higher Education Accreditation |
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Official SAT Test Site |
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California SBDC Partner |
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Commission on Accreditation for Prehospital Continuing Education |
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California Massage Therapy Council |
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Council for Higher Education Accreditation |
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Los Angeles County Emergency Medical Services Agency |
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Board of Vocational Nursing and Psychiatric Technicians |
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National Association of Intercollegiate Athletics |
Our
business activities are planned and implemented to comply with the standards of these bodies and regulatory agencies. We employ a full-time
director of compliance who is knowledgeable about regulatory matters relevant to student financial aid programs and our chief financial
officer and general counsel also provide oversight designed to ensure that we meet the requirements of our regulated operating environment.
Regulation of Federal Student Financial Aid
Programs, related to UAV
To be eligible to participate in the Title IV programs,
an institution must comply with specific requirements contained in the Higher Education Act and the regulations issued thereunder by the
Department of Education. An institution must, among other things, be licensed or authorized to offer its educational programs by the state
in which it is physically located (in our case, California) and maintain institutional accreditation by an accrediting commission recognized
by the DOE. We are currently certified to participate in the Title IV programs.
The substantial amount of federal funds disbursed
to schools through the Title IV programs, the large number of students and institutions participating in these programs, and allegations
of fraud and abuse by certain for-profit educational institutions have caused Congress to require the DOE to exercise considerable regulatory
oversight over for-profit educational institutions. As a result, our institution is subject to extensive oversight and review. Because
the DOE periodically revises its regulations and changes its interpretations of existing laws and regulations, we cannot predict with
certainty how the Title IV program requirements will be applied in all circumstances.
In general, the criteria that institutions must meet
in order to remain qualified for Title IV funding include:
Administrative capability. The DOE regulations
specify extensive criteria by which an institution must establish that it has the requisite “administrative capability” to
participate in Title IV programs. To meet the administrative capability standards, an institution must, among other things: comply with
all applicable Title IV program requirements; have an adequate number of qualified personnel to administer Title IV programs; have acceptable
standards for measuring the satisfactory academic progress of its students; not have student loan cohort default rates above specified
levels; have various procedures in place for awarding, disbursing and safeguarding Title IV program funds and for maintaining required
records; administer Title IV programs with adequate checks and balances in its system of internal controls; not be, and not have any principal
or affiliate who is, debarred or suspended from federal contracting or engaging in activity that is cause for debarment or suspension;
provide financial aid counseling to its students; refer to the DOE’s Office of Inspector General any credible information indicating
that any student, parent, employee, third-party servicer or other agent of the institution has engaged in any fraud or other illegal conduct
involving Title IV programs; submit all required reports and financial statements in a timely manner; and not otherwise appear to lack
administrative capability. If an institution fails to satisfy any of these criteria, the DOE may require the institution to repay Title
IV funds its students previously received, change the institution’s method of receiving Title IV program funds, which in some cases
may result in a significant delay in the institution’s receipt of those funds, place the institution on provisional certification
status or commence a proceeding to impose a fine or to limit, suspend or terminate the institution’s participation in Title IV programs.
If the DOE determines that UAV fails to satisfy its administrative capability requirements, then the institution’s students could
lose, or be limited in their access to, Title IV program funding.
Financial responsibility. The WASC and DOE
regulations establish extensive standards of financial responsibility that institutions such as ours must satisfy to participate in Title
IV programs. The DOE evaluates institutions for compliance with these standards on an annual basis based on the institution’s annual
audited financial statements as well as when the institution applies to the DOE to have its eligibility to participate in Title IV programs
recertified. The most significant financial responsibility standard is the institution’s composite score, which is derived from
a formula established by the DOE based on three financial ratios: (1) equity ratio, which measures the institution’s capital resources,
financial viability and ability to borrow; (2) primary reserve ratio, which measures the institution’s ability to support current
operations from expendable resources; and (3) net income ratio, which measures the institution’s ability to operate at a profit
or within its means. The DOE assigns a strength factor to the results of each of these ratios on a scale from negative 1.0 to positive
3.0, with negative 1.0 reflecting financial weakness and positive 3.0 reflecting financial strength. The DOE then assigns a weighting
percentage to each ratio and adds the weighted scores for the three ratios together to produce a composite score for the institution.
The composite score must be at least 1.5 for the institution to be deemed financially responsible without the need for further DOE oversight.
In addition to having an acceptable composite score, an institution must, among other things, provide the administrative resources necessary
to comply with Title IV program requirements, meet all of its financial obligations including required refunds to students and any Title
IV liabilities and debts, be current in its debt payments and not receive an adverse, qualified or disclaimed opinion by its accountants
in its audited financial statements.
If the DOE determines that an institution does not
meet the financial responsibility standards due to a failure to meet the composite score or other factors, the institution should be able
to establish financial responsibility on an alternative basis permitted by the DOE. This alternative basis could include, in the DOE’s
discretion, posting a letter of credit, accepting provisional certification, complying with additional DOE monitoring requirements, agreeing
to receive Title IV program funds under an arrangement other than the DOE’s standard advance funding arrangement, such as the reimbursement
method of payment or heightened cash monitoring, or complying with or accepting other limitations on the institution’s ability to
increase the number of programs it offers or the number of students it enrolls. Any requirement to post, maintain or increase a letter
of credit or other sanctions that may be imposed by the DOE could increase our cost of regulatory compliance and could affect our cash
flows. If our U.S. Institutions are unable to meet the minimum composite score requirement or comply with the other standards of financial
responsibility, and could not post a required letter of credit or comply with the alternative bases for establishing financial responsibility,
then students at UAV could lose their access to Title IV program funding.
C. Organizational Structure
The nine companies within the Group are as follows:
Genius Group Ltd is the holding company that
is listed on NYSE American. It is currently a Singapore public limited company that following the various completed
acquisitions and completed funding.
Genius Group Ltd operates as the owner
of the group of companies, providing strategic management, accounting, legal and human resources services to the companies within the
Group, in addition to managing investor relations. It derives revenues from management fees, and together with GeniusU Ltd, Entrepreneurs
Institute and Entrepreneur Resorts makes up the Pre-IPO Group. In the fiscal year ended December 31, 2021, Pre-IPO Group revenues were
$8.3 million. In the fiscal year ended December 31, 2022, the audited financial revenue were $18.2 million and the pro forma revenue
of $23.5 million. In the first half of 2023, the unaudited financial revenue was $11.8 million and pro forma revenue were $9.0 million.
GeniusU Ltd is the Edtech company within Genius
Group. GeniusU Ltd provides the technology that enables us to grow our acquisitions as Edtech companies with its Edtech platform, AI digital
assistant, personalized learning and global community. This is what we believe gives Genius Group its competitive edge, as each student
and faculty member is able to use the tools on GeniusU to design their own personalized path and access the courses and content of all
our acquisition companies from anywhere in the world. GeniusU Pte Ltd converted from a Singapore private limited company to a Singapore
public limited company (unlisted) in May 2021.
GeniusU provides free assessments and courses to students,
enabling a high volume and low cost of acquisition of new students across all age ranges. A percentage of these students in turn upgrade
and pay for events, courses and products on the GeniusU Edtech platform, guided by our Genie AI digital assistant. A further percentage
of these paying students then upgrade to our annual memberships, mentoring and certification programs, where many choose to become certified
as faculty and partners. They in turn host their own events, courses and products on GeniusU.
At the end of June 2023, GeniusU
had 3.34 million students of which 3.29 million were free students, 45,038 had upgraded to paying students and 13,165
had upgraded to become faculty or partners. Total students grew by 17% with 444,290 new students joining in at December 31, 2022
and further by 15% with 232,042 students joining in the first half of 2023, paying students grew by 15% in 2022 and 9% in the
first half of 2023 and our faculty and partners grew by 27% in 2022 as we released a range of new tools on GeniusU for teachers,
trainers and mentors to create their own events, courses and products and further by 2% in the first half of 2023.
GeniusU generates revenue from education programs
hosted on GeniusU by our partners together with revenue from education programs that form our entrepreneur curriculum. The six other companies
in the Group benefit from GeniusU’s ability to integrate, digitize and distribute their education programs across different age
groups, and the Group in turn benefits from increasing the lifetime value and spend of each student by providing a lifelong learning pathway.
Entrepreneurs Institute is a Singapore-based
company that owns and develops the entrepreneur education curriculum and tools in the Group, used by many of the leading fast-growth high-tech
companies in the world. In August 2019, Genius Group Ltd acquired Entrepreneurs Institute for $8 million.
Entrepreneurs Institute historically generated revenue
from education programs and tools including under the Wealth Dynamics, Talent Dynamics and Impact Dynamics brands. It also ran the Global
Entrepreneur Summit series in Asia, Australia, Africa, Europe and the U.S., and was the first company to bring its community of entrepreneurs
onto the GeniusU Edtech platform.
Prior to the acquisition, Genius Group Ltd received
10% to 30% of Entrepreneurs Institute’s revenue as a platform fee. Following the acquisition of Entrepreneurs Institute, all products
have been converted to digital offerings on GeniusU, and all revenues and costs of Entrepreneurs Institute have subsequently been absorbed
into GeniusU Ltd, with 100% of revenue becoming Edtech platform revenue in 2020.
The growing community within Entrepreneurs Institute
has provided a test bed for GeniusU to grow and to now attract other educators to follow a similar model for global expansion. The loyalty
of entrepreneurs within the community is demonstrated by examples of going from startup to high-growth, initial public offering, and exit
over the last 20 years, and now supporting the creation of the Genius Group curriculum for their own children.
Genius Group Ltd entered into a further
five acquisition agreements with five education companies that we plan to integrate with GeniusU and our Genius Curriculum. This forms
the Acquisitions detailed below:
Education Angels is a New Zealand-based home
childcare and education company. Genius Group Ltd entered into an agreement to purchase Education Angels in November 2020 and completed
the acquisition in April, 2022 for a purchase price of $1.9 million. The company has a model to train childcare professionals as educators
for children from 0-5 years old, developing 21st century play and discovery skills as the first step in the Genius School curriculum.
We completed the acquisition of Education Angels on April 30, 2022 and are expanding this model globally via our Edtech platform, with
home educators certified on GeniusU.
The company generates revenue from parents of young
children from 0-5 years old paying for an Education Angels’ trained educator to both educate and care for their child. Educators
within a region can provide education and care for up to 4 children at a time and are supervised by trained teachers. In New Zealand,
Education Angels is approved and licensed by the New Zealand Department of Education, and the government funds 50% of the education.
In the fiscal year ended December 31,
2021, revenue was $0.9 million. In the fiscal year ended December 31, 2022, revenue was $0.9 million. This accounted for
3% of the pro forma revenue for the Group. In the first half of 2023, revenue was $0.6 million representing 6% of the pro forma revenue.
We are integrating to expand this model globally via
our Edtech platform, with home educators certified on GeniusU and parents participating in courses on GeniusU to guide their child’s
development in a more personalized way. This will take place as both a parent-funded model and a government funded model in the countries
where government funding is available. We are also expanding Education Angels’ home-based education model to primary school age,
in order to provide parents with the option of guided home schooling in our curriculum.
E-Square is an entrepreneur education campus
in South Africa, providing a full range of programs from pre- primary through primary school, secondary school and vocational college.
Genius Group Ltd entered into an agreement to purchase E-Square in November 2020 and completed the acquisition in May, 2022 for a purchase
price of $3.8 million. E-Square’s training programs are government-funded, corporate- sponsored, and include a partnership with
Microsoft Imagination Academy, providing technology skills to students. We plan to expand this model globally via our Edtech platform,
faculty certifications and licenses to schools and vocational colleges.
E-Square generates revenue from students attending
their pre-primary, primary and secondary schools, together with their vocational college. Prior to the pandemic, E-Square developed their
education system into a hybrid model where students attended classes while completing assignments online on their smart phones. As a result,
students can attend teacher-led classes both in person and virtually. When the pandemic resulted in school closures in South Africa, E-Square
was able to continue its operations online without undue disruption.
E-Square’s school curriculum is focused on building
vocational and entrepreneurial skills, and its schools are approved by the South Africa Department of Education. It is also a certified
Microsoft Training Partner and has developed interactive technology courses for students online.
In the fiscal year ended December 31,
2021, revenue was $0.7 million. In the fiscal year ended December 31, 2022, revenue was $0.6 million. This accounted for
2% of the pro forma revenue for the Group. In the first half of 2023, revenue was $0.3 million representing 3% of the pro forma revenue.
We plan to integrate E-Square’s offering globally through courses, camps and delivery of a full primary school and high school
curriculum, and our goal is to integrate E-Square’s innovative approach and courses with GeniusU’s Edtech platform and curriculum
in order to be accessible to our global community. We are also planning expanding our faculty, partnerships and campuses so that primary
and high school students can receive their education and high school diploma online, via guided home schooling or via our campuses and
partner schools.
University
of Antelope Valley (UAV) is an accredited university based on a 10-acre campus in Lancaster, California. It offers career-focused
on-campus and online programs at the master’s, bachelor’s and associate degree level, as well as certificate and continuing
education programs in several high-demand sectors. Genius Group Ltd entered into an agreement to purchase UAV in March 2021 and closed
the acquisition in August, 2022 for purchase price of $14.5 million with an additional top up consideration paid based on the
performance of UAV in 2022, 2023 and 2024.
The university is WASC accredited with Title IV approval
from the US Department of Education, offering federally-backed student loans. It is also SEVP-certified, enabling the participation of
foreign students. Originally established as a Medical College, the University currently has a focus on building vocational skills in the
business, communications, legal and medical fields. Full details of UAV’s certifications and certifying bodies is provided in the
“Our Accreditations” section below.
During the pandemic UAV pivoted from
on-campus education to a fully online education model with a drop in revenues that is expected to be short-term. In the fiscal year ended
December 31, 2021, revenue was $9.0 million. In the fiscal year ended December 31, 2022, revenue was $8.1 million. This
accounted for 35% of the pro forma revenue for the Group. In the first half of 2023, revenue was $3.1 million representing 35%
of the pro forma revenue. We are in the process of digitizing UAV’s certificate and degree programs on our GeniusU Edtech platform,
and to enhance these programs with GeniusU’s entrepreneur curriculum and learning tools in order that our students globally can
obtain a US accredited certificate or degree either virtually, through guided home study, via our global campuses or on campus in Lancaster,
California.
Our plan is to also establish the campus of UAV in
Lancaster to be the innovation lab for our global curriculum, in which we plan to attract faculty and corporate partnerships to develop
relevant course content and curriculum that we can integrate, digitize and distribute globally via our GeniusU Edtech platform.
Property Investors Network is a U.K.-based
company that provides investment education through its fifty city chapters and monthly events in England, held both virtually and in-person.
We believe that PIN is the largest property investor network in England based on student numbers. Genius Group Ltd entered into an agreement
to purchase PIN in November 2020 and completed the acquisition in April, 2022 for a purchase price of $29.7 million. We completed the
acquisition of PIN, which has a digital education and event model for investor education that we are expanding globally via our Edtech
platform.
PIN’s students join PIN online or via the fifty
city chapters managed by PIN City Hosts. Each City Host is an active property investor and each monthly event is attended by property
investors in the local area, where they learn from guest speakers and share opportunities.
PIN generates revenues from event and membership fees,
and from members purchasing property, education courses and mentorship. These include two-day summits, six-week microcourses and twelve-month
mentorships. During the pandemic all events and programs became completely virtual and revenues saw an increase.
In the fiscal year ended December 31,
2021, revenues were $5.1 million. In the fiscal year ended December 31, 2022, revenues were $3 million. This continued to account for
11% of the pro forma revenue for the Group. In the first half of 2023, revenue was $2.0 million representing 22% of the pro forma
revenue. We are expanding PIN’s city host model globally, to integrate it with GeniusU’s own City Leader model and to
manage all PIN’s events and community on the GeniusU Edtech platform. We also plan to extend PIN’s courses and certification
programs to grow its faculty globally, and to integrate its financial literacy, investment literacy and business communication courses
in our high school and university programs. We see these skills as being important parts of our global curriculum.
Revealed Films Inc is a Utah based media production
company that specializes in multi-part documentaries. Such documentaries and docuseries span various topics. From educational investment
and entrepreneurial best practices by leading experts to hard hitting societal topics.
In the half year ended June
30, 2022, revenue was $3.6 million. In the six months ended June 30, 2023, revenue was $1.64 million.
This accounted for 19% of the pro forma revenue for the Group. In the first half of 2023, revenue was $1.6 million representing
18% of the pro forma revenue. We plan to expand RF’s project production schedule, and developing curriculum to offer it on
the GeniusU Edtech platform. We also plan to build key courses and certification programs to grow its speaker base globally.
The Company’s principal subsidiaries
as at June 30, 2023 are as follows:
Name | |
Principal activities | |
Proportion of voting rights and shares held (directly or indirectly) | | |
Country of Incorporation |
GeniusU Ltd | |
Operating company including tech development platform | |
| 97 | % | |
Singapore |
Wealth Dynamics Pte Ltd trading as Entrepreneurs Institute | |
IP holding company | |
| 100 | % | |
Singapore |
Entrepreneur Resorts Ltd | |
Holding company – listed on Merj Exchange | |
| 96 | % | |
Seychelles |
Entrepreneur Resorts Pte Ltd | |
Management company | |
| 96 | % | |
Singapore |
Genius Central Singapore Pte Ltd | |
Hospitality operation | |
| 96 | % | |
Singapore |
PT. Bali XL Vision Villa | |
Resort operation | |
| 96 | % | |
Indonesia |
Tau Game Lodge (Pty) Ltd | |
Resort operation | |
| 96 | % | |
South Africa |
Matla Game Lodge (Pty) Ltd | |
Resort operation | |
| 96 | % | |
South Africa |
Education Angels In Home Childcare Limited | |
Early childhood education | |
| 100 | % | |
New Zealand |
E-Squared Education Enterprises (Pty) Ltd | |
Primary and secondary education | |
| 100 | % | |
South Africa |
University of Antelope Valley Inc. | |
Tertiary education | |
| 100 | % | |
USA |
Property Investors Network Ltd | |
Investment education | |
| 100 | % | |
UK |
Mastermind Principles Ltd | |
Investment education | |
| 100 | % | |
UK |
Revealed Films Inc | |
Film Production | |
| 100 | % | |
USA |
D. Property, plants and
equipment.
Facilities
Genius Group’s principal operational offices
are located in Singapore under a lease for 7,469 square feet of office space with an annual rental cost of $0.45 million renewed September
2022 for a further three years. The Group has a remote working structure for most of our team globally.
GeniusU has its principal offices located in Singapore
at the principal offices of Genius Group.
Our Acquisitions have physical locations of operation
as follows.
|
● |
Education Angels has a number of small education centers in New Zealand with its principal office in Wellington, New Zealand. |
|
|
|
|
● |
E-Square principal offices and university campus are in Port Elizabeth, South Africa under a lease on a rolling monthly basis. |
|
● |
UAV’s principal offices and university campus are in Lancaster, California. Genius Group has a right of first refusal and option to acquire the property, which expires two years after closing of the acquisition of UAV. |
|
|
|
|
● |
Property Investors Network has its principal offices in Birmingham, UK. |
|
|
|
|
● |
Revealed Films has its principal offices in Utah, USA. |
Genius Group’s strategy is to leverage various
global infrastructure and remote working methodologies to enable flexible and cost effective working environments for administrative and
sales teams, whilst leasing or acquiring property required for location based operations.
Legal Proceedings
From
time to time, we may be subject to litigation and arbitration claims incidental to its business. Such claims may not be covered
by our insurance coverage, and even if they are, if claims against our business are successful, they may exceed the limits of applicable
insurance coverage.
A.
Directors and senior management.
The following table sets forth information
regarding our executive officers and directors as of the date of this Prospectus.
Name |
|
Age |
|
Position with our Company |
Roger James Hamilton |
|
54 |
|
Chief Executive Officer and Chairman |
Suraj Naik |
|
38 |
|
Chief Technology Officer and Director |
Jeremy Harris |
|
52 |
|
Chief Financial Officer |
Richard J. Berman |
|
80 |
|
Director |
Salim Ismail |
|
58 |
|
Director |
Eric Pulier |
|
57 |
|
Director |
Roger James Hamilton has been our Chief Executive
Officer and Chairman since 2015. He is also the founder and Chief Executive Officer of Entrepreneur Resorts Limited, a hospitality company
and a subsidiary of Genius Group Ltd, since 2017, where he is responsible for the growth of the company’s resorts and beach clubs
and led the company through its initial public offering in 2017. Mr. Hamilton is also founder and Chairman of Entrepreneurs Institute
and GeniusU Ltd, which are both companies within Genius Group. Mr. Hamilton is a New York Times bestselling author and entrepreneur who
mentors other entrepreneurs to grow their enterprises and find their flow. He holds a B.A. from the University of Cambridge.
Suraj Naik has been our Chief Technology Officer
since 2017 and Director since 2020. Prior to joining the Group, Mr. Naik created an online event ticketing and registration platform,
which he later sold to Idea Wave Labs. After successfully launching Wealth Dynamics and Millionaire Master Plan, where he was responsible
for executing a 4-month campaign to ensure placement of The Millionaire Master Plan book on the bestsellers lists of the New
York Times, USA Today, Amazon and Barnes & Noble, Suraj led the launch of GeniusU. Mr. Naik holds an MBA from James Cook
University and a bachelor’s degree from Maharaja Sayajirao University.
Jeremy
Harris served as our Chief Financial Officer from 2020 to 2022, and is currently acting in the position on an interim basis. Mr.
Harris has over 25 years’ experience as an accountant and business advisor. He is a director and the Lead CFO at Grow CFO, a private
limited company based in Australia, and he specializes in providing strategic financial advice to entrepreneurs. Mr. Harris was previously
a partner at Gill, McKerrow & Associates, a full-service accounting and tax consulting company in Australia, from 2000 to 2018 during
which time he was a registered Tax Agent and Financial Adviser, and a consultant at the firm from 2018 to 2020. Mr. Harris holds a bachelor’s
degree from the Queensland University of Technology and is a Member of Chartered Accountants Australia and New Zealand.
Richard J. Berman joined Genius Group as a
Director since January 2022 and also serves as Genius Group’s Audit Committee Chair. He holds a BSc and an MBA degree from the Stern
School of Business of NYU and U.S. and foreign law degrees. His business career spans over 35 years in senior management, mergers and
acquisitions, and venture capital. He is a director of four public NASDAQ companies – Cryoport Inc., Comsovereign Holding Corp.,
BioVie Inc., and Context Therapeutics Inc., and over the last decade he has served on the board of six companies that have reached over
one billion dollars in market cap – Cryoport, Advaxis, EXIDE, Internet Commerce Corp., Ontrak (Catasys), and Kapitus. His early
career began with Goldman Sachs and thereafter he became the Senior Vice President of the Bankers Trust Company, where he started the
mergers and acquisitions, and leveraged buyout departments.
Salim Ismail joined Genius Group’s Board
in October 2023. Salim is a futurist and best-selling author of Exponential Organizations and Exponential Transformation, and has been
building disruptive digital companies as a serial entrepreneur since the early 2000s. Salim is Founding Executive Director of Singularity
University and Co-founder and Chairman of OpenExO, a global transformation ecosystem that connects world-class professionals with organizations,
institutions and people who want to build a better future through cutting-edge ideas and actionable methodologies. Salim founded and
led some of the most influential tech companies at the foundation of our digital society, including PubSub Concepts and Angstro, which
Google acquired in 2010. He led Yahoo!’s internal incubator, Brickhouse, and is an XPRIZE Foundation Board member.
Eric Pulier joined Genius Group’s Board in
October 2023. Eric Pulier is an entrepreneur, technologist, author, public speaker, investor, philanthropist, and founder of over
16 companies, has raised more than a billion dollars for ventures he has founded or co-founded. His ventures have achieved various liquidity
events, such as acquisitions, IPOs, ICOs, and mergers. Pulier is credited with starting one of the first and largest internet professional
services companies, creating the first enterprise desktops-as-service platform, the first enterprise hybrid computing system, and inventing
the concept of programmable non-fungible tokens for access, rewards, and utility, known as Smart NFTs. Pulier graduated Magna Cum Laude
from Harvard University, where he was an editor of the Harvard Crimson. In 1996, Pulier was selected to conceive and build the “Bridge
to the 21st Century” for Bill Clinton and Al Gore for their second inauguration. Additionally, Mr. Pulier is the creator of Starbright
World, a project that connected 75 hospitals in the first-ever virtual community for children, funded by Microsoft co-founder Paul Allen
and chaired by director Steven Spielberg. He is the author of “Understanding Enterprise SOA” and a renowned expert and speaker
on the practical applications of artificial intelligence, spatial computing, augmented reality, cloud computing, blockchain, and other
exponential technologies.
Family Relationships
There are no family relationships between any of the
directors. There are no family relationships between any director and any of the senior management of our Company.
B. Compensation.
Executive Compensation
We are not required to disclose compensation paid
to our senior management on an individual basis under the laws of Singapore and we have not otherwise publicly disclosed this information
other than in this document and the associated financial statements.
| |
2023 | | |
2022 | |
| |
Salary | | |
Stock Based | | |
Total | | |
Salary | | |
Stock Based | | |
Total | |
Key Management Compensation | |
| 1,510,983 | | |
| 389,250 | | |
| 1,900,233 | | |
| 1,184,506 | | |
| 553,987 | | |
| 1,738,493 | |
C. Board practices.
Board of Directors
Our board of directors consists of 5
directors, including 2 executive (or otherwise-non-independent) directors and 3 independent directors. We established
an Audit Committee, a Nominating and Corporate Governance Committee and a Compensation Committee upon the effectiveness of our registration
statement on Form F-1, on March 31, 2022. We adopted a charter for each of the three committees. Each of the committees of our board
of directors have the composition and responsibilities described below.
The Singapore Companies Act requires
that we must have at all times at least one director who is ordinarily resident in Singapore. Roger James Hamilton is the ordinarily
resident in Singapore. Vacation of all six board positions by these directors shall be deemed to be invalid absent a prior appointment
of another director to the Board who is ordinarily resident in Singapore.
Audit Committee
Eric Pulier, Richard J. Berman
and Salim Ismail serve as members of our Audit Committee. Richard J. Berman serves as the chairman of the Audit Committee. Each
of our Audit Committee members satisfy the “independence” requirements of the NYSE American listing rules and meet the independence
standards under Rule 10A-3 under the Exchange Act. We have determined that Richard J. Berman possesses accounting or related financial
management experience that qualifies him as an “audit committee financial expert” as defined by the rules and regulations
of the SEC. Our Audit Committee oversees our accounting and financial reporting processes and the audits of our financial statements.
Our Audit Committee performs several functions, including:
|
➢ |
evaluating the independence and performance of, and assesses the qualifications of, our independent auditor, and engages such independent auditor; |
|
➢ |
approving the plan and fees for the annual audit, quarterly reviews, tax and other audit-related services, and approves in advance any non-audit service to be provided by the independent auditor; |
|
➢ |
monitoring the independence of the independent auditor and the rotation of partners of the independent auditor on our engagement team as required by law; |
|
➢ |
reviewing
the financial statements to be included in our Prospectus on Form 20-F and Current Reports on Form 6-K and reviews with management
and the independent auditors the results of the annual audit and reviews of our quarterly financial statements; |
|
➢ |
overseeing all aspects of our systems of internal accounting control and corporate governance functions on behalf of the Board; |
|
➢ |
reviewing and approving in advance any proposed related-party transactions and report to the full Board on any approved transactions; and |
|
➢ |
providing oversight assistance in connection with legal, ethical and risk management compliance programs established by management and our board of directors, including Sarbanes-Oxley Act implementation, and makes recommendations to our board of directors regarding corporate governance issues and policy decisions. |
Compensation Committee
Eric Pulier, Richard J. Berman and
Salim Ismail serve as members of our Compensation Committee. Richard J. Berman serves as the chairman of the Compensation
Committee. All of our Compensation Committee members satisfy the “independence” requirements of the NYSE American listing
rules and meet the independence standards under Rule 10A-3 under the Exchange Act. Our Compensation Committee is responsible for overseeing
and making recommendations to our board of directors regarding the salaries and other compensation of our executive officers and general
employees and providing assistance and recommendations with respect to our compensation policies and practices.
Nominating and Corporate Governance Committee
Eric Pulier, Richard J. Berman and
Salim Ismail serve as members of our Nominating and Corporate Governance Committee. Richard J. Berman serves as the chairman
of the Nominating and Corporate Governance Committee. All of our Nominating and Corporate Governance Committee members satisfy the “independence”
requirements of the NYSE American listing rules and meet the independence standards under Rule 10A-3 under the Exchange Act. Our Nominating
and Corporate Governance Committee is responsible for identifying and proposing new potential director nominees to the board of directors
for consideration and reviewing our corporate governance policies.
Duties of Directors
Under Singapore law, our directors have a duty to
act honestly, and in good faith in the best interests of our Company. Our directors are also required to use reasonable diligence in the
discharge of the duties of their office. Our Company has the right to seek damages if a duty owed by our directors is breached.
The business of our Company shall be managed by, or
under the direction or supervision of, our directors. Our directors may exercise all the powers of our Company except any power that the
Singapore Companies Act or our constitution requires our Company to exercise in general meeting. The functions and powers of our board
of directors include, among others:
|
➢ |
convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; |
|
➢ |
recommending dividends and distributions; |
|
➢ |
appointing officers and determining the term of office of officers; |
|
➢ |
exercising the borrowing powers of our Company and mortgaging the property of our Company; and |
|
➢ |
approving the transfer of shares of our Company, including the registering of such shares in our register of members. |
Terms of Directors and Officers
Our directors are not subject to a set term of office.
Our constitution provides that at each annual general
meeting, one-third of the directors for the time being, or if the number is not three or a multiple of three, then the number nearest
one-third, shall retire from office by rotation and will be eligible for re-election at that annual general meeting (the directors so
to retire being those longest in office since their last election). The office of a director will be vacated if, among other things, the
director becomes prohibited by law from acting as a director, resigns in writing, has a receiving order made against him or suspends payments
or compounds with his/her creditors generally or is found lunatic or becomes of unsound mind.
Our officers, such as our Chief Executive Officer
and our Chief Financial Officer, are appointed by and serve at the discretion of our board of directors.
D. Employees
We currently have 475 staff members,
with 17 in Genius Group Ltd, 47 in GeniusU Ltd, 114 in University of
Antelope Valley, 26 in Property Investors Network, 37 in E-Squared, 21 in Education Angels and 37 in Revealed Films.
We operate as one global team with regional leadership, and we established a remote working culture prior to the COVID-19 crisis, which
put us in a strong position to manage through the crisis without any major change to our management process.
By illustration, our main leadership team works from
Singapore, Australia, New Zealand, Indonesia, South Africa, England, Portugal, Poland and the United States. Our accounts team operates
from Australia and our development team works from India, Ukraine and Poland. Our campus teams are based in Indonesia, Singapore and South
Africa.
Share Incentive Plan
Our Genius Group share incentive plan (the “Incentive
Plan”) was introduced in 2018 to the then-existing employees of Genius Group Ltd. It was subsequently extended to all companies
within the Pre-IPO Group. We have further adopted Share Incentive Plan 2023 and our intention is to extend it to the Acquisitions and
to continue to extend the plan to new employees and new acquisitions.
The purpose of our Incentive Plan is to provide eligible
persons with an opportunity to share in the growth in value of our shares and to encourage them to improve the performance of Genius Group’s
return to shareholders. It is also intended that the Incentive Plan will enable Genius Group to retain and attract skilled and experienced
employees.
In summary, the rules of the Incentive Plan are:
|
➢ |
An option pool is determined by the Board of Directors at the beginning of each calendar year. The size of the pool is approximately equivalent to two months payroll cost and may change from time to time. |
|
➢ |
Options are granted from the pool to eligible employees each year. Eligible employees are those that are in full-time employment and have been employed by the Company for at least three months prior to December 31 each year. |
|
➢ |
At the grant date, employees are issued with a letter stating the number of options earned and the exercise price. These are calculated based on the total options pool available, and divided pro rata to their length of employment in the year and proportional to their salary as a percentage of total wages. |
|
➢ |
The exercise price is at the share price at the time of the grant date. |
|
➢ |
The vesting date is one year after the grant date. In order to vest, an employee must still be in employment with Genius Group as of the vesting date. |
|
➢ |
On the vesting date, eligible employees may exercise their option at the pre-fixed exercise price. |
|
➢ |
Should employees choose to exercise their option, shares are issued as an interest-free loan repayable at the time of sale of the shares. |
|
➢ |
Should employees not to exercise, or if they leave employment prior to the vesting date, the options lapse. |
|
➢ |
Employees are required to complete the KYC (Know Your Customer) process before receiving the share certificates. |
Below are details of the options and restricted stock
units issued to date:
| |
| |
| | |
| | |
| | |
No of Shares | |
| |
| |
No of | | |
Price | | |
Total | | |
after Share | |
Year | |
Companies | |
Shares | | |
Per Share | | |
Consideration | | |
Split | |
2018 | |
Genius Group Ltd | |
| 20,317 | | |
$ | 15.45 | | |
$ | 313,898 | | |
| 121,902 | |
2019 | |
Genius Group Ltd, GeniusU Ltd, Entrepreneur Institute Ltd, Entrepreneur Resorts Ltd | |
| 42,913 | | |
$ | 21.34 | | |
$ | 915,763 | | |
| 257,487 | |
2020 | |
Genius Group Ltd, GeniusU Ltd, Entrepreneur Institute Ltd, Entrepreneur Resorts Ltd | |
| 20,075 | | |
$ | 34.87 | | |
$ | 700,015 | | |
| 120,450 | |
2021 | |
Genius Group Ltd, GeniusU Ltd, Entrepreneur Institute Ltd, Entrepreneur Resorts Ltd | |
| 22,369 | | |
$ | 36.00 | | |
$ | 805,284 | | |
| 134,214 | |
2022 | |
Genius Group Ltd, University of Antelope Valley | |
| | | |
| n.m. | (1) | |
$ | 4,962,499 | | |
| 2,071,852 | |
2023 | |
Genius Group Ltd and Subsidiaries | |
| | | |
| n.m. | (1) | |
$ | 730,130 | | |
| 873,429 | |
| |
| |
| | | |
| | | |
| | | |
| | |
| |
TOTAL | |
| | | |
| | | |
$ | 8,427,589 | | |
| 3,579,334 | |
|
(1) |
All options and restricted stock units have been issued at different price per shares |
Employment Agreements
We have entered into employment agreements with each
of our executive officers for a specified time period providing that the agreements are terminable for cause at any time. The terms of
these agreements are substantially similar to each other. A senior executive officer may terminate his or her employment at any time upon
30 days’ prior written notice. We may terminate the executive officer’s employment for cause, at any time, without advance
notice or remuneration, for certain acts of the executive officer, such as conviction or plea of guilty to a felony or any crime involving
moral turpitude, negligent or dishonest acts to our detriment, or misconduct or a failure to perform agreed duties.
Each executive officer has agreed to hold in strict
confidence and not to use, except for the benefit of our Company, any proprietary information, technical data, trade secrets and know-how
of our Company or the confidential or proprietary information of any third party, including our subsidiaries and our clients, received
by our Company. Each of these executive officers has also agreed to be bound by noncompetition and non-solicitation restrictions during
the term of his or her employment and typically for two years following the last date of employment.
E. Share Ownership
Refer to Item 7.A. for details of share ownership
by our officers and directors.
Item 7. Major Shareholders and Related Party Transactions
A. Share Ownership
The following table sets forth information
regarding the beneficial ownership of our ordinary shares as of the date of this Prospectus by (i) our officers and directors,
(ii) our officers and directors as a group, and (iii) 5% or greater beneficial owners of ordinary shares.
We have determined beneficial ownership in accordance
with the rules of the NYSE American. These rules generally attribute beneficial ownership of securities to persons who possess
sole or shared voting power or investment power with respect to those securities. The person is also deemed to be a beneficial owner of
any security of which that person has a right to acquire beneficial ownership within 60 days. Unless otherwise indicated, the person identified
in this table has sole voting and investment power with respect to all shares shown as beneficially owned by him, subject to applicable
community property laws.
| |
| | |
After Offering | |
| |
Amount of | | |
Percentage of | |
| |
Beneficial | | |
Outstanding | |
Name and Address of Beneficial Owner | |
Ownership(1) | | |
Shares(2) | |
Executive Officers and Directors: | |
| | | |
| | |
Roger James Hamilton | |
| 9,379,404 | | |
| 12.80 | % |
Suraj Naik | |
| 265,626 | | |
| 0.40 | % |
Richard J. Berman | |
| 6,667 | | |
| ** | % |
Salim Ismail | |
| - | | |
| ** | % |
Eric Pulier | |
| - | | |
| ** | % |
Jeremy Harris | |
| - | | |
| ** | % |
| |
| | | |
| | |
All directors and executive officers as a group (7 individuals) | |
| 9,379,404 | | |
| 13.13 | % |
** Less than 1%.
(1) |
The Amount of Beneficial Ownership includes allocated shares only and does not include share options that are exercisable within 60 days, since there are no such share options. |
|
|
(2) |
The
Percentage of Outstanding Shares is based on the total outstanding shares of 73,873,784 as of December 27, 2023, which
includes all issued and outstanding shares. |
B. Related party transactions
Before the completion of the IPO, we adopted an audit
committee charter, which requires the committee to review all related-party transactions on an ongoing basis and that all such transactions
be approved by the committee.
Set forth below are the related party
transactions of our Company that occurred during the last full fiscal year up to the date of this Prospectus.
Related
Party Transactions in 2023
World
Game Pte Ltd (Roger Hamilton) — The Pre-IPO Group paid fees to World Game Pte Ltd for the services of Roger Hamilton as CEO
amounting to $677,300 in 2023. The outstanding balance payable as at December 31, 2023 was nil.
Employee
share Option Plan — loan — In 2023, the company granted 873,429 share options to the employees for the year 2023 under
Employee share option plan. None of the options are exercised and hence the outstanding balance under subscription receivables remains
unchanged.
Entrepreneurs
Institute Australia Pty Ltd — The Pre-IPO Group pays fees to Entrepreneurs Institute Australia Pty Ltd (“EIA”),
an Australian company controlled and ultimately owned by Roger Hamilton and Sandra Morrell, directors of Genius Group Ltd. In June 2023,
the Company began the process of liquidation and is currently in review with the regulators. The total in 2023 was $117,790. The sole
purpose of the entity is to engage local team and physical resources to provide day-to-day support to the Group with its own business
requirements as well as catering to external clients. EIA on-charges its costs and does not record a material profit or loss; therefore,
the related party shareholders do not receive any financial benefit from this arrangement.
GU
Web Services India Pvt Ltd — The Pre-IPO Group pays fees to GeniusU Web Services India Pvt Ltd (“GU India”), an
Indian company controlled and ultimately owned by Suraj Naik, an employee of the Pre- IPO Group, and a family member of Suraj Naik. The
total in 2023 was $288,937. The sole purpose of the entity is to engage local team and physical resources to provide day-to-day support
to the Group with its own business requirements as well as catering to external clients. GU India on-charges its costs and does not record
a material profit or loss; therefore, the related party shareholders do not receive any financial benefit from this arrangement.
Roger
Hamilton — The loan payable to Roger Hamilton is for the for a loan agreement entered on October 16, 2023 with its CEO, Roger
James Hamilton, to provide it with up to $4 million as an interest free loan, to be converted into equity in the Company as ordinary
shares and upon the same terms at the next qualified financing round. Roger Hamilton has loaned the Company $2.1 million under this agreement.
He has agreed to have $1 million converted into the securities offered under this prospectus upon the same terms as set forth here. The
balance of $1.1 million will be repaid in cash at a date no sooner than July 1, 2024.
Revealed
Films – The loan payable to the prior owner of Revealed Films (Jeff Hays and Patrick Gentempo) for the acquisition of Revealed
Films in Oct 2022 is non-interest bearing with payment of $2,000,000 due on or before March 31, 2023. The total outstanding balance on
December 31, 2022 was $2,000,000 was repaid during the year 2023 and the outstanding balance payable as at December 31, 2023 was nil.
E-Squared
Education - The loan payable to the prior owner of E-Squared Education (Lilian Niemann) for the acquisition of E-Squared in May 2022
is non-interest bearing with payment of ZAR 3.6 million (approx. $299,231) payable on or before Nov 30, 2022. The total outstanding balance
on December 31, 2022 was $299,231 was repaid during the year 2023 and the outstanding balance payable as at December 31, 2023 was nil.
Related Party Transactions in 2022
World Game Pte Ltd (Roger Hamilton) — The
Pre-IPO Group paid fees to World Game Pte Ltd for the services of Roger Hamilton as CEO amounting to $621,348 in 2022. The outstanding
balance payable as at December 31, 2022 was $78,235.
Employee share Option Plan — loan —
In April 2022, the company granted 134,214 share options to the employees for the year 2021 under Employee share option plan. None
of the options are exercised and hence the outstanding balance under subscription receivables remains unchanged.
Entrepreneurs Institute Australia Pty Ltd —
The Pre-IPO Group pays fees to Entrepreneurs Institute Australia Pty Ltd (“EIA”), an Australian company controlled and
ultimately owned by Roger Hamilton and Sandra Morrell, directors of Genius Group Ltd. The total in 2022 was $325,243. The sole purpose
of the entity is to engage local team and physical resources to provide day-to-day support to the Group with its own business requirements
as well as catering to external clients. EIA on-charges its costs and does not record a material profit or loss; therefore, the related
party shareholders do not receive any financial benefit from this arrangement. The outstanding balance payable as at December 31, 2022
was $35,305.
GU Web Services India Pvt Ltd — The Pre-IPO
Group pays fees to GeniusU Web Services India Pvt Ltd (“GU India”), an Indian company controlled and ultimately owned by Suraj
Naik, an employee of the Pre- IPO Group, and a family member of Suraj Naik. The total in 2021 was $209,322. The sole purpose of the entity
is to engage local team and physical resources to provide day-to-day support to the Group with its own business requirements as well as
catering to external clients. GU India on-charges its costs and does not record a material profit or loss; therefore, the related party
shareholders do not receive any financial benefit from this arrangement.
Roger Hamilton — The loan payable to
Roger Hamilton for the acquisition of Entrepreneurs Institute is non-interest bearing, with payments of $348,000 payable on each of the
first and second anniversaries of the acquisition of Entrepreneurs Institute. The amount of $348,000 was repaid during 2022. The total
outstanding balance on December 31, 2022 was $nil.
Revealed Films – The loan payable to
the prior owner of Revealed Films (Jeff Hays and Patrick Gentempo) for the acquisition of Revealed Films in Oct 2022 is non-interest bearing
with payment of $2,000,000 due on or before March 31, 2023. The total outstanding balance on December 31, 2022 was $2,000,000. During
December 2022, Revealed Films sold the rights to a movie for $451,101 and purchased the rights to a movie for $433,964; both transactions
were with Jeff Hays Films LLC. Jeff Hayes is the owner of Jeff Hays Films LLC and was one or the former owners of Revealed Films before
its acquisition by the Company.
University
of Antelope Valley – During August 2022, the Company signed two lease agreements for University of Antelope Valley
university buildings with the former owners of University of Antelope Valley, both with 12-year terms. A right of use asset and a lease
liability of $11,149,101 was booked to the Consolidated Statements of Financial Condition for the leases.
E-Squared Education - The loan payable to the
prior owner of E-Squared Education (Lilian Niemann) for the acquisition of E-Squared in May 2022 is non-interest bearing with payment
of ZAR 3.6 million (approx. $299,231) payable on or before Nov 30, 2022. The total outstanding balance on December 31, 2022 was $299,231.
Related Party Transactions in 2021
World Game Pte Ltd (Roger Hamilton) — The
Pre-IPO Group paid fees to World Game Pte Ltd for the services of Roger Hamilton as CEO amounting to $593,068 in 2021. The outstanding
balance payable as at December 31, 2021 was $11,767.
Employee share Option Plan — loan —
In December 2021 some of the employees who had been granted options in December 2020 exercised those options, and under the terms
of the Employee Share Option Plan the exercise price is recorded as an interest free loan to each employee, repayable on sale of the shares.
The total loan amount for December 2021 was $433,800. To the extent that such loans are made to directors and officers, then before the
Company’s IPO the Company will redeem a sufficient number of the allotted shares for each employee as will satisfy the loan obligations
in full.
Entrepreneurs Institute Australia Pty Ltd —
The Pre-IPO Group pays fees to Entrepreneurs Institute Australia Pty Ltd (“EIA”), an Australian company controlled and
ultimately owned by Roger Hamilton and Sandra Morrell, directors of Genius Group Ltd. The total in 2021 was $172,740. The sole purpose
of the entity is to engage local team and physical resources to provide day-to-day support to the Group with its own business requirements
as well as catering to external clients. EIA on-charges its costs and does not record a material profit or loss; therefore, the related
party shareholders do not receive any financial benefit from this arrangement. The outstanding balance payable as at December 31, 2021
was $33,443.
GU Web Services India Pvt Ltd — The Pre-IPO
Group pays fees to GeniusU Web Services India Pvt Ltd (“GU India”), an Indian company controlled and ultimately owned by Suraj
Naik, an employee of the Pre- IPO Group, and a family member of Suraj Naik. The total in 2021 was $167,735. The sole purpose of the entity
is to engage local team and physical resources to provide day-to-day support to the Group with its own business requirements as well as
catering to external clients. GU India on-charges its costs and does not record a material profit or loss; therefore, the related party
shareholders do not receive any financial benefit from this arrangement.
Roger Hamilton — The loan payable to
Roger Hamilton for the acquisition of Entrepreneurs Institute is non-interest bearing, with payments of $348,000 payable on each of the
first and second anniversaries of the acquisition of Entrepreneurs Institute. The amount of $348,000 was not repaid during 2021. The total
outstanding balance on December 31, 2021 was $348,000.
Sandra Morrell — The loan payable to
Sandra Morrell for the acquisition of Entrepreneurs Institute is non- interest bearing, with payments of $32,000 payable on each of the
first and second anniversaries of the acquisition of Entrepreneurs Institute. The amount of $32,000 was repaid during 2021. The total
outstanding balance on December 31, 2021 was $nil.
Michelle Clarke — The loan payable to
Michelle Clarke for the acquisition of Entrepreneurs Institute is non- interest bearing, with payments of $20,000 payable on each of the
first and second anniversaries of the acquisition of Entrepreneurs Institute. The amount of $20,000 was repaid during 2021. The total
outstanding balance on December 31, 2021 was $nil.
DESCRIPTION
OF SHARE CAPITAL
General
For the purposes
of this section, references to “shareholders” mean those persons whose names and number of shares are entered in our register
of members. Only persons who are registered in our register of members are recognized under Singapore law as shareholders of our Company.
As a result, only registered shareholders have legal standing to institute shareholder actions against us or otherwise seek to enforce
their rights as shareholders. The branch register of members is maintained by VStock Transfer, LLC, our transfer agent.
We will not, except
as required by applicable law, recognize any equitable, contingent, future or partial interest in any ordinary share, or any interest
in any fractional part of an ordinary share, or other rights for any ordinary share other than the absolute right thereto of the registered
holder of that ordinary share.
The shares offered
in the offering pursuant to this prospectus are expected to be held through the Depository Trust Company (“DTC”). Accordingly,
DTC or its nominee, Cede & Co., will be the shareholder on record registered in our register of members. The holder of our shares
held in book-entry interests through DTC or its nominee may become a registered shareholder by exchanging its interest in our shares for
certificated shares and being registered in our register of members in respect of such shares. The procedures by which a holder of book-entry
interests held through DTC or its nominee may exchange such interests for certificated shares are determined by DTC and VStock Transfer,
LLC, in accordance with their internal policies and guidelines regulating the withdrawal and exchange of book-entry interests for certificated
shares, and following such an exchange VStock Transfer, LLC will perform the procedures to register the shares in the branch register
of members.
Under the Singapore
Companies Act, if (a) the name of any person is without sufficient cause entered in or omitted from the register of members; or (b) default
is made or unnecessary delay takes place in entering in the register of members the fact of any person having ceased to be a member, the
person aggrieved or any member of the public company or the company itself, may apply to the Singapore courts for rectification of the
register of members. The Singapore courts may either refuse the application or order rectification of the register of members, and may
direct the company to pay any damages sustained by any party to the application. The Singapore courts will not entertain any application
for the rectification of a register of members in respect of an entry which was made in the register of members more than 30 years before
the date of the application.
The
number of ordinary shares outstanding as of December 27, 2023 is 73,873,784 and excludes:
| ● | 2,516,581
management
and employee share options issued and reserved. |
| ● | Any
further conversion from the convertible debt issuance or any outstanding warrants. |
➢ The following description
of our share capital and provisions of our constitution (formerly known as our memorandum and articles of association) are summaries
and are qualified by reference to the applicable provisions of Singapore law (including the Singapore Companies Act) and our constitution.
A copy of our constitution has been filed with the SEC as an exhibit to the registration statement of which this prospectus forms a part.
Ordinary
Shares
As
of the date of this prospectus, our issued and paid-up ordinary share capital consisted of 73,473,784 ordinary shares as described
above. We currently have only one class of issued ordinary shares, which have identical rights in all respects and rank equally with
one another. Our ordinary shares have no par value as there is no concept of authorized share capital under Singapore law. There is a
provision in our constitution which provides that subject to the Singapore Companies Act, we may issue shares with such preferred, deferred
or other special rights or such restrictions, whether in regard to dividend, voting, return of capital or otherwise as our board of directors
may determine.
All of our shares
presently issued are fully paid-up, and existing shareholders are not subject to any calls on these shares. Although Singapore law does
not recognize the concept of “non-assessability” with respect to newly issued shares, we note that any subscriber of our shares
who has fully paid up all amounts due with respect to such shares will not be subject under Singapore law to any personal liability to
contribute to the assets or liabilities of our Company in such subscriber’s capacity solely as a holder of such shares. We believe
that this interpretation is substantively consistent with the concept of “non-assessability” under most, if not all, U.S.
state corporations’ laws. All of our shares are in registered form. We cannot, except in the circumstances permitted by the Singapore
Companies Act, grant any financial assistance for the acquisition or proposed acquisition of our own shares. Except as described below
under “— Take-overs,” there are no limitations imposed by the Singapore Companies Act or by our constitution on the
rights of shareholders not resident in Singapore to hold or vote in respect of our ordinary shares.
Transfer
Agent and Branch Registrar
The transfer agent
and branch registrar for our ordinary shares is VStock Transfer, LLC.
Listing
We
have listed our ordinary shares listed on the NYSE American under the symbol “GNS”. l.
New Shares
Under the Singapore
Companies Act, new shares may be issued only with the prior approval of our shareholders in a general meeting. General approval may be
sought from our shareholders in a general meeting for the issuance of shares. Such approval, if granted, will lapse at the earlier of:
➢
the conclusion of the next annual general meeting; or
➢
the expiration of the period within which the next annual general meeting is required by law to be held (i.e., within six months
after the end of each financial year), but any approval may be revoked or varied by the shareholders in a general
meeting.
Our shareholders
have in April 2021 provided such general authority to issue new ordinary shares until the conclusion of our next annual general meeting,
or the date by which the next annual general meeting of the Company is required by law to be held, whichever is earlier. Such approval
will lapse in accordance with the preceding paragraph if our shareholders do not grant a new approval at our next annual general meeting,
or the date by which the next annual general meeting of the Company is required by law to be held, whichever is earlier. Subject to this
and the provisions of the Singapore Companies Act and our constitution, our board of directors may allot and issue new ordinary shares
on such terms and conditions and for such purposes as may be determined by our board of directors in its sole discretion.
Preference
Shares
We currently do
not have any preference shares issued.
Under the Singapore
Companies Act, different classes of shares in a public company may be issued only if (a) the issue of the class or classes of shares is
provided for in the constitution of the public company and (b) the constitution of the public company sets out in respect of each class
of shares the rights attached to that class of shares. Our constitution provides that subject to the Singapore Companies Act we may issue
shares with such preferred, deferred or other special rights, or such restrictions, whether in regard to dividend, voting, return of capital
or otherwise as our board of directors may determine.
We may, subject
to the Singapore Companies Act and the prior approval in a general meeting of our shareholders, issue preference shares which are, or
at our option are to be, subject to redemption provided that such preference shares may not be redeemed out of capital unless:
➢
all the directors have made a solvency statement in relation to such redemption; and
➢
we have lodged a copy of the statement with the Singapore Registrar of Companies.
Further, such
shares must be fully paid-up before they are redeemed.
As of the date
of this prospectus, we have no preference shares outstanding. At present, we have no plans to issue preference shares.
Registration
Rights
There are currently
no registration rights relating to our securities.
Transfer
of Ordinary Shares
Subject to applicable
securities laws in relevant jurisdictions and our constitution, our ordinary shares are freely transferable. Our constitution provides
that shares may be transferred by a duly signed instrument of transfer in any usual or common form or in a form approved by the directors.
The directors may decline to register any transfer unless, among other things, evidence as the directors may reasonably require to show
the right of the transferor to make the transfer.
Election
and Re-election of Directors
We may, by ordinary
resolution, remove any director before the expiration of his or her period of office, notwithstanding anything in our constitution or
in any agreement between us and such director but where any director so removed was appointed to represent the interests of any particular
class of shareholders or debenture holders the resolution to remove him or her shall not take effect until his or her successor has been
appointed. We may also, by an ordinary resolution, appoint another person in place of a director removed from office pursuant to the foregoing.
Our constitution
provides that at each annual general meeting, one-third of the directors for the time being, or if the number is not three or a multiple
of three, then the number nearest one-third, shall retire from office by rotation and will be eligible for re-election at that annual
general meeting (the directors so to retire being those longest in office since their last election).
Our board of directors
shall have the power, at any time and from time to time, to appoint any person to be a director either to fill a casual vacancy or as
an additional director so long as the total number of directors shall not at any time exceed the maximum number (if any) fixed in accordance
with our constitution. Any director so appointed shall hold office only until the next retirement of directors under our constitution,
and shall then be eligible for re-election but shall not be taken into account in determining the directors who are to retire by rotation
under our constitution.
Shareholders’
Meetings
Subject to the
Singapore Companies Act, we are required to hold an annual general meeting within six months after the end of each financial year. The
directors may convene an extraordinary general meeting whenever they think fit and they must do so upon the written requisition of shareholders
holding not less than 10% of the total number of paid-up shares as of the date of deposit of the requisition carrying the right to vote
at a general meeting (disregarding paid-up shares held as treasury shares). In addition, two or more shareholders holding not less than
10% of our total number of issued shares (excluding our treasury shares) may call a meeting of our shareholders.
The Singapore
Companies Act provides that a shareholder is entitled to attend any general meeting and speak on any resolution put before the general
meeting. The holder of a share may vote on a resolution before a general meeting of the company if the share confers on the holder a right
to vote on that resolution. Unless otherwise required by law or by our constitution, resolutions put forth at general meetings may be
decided by ordinary resolution, requiring the affirmative vote of a simple majority of the shareholders present in person or represented
by proxy at the meeting and entitled to vote on the resolution. An ordinary resolution suffices, for example, for appointments of directors
(unless the constitution otherwise provides). A special resolution, requiring an affirmative vote of not less than three-fourths of the
shareholders present in person or represented by proxy at the meeting and entitled to vote on the resolution, is necessary for certain
matters under Singapore law, such as an alteration of our constitution. We must give at least 21 days’ notice in writing for every
general meeting convened for the purpose of passing a special resolution. General meetings convened for the purpose of passing ordinary
resolutions generally require at least 14 days’ notice in writing. A shareholder entitled to attend and vote at a meeting of the
company, or at a meeting of any class of shareholders of the company, shall be entitled to appoint another person or persons, whether
a shareholder of the company or not, as the shareholder’s proxy to attend and vote instead of the shareholder at the meeting. Under
the Singapore Companies Act, a proxy appointed to attend and vote instead of the shareholder shall also have the same right as the shareholder
to speak at the meeting, but unless the constitution of the company otherwise provides, (i) a proxy shall not be entitled to vote except
on a poll, (ii) a shareholder shall not be entitled to appoint more than two proxies to attend and vote at the same meeting and (iii)
where a shareholder appoints two proxies, the appointment shall be invalid unless the shareholder specifies the proportions of his holdings
to be represented by each proxy.
Notwithstanding
the foregoing, a registered shareholder entitled to attend and vote at a meeting of the company held pursuant to an order of court under
Section 210(1) of the Singapore Companies Act, or at any adjourned meeting under Section 210(3) of the Singapore Companies Act, is, unless
the court orders otherwise, entitled to appoint only one proxy to attend and vote at the same meeting, and except where the aforementioned
applies, a registered shareholder of a company having a share capital who is a relevant intermediary (as defined under the Singapore Companies
Act) may appoint more than two proxies in relation to a meeting to exercise all or any of the shareholder’s rights to attend and
to speak and vote at the meeting, but each proxy must be appointed to exercise the rights attached to a different share or shares held
by the shareholder (which number and class of shares shall be specified), and at such meeting, the proxy has the right to vote on a show
of hands.
Shares in a public
company may confer special, limited or conditional voting rights or not confer voting rights. In this regard, different classes of shares
in a public company may be issued only if the issue of the class or classes of shares is provided for in the constitution of the public
company and the constitution of the public company sets out in respect of each class of shares the rights attached to that class of shares.
A public company shall not undertake any issuance of shares that confer special, limited or conditional voting rights or that confer no
voting rights unless it is approved by shareholders by special resolution.
Voting Rights
As provided under
our constitution and subject to the Singapore Companies Act, voting at any meeting of shareholders is by show of hands unless a poll has
been demanded prior to or on the declaration of the result of the show of hands by, among others, (i) the chairman or (ii) at least three
shareholders present in person or by proxy. On a poll every holder of ordinary shares who is present in person or by proxy or by attorney,
or other duly authorized representative, has one vote for every ordinary share held by such shareholder. Proxies need not be shareholders.
Subject to the
Singapore Companies Act and our constitution, only those shareholders who are registered in our register of members will be entitled to
vote at any meeting of shareholders. Therefore, since the shares offered in this offering are expected to be held through DTC or its nominee,
DTC or its nominee will grant an omnibus proxy to DTC participants holding our shares in book-entry form. A person holding through a broker,
bank, nominee, or other institution that is a direct or indirect participant in DTC will have the right to instruct his or her broker,
bank, nominee or other institution holding these shares on how to vote such shares by completing the voting instruction form provided
by the applicable broker, bank, nominee, or other institution. Whether voting is by a show of hands or by a poll, the vote of DTC or its
nominee will be voted by the chairman of the meeting according to the results of the DTC’s participants’ votes (which results
will reflect the instructions received from persons that own our shares electronically in book-entry form through DTC).
Minority
Rights
The rights of
minority shareholders of Singapore companies are protected, among other things, under Section 216 of the Singapore Companies Act, which
gives the Singapore courts a general power to make any order, upon application by any shareholder of a company, as they think fit to remedy
any of the following situations:
➢
the affairs of a company are being conducted or the powers of the board of directors are being exercised in a manner oppressive to,
or in disregard of the interests of, one or more of the shareholders, including the applicant; or
➢ a
company takes an action, or threatens to take an action, or the shareholders pass a resolution, or propose to pass a resolution,
which unfairly discriminates against, or is otherwise prejudicial to, one or more of the shareholders, including the
applicant.
Singapore courts have a wide discretion as to the remedies they may grant, and the remedies listed in the Singapore Companies Act
itself are not exclusive. In general, the Singapore courts may:
➢
direct or prohibit any act or cancel or modify any transaction or resolution;
➢regulate the conduct
of the affairs of the company in the future;
➢ authorize
civil proceedings to be brought in the name of, or on behalf of, the company by a person or persons and on such terms as the court
may direct;
➢
provide for the purchase of a minority shareholder’s shares by the other shareholders or by the company;
➢in the case of
a purchase of shares by the company provide for a reduction accordingly of the company’s capital; or
➢ provide
that the company be wound up.
In addition, Section
216A of the Singapore Companies Act allows a complainant (including a minority shareholder) to apply to the Singapore courts for leave
to bring an action in a court proceeding or arbitration to which a company is a party or intervene in an action in a court proceeding
or arbitration to which a company is a party for the purchase of prosecuting, defending or discontinuing the action or arbitration on
behalf of a company.
Dividends
We may, by ordinary
resolution, declare dividends at a general meeting of shareholders, but we are restricted from paying dividends in excess of the amount
recommended by our board of directors. Pursuant to Singapore law and our constitution, no dividend may be paid except out of our profits.
To date, we have not declared any cash dividends on our ordinary shares and have no current plans to pay cash dividends in the foreseeable
future.
Bonus and
Rights Issues
In a general meeting,
our shareholders may, upon the recommendation of the directors, resolve that it is desirable to capitalize any reserves or profits and
distribute them as shares, credited as paid-up, to the shareholders in proportion to their shareholdings.
Subject
to the provisions of the Singapore Companies Act and our constitution, our directors may also issue rights to take up additional ordinary
shares to our shareholders in proportion to their respective ownership. Such rights are subject to any condition attached to such issue
and the regulations of any stock exchange on which our shares are listed, as well as U.S. federal and blue-sky securities laws
applicable to such issue.
Take-overs
The Singapore
Take-over Code regulates, among other things, the acquisition of voting shares of Singapore-incorporated public companies. In this regard,
the Singapore Take-over Code applies to, among others, corporations with a primary listing of their equity securities in Singapore. While
the Singapore Take-over Code is drafted with, among others, listed public companies in mind, unlisted public companies with more than
50 shareholders and net tangible assets of S$5 million or more must also observe the letter and spirit of the general principles and rules
of the Singapore Take-over Code, wherever this is possible and appropriate. Public companies with a primary listing overseas may apply
to SIC to waive the application of the Singapore Take-over Code. As at the date of this prospectus, no application has been made to SIC
to waive the application of the Singapore Take-over Code in relation to us. We may submit an application to SIC for a waiver from the
Singapore Take-over Code so that the Singapore Take-over Code will not apply to us for so long as we are not listed on a securities exchange
in Singapore. We will make an appropriate announcement if we submit the application and when the result of the application is known.
Any person acquiring
an interest, whether by a series of transactions over a period of time or not, either on his or her own or together with parties acting
in concert with such person, in 30% or more of the voting rights in the Company, or any person holding, either on his or her own or together
with parties acting in concert with such person, between 30% and 50% (both amounts inclusive) of the voting rights in the Company, and
if such person (or parties acting in concert with such person) acquires additional voting shares representing more than 1% of the voting
rights in the Company in any six-month period, must, except with the consent of the SIC in Singapore, extend a mandatory take-over offer
for all the remaining voting shares in accordance with the provisions of the Singapore Take-over Code. Responsibility for ensuring compliance
with the Singapore Take-over Code rests with parties (including company directors) to a take-over or merger and their advisors.
Under the Singapore
Take-over Code, “parties acting in concert” comprise individuals or companies who, pursuant to an agreement or understanding
(whether formal or informal), cooperate, through the acquisition by any of them of shares in a company, to obtain or consolidate effective
control of that company. Certain persons are presumed (unless the presumption is rebutted) to be acting in concert with each other. They
are as follows:
➢ A
company, its parent company, subsidiaries and fellow subsidiaries (together, the related companies), the associated companies of any
of the company and its related companies, companies whose associated companies include any of these foregoing companies and any
person who has provided financial assistance (other than a bank in the ordinary course of business) to any of the foregoing for the
purchase of voting rights;
➢ A
company with any of its directors (together with their close relatives, related trusts and companies controlled by any of the
directors, their close relatives and related trusts);
➢ A
company with any of its pension funds and employee share schemes;
➢
A person with any investment company, unit trust or other fund whose investment such person manages on a discretionary basis, but
only in respect of the investment account which such person manages;
➢ A
financial or other professional adviser, including a stockbroker, with its client in respect of the shareholdings of the adviser and
persons controlling, controlled by or under the same control as the adviser;
➢ Directors
of a company (together with their close relatives, related trusts and companies controlled by any of such directors, their close
relatives and related trusts) which is subject to an offer or where the directors have reason to believe a bona fide offer for their
company may be imminent;
➢
Partners; and
An individual
and (i) such individual’s close relatives, (ii) such individual’s related trusts, (iii) any person who is accustomed to act
in accordance with such individual’s instructions, (iv) companies controlled by any of the individual, such individual’s close
relatives, related trusts or any person who is accustomed to act in accordance with such individual’s instructions and (v) any person
who has provided financial assistance (other than a bank in the ordinary course of business) to any of the foregoing for the purchase
of voting rights.
Subject to certain
exceptions, a mandatory offer must be in cash or be accompanied by a cash alternative at not less than the highest price paid by the offeror
or parties acting in concert with the offeror during the offer period and within the six months prior to its commencement.
Under the Singapore
Take-over Code, where effective control of a company is acquired or consolidated by a person, or persons acting in concert, a general
offer to all other shareholders is normally required. An offeror must treat all shareholders of the same class in an offeree company equally.
A fundamental requirement is that shareholders in the company subject to the take-over offer must be given sufficient information, advice
and time to enable them to reach an informed decision on the offer. These legal requirements may impede or delay a take-over of our Company
by a third party.
Liquidation
or Other Return of Capital
On a winding-up
or other return of capital, subject to any special rights attaching to any other classes of shares, holders of ordinary shares will be
entitled to participate in any surplus assets in proportion to their shareholdings.
Limitations
of Liability and Indemnification Matters
Under Section
172 of the Singapore Companies Act, any provision exempting or indemnifying the officers of a company (including directors) against any
liability that would otherwise attach to them in connection with any negligence, default, breach of duty or breach of trust in relation
to the company is void. However, a company is not prohibited from (a) purchasing and maintaining for any such individual insurance against
liability incurred by him or her in connection with any negligence, default, breach of duty or breach of trust in relation to the company,
or (b) indemnifying the individual against liability incurred by him or her to a person other than the company except when the indemnity
is against any liability (i) of the individual to pay a fine in criminal proceedings, (ii) of the individual to pay a penalty to a regulatory
authority in respect of non-compliance with any requirements of a regulatory nature (howsoever arising), (iii) incurred by the individual
in defending criminal proceedings in which he or she is convicted, (iv) incurred by the individual in defending civil proceedings brought
by the company or a related company in which judgment is given against him or her, or (v) incurred by the individual in connection with
an application for relief under Section 76A(13) or Section 391 of the Singapore Companies Act in which the court refuses to grant him
or her relief.
Under our constitution,
it is provided that every director shall be indemnified out of the assets of our Company to the extent permitted by the Singapore Companies
Act.
We have entered
into deeds of indemnity with each of our directors and officers. These agreements will require us to indemnify these individuals to the
fullest extent permitted under our constitution and the Singapore Companies Act against liabilities that may arise by reason of their
service to us as a director or officer of the Company (as the case may be), and to advance expenses incurred in connection with any proceeding
against them by reason of their status as a director, officer, agent or employee of the Company in accordance with the terms of the deeds.
These indemnification rights shall not be exclusive of any other right which an indemnified person may have or thereafter acquire under
any applicable law, provision of our constitution, agreement, vote of shareholders or disinterested directors or otherwise.
We expect to maintain
standard policies of insurance that provide coverage (1) to our directors and officers against loss arising from claims made by reason
of breach of duty or other wrongful act and (2) to us with respect to indemnification payments that we may make to such directors and
officers.
COMPARISON
OF SHAREHOLDER RIGHTS
We are incorporated
under the laws of Singapore. The following discussion summarizes material differences between the rights of holders of our ordinary shares
and the rights of holders of the common stock of a typical corporation incorporated under the laws of the state of Delaware which result
from differences in governing documents and the laws of Singapore and Delaware.
This discussion
does not purport to be a complete or comprehensive statement of the rights of holders of our ordinary shares under applicable law in Singapore
and our constitution or the rights of holders of the common stock of a typical corporation under applicable Delaware law and a typical
certificate of incorporation and bylaws.
Delaware |
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Singapore |
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Board of Directors |
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A typical certificate of incorporation and bylaws provides that the number of directors on the board of directors will be fixed from time to time by a vote of the majority of the authorized directors. Under Delaware law, a board of directors can be divided into classes and cumulative voting in the election of directors is only permitted if expressly authorized in a corporation’s certificate of incorporation. |
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The constitution of companies will typically state the minimum and maximum (if any) number of directors as well as provide that the number of directors may be increased or reduced by shareholders via ordinary resolution passed at a general meeting, provided that the number of directors following such increase or reduction is within the maximum (if any) and minimum number of directors provided in the constitution and the Singapore Companies Act, respectively. |
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Limitation on Personal Liability of Directors |
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A typical certificate of incorporation provides for the elimination of personal monetary liability of directors for breach of fiduciary duties as directors to the fullest extent permissible under the laws of Delaware, except for liability (i) for any breach of a director’s loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law (relating to the liability of directors for unlawful payment of a dividend or an unlawful stock purchase or redemption) or (iv) for any transaction from which the director derived an improper personal benefit. A typical certificate of incorporation also provides that if the Delaware General Corporation Law is amended so as to allow further elimination of, or limitations on, director liability, then the liability of directors will be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law as so amended. |
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Pursuant to the Singapore Companies Act, any provision (whether in the constitution, a contract with the company or otherwise) exempting or indemnifying a director against any liability which would otherwise attach to him or her in connection with any negligence, default, breach of duty or breach of trust in relation to the company is void. However, a company is not prohibited from (a) purchasing and maintaining for such director insurance against any such liability, or (b) indemnifying such director against any liability incurred by him or her to a person other than the company except when the indemnity is against any liability (i) of the director to pay a fine in criminal proceedings, (ii) of the director to pay a penalty to a regulatory authority in respect of non-compliance with any requirements of a regulatory nature (howsoever arising), (iii) incurred by the director in defending criminal proceedings in which he or she is convicted, (iv) incurred by the director in defending civil proceedings brought by the company or a related company in which judgment is given against him or her, or (v) incurred by the director in connection with an application for relief under Section 76A(13) or Section 391 of the Singapore Companies Act in which the court refuses to grant him or her relief.
Under our constitution, it is provided that every director shall be indemnified out of the assets of our Company to the extent permitted by the Singapore Companies Act. |
Delaware |
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Interested Shareholders |
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Section 203 of
the Delaware General Corporation Law generally prohibits a Delaware corporation from engaging in specified corporate transactions (such
as mergers, stock and asset sales, and loans) with an “interested stockholder” for three years following the time that the
stockholder becomes an interested stockholder. Subject to specified exceptions, an “interested stockholder” is a person or
group that owns 15% or more of the corporation’s outstanding voting stock (including any rights to acquire stock pursuant to an
option, warrant, agreement, arrangement or understanding, or upon the exercise of conversion or exchange rights, and stock with respect
to which the person has voting rights only), or is an affiliate or associate of the corporation and was the owner of 15% or more of the
voting stock at any time within the previous three years.
A Delaware corporation may elect to
“opt out” of, and not be governed by, Section 203 through a provision in either its original certificate of incorporation,
or an amendment to its original certificate or bylaws that was approved by majority stockholder vote. With a limited exception, this amendment
would not become effective until 12 months following its adoption. |
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There are no comparable provisions under the Singapore Companies Act with respect to public companies which are not listed on the Singapore Exchange Securities Trading Limited. |
Removal of Directors |
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A typical certificate of incorporation and bylaws provide that, subject to the rights of holders of any preferred stock, directors may be removed at any time by the affirmative vote of the holders of at least a majority, or in some instances a supermajority, of the voting power of all of the then outstanding shares entitled to vote generally in the election of directors, voting together as a single class. A certificate of incorporation could also provide that such a right is only exercisable when a director is being removed for cause (removal of a director only for cause is the default rule in the case of a classified board). |
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Under
the Singapore Companies Act, directors of a public company may be removed before expiration of their term of office, notwithstanding
anything in its constitution or in any agreement between the public company and such directors, by ordinary resolution (i.e., a
resolution which is passed by a simple majority of those shareholders present and voting in person or by proxy). Notice of the
intention to move such a resolution has to be given to the company not less than 28 days before the meeting at which it is moved.
The company shall then give notice of such resolution to its shareholders not less than 14 days before the meeting. Where any
director removed in this manner was appointed to represent the interests of any particular class of shareholders or debenture
holders, the resolution to remove such director will not take effect until such director’s successor has been appointed. |
Delaware |
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Filling Vacancies on the Board of Directors |
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A typical certificate of incorporation and bylaws provide that, subject to the rights of the holders of any preferred stock, any vacancy, whether arising through death, resignation, retirement, disqualification, removal, an increase in the number of directors or any other reason, may be filled by a majority vote of the remaining directors, even if such directors remaining in office constitute less than a quorum, or by the sole remaining director. Any newly elected director usually holds office for the remainder of the full term expiring at the annual meeting of stockholders at which the term of the class of directors to which the newly elected director has been elected expires. |
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The constitution of a Singapore company typically provides that the directors have the power to appoint any person to be a director, either to fill a casual vacancy or as an addition to the existing directors, but so that the total number of directors shall not at any time exceed the maximum number (if any) fixed by or in accordance with the constitution. Our constitution provides that the directors may appoint any person to be a director either to fill a casual vacancy or as an additional director but so that the total number of Directors shall not at any time exceed the maximum number fixed in accordance with the constitution. Our constitution also provides that any director so appointed shall hold office only until the next retirement of directors under our constitution. |
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Amendment of Governing Documents |
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Under the Delaware General Corporation Law, amendments to a corporation’s certificate of incorporation require the approval of stockholders holding a majority of the outstanding shares entitled to vote on the amendment. If a class vote on the amendment is required by the Delaware General Corporation Law, a majority of the outstanding stock of the class is required, unless a greater proportion is specified in the certificate of incorporation or by other provisions of the Delaware General Corporation Law. Under the Delaware General Corporation Law, the board of directors may amend bylaws if so authorized in the charter. The stockholders of a Delaware corporation also have the power to amend bylaws. |
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Our constitution
may be altered by special resolution (i.e., a resolution passed by at least a three-fourths majority of the shareholders entitled to vote,
present in person or by proxy at a meeting for which not less than 21 days’ written notice is given). The board of directors has
no power to amend the constitution.
Under the Singapore Companies Act,
an entrenching provision may be included in the constitution with which a company is formed and may at any time be inserted into the constitution
of a company only if all the shareholders of the company agree. An entrenching provision is a provision of the constitution of a company
to the effect that other specified provisions of the constitution may not be altered in the manner provided by the Singapore Companies
Act or may not be so altered except (i) by a resolution passed by a specified majority greater than 75% (the minimum majority required
by the Singapore Companies Act for a special resolution) or (ii) where other specified conditions are met. The Singapore Companies Act
provides that such entrenching provision may be removed or altered only if all the members of the company agree. |
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Meetings of Shareholders |
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Annual and
Special Meetings
Typical bylaws provide that annual
meetings of stockholders are to be held on a date and at a time fixed by the board of directors. Under the Delaware General Corporation Law, a special meeting of stockholders may be called by the board of directors or by any other person authorized to do so in the certificate of incorporation or the bylaws. |
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Annual General
Meetings
Subject to the Singapore Companies
Act, all companies are required to hold an annual general meeting after the end of each financial year within either 4 months (in the case of a public company that is listed on an exchange in Singapore approved by the Monetary Authority of Singapore) or 6 months (in the case of any other company). |
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Extraordinary
General Meetings
Any general meeting other than the
annual general meeting is called an “extraordinary general meeting.” Notwithstanding anything in the constitution, directors
of a company are required to convene an extraordinary general meeting if required to do so by requisition (i.e. written notice to the
directors requiring that a meeting be called) by shareholder(s) holding not less than 10% of the total number of paid-up shares as at
the date of the deposit of the requisition carrying the right of voting at general meetings of the company. In addition, the constitution
usually also provides that general meetings may be convened in accordance with the Singapore Companies Act by the directors. |
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Quorum Requirements |
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Quorum Requirements |
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Under the Delaware General Corporation Law, a corporation’s certificate of incorporation or bylaws can specify the number of shares which constitute the quorum required to conduct business at a meeting, provided that in no event shall a quorum consist of less than one-third of the shares entitled to vote at a meeting. |
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Our constitution provides that the quorum at any general meeting shall be any two shareholders present in person or by proxy or, in the case of a corporation, by a representative and entitled to vote thereat]. In the event a quorum is not present within half an hour from the time appointed for the meeting, the meeting, if convened upon the requisition of members, shall be dissolved. In any other case, the meeting shall be adjourned for one week, or to such other day and at such other time and place as the directors may determine. |
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Shareholders’
Rights at Meetings
Only registered
shareholders of our company reflected in our register of members are recognized under Singapore law as shareholders of our company. As
a result, only registered shareholders have legal standing under Singapore law to institute shareholder actions against us or otherwise
seek to enforce their rights as shareholders.
The Singapore Companies Act provides
that every member shall, notwithstanding any provision in the constitution, have a right to attend any general meeting of the company
and to speak on any resolution before the meeting. The holder of a share may vote on a resolution before a general meeting of the company
if the share confers on the holder a right to vote on that resolution. The company’s constitution may provide that a member shall
not be entitled to vote unless all calls or other sums personally payable
by him in respect of shares in the company have been paid. |
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Shares in a public
company may confer special, limited or conditional voting rights or not confer voting rights. In this regard, different classes of shares
in a public company may be issued only if the issue of the class or classes of shares is provided for in the constitution of the public
company and the constitution of the public company sets out in respect of each class of shares the rights attached to that class of shares.
A public company shall not undertake any issuance of shares that confer special, limited or conditional voting rights or that confer no
voting rights unless it is approved by shareholders by special resolution.
Circulation
of Shareholders’ Resolutions
Under the Singapore Companies Act,
a company shall on the requisition of (a) any number of shareholders representing not less than 5% of the total voting rights of all the
shareholders having at the date of requisition a right to vote at a meeting to which the requisition relates or (b) not less than 100
shareholders holding shares on which there has been paid up an average sum, per shareholder, of not less than S$500, and unless the company
otherwise resolves, at the expense of the requisitionists, (i) give to shareholders entitled to receive notice of the next annual general
meeting notice of any resolution which may properly be moved and is intended to be moved at that meeting, and (ii) circulate to shareholders
entitled to receive notice of any general meeting any statement of not more than 1,000 words with respect to the matter referred to in
any proposed resolution or the business to be dealt with at that meeting. |
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Indemnification of Officers, Directors and Employees |
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Under the Delaware General Corporation Law, subject to specified limitations in the case of derivative suits brought by a corporation’s stockholders in its name, a corporation may indemnify any person who is made a party to any third-party action, suit or proceeding on account of being a director, officer, employee or agent of the corporation (or was serving at the request of the corporation in such capacity for another corporation, partnership, joint venture, trust or other enterprise) against expenses, including attorney’s fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit or proceeding through, among other things, a majority vote of a quorum consisting of directors who were not parties to the suit or proceeding, if the person: |
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Under Section
172 of the Singapore Companies Act, any provision exempting or indemnifying the officers of a company (including directors) against liability,
which would otherwise attach to them in connection with any negligence, default, breach of duty or breach of trust in relation to the
company is void.
However, the Singapore
Companies Act allows a company to:
➢
purchase and maintain for any officer insurance against any liability which would otherwise attach to such officer in connection
with any negligence, default, breach of duty or breach of trust in relation to the company; and
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Singapore
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➢
acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation
or, in some circumstances, at least not opposed to its best interests; and
➢
in a criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Delaware
corporate law permits indemnification by a corporation under similar circumstances for expenses (including attorneys’ fees)
actually and reasonably incurred by such persons in connection with the defense or settlement of a derivative action or suit, except
that no indemnification may be made in respect of any claim, issue or matter as to which the person is adjudged to be liable to the
corporation unless the Delaware Court of Chancery or the court in which the action or suit was brought determines upon application
that the person is fairly and reasonably entitled to indemnity for the expenses which the court deems to be proper.
To
the extent a director, officer, employee or agent is successful in the defense of such an action, suit or proceeding, the corporation
is required by Delaware corporate law to indemnify such person for reasonable expenses incurred thereby. Expenses (including attorneys’
fees) incurred by such persons in defending any action, suit or proceeding may be paid in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of that person to repay the amount if it is ultimately
determined that that person is not entitled to be so indemnified. |
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indemnify such officer against any liability incurred by him or her to a person other than the company except when the indemnity
is against any liability (i) of the officer to pay a fine in criminal proceedings, (ii) of the officer to pay a penalty to a regulatory
authority in respect of non-compliance with any requirements of a regulatory nature (howsoever arising), (iii) incurred by the officer
in defending criminal proceedings in which he or she is convicted, (iv) incurred by the officer in defending civil proceedings brought
by the company or a related company in which judgment is given against him or her, or (v) incurred by the officer in connection with
an application for relief under Section 76A(13) or Section 391 of the Singapore Companies Act in which the court refuses to grant
him or her relief.
In
cases where a director is sued by the company, the Singapore Companies Act gives the court the power to relieve directors either
wholly or partially from their liability for their negligence, default, breach of duty or breach of trust. In order for relief to
be obtained, it must be shown that (i) the director acted reasonably and honestly; and (ii) it is fair, having regard to all the
circumstances of the case including those connected with such director’s appointment, to excuse the director. However, Singapore
case law has indicated that such relief will not be granted to a director who has benefited as a result of his or her breach of trust.
Under
our constitution, it is provided that every director shall be indemnified out of the assets of our Company to the extent permitted
by the Singapore Companies Act. |
Delaware |
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Shareholder Approval of Issuances of Shares |
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Under Delaware law, the board of directors has the authority to issue, from time to time, capital stock in its sole discretion, as long the number the shares to be issued, together with those shares that are already issued and outstanding and those shares reserved to be issued, do not exceed the authorized capital for the corporation as previously approved by the stockholders and set forth in the corporation’s certificate of incorporation. Under the foregoing circumstances, no additional stockholder approval is required for the issuance of capital stock. Under Delaware law, stockholder approval is required (i) for any amendment to the corporation’s certificate of incorporation to increase the authorized capital and (ii) for the issuance of stock in a direct merger transaction where the number of shares exceeds 20% of the corporation’s shares outstanding prior to the transaction, regardless of whether there is sufficient authorized capital. |
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Section 161 of the Singapore Companies Act provides that notwithstanding anything in the company’s constitution, the directors shall not exercise any power to issue shares without prior approval of the company’s shareholders in a general meeting. Such authorization may be obtained by ordinary resolution. Once this shareholders’ approval is obtained, unless previously revoked or varied by the company in a general meeting, it continues in force until the conclusion of the next annual general meeting or the expiration of the period within which the next annual general meeting after that date is required by law to be held, whichever is earlier; but any approval may be revoked or varied by the company in a general meeting. Notwithstanding this general authorization to allot and issue our ordinary shares, the Company will be required to seek shareholder approval with respect to future issuances of ordinary shares, where required under the NYSE American rules, such as if we were to propose an issuance of ordinary shares that would result in a change in control of the Company or in connection with a transaction involving the issuance of ordinary shares representing 20% or more of our outstanding ordinary shares. |
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Shareholder Approval of Business Combinations |
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Generally, under the Delaware General Corporation
Law, completion of a merger, consolidation, or the sale, lease or exchange of substantially all of a corporation’s assets or dissolution
requires approval by the board of directors and by a majority (unless the certificate of incorporation requires a higher percentage) of
outstanding stock of the corporation entitled to vote.
The Delaware General Corporation Law also requires a special vote of stockholders
in connection with a business combination with an “interested stockholder” as defined in section 203 of the Delaware General
Corporation Law. See “— Interested Shareholders” above. |
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The Singapore Companies Act mandates that specified
corporate actions require approval by the shareholders in a general meeting, notably:
➢ notwithstanding anything in the
company’s constitution, directors are not permitted to carry into effect any proposals for disposing of the whole or
substantially the whole of the company’s undertaking or property unless those proposals have been approved by shareholders in
a general meeting;
➢ subject to the constitution of each
amalgamating company, an amalgamation proposal must be approved by the shareholders of each amalgamating company via special
resolution at a general meeting; and
➢ notwithstanding anything in the
company’s constitution, the directors may not, without the prior approval of shareholders, issue shares, including shares
being issued in connection with corporate actions. |
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Shareholder Action Without A Meeting |
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Under the Delaware General Corporation Law, unless otherwise provided in a corporation’s certificate of incorporation, any action that may be taken at a meeting of stockholders may be taken without a meeting, without prior notice and without a vote if the holders of outstanding stock, having not less than the minimum number of votes that would be necessary to authorize such action, consent in writing. It is not uncommon for a corporation’s certificate of incorporation to prohibit such action. |
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There are no equivalent provisions under the Singapore Companies Act in respect of public companies which are listed on a securities exchange outside Singapore, like our Company. |
Delaware |
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Shareholder Suits |
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Under the Delaware General Corporation Law, a stockholder may bring a derivative action on behalf of the corporation to enforce the rights of the corporation. An individual also may commence a class action suit on behalf of himself or herself and other similarly situated stockholders where the requirements for maintaining a class action under the Delaware General Corporation Law have been met. A person may institute and maintain such a suit only if such person was a stockholder at the time of the transaction which is the subject of the suit or his or her shares thereafter devolved upon him or her by operation of law. |
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Standing
Only registered shareholders of our
company reflected in our register of members are recognized under Singapore law as shareholders of our company. As a result, only registered
shareholders have legal standing under Singapore law to institute shareholder actions against us or otherwise seek to enforce their rights
as shareholders. Holders of book-entry interests in our shares will be required to exchange their book-entry interests for certificated
shares and to be registered as shareholders in our register of members in order to institute or enforce any legal proceedings or claims
against us relating to shareholder rights. A holder of book-entry interests may become a registered shareholder of our company by exchanging
its interest in our shares for certificated shares and being registered in our register of members. |
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Additionally, under Delaware case law, the plaintiff generally must be a stockholder not only at the time of the transaction which is the subject of the suit, but also through the duration of the derivative suit. The Delaware General Corporation Law also requires that the derivative plaintiff make a demand on the directors of the corporation to assert the corporate claim before the suit may be prosecuted by the derivative plaintiff, unless such demand would be futile. |
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Personal remedies
in cases of oppression or injustice
A shareholder
may apply to the court for an order under Section 216 of the Singapore Companies Act to remedy situations where (i) the company’s
affairs are being conducted or the powers of the company’s directors are being exercised in a manner oppressive to, or in disregard
of the interests of, one or more of the shareholders or holders of debentures of the company, including the applicant; or (ii) the company
has done an act, or threatens to do an act, or the shareholders or holders of debentures have proposed or passed some resolution, which
unfairly discriminates against, or is otherwise prejudicial to, one or more of the company’s shareholders or holders of debentures,
including the applicant.
Singapore courts have wide discretion
as to the relief they may grant under such application, including, inter alia, directing or prohibiting any act or cancelling or varying
any transaction or resolution, providing that the company be wound up, or authorizing civil proceedings to be brought in the name of or
on behalf of the company by such person or persons and on such terms as the court directs. |
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Derivative
actions and arbitrations
The Singapore
Companies Act has a provision which provides a mechanism enabling shareholders to apply to the court for leave to bring a derivative action
or commence an arbitration on behalf of the company.
Applications are
generally made by shareholders of the company, but courts are given the discretion to allow such persons as they deem proper to apply
(e.g., beneficial owner of shares).
It should be noted that this provision
of the Singapore Companies Act is primarily used by minority shareholders to bring an action or arbitration in the name and on behalf
of the company or intervene in an action or arbitration to which the company is a party for the purpose of prosecuting, defending or discontinuing
the action or arbitration on behalf of the company. Prior to commencing a derivative action or arbitration, the court must be satisfied
that (i) 14 days’ notice has been given to the directors of the company of the party’s intention to make such an application
if the directors of the company do not bring, diligently prosecute or defend or discontinue the action or arbitration, (ii) the party
is acting in good faith and (iii) it appears to be prima facie in the interests of the company that the action or arbitration be brought,
prosecuted, defended or discontinued. |
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Class actions
The concept of class action suits in
the United States, which allows individual shareholders to bring an action seeking to represent the class or classes of shareholders,
does not exist in the same manner in Singapore. In Singapore, it is possible as a matter of procedure for a number of shareholders to
lead an action and establish liability on behalf of themselves and other shareholders who join in or who are made parties to the action.
These shareholders are commonly known as “lead plaintiffs”. |
Delaware |
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Distributions and Dividends; Repurchases and Redemptions |
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The Delaware General Corporation Law permits a corporation to declare and pay dividends out of statutory surplus or, if there is no surplus, out of net profits for the fiscal year in which the dividend is declared and/or for the preceding fiscal year as long as the amount of capital of the corporation following the declaration and payment of the dividend is not less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution
of assets. |
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The Singapore
Companies Act provides that no dividends can be paid to shareholders except out of profits. The Singapore Companies Act does not provide
a definition on when profits are deemed to be available for the purpose of paying dividends and this is accordingly governed by case law.
Our
constitution provides that no dividend can be paid otherwise than out of profits. |
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Under
the Delaware General Corporation Law, any corporation may purchase or redeem its own shares, except that generally it may not purchase
or redeem these shares if the capital of the corporation is impaired at the time or would become impaired as a result of the redemption.
A corporation may, however, purchase or redeem out of capital shares that are entitled upon any distribution of its assets to a preference
over another class or series of its shares if the shares are to be retired and the capital reduced. |
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Acquisition of a company’s
own shares
The
Singapore Companies Act generally prohibits a company from acquiring its own shares or purporting to acquire the shares of its holding
company or ultimate holding company, whether directly or indirectly, in any way, subject to certain exceptions. Any contract or transaction
made or entered into in contravention of the aforementioned prohibition by which a company acquires or purports to acquire its own shares
or shares in its holding company or ultimate holding company is void. However, provided that it is expressly permitted to do so by its
constitution (as the case may be) and subject to the special conditions of each permitted acquisition contained in the Singapore Companies
Act, a company may:
➢ redeem
redeemable preference shares on such terms and in such manner as is provided by its constitution. Preference shares may be redeemed
out of capital only if all the directors make a solvency statement in relation to such redemption in accordance with the Singapore
Companies Act, and the company lodges a copy of the statement with the Registrar of Companies;
➢ whether
listed on an exchange in Singapore approved by the Monetary Authority of Singapore or any securities exchange outside Singapore, or
not, make an off-market purchase of its own shares in accordance with an equal access scheme authorized in advance at a general
meeting;
➢ make
a selective off-market purchase of its own shares in accordance with an agreement authorized in advance at a general meeting by a
special resolution where persons whose shares are to be acquired and their associated persons have abstained from voting;
➢
whether listed on an exchange in Singapore approved by the Monetary Authority of Singapore or any securities exchange outside
Singapore, or not, make an acquisition of its own shares under a contingent purchase contract which has been authorized in advance
at a general meeting by a special resolution; and
➢ where
listed on a securities exchange, make an acquisition of its own shares on the securities exchange, in accordance with the terms and limits
authorized in advance at a general meeting. |
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A company may also purchase its own shares by an order of a Singapore
court. |
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Singapore |
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➢ The
total number of ordinary shares, stocks in any class and non-redeemable preference shares that may be acquired by a company in a
relevant period may not exceed 20% (or such other prescribed percentage) of the total number of ordinary shares, stocks in that
class or non-redeemable preference shares (as the case may be) as of the date of the resolution passed to authorize the acquisition
of the shares. Where, however, a company has reduced its share capital by a special resolution or a Singapore court has made an
order confirming the reduction of share capital of the company, the total number of ordinary shares, stocks in any class or
non-redeemable preference shares shall be taken to be the total number of ordinary shares, stocks in any class or non-redeemable
preference shares (as the case may be) as altered by the special resolution or the order of the court. Payment, including any
expenses (including brokerage or commission) incurred directly in the acquisition by the company of its own shares, may be made out
of the company’s profits or capital, provided that the company is solvent. |
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Financial assistance
for the acquisition of shares
A public company
or a company whose holding company or ultimate holding company is a public company shall not give financial assistance to any person whether
directly or indirectly for the purpose of or in connection with:
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the acquisition or proposed acquisition of shares in the company or units of such shares; or
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the acquisition or proposed acquisition of shares in its holding company or ultimate holding company, or units of such
shares.
Financial assistance
may take the form of a loan, the giving of a guarantee, the provision of security, the release of an obligation, the release of a debt
or otherwise.
However, it should
be noted that a company may provide financial assistance for the acquisition of its shares or shares in its holding company or ultimate
holding company if it complies with the requirements (including approval by special resolution) set out in the Singapore Companies Act.
Our constitution provides that subject
to and in accordance with the provisions of the Singapore Companies Act, we may purchase or otherwise acquire our own shares on such terms and in such manner as we may think fit. Any share that is so purchased or acquired by us shall, unless held in treasury in accordance with the Singapore Companies Act, be deemed to be cancelled immediately on purchase or acquisition. On the cancellation of a share as aforesaid, the rights and privileges attached to that share shall expire. |
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Transactions with Officers or Directors |
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Under the Delaware General Corporation Law, some contracts or transactions in which one or more of a corporation’s directors has an interest are not void or voidable because of such interest provided that some conditions, such as obtaining the required approval and fulfilling the requirements of good faith and full disclosure, are met. Under the Delaware General Corporation Law, either (a) the stockholders or the board of directors of a corporation must approve in good faith any such contract or transaction after full disclosure of the material facts or (b) the contract or transaction must have been “fair” as to the corporation at the time it was approved. If board approval is sought, the contract or transaction must be approved in good faith by a majority of disinterested directors after full disclosure of material facts, even though less than a majority of a quorum. |
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Under the Singapore Companies Act, directors and the chief executive officer of the company are not prohibited from dealing with the company, but where they have an interest, whether directly or indirectly, in a transaction with the company, that interest must be disclosed to the board of directors. In particular, every director or chief executive officer who is in any way, whether directly or indirectly, interested in a transaction or proposed transaction with the company must, as soon as is practicable after the relevant facts have come to such director’s or, as the case may be, the chief executive officer’s knowledge, declare the nature of such interest at a meeting of the directors or send a written notice to the company detailing the nature, character and extent of the interest. |
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In addition, a
director or chief executive officer who holds any office or possesses any property whereby, whether directly or indirectly, any duty or
interest might be created in conflict with such director’s or, as the case may be, the chief executive officer’s duties as
director or chief executive officer (as the case may be) is required to declare the fact and the nature, character and extent of the conflict
at a meeting of directors or send a written notice to the company detailing the fact and the nature, character and extent of the conflict.
The
Singapore Companies Act extends the scope of this statutory duty of a director and chief executive officer to disclose any interests
by pronouncing that an interest of a member of a director’s or, as the case may be, the chief executive officer’s family
(including spouse, son, adopted son, step-son, daughter, adopted daughter and step-daughter) will be treated as an interest of the director
or chief executive officer (as the case may be).
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There is, however, no requirement for
disclosure where the interest of the director or chief executive officer (as the
case may be) consists only of being a member or creditor of a corporation which is interested in the transaction or proposed transaction
with the company if the interest may properly be regarded as immaterial. Where the transaction or the proposed transaction relates to
any loan to the company, no disclosure need be made where the director or chief executive officer (as the case may be) has only guaranteed
or joined in guaranteeing the repayment of such loan, unless the constitution provides otherwise.
Further, where
the transaction or the proposed transaction has been or will be made with or for the benefit of a related corporation (i.e., the holding
company, subsidiary or subsidiary of a common holding company), the director or chief executive officer shall not be deemed to be interested
or at any time interested in such transaction or proposed transaction where he is a director or chief executive officer (as the case may
be) of the related corporation, unless the constitution provides otherwise.
Subject
to specified exceptions, the Singapore Companies Act prohibits a company (other than an exempt private company) from, among others, (i)
making a loan or a quasi-loan to its directors or to directors of a related corporation, or giving a guarantee or security in connection
with such a loan or quasi-loan, (ii) entering into a credit transaction as creditor for the benefit of its directors or the directors
of a related corporation, or giving a guarantee or any security in connection with such a credit transaction, (iii) arranging an assignment
to or assumption by the company of any rights, obligations or liabilities under a transaction which, if it had been entered into by the
company, would have been a restricted transaction, and (iv) taking part in an arrangement under which another person enters into a transaction
which, if entered into by the company, would have been a restricted transaction and such person obtains a benefit from the company or
its related corporation pursuant thereto. Companies are also prohibited from entering into any of these transactions with the spouse
or children (whether adopted or natural or step-children) of its directors.
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Subject
to specified exceptions, the Singapore Companies Act prohibits a company (other than an exempt private company) from, among others,
making a loan or a quasi-loan to another company or a limited liability partnership or entering into any guarantee
or providing any security in connection with a loan or a quasi-loan made to another company or a limited liability partnership by a
person other than the first-mentioned company, entering into a credit transaction as a creditor for the benefit of another company
or a limited liability partnership, or entering into any guarantee or providing any security in connection with a credit transaction
entered into by any person for the benefit of another company or a limited liability partnership if a director or directors of the
first-mentioned company is or together are interested in 20% or more of the total voting power in the other company or the limited
liability partnership (as the case may be).
Such prohibition
shall extend to apply to, among others, a loan or quasi-loan made by a company (other than an exempt private company) to another company
or a limited liability partnership, a credit transaction made by a company (other than an exempt private company) for the benefit of another
company or limited liability partnership and a guarantee or security provided by a company (other than an exempt private company) in connection
with a loan or quasi-loan made by a person other than the first-mentioned company to another company or a limited liability partnership,
where such other company or limited liability partnership is incorporated or formed (as the case may be) outside Singapore, if a director
or directors of the first-mentioned company (a) is or together are interested in 20% or more of the total voting power in the other company
or limited liability partnership or (b) in a case where the other company does not have a share capital, exercises or together exercise
control over the other company whether by reason of having the power to appoint directors or otherwise.
The Singapore Companies Act also provides
that an interest of a member of a director’s family (including spouse, son, adopted son, step-son, daughter, adopted daughter and
step-daughter) will be treated as an interest of the director. |
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Under the Delaware General Corporation Law, a stockholder of a corporation participating in some types of major corporate transactions may, under varying circumstances, be entitled to appraisal rights pursuant to which the stockholder may receive cash in the amount of the fair market value of his or her shares in lieu of the consideration he or she would otherwise receive in the transaction. |
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There are no equivalent provisions in Singapore under the Singapore Companies Act. |
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Cumulative Voting |
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DESCRIPTION OF WARRANTS
Series 2024-A Warrants
The following description of the Series
2024-A warrants is a summary, is not complete and is subject to, and qualified in its entirety by, the provisions of the Series
2024-A warrants, the form of which is to be filed as an exhibit to the registration statement of which this prospectus forms a part,
by amendment. It summarizes only those aspects of the Series 2024-A warrants that we believe will be most important to your decision
to invest in the Series 2024-A warrants. You should keep in mind, however, that it is the terms in the Series 2024-A warrants,
and not this summary, which define your rights as a holder of the Series 2024-A warrants. There may be other provisions in the
Series 2024-A warrants that are also important to you. You should read the form of the Series 2024-A warrants for a full
description of the terms of the Series 2024-A warrants.
Duration and Exercise Price
Each full Series 2024-A warrant entitles
the holder thereof to purchase one share of our ordinary shares at an exercise price equal to $0.35 per share. The Series 2024-A
warrants will be exercisable during the period commencing on the date of issuance and will expire on the five year anniversary of the
date of issuance. The Series 2024-A warrants will be issued in certificated form.
Exercisability
The Series 2024-A warrants may be exercised by delivering
to the Company a duly-executed notice of election to exercise the Series 2024-A warrant and delivering to the Company cash payment of
the exercise price. Upon delivery of the written notice of election to exercise the Series 2024-A warrant and cash payment of the exercise
price, on and subject to the terms and conditions of the Series 2024-A warrants, we will deliver or cause to be delivered to such holder,
the number of whole shares of ordinary shares to which the holder is entitled, which shares shall be delivered in book-entry form. If
a Series 2024-A warrant is exercised for fewer than all of the shares of ordinary shares for which such Series 2024-A warrant may be exercised,
then upon request of the holder and surrender of such Series 2024-A warrant, we shall issue a new Series 2024-A warrant exercisable for
the remaining number of shares of ordinary shares.
A holder (together with its affiliates) may not exercise
any portion of the Series 2024-A warrants to the extent that the holder (together with its affiliates) would beneficially own more than
4.99% (or, at the election of the holder prior to the date of issuance, 9.99%) of our outstanding ordinary shares after exercise. The
holder may increase or decrease this beneficial ownership limitation to any other percentage not in excess of 9.99%, upon notice to us,
provided that, in the case of an increase of such beneficial ownership limitation, such notice shall not be effective until 61 days following
notice to us.
Cashless Exercise
If, and only if, a registration statement relating
to the issuance of the shares underlying the Series 2024-A warrants is not then effective or the prospectus therein is not available for
use, a holder of Series 2024-A warrants may exercise the Series 2024-A warrants on a cashless basis, where the holder receives the net
value of the Series 2024-A warrants in shares of ordinary shares pursuant to the formula set forth in the Series 2024-A warrants. However,
if an effective registration statement and the prospectus is available for the issuance of the shares underlying the Series 2024-A warrants,
a holder may only exercise the Series 2024-A warrants through a cash exercise. Shares issued pursuant to a cashless exercise would be
issued pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), and the shares of ordinary
shares issued upon such cashless exercise would take on the registered characteristics of the Series 2024-A warrants being exercised.
Failure to Timely Deliver Shares of Ordinary shares
If we fail to timely deliver shares of ordinary shares
pursuant to any exercise of the Series 2024-A warrants, and such exercising holder elects or is required to purchase shares of ordinary
shares (in an open market transaction or otherwise) to deliver in satisfaction of a sale by such holder of all or a portion of the shares
of ordinary shares for which such Series 2024-A warrant was exercised, then we will be required to deliver an amount in cash by which
holder’s purchase price, including commissions, exceeds the number of shares of ordinary shares to be delivered multiplied by the
price at which the sell order was executed and, at option of holder, reinstate the portion of warrant for the exercise that was not honored
or deliver the number of shares of ordinary shares.
Fundamental Transaction
If, at any time while the Series 2024-A warrants are
outstanding, we directly or indirectly, in one or more related transactions, enter into a fundamental transaction, which includes any
merger with or into another entity, sale of all or substantially all of our assets, tender offer or exchange offer, or reclassification
of our ordinary shares as further described in the Series 2024-A warrants, then each holder shall become entitled to receive the same
amount and kind of securities, cash or property as such holder would have been entitled to receive upon the occurrence of such fundamental
transaction if the holder had been, immediately prior to such fundamental transaction, the holder of the number of shares of ordinary
shares then issuable upon exercise of such holder’s Series 2024-A warrants. Any successor to us, surviving entity or the corporation
purchasing or otherwise acquiring such assets shall assume the obligation to deliver to the holder such alternate consideration, and the
other obligations, under the Series 2024-A warrants. In addition, upon a fundamental transaction, the holder will have the right to require
us to repurchase its Series 2024-A warrant at its fair value using the Black Scholes option pricing formula in the Series 2024-A warrants;
provided, however, that, if the fundamental transaction is not within our control, including not approved by our board of directors, then
the holder shall only be entitled to receive the same type or form of consideration (and in the same proportion), at the Black Scholes
value of the unexercised portion of the warrant, that is being offered and paid to the holders of our ordinary shares in connection with
the fundamental transaction.
Certain Adjustments
The exercise price and the number of shares purchasable
upon exercise of the Series 2024-A warrants are subject to adjustment upon certain reclassifications, stock dividends and stock splits.
Subject to NYSE rules and regulations, we have the right at any time during the term of the Series 2024-A warrants to reduce the then-existing
exercise price, with respect to all or any portion of any outstanding Series 2024-A warrants to any amount and for any period of time
deemed appropriate by our board of directors.
Pro Rata Distributions
If, at any time while the Series 2024-A warrants are
outstanding, we declare or make any dividend or other distribution of our assets to holders of shares of our ordinary shares, by way of
return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property, or options,
by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) or we grant,
issue or sell any options, convertible securities or rights to purchase stock, warrants, securities or other property pro rata to the
record holders of any class of ordinary shares (in each case, “Series 2024-A Distributed Property”), then each holder of a
Series 2024-A warrant shall receive, with respect to the shares of ordinary shares issuable upon exercise of such Series 2024-A warrant,
the Series 2024-A Distributed Property that such holder would have been entitled to receive had the holder been the record holder of such
number of shares of ordinary shares issuable upon exercise of the warrant immediately prior to the record date for such Series 2024-A
Distributed Property.
Authorized and Unreserved Shares of Ordinary shares
So long as any of the Series 2024-A warrants remain
outstanding, we are required to maintain a number of authorized and unreserved shares of ordinary shares equal to the number of shares
of ordinary shares issuable upon the exercise of all of the Series 2024-A warrants then outstanding.
Fractional Shares
No fractional shares will be issued upon exercise
of the Series 2024-A warrants, but we will pay a cash adjustment or round up to the next whole share in connection with any fractional
share.
Rights as a Stockholder
Except as set forth in the Series 2024-A warrants,
the Series 2024-A warrants do not confer upon holders any voting or other rights as stockholders of the Company.
Trading Market
There is no established public trading market available
for the Series 2024-A warrants on any national securities exchange or other nationally recognized trading system. In addition, we do not
intend to apply to list the Series 2024-A warrants on any national securities exchange or other nationally recognized trading system,
including the NYSE American.
Series
2024-C Warrants
The
following description of the Series 2024-C warrants is a summary, is not complete and is subject to, and qualified in its entirety by,
the provisions of the Series 2024-C warrants, the form of which is to be filed as an exhibit to the registration statement of which this
prospectus forms a part, by amendment. It summarizes only those aspects of the Series 2024-C warrants that we believe will be most important
to your decision to invest in the Series 2024-C warrants. You should keep in mind, however, that it is the terms in the Series 2024-C
warrants, and not this summary, which define your rights as a holder of the Series 2024-C warrants. There may be other provisions in
the Series 2024-C warrants that are also important to you. You should read the form of the Series 2024-C warrants for a full description
of the terms of the Series 2024-C warrants.
Duration
and Exercise Price
Each
full Series 2024-C warrant entitles the holder thereof to purchase one share of our ordinary shares at an exercise price equal to $0.35
per share. The Series 2024-C warrants will be exercisable during the period commencing on the date of issuance and will expire on
the 18-mongth anniversary of the date of issuance. The Series 2024-C warrants will be issued in certificated form.
Exercisability
The
Series 2024-C warrants may be exercised by delivering to the Company a duly-executed notice of election to exercise the Series 2024-C
warrant and delivering to the Company cash payment of the exercise price. Upon delivery of the written notice of election to exercise
the Series 2024-C warrant and cash payment of the exercise price, on and subject to the terms and conditions of the Series 2024-C warrants,
we will deliver or cause to be delivered to such holder, the number of whole shares of ordinary shares to which the holder is entitled,
which shares shall be delivered in book-entry form. If a Series 2024-C warrant is exercised for fewer than all of the shares of ordinary
shares for which such Series 2024-C warrant may be exercised, then upon request of the holder and surrender of such Series 2024-C warrant,
we shall issue a new Series 2024-C warrant exercisable for the remaining number of shares of ordinary shares.
A
holder (together with its affiliates) may not exercise any portion of the Series 2024-C warrants to the extent that the holder (together
with its affiliates) would beneficially own more than 4.99% (or, at the election of the holder prior to the date of issuance, 9.99%)
of our outstanding ordinary shares after exercise. The holder may increase or decrease this beneficial ownership limitation to any other
percentage not in excess of 9.99%, upon notice to us, provided that, in the case of an increase of such beneficial ownership limitation,
such notice shall not be effective until 61 days following notice to us.
Cashless
Exercise
If,
and only if, a registration statement relating to the issuance of the shares underlying the Series 2024-C warrants is not then effective
or the prospectus therein is not available for use, a holder of Series 2024-C warrants may exercise the Series 2024-C warrants on a cashless
basis, where the holder receives the net value of the Series 2024-C warrants in shares of ordinary shares pursuant to the formula set
forth in the Series 2024-C warrants. However, if an effective registration statement and the prospectus is available for the issuance
of the shares underlying the Series 2024-C warrants, a holder may only exercise the Series 2024-C warrants through a cash exercise. Shares
issued pursuant to a cashless exercise would be issued pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities
Act”), and the shares of ordinary shares issued upon such cashless exercise would take on the registered characteristics of the
Series 2024-C warrants being exercised.
Failure
to Timely Deliver Shares of Ordinary shares
If
we fail to timely deliver shares of ordinary shares pursuant to any exercise of the Series 2024-C warrants, and such exercising holder
elects or is required to purchase shares of ordinary shares (in an open market transaction or otherwise) to deliver in satisfaction of
a sale by such holder of all or a portion of the shares of ordinary shares for which such Series 2024-C warrant was exercised, then we
will be required to deliver an amount in cash by which holder’s purchase price, including commissions, exceeds the number of shares
of ordinary shares to be delivered multiplied by the price at which the sell order was executed and, at option of holder, reinstate the
portion of warrant for the exercise that was not honored or deliver the number of shares of ordinary shares.
Fundamental
Transaction
If,
at any time while the Series 2024-C warrants are outstanding, we directly or indirectly, in one or more related transactions, enter into
a fundamental transaction, which includes any merger with or into another entity, sale of all or substantially all of our assets, tender
offer or exchange offer, or reclassification of our ordinary shares as further described in the Series 2024-C warrants, then each holder
shall become entitled to receive the same amount and kind of securities, cash or property as such holder would have been entitled to
receive upon the occurrence of such fundamental transaction if the holder had been, immediately prior to such fundamental transaction,
the holder of the number of shares of ordinary shares then issuable upon exercise of such holder’s Series 2024-C warrants. Any
successor to us, surviving entity or the corporation purchasing or otherwise acquiring such assets shall assume the obligation to deliver
to the holder such alternate consideration, and the other obligations, under the Series 2024-C warrants. In addition, upon a fundamental
transaction, the holder will have the right to require us to repurchase its Series 2024-C warrant at its fair value using the Black Scholes
option pricing formula in the Series 2024-C warrants; provided, however, that, if the fundamental transaction is not within our control,
including not approved by our board of directors, then the holder shall only be entitled to receive the same type or form of consideration
(and in the same proportion), at the Black Scholes value of the unexercised portion of the warrant, that is being offered and paid to
the holders of our ordinary shares in connection with the fundamental transaction.
Certain
Adjustments
The
exercise price and the number of shares purchasable upon exercise of the Series 2024-C warrants are subject to adjustment upon certain
reclassifications, stock dividends and stock splits. Subject to NYSE rules and regulations, we have the right at any time during the
term of the Series 2024-C warrants to reduce the then-existing exercise price, with respect to all or any portion of any outstanding
Series 2024-C warrants to any amount and for any period of time deemed appropriate by our board of directors.
Pro
Rata Distributions
If,
at any time while the Series 2024-C warrants are outstanding, we declare or make any dividend or other distribution of our assets to
holders of shares of our ordinary shares, by way of return of capital or otherwise (including, without limitation, any distribution of
cash, stock or other securities, property, or options, by way of a dividend, spin off, reclassification, corporate rearrangement, scheme
of arrangement or other similar transaction) or we grant, issue or sell any options, convertible securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any class of ordinary shares (in each case, “Series 2024-C
Distributed Property”), then each holder of a Series 2024-C warrant shall receive, with respect to the shares of ordinary shares
issuable upon exercise of such Series 2024-C warrant, the Series 2024-C Distributed Property that such holder would have been entitled
to receive had the holder been the record holder of such number of shares of ordinary shares issuable upon exercise of the warrant immediately
prior to the record date for such Series 2024-C Distributed Property.
Authorized
and Unreserved Shares of Ordinary shares
So
long as any of the Series 2024-C warrants remain outstanding, we are required to maintain a number of authorized and unreserved shares
of ordinary shares equal to the number of shares of ordinary shares issuable upon the exercise of all of the Series 2024-C warrants then
outstanding.
Fractional
Shares
No
fractional shares will be issued upon exercise of the Series 2024-C warrants, but we will pay a cash adjustment or round up to the next
whole share in connection with any fractional share.
Rights
as a Stockholder
Except
as set forth in the Series 2024-C warrants, the Series 2024-C warrants do not confer upon holders any voting or other rights as stockholders
of the Company.
Trading Market
There is no established public trading market
available for the Series 2024-C warrants on any national securities exchange or other nationally recognized trading system. In addition,
we do not intend to apply to list the Series 2024-C warrants on any national securities exchange or other nationally recognized trading
system, including the NYSE American.
Pre-Funded Series 2024-B Warrants
The following description of the pre-funded
Series a summary, is not complete and is subject to, and qualified in its entirety by, the provisions of the pre-funded Series 2024-B
warrants, the form of which is filed as an exhibit to the registration statement of which this prospectus forms a part. It summarizes
only those aspects of the pre-funded Series 2024-B warrants that we believe will be most important to your decision to invest
in the pre-funded Series 2024-B warrants. You should keep in mind, however, that it is the terms in the pre-funded Series 2024-B
warrants, and not this summary, which define your rights as a holder of the pre-funded Series 2024-B warrants. There may be other
provisions in the pre-funded Series 2024-B warrants that are also important to you. You should read the form of the pre-funded
Series 2024-B warrants for a full description of the terms of the pre-funded Series 2024-B warrants.
Duration and Exercise Price
Each pre-funded Series 2024-B warrant
entitles the holder thereof to purchase one share of our ordinary shares at an exercise price equal to $0.0001 per share. The public
offering price per share, except for a nominal exercise price of $0.0001 per share, will be pre-paid to us upon issuance of the pre-funded
Series 2024-B warrants and, consequently, no additional payment or other consideration (other than the nominal exercise price of $0.0001
per share) will be required to be delivered to us by the holder upon exercise. The pre-funded Series 2024-B warrants will be exercisable
during the period commencing on the date of issuance and expire on the fifth anniversary thereof. The prefunded Series 2024-B warrants
will be issued in certificated form.
The purpose of the pre-funded Series 2024-B warrants
is to enable investors that may not wish to beneficially own more than 4.99% or 9.99%, at the investor’s election, of our outstanding
ordinary shares following the consummation of this offering the opportunity to invest capital into the Company without surpassing such
ownership limitations. By receiving pre-funded Series 2024-B warrants in lieu of the shares of ordinary shares contained in the Series
1 units which would result in such holders’ ownership exceeding 4.99% or 9.99%, as applicable, such holders will have the ability
to purchase the shares underlying the pre-funded Series 2024-B warrants for nominal consideration at a later date.
Exercisability
The pre-funded Series 2024-B warrants
may be exercised by delivering to the Company a duly-executed written notice of election to exercise the pre-funded Series 2024-B
warrant and delivering to the Company cash payment of the nominal exercise price of $0.0001 per share. Upon delivery of the written
notice of election to exercise the pre-funded Series 2024-B warrant and cash payment of the nominal exercise price of $0.0001
per share, on and subject to the terms and conditions of the pre-funded Series 2024-B warrants, we will deliver or cause to
be delivered such holder the number of whole shares of ordinary shares to which the holder is entitled, which shares shall be delivered
in book-entry form. If a pre-funded Series 2024-B warrant is exercised for fewer than all of the shares of ordinary shares for
which such pre-funded Series 2024-B warrant may be exercised, then upon request of the holder and surrender of such pre-funded
Series 2024-B warrant, we shall issue a new pre-funded Series 2024-B warrant exercisable for the remaining number of shares
of ordinary shares.
A holder (together with its affiliates) may not exercise
any portion of the pre-funded Series 2024-B warrants to the extent that the holder (together with its affiliates) would beneficially own
more than 4.99% (or, at the election of the holder prior to the date of issuance, 9.99%) of our outstanding ordinary shares after exercise.
The holder may increase or decrease this beneficial ownership limitation to any other percentage not in excess of 9.99 upon notice to
us, provided that, in the case of an increase of such beneficial ownership limitation, such notice shall not be effective until 61 days
following notice to us.
Cashless Exercise
At any time while the pre-funded Series 2024-B warrants
are outstanding, a holder of pre-funded Series 2024-B warrants may exercise the pre-funded Series 2024-B warrants on a cashless basis
pursuant to the formula in the pre-funded Series 2024-B warrants. Shares issued pursuant to a cashless exercise would be issued pursuant
to Section 3(a)(9) of the Securities Act, and the shares of ordinary shares issued upon such cashless exercise would take on the registered
characteristics of the pre-funded Series 2024-B warrants being exercised.
Failure to Timely Deliver Shares of Ordinary shares
If we fail to timely deliver shares of ordinary shares
pursuant to any pre-funded Series 2024-B warrant exercise, and such exercising holder elects or is required to purchase shares of ordinary
shares (in an open market transaction or otherwise) to deliver in satisfaction of a sale by such holder of all or a portion of the shares
of ordinary shares for which such pre-funded Series 2024-B warrant was exercised, then we will be required to deliver an amount in cash
by which holder’s purchase price, including commissions, exceeds the number of shares of ordinary shares to be delivered multiplied
by the price at which the sell order was executed and, at option of holder, reinstate the portion of warrant for the exercise that was
not honored or deliver the number of shares of ordinary shares.
Fundamental Transaction
If, at any time while the pre-funded Series 2024-B
warrants are outstanding, we directly or indirectly, in one or more related transactions, enter into a fundamental transaction, which
includes any merger with or into another entity, sale of all or substantially all of our assets, tender offer or exchange offer, or reclassification
of our ordinary shares as further described in the pre-funded Series 2024-B warrants, then each holder shall become entitled to receive
the same amount and kind of securities, cash or property as such holder would have been entitled to receive upon the occurrence of such
fundamental transaction if the holder had been, immediately prior to such fundamental transaction, the holder of the number of shares
of ordinary shares then issuable upon exercise of such holder’s pre-funded Series 2024-B warrants. Any successor to us, surviving
entity or the corporation purchasing or otherwise acquiring such assets shall assume the obligation to deliver to the holder such alternate
consideration, and the other obligations, under the pre-funded Series 2024-B warrants.
Certain Adjustments
The exercise price and the number of shares purchasable
upon exercise of the pre-funded Series 2024-B warrants are subject to adjustment upon certain reclassifications, stock dividends and stock
splits.
Pro Rata Distributions
If, at any time while the pre-funded Series 2024-B
warrants are outstanding, we declare or make any dividend or other distribution of our assets to holders of shares of our ordinary shares,
by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property,
or options, by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
or we grant, issue or sell any options, convertible securities or rights to purchase stock, warrants, securities or other property pro
rata to the record holders of any class of ordinary shares (in each case, “Series 2024-B Distributed Property”), then each
holder of a pre-funded Series 2024-B warrant shall receive, with respect to the shares of ordinary shares issuable upon exercise of such
pre-funded Series 2024-B warrant, the Series 2024-B Distributed Property that such holder would have been entitled to receive had the
holder been the record holder of such number of shares of ordinary shares issuable upon exercise of the warrant immediately prior to the
record date for such Series 2024-B Distributed Property.
Authorized and Unreserved Shares of Ordinary shares
So long as any of the pre-funded Series 2024-B warrants
remain outstanding, we are required to maintain a number of authorized and unreserved shares of ordinary shares equal to the number of
shares of ordinary shares issuable upon the exercise of all of the pre-funded Series 2024-B warrants then outstanding.
Fractional Shares
No fractional shares will be issued upon exercise
of the pre-funded Series 2024-B warrants, but we will pay a cash adjustment or round up to the next whole share in connection with any
fractional share.
Rights as a Stockholder
Except as set forth in the pre-funded Series 2024-B
warrants, the pre-funded Series 2024-B warrants do not confer upon holders any voting or other rights as stockholders of the Company.
Trading Market
There is no established public trading market available
for the pre-funded Series 2024-B warrants on any national securities exchange or other nationally recognized trading system. In addition,
we do not intend to apply to list the pre-funded Series 2024-B warrants on any national securities exchange or other nationally recognized
trading system, including the NYSE American.
CERTAIN MATERIAL
TAX CONSIDERATIONS
Material
United States Federal Income Tax Considerations
The following
is a discussion of certain material United States federal income tax considerations relating to the acquisition, ownership, and disposition
of our ordinary shares by a U.S. Holder, as defined below, that acquires our ordinary shares in this offering and holds our ordinary shares
as “capital assets” (generally, property held for investment) under the United States Internal
Revenue Code of 1986, as amended (the “Code”). This discussion is based on existing United States federal income tax law,
which is subject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the Internal
Revenue Service (the “IRS”) with respect to any United States federal income tax consequences described below, and there can
be no assurance that the IRS or a court will not take a contrary position. This discussion does not address all aspects of United States
federal income taxation that may be important to particular investors in light of their individual circumstances, including investors
subject to special tax rules (such as, for example, certain financial institutions, insurance companies, regulated investment companies,
real estate investment trusts, broker-dealers, traders in securities that elect mark-to-market treatment, partnerships (or other entities
treated as partnerships for United States federal income tax purposes) and their partners, tax-exempt organizations (including private
foundations)), investors who are not U.S. Holders, investors that own (directly, indirectly, or constructively) 5% or more of our voting
shares, investors that hold their ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction),
or investors that have a functional currency other than the U.S. dollar, all of whom may be subject to tax rules that differ significantly
from those summarized below. In addition, this discussion does not address any tax laws other than the United States federal income tax
laws, including any state, local, alternative minimum tax or non-United States tax considerations, or the Medicare tax on unearned income.
Each potential investor is urged to consult its tax advisor regarding the United States federal, state, local and non-United States income
and other tax considerations of an investment in our ordinary shares.
General
For purposes of
this discussion, a “U.S. Holder” is a beneficial owner of our ordinary shares that is, for United States federal income tax
purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation
for United States federal income tax purposes) created in, or organized under the laws of, the United States or any state thereof or the
District of Columbia, (iii) an estate the income of which is includible in gross income for United States federal income tax purposes
regardless of its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of a United States court
and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (B) that has
otherwise elected to be treated as a United States person under the Code.
If a partnership
(or other entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of our ordinary shares,
the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. Partnerships
and partners of a partnership holding our ordinary shares are urged to consult their tax advisors regarding an investment in our ordinary
shares.
The discussion
set forth below is addressed only to U.S. Holders that purchase ordinary shares in this offering. Prospective purchasers are urged to
consult their own tax advisors about the application of U.S. federal income tax law to their particular circumstances as well as the state,
local, foreign and other tax consequences to them of the purchase, ownership and disposition of our ordinary shares.
Taxation
of Dividends and Other Distributions on our Ordinary Shares
Subject to the
passive foreign investment company rules discussed below, distributions of cash or other property made by us to you with respect to the
ordinary shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend income
on the date of receipt by you, but only to the extent that the distribution is paid out of our current or accumulated earnings and profits
(as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, the dividends will not be eligible for
the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.
With respect to
non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate applicable to qualified
dividend income, provided that (1) the ordinary shares are readily tradable on an established securities market in the United States,
or we are eligible for the benefits of an approved qualifying income tax treaty with the United States that includes an exchange of information
program, (2) we are not a passive foreign investment company (as discussed below) for either our taxable year in which the dividend is
paid or the preceding taxable year, and (3) certain holding period requirements are met. You are urged to consult your tax advisors regarding
the availability of the lower rate for dividends paid with respect to our ordinary shares, including the effects of any change in law
after the date of this prospectus.
To the extent
that the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S. federal income
tax principles), it will be treated first as a tax-free return of your tax basis in your ordinary shares, and to the extent the amount
of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings and profits
under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend even
if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.
Taxation
of Dispositions of Ordinary Shares
Subject to the
passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable
disposition of a share equal to the difference between the amount realized (in U.S. dollars) for the share and your tax basis (in U.S.
dollars) in the ordinary shares. The gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual
U.S. Holder, who has held the ordinary shares for more than one year, you may be eligible for reduced tax rates on any such capital gains.
The deductibility of capital losses is subject to limitations.
Passive
Foreign Investment Company
A non-U.S. corporation
is considered a PFIC for any taxable year if either:
➢ at
least 75% of its gross income for such taxable year is passive income; or
➢
at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is
attributable to assets that produce or are held for the production of passive income (the “asset test”).
Passive income
generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade
or business) and gains from the disposition of passive assets. We will be treated as owning our proportionate share of the assets and
earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value)
of the stock. In determining the value and composition of our assets for purposes of the PFIC asset test, (1) the cash we raise in this
offering will generally be considered to be held for the production of passive income and (2) the value of our assets must be determined
based on the market value of our ordinary shares from time to time, which could cause the value of our non-passive assets to be less than
50% of the value of all of our assets (including the cash raised in this offering) on any particular quarterly testing date for purposes
of the asset test.
We must make a
separate determination each year as to whether we are a PFIC. Depending on the amount of cash we raise in this offering, together with
any other assets held for the production of passive income, it is possible that, for our current taxable year or for any subsequent taxable
year, more than 50% of our assets may be assets held for the production of passive income. We will make this determination following the
end of any particular tax year. Although the law in this regard is unclear, we treat our consolidated affiliated entities as being owned
by us for United States federal income tax purposes, not only because we exercise effective control over the operation of such entities
but also because we are entitled to substantially all of their economic benefits, and, as a result, we consolidate their operating results
in our combined and consolidated financial statements. In particular, because the value of our assets for purposes of the asset test will
generally be determined based on the market price of our ordinary shares and because cash is generally considered to be an asset held
for the production of passive income, our PFIC status will depend in large part on the market price of our ordinary shares and the amount
of cash we raise in this offering. Accordingly, fluctuations in the market price of the ordinary shares may cause us to become a PFIC.
In addition, the application of the PFIC rules is subject to uncertainty in several respects and the composition of our income and assets
will be affected by how, and how quickly, we spend the cash we raise in this offering. We are under no obligation to take steps to reduce
the risk of our being classified as a PFIC, and as stated above, the determination of the value of our assets will depend upon material
facts (including the market price of our ordinary shares from time to time and the amount of cash we raise in this offering) that may
not be within our control. If we are a PFIC for any year during which you hold ordinary shares, we will continue to be treated as a PFIC
for all succeeding years during which you hold ordinary shares. However, if we cease to be a PFIC and you did not previously make a timely
“mark-to-market” election as described below, you may avoid some of the adverse effects of the PFIC regime by making a “purging
election” (as described below) with respect to the ordinary shares.
If
we are a PFIC for your taxable year(s) during which you hold ordinary shares, you will be subject to special tax rules with respect to
any “excess distribution” that you receive and any gain you realize from a sale or other disposition (including a pledge)
of the ordinary shares, unless you make a “mark-to-market” election as discussed below. Distributions you receive in a taxable
year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years
or your holding period for the ordinary shares will be treated as an excess distribution. Under these special tax rules:
➢ the
excess distribution or gain will be allocated ratably over your holding period for the ordinary shares;
➢ the
amount allocated to your current taxable year, and any amount allocated to any of your taxable year(s) prior to the first taxable
year in which we were a PFIC, will be treated as ordinary income, and
➢ the
amount allocated to each of your other taxable year(s) will be subject to the highest tax rate in effect for that year and the
interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such
year.
The tax liability
for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset by any net operating
losses for such years, and gains (but not losses) realized on the sale of the ordinary shares cannot be treated as capital, even if you
hold the ordinary shares as capital assets.
A U.S. Holder
of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election for such
stock to elect out of the tax treatment discussed above. If you make a mark-to-market election for the first taxable year during which
you hold (or are deemed to hold) ordinary shares and for which we are determined to be a PFIC, you will include in your income each year
an amount equal to the excess, if any, of the fair market value of the ordinary shares as of the close of such taxable year over your
adjusted basis in such ordinary shares, which excess will be treated as ordinary income and not capital gain. You are allowed an ordinary
loss for the excess, if any, of the adjusted basis of the ordinary shares over their fair market value as of the close of the taxable
year. However, such ordinary loss is allowable only to the extent of any net mark-to-market gains on the ordinary shares included in your
income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or
other disposition of the ordinary shares, are treated as ordinary income. Ordinary loss treatment also applies to any loss realized on
the actual sale or disposition of the ordinary shares, to the extent that the amount of such loss does not exceed the net mark-to-market
gains previously included for such ordinary shares. Your basis in the ordinary shares will be adjusted to reflect any such income or loss
amounts. If you make a valid mark-to-market election, the tax rules that apply to distributions by corporations which are not PFICs would
apply to distributions by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under
“— Taxation of Dividends and Other Distributions on our ordinary shares” generally would not apply. The mark-to-market
election is available only for “marketable stock”, which is stock that is traded in other than de minimis quantities
on at least 15 days during each calendar quarter (“regularly traded”) on a qualified exchange or other market (as defined
in applicable U.S. Treasury regulations). If the ordinary shares are regularly traded on a qualified stock exchange or other market, and
if you are a holder of ordinary shares, the mark-to-market election would be available to you were we to be or become a PFIC.
Alternatively,
a U.S. Holder of stock in a PFIC may make a “qualified electing fund” election with respect to such PFIC to elect out of the
tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally
include in gross income for a taxable year such holder’s pro rata share of the corporation’s earnings and profits for the
taxable year. However, the qualified electing fund election is available only if such PFIC provides such U.S. Holder with certain information
regarding its earnings and profits as required under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide
the information that would enable you to make a qualified electing fund election. If you hold ordinary shares in any taxable year in which
we are a PFIC, you will be required to file IRS Form 8621 in each such year and provide certain annual information regarding such ordinary
shares, including regarding distributions received on the ordinary shares and any gain realized on the disposition of the ordinary shares.
If you do not
make a timely “mark-to-market” election (as described above), and if we were a PFIC at any time during the period you hold
our ordinary shares, then such ordinary shares will continue to be treated as stock of a PFIC with respect to you even if we cease to
be a PFIC in a future year, unless you make a “purging election” for the year we cease to be a PFIC. A “purging election”
creates a deemed sale of such ordinary shares at their fair market value on the last day of the last year in which we are treated as a
PFIC. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an
excess distribution, as described above. As a result of the purging election, you will have a new basis (equal to the fair market value
of the ordinary shares on the last day of the last year in which we are treated as a PFIC) and holding period (which new holding period
will begin the day after such last day) in your ordinary shares for tax purposes.
You are urged
to consult your tax advisors regarding the application of the PFIC rules to your investment in our ordinary shares and the elections discussed
above.
Information
Reporting and Backup Withholding
Dividend payments
with respect to our ordinary shares and proceeds from the sale, exchange or redemption of our ordinary shares may be subject to information
reporting to the IRS and possible U.S. backup withholding. Backup withholding will not apply, however, to a U.S. Holder who furnishes
a correct taxpayer identification number and makes any other required certification on IRS Form W-9 or who is otherwise exempt from backup
withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on IRS Form W-9.
U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding
rules.
Backup withholding
is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you
may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with
the IRS and furnishing any required information. We do not intend to withhold taxes for individual shareholders. However, transactions
effected through certain brokers or other intermediaries may be subject to withholding taxes (including backup withholding), and such
brokers or intermediaries may be required by law to withhold such taxes.
Under the Hiring
Incentives to Restore Employment Act of 2010, certain U.S. Holders are required to report information relating to our ordinary shares,
subject to certain exceptions (including an exception for ordinary shares held in accounts maintained by certain financial institutions),
by attaching a complete IRS Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they
hold ordinary shares.
Material
Singapore Tax Considerations
The following
discussion is a summary of material Singapore income tax, Goods and Services Tax, stamp duty and estate duty considerations relevant to
the purchase, ownership and disposition of our ordinary shares by an investor who is not tax resident or domiciled in Singapore and who
does not carry on business or otherwise have a presence in Singapore. The statements made herein regarding taxation are based on certain
aspects of the tax laws of Singapore and administrative guidelines issued by the relevant authorities in force as of the date hereof and
are subject to any changes in such laws or administrative guidelines, or in the interpretation of those laws or guidelines, occurring
after such date, which changes could be made on a retroactive basis. The statements made herein do not describe all of the tax considerations
that may be relevant to all our shareholders, some of which (such as dealers in securities) may be subject to different rules. The statements
are not intended to be and do not constitute legal or tax advice and no assurance can be given that courts or fiscal authorities responsible
for the administration of such laws will agree with the interpretation adopted therein. Each prospective investor should consult an independent
tax advisor regarding all Singapore income and other tax consequences applicable to them from owning or disposing of our ordinary shares
in light of the investor’s particular circumstances.
Income
Taxation Under Singapore Law
Dividend Distributions
with Respect to Ordinary Shares
On the basis that
a company is not tax resident in Singapore for Singapore tax purposes, dividends paid by the company should generally be considered as
sourced outside Singapore. Dividends paid by the company incorporated in Singapore under the one-tier tax exemption scheme would allow
such dividends not to be subjected to a withholding tax at the point of the distribution nor to be taxed in Singapore upon receipt of
such dividends in the hands of the holders of the shares.
Foreign-sourced
dividends received or deemed received in Singapore by an individual not resident in Singapore would be exempt from Singapore income tax.
This exemption will also apply in the case of a Singapore tax resident individual who receives such foreign-sourced income in Singapore
(except where such income is received through a partnership in Singapore).
Foreign-sourced
dividends received or deemed received by corporate investors in Singapore will be liable for Singapore tax. However, if the conditions
for the exemption of specified foreign-sourced income are met, foreign-sourced dividends received by corporate investors resident in Singapore
would be exempt from Singapore tax.
Foreign-sourced
dividends received or deemed received in Singapore on or after June 1, 2003 by a Singapore resident corporate taxpayer is exempt from
tax, provided certain prescribed conditions are met, including the following:
(a)
such income is subject to tax of a similar character to income tax under the law of the jurisdiction from which such income is
received;
(b)
at the time the income is received in Singapore, the highest rate of tax of a similar character to income tax (by whatever name
called) levied under the law of the territory from which the income is received on any gains or profits from any trade or business
carried on by any company in that territory at that time is not less than 15%; and
(c)
the Comptroller of Income Tax is satisfied that the tax exemption would be beneficial to the person resident in
Singapore.
In the case of
dividends paid by a company resident in a territory from which the dividends are received, the “subject to tax condition”
in (a) above is considered met where tax is paid in that territory by such company in respect of its income out of which such dividends
are paid or tax is paid on such dividends in that territory from which such dividends are received. Certain concessions and clarifications
have also been announced by the Inland Revenue Authority of Singapore (“IRAS”) with respect to the above conditions.
Capital Gains
upon Disposition of Ordinary Shares
Under current
Singapore tax law, there is no tax on capital gains. As such, any profits from the disposal of our ordinary shares would not ordinarily
(where such decision to transact would have been made in Singapore) be taxable in Singapore unless the profits are deemed to be income
in nature. However, there are no specific laws or regulations which deal with the characterization of whether a gain is income or capital
in nature. If the decision to transact can be construed as having been made in Singapore and the gains from the disposal of ordinary shares
can be construed to be of an income nature (the IRAS would look at the determining factors such as the motive, the holding period, the
frequency of transactions, the nature of the subject matter, the circumstances of realization, the mode of financing and other factors
to determine the nature of the trade), the disposal profits would be taxable as income rather than capital gains. As the precise status
of each prospective investor will vary from one another, each prospective investor should consult an independent tax advisor on the Singapore
income tax and other tax consequences that will apply to their individual circumstances.
Subject to certain
conditions being satisfied, gains derived by a company from the disposal of our ordinary shares between the period of June 1, 2012 and
December 31, 2027 (inclusive of both dates) will not be subject to Singapore income tax, if the divesting company holds a minimum shareholding
of 20% of our ordinary shares and these shares have been held for a continuous minimum period of 24 months. For disposals during the period
from June 1, 2012, and May 31, 2022 (inclusive of both dates), this exemption would not apply to the disposal of unlisted shares in a
company that is in the business of trading or holding immovable properties in Singapore (excluding property development). For disposals
during the period from June 1, 2022, and December 31, 2027 (inclusive of both dates), this exemption would not apply to the disposal of
unlisted shares in a company that is in the business of trading, holding or developing immovable properties in Singapore or abroad.
In addition, shareholders
who apply, or who are required to apply, the Singapore Financial Reporting Standard 39 (“FRS 39”), Financial Reporting Standard
109 (“FRS 109”) or Singapore Financial Reporting Standard (International) 9 (Financial Instruments) (“SFRS(I) 9”)
(as the case may be), for the purposes of Singapore income tax may be required to recognize gains or losses (not being gains or losses
in the nature of capital) in accordance with the provisions of FRS 39, FRS 109 or SFRS(I) 9 (as modified by the applicable provisions
of Singapore income tax law) even though no sale or disposal of our ordinary shares is made. Singapore corporate shareholders who may
be subject to such tax treatment should consult their own accounting and tax advisors regarding the Singapore income tax consequences
of their acquisition, holding and disposal of our ordinary shares.
Stamp Duty
There is no Singapore
stamp duty payable in respect of the issuance or holding of our new ordinary shares. Singapore stamp duty will be payable if there is
an instrument of transfer of our ordinary shares executed in Singapore or if there is an instrument of transfer executed outside of Singapore
which is received in Singapore. Under Singapore law, and subject to meeting the qualifying requirements, stamp duty is not applicable
to electronic transfers of our shares effected on a book entry basis outside Singapore. We therefore expect that if all qualifying conditions
are met, no Singapore stamp duty will be payable in respect of ordinary shares purchased by U.S. holders in this offering assuming that
they are acquired solely in book entry form through the facility outside Singapore established by our transfer agent and registrar outside
Singapore.
Where shares evidenced
in certificated form are transferred and an instrument of transfer is executed (whether physically or in the form of an electronic instrument)
in Singapore or outside Singapore and which is received in Singapore, Singapore stamp duty is payable on the instrument of transfer for
the sale of our ordinary shares at the rate of 0.2% of the consideration for, or market value of, the transferred shares, whichever is
higher. The Singapore stamp duty is borne by the purchaser unless there is an agreement to the contrary. Where the instrument of transfer
is executed outside of Singapore and is received in Singapore, Singapore stamp duty must be paid within 30 days of receipt of the instrument
of transfer in Singapore. Electronic instruments that are executed outside Singapore are treated as received in Singapore in any of the
following scenarios: (a) it is retrieved or accessed by a person in Singapore; (b) an electronic copy of it is stored on a device (including
a computer) and brought into Singapore; or (c) an electronic copy of it is stored on a computer in Singapore. Where the instrument of
transfer is executed in Singapore, Singapore stamp duty must be paid within 14 days of the execution of the instrument of transfer.
Goods and
Services Tax
The issue or transfer
of ownership of our ordinary shares would be exempt from Singapore goods and services tax, or GST. Hence, no GST would be incurred on
the subscription or subsequent transfer of our ordinary shares.
The sale of our
ordinary shares by a GST-registered investor belonging in Singapore for GST purposes to another person belonging in Singapore is an exempt
supply not subject to GST. Any input GST incurred by the GST-registered investor in making the exempt supply is generally not recoverable
from the Singapore Comptroller of GST.
Where our ordinary
shares are sold by a GST-registered investor in the course of or furtherance of a business carried on by such investor contractually to
and for the direct benefit of a person belonging outside Singapore, the sale should generally, subject to satisfaction of certain conditions,
be considered a taxable supply subject to GST at 0%. Subject to the normal rules for input tax claims, any input GST incurred by the GST-registered
investor in making such a supply in the course of or furtherance of a business carried out by such investor may be fully recoverable from
the Singapore Comptroller of GST.
Each prospective
investor should consult an independent tax advisor on the recoverability of input GST incurred on expenses in connection with the purchase
and sale of our ordinary shares if applicable.
Services
consisting of arranging, brokering, placement agent’s or advising on the issue, allotment or transfer of ownership of our
ordinary shares rendered by a GST-registered person to an investor belonging in Singapore for GST purposes in connection with the investor’s
purchase, sale or holding of our ordinary shares will be subject to GST at the standard rate of 7%. Similar services rendered by a GST-registered
person contractually to and for the direct benefit of an investor belonging outside Singapore should generally, subject to the satisfaction
of certain conditions, be subject to GST at 0%.
With
the implementation of reverse charge from January 1, 2020, the “directly benefit” condition for zero-rating (i.e. GST at
0%) will be amended to allow the zero-rating of a supply of services to the extent that the services directly benefit a person belonging
outside Singapore or a GST-registered person in Singapore. Under the reverse charge regime, a GST-registered partially exempt business
that is not entitled to full input tax claims will be required to account for GST on all services that it procures from overseas suppliers
(except for certain services which are specifically exempt from reverse charge). A non GST-registered person whose total value of imported
services for a 12-month period exceeds S$1 million and is not entitled to full input tax claims even if such person was GST-registered
may become liable for GST registration and be required to account for GST both on its taxable supplies and imported services subject
to reverse charge.
Estate
Duty
Singapore
estate duty has been abolished with effect from February 15, 2008 in relation to the estate of any person whose death has occurred on
or after February 15, 2008.
Tax
Treaties Regarding Withholding Taxes
There
is currently no comprehensive avoidance of double taxation agreement between the United States and Singapore which applies to withholding
taxes on dividends or capital gains.
POTENTIAL
PURCHASERS OF OUR ORDINARY SHARES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE U.S. FEDERAL, STATE, LOCAL, AND NON-U.S.
INCOME, GIFT, ESTATE OR GENERATION-SKIPPING TRANSFER, AND OTHER TAX AND TAX TREATY CONSIDERATIONS OF PURCHASING, OWNING AND DISPOSING
OF OUR ORDINARY SHARES
PLAN OF DISTRIBUTION
Pursuant to an engagement agreement (the
“engagement agreement”), we have engaged H.C. Wainwright & Co., LLC, or the placement agent, to act as our exclusive
placement agent in connection with this offering of our securities pursuant to this prospectus. The placement agent has agreed to use
reasonable best efforts to arrange for the sale of the securities pursuant to this prospectus. The terms of this offering are subject
to market conditions and negotiations between us, the placement agent and prospective investors. The engagement agreement does not give
rise to any commitment by the placement agent to purchase any of our securities and the placement agent is not required to arrange the
purchase or sale of any specific number or dollar amount of securities. The placement agent will have no authority to bind us by virtue
of the engagement agreement and the placement agent does not guarantee that it will be able to raise new capital in any prospective offering.
The placement agent may engage sub-agents or selected dealers to assist with the offering.
We have entered into a securities
purchase agreement directly with certain institutional investors purchasing our securities in this offering, providing
such investors with certain representations, warranties and covenants from us, which representations, warranties and covenants will not
be available to other investors in this offering that did not enter into a securities purchase agreement. Investors that did
not enter into a securities purchase agreement are relying solely on this prospectus in connection with the purchase
of our securities in the offering.
There is no required minimum number of securities
or amount of proceeds that must be sold as a condition to completion of this offering.
We will deliver the securities being
issued to the investors upon receipt of investor funds for the purchase of the securities offered pursuant to this prospectus. We expect
to deliver the securities being offered pursuant to this prospectus on or about January 17, 2024.
The placement agent may distribute this prospectus
electronically.
Commissions and Expenses
We have agreed to pay the placement agent
a total cash fee equal to 7.5% of the gross cash proceeds from this offering less $1,000,000, representing the gross cash proceeds to
the Company from the Founder Securities. Pursuant to the engagement agreement, half of the fee will be delivered to Boustead,
and the remainder of the
fee will be distributed among the placement agent and any selected-dealers or sub-agents, if any, that the placement agent has
retained to act on their behalf in connection with this offering. The following table shows the per unit placement agent fees payable
to the placement agent by us in connection with this offering.
We will also reimburse the placement
agent for the placement agent’s legal fees and expenses in the amount of up to $150,000 and $15,950 for closing fees. We estimate
the total offering expenses of this offering that will be payable by us, excluding the placement agent fees and expenses, will be approximately
$290,000.
Placement
Agent Warrants
We have also agreed to issue to the placement
agent or its designees, at the closing of this offering, warrants (the “Placement Agent Warrants”) to purchase a number of
ordinary shares equal to 5.0% of the number of ordinary shares and pre-funded warrants sold in the offering less $1,000,000 worth of
ordinary shares and pre-funded warrants sold in the offering (in respect of the Founder Securities), which is 1,035,714 Placement
Agent Warrants, half of which will be delivered to Boustead pursuant to the engagement agreement. The Placement Agent Warrants will have an exercise price of $5.17 and will be in the same form as the warrants issued to the purchasers in this offering, except that the Placement Agent Warrants will
have a termination date of the five year anniversary of the commencement of the sales pursuant to this offering. Pursuant to FINRA Rule
5110(e), the Placement Agent Warrants and any ordinary shares issued upon exercise of the Placement Agent Warrants shall not be sold,
transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that
would result in the effective economic disposition of the securities by any person for a period of 180 days immediately following the
date of commencement of sales of this offering, except the transfer of any security: (i) by operation of law or by reason of reorganization
of the issuer; (ii) to any FINRA member firm participating in the offering and the officers, partners, registered persons or affiliates
thereof, if all securities so transferred remain subject to the lock-up restriction set forth above for the remainder of the time period;
(iii) if the aggregate amount of our securities held by the placement agent or related persons does not exceed 1.0% of the securities
being offered; (iv) that is beneficially owned on a pro-rata basis by all equity owners of an investment fund, provided that no participating
member manages or otherwise directs investments by the fund and the participating members in the aggregate do not own more than 10% of
the equity in the fund; (v) the exercise or conversion of any security, if all securities remain subject to the lock-up restriction set
forth above for the remainder of the time period; (vi) if we meet the registration requirements of Form F-3; or (vii) back to us in a
transaction exempt from registration with the SEC. The Placement Agent Warrants and the ordinary shares underlying the Placement Agent
Warrants are registered on the registration statement of which this prospectus forms a part.
Right
of First Refusal
We
have granted the placement agent, subject to certain exceptions (including compliance with FINRA Rule 5110(g)(6)), a right of first refusal
for twelve (12) months following the closing of this offering to act as our sole book-running manager, sole underwriter or exclusive
placement agent for any further capital raising transactions undertaken by us.
Tail
We
have also agreed to pay the placement agent a tail fee equal to the cash and warrant compensation in this offering, if any investor,
who was contacted or introduced to us by the placement agent during the term of its engagement, provides us with capital in any public
or private offering or other financing or capital raising transaction during the 12-month period following expiration or termination
of our engagement of the placement agent.
Lock-up
Agreements
We
have agreed, subject to limited exceptions, for a period of 90 days after the closing of this offering, not to offer, sell, contract
to issue, enter into any agreement to issue or announce the issuance or proposed issuance of ordinary shares or securities convertible,
exchangeable or exercisable into, ordinary shares. Our directors and officers have agreed, subject to limited exceptions, for a period
of 90 days after the closing of this offering, not to offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of (or
enter into any transaction designed or expected to result in the disposition of) ordinary shares or securities convertible, exchangeable
or exercisable into ordinary shares either owned as of the date of this prospectus supplement or thereafter acquired. In addition, we
have agreed not to effect or enter into an agreement to effect any issuance of ordinary shares or any securities convertible into or
exercisable or exchangeable for shares of ordinary shares involving a Variable Rate Transaction (as such term is defined in the securities
purchase agreement) until one year following the closing of this offering; provided that, after 90 days following the closing of this
offering, the entry into and/or issuance of shares in an “at the market” offering with the placement agent shall not be deemed
a Variable Rate Transaction.
Other Relationships
The placement agent and its respective affiliates
have engaged in, and may in the future engage in, investment banking, advisory and other commercial dealings in the ordinary course of
business with us or our affiliates for which they have received and may continue to receive customary fees and commissions.
Price Stabilization,
Short Positions and Penalty Bids
In
order to facilitate the offering of our securities, the placement agents may engage in transactions that stabilize, maintain or
otherwise affect the price of our securities. In connection with the offering, the placement agents may purchase and sell our
securities in the open market. These transactions may include short sales, purchases on the open market to cover positions created by
short sales and stabilizing transactions. Short sales involve the sale by the placement agents of a greater number of shares of
securities than they are required to purchase in the offering. “Covered” short sales are sales made in an amount not greater
than the placement agents’ option to purchase additional shares of securities in the offering. The placement agents
may close out any covered short position by purchasing shares in the
open market. Stabilizing
transactions consist of various bids for or purchases of shares of securities made by the placement agents in the open market
before the completion of the offering.
Similar
to other purchase transactions, the placement agents’ purchases to cover the syndicate short sales may have the effect of
raising or maintaining the market price of our securities or preventing or retarding a decline in the market price of our securities.
As result, the price of our securities may be higher than the price that might otherwise exist in the open market.
The
placement agents make no representation or prediction as to the direction or magnitude of any effect that the transactions described
above may have on the price of our securities. In addition, neither we nor the placement agents make any representation that the
placement agents will engage in these transactions or that these transactions, once commenced, will not be discontinued without
notice.
Electronic
Offer, Sale and Distribution of Securities
A prospectus in electronic format may be made
available on the websites maintained by the placement agent or selling group members, if any, participating in the offering. The placement
agent may allocate a number of shares of securities to the placement agent and selling group members for sale to their online brokerage
account holders. Internet distributions will be allocated by the placement agent and selling group members that may make internet distributions
on the same basis as other allocations. Other than the prospectus in electronic format, the information on the placement agent’s
website and any information contained in any other website maintained by the placement agent or any selling group member is not part
of this prospectus or the registration statement of which this prospectus forms a part.
Other Relationships
From
time to time, the placement agent and/or its affiliates may provide in the future, various advisory, investment and commercial
banking and other services to us in the ordinary course of business, for which it will receive customary fees and commissions.
However, except as disclosed in this prospectus, we have no present arrangements with the placement agent or any of its affiliates
for any further services.
Offer Restrictions
Outside the United States
Other
than in the United States, no action has been taken by us or the placement agent that would permit a public offering of the securities
offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may
not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection
with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will
result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes
are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus.
This prospectus
does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction
in which such an offer or a solicitation is unlawful.
Australia
No placement document,
prospectus, product disclosure statement, or other disclosure document has been lodged with the Australian Securities and Investments
Commission (the “ASIC”) in relation to this offering. This prospectus does not constitute a prospectus, product disclosure
statement, or other disclosure document under the Corporations Act 2001 (“the Corporations Act”), and does not purport to
include the information required for a prospectus, product disclosure statement, or other disclosure document under the Corporations Act.
Any offer in Australia
of our securities may only be made to persons (“Exempt Investors”) who are “sophisticated investors” (within the
meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the
Corporations Act), or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful
to offer our securities without disclosure to investors under Chapter 6D of the Corporations Act.
The securities
applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of twelve months after the date of
allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not
be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure
document which complies with Chapter 6D of the Corporations Act. Any person acquiring securities must observe such Australian on-sale
restrictions.
This prospectus
contains general information only and does not take account of the investment objectives, financial situation, or particular needs of
any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision,
investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and,
if necessary, seek expert advice on those matters.
Canada
The securities
may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined
in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients,
as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the securities
must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities
laws. Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages
if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages
are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory.
The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for
particulars of these rights or consult with a legal advisor.
China
The information
in this document does not constitute a public offer of the securities, whether by way of sale or subscription, in the People’s Republic
of China (excluding, for purposes of this paragraph, Hong Kong Special Administrative Region, Macau Special Administrative Region and
Taiwan). The securities may not be offered or sold directly or indirectly in the PRC to legal or natural persons other than directly to
“qualified domestic institutional investors.”
European
Economic Area
In relation to
each Member State of the European Economic Area (each an “EEA State”), no securities have been offered or will be offered
pursuant to the offering to the public in that EEA State prior to the publication of a prospectus in relation to the securities which
has been approved by the competent authority in that EEA State or, where appropriate, approved in another EEA State and notified to the
competent authority in that EEA State, all in accordance with the EU Prospectus Regulation, except that it may make an offer to the public
in that EEA State of any shares at any time under the following exemptions under the EU Prospectus Regulation:
(a)
to any legal entity which is a qualified investor as defined under the EU Prospectus Regulation;
(b)
to fewer than 150 natural or legal persons (other than qualified investors as defined under the EU Prospectus Regulation), subject
to obtaining the prior consent of the representatives for any such offer; or
(c)
in any other circumstances falling within Article 1(4) of the EU Prospectus Regulation, provided no such offer of the securities
shall require us or any of our representatives to publish a prospectus pursuant to Article 3 of the EU Prospectus Regulation or
supplement a prospectus pursuant to Article 23 of the EU Prospectus Regulation.
For the purposes
of this provision, the expression an “offer to the public” in relation to the securities offered by this prospectus in any
EEA State means the communication in any form and by any means of sufficient information on the terms of the offer and any securities
to be offered so as to enable an investor to decide to purchase or subscribe for any of the securities offered by this prospectus and
the expression “EU Prospectus Regulation” means Regulation (EU) 2017/1129.
France
Neither this prospectus
nor any other offering material relating to the securities described in this prospectus has been submitted to the clearance procedures
of the Autorité des Marchés Financiers or of the competent authority of another member state of the European Economic Area
and notified to the Autorité des Marchés Financiers. The securities have not been offered or sold and will not be offered
or sold, directly or indirectly, to the public in France. Neither this prospectus nor any other offering material relating to the securities
has been or will be (1) released, issued, distributed or caused to be released, issued or distributed to the public in France; or (2)
used in connection with any offer for subscription or sale of the securities to the public in France.
Such offers, sales
and distributions will be made in France only:
(a)
to qualified investors (investisseurs estraint) and/or to a restricted circle of investors (cercle estraint d’investisseurs),
in each case investing for their own account, all as defined in, and in accordance with, articles L.411-2, D.411-1, D.411-2,
D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code monétaire et financier;
(b)
to investment services providers authorized to engage in portfolio management on behalf of third parties; or
(c)
in a transaction that, in accordance with article L.411-2-II-1º -or-2º -or 3º of the French Code monétaire et
financier and article 211-2 of the General Regulations (Réglement Général) of the Autorité des
Marchés Financiers, does not constitute a public offer (appel public á l’épargne).
The securities
may be resold, directly or indirectly, only in compliance with articles L.411-1, L.411-2, L412-1 and L.621-8 through L.621-8-3 of the
French Code monétaire et financier.
United
Kingdom
Neither the information
in this document nor any other document relating to the offer has been delivered for approval to the Financial Services Authority in the
United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Markets Act 2000, as amended (“FSMA”))
has been published or is intended to be published in respect of the securities. This document is issued on a confidential basis to “qualified
investors” (within the meaning of section 86(7) of FSMA) in the United Kingdom, and the securities
may not be offered or sold in the United Kingdom by means of this document, any accompanying letter or any other document, except in circumstances
which do not require the publication of a prospectus pursuant to section 86(1) FSMA. This document should not be distributed, published
or reproduced, in whole or in part, nor may its contents be disclosed by recipients to any other person in the United Kingdom.
Any invitation
or inducement to engage in investment activity (within the meaning of section 21 of FSMA) received in connection with the issue or sale
of the securities has only been communicated or caused to be communicated and will only be communicated or caused to be communicated in
the United Kingdom in circumstances in which section 21(1) of FSMA does not apply to our Company.
In the United
Kingdom, this document is being distributed only to, and is directed at, persons (i) who have professional experience in matters relating
to investments falling within Article 19(5) (investment professionals) of the Financial Services and Markets Act 2000 (Financial Promotions)
Order 2005 (“FPO”), (ii) who fall within the categories of persons referred to in Article 49(2)(a) to (d) (high net worth
companies, unincorporated associations, etc.) of the FPO or (iii) to whom it may otherwise be lawfully communicated (together “relevant
persons”). The investments to which this document relates are available only to, and any invitation, offer or agreement to purchase
will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any
of its contents.
Hong Kong
Neither the information
in this document nor any other document relating to the offer has been delivered for registration to the Registrar of Companies in Hong
Kong, and its contents have not been reviewed or approved by any regulatory authority in Hong Kong, nor have we been authorized by the
Securities and Futures Commission in Hong Kong. This document does not constitute an offer or invitation to the public in Hong Kong to
acquire shares. Accordingly, unless permitted by the securities laws of Hong Kong, no person may issue or have in its possession for the
purpose of issue, this document or any advertisement, invitation or document relating to the shares, whether in Hong Kong or elsewhere,
which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong other than in relation to
shares which are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” (as
such term is defined in the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (“SFO”) and the subsidiary
legislation made thereunder) or in circumstances which do not result in this document being a “prospectus” as defined in the
Companies (Winding Up and Miscellaneous Provisions) Ordinance of Hong Kong (Cap. 32 of the Laws of Hong Kong) (the “CO”) or
which do not constitute an offer or an invitation to the public for the purposes of the SFO or the CO. The offer of the shares is personal
to the person to whom this document has been delivered by or on behalf of our Company, and a subscription for shares will only be accepted
from such person. No person to whom a copy of this document is issued may issue, circulate or distribute this document in Hong Kong or
make or give a copy of this document to any other person. You are advised to exercise caution in relation to the offer. If you are in
any doubt about any of the contents of this document, you should obtain independent professional advice. No document may be distributed,
published or reproduced (in whole or in part), disclosed by or to any other person in Hong Kong or to any person to whom the offer of
sale of the shares would be a breach of the CO or SFO.
Singapore
This prospectus
has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, our ordinary shares were not offered or
sold or caused to be made the subject of an invitation for subscription or purchase and will not be offered or sold or caused to be made
the subject of an invitation for subscription or purchase, and this prospectus or any other document or material in connection with the
offer or sale, or invitation for subscription or purchase, of our ordinary shares, has not been circulated or distributed, nor will it
be circulated or distributed, whether directly or indirectly, to any person in Singapore other than (i) to an institutional investor (as
defined in Section 4A of the Securities and Futures Act 2001 of Singapore, as modified or amended from time to time (“SFA”))
pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of
the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA
and (where applicable) Regulation 3 of the Securities and Futures (Classes of Investors) Regulations 2018, or (iii) otherwise pursuant
to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where our ordinary
shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
(a)
a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold
investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor;
or
(b)
a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the
trust is an individual who is an accredited investor, securities or securities-based derivatives contracts (each term as defined in
Section 2(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust
shall not be transferred within six months after that corporation or that trust has acquired the ordinary shares pursuant to an
offer made under Section 275 of the SFA, except:
➢ to
an institutional investor or to a relevant person, or to any person arising from an offer referred to in Section 275(1A) of the SFA
or Section 276(4)(c)(ii) of the SFA;
➢ where
no consideration is or will be given for the transfer;
➢ where
the transfer is by operation of law;
➢ as
specified in Section 276(7) of the SFA; or
➢ as
specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives
Contracts) Regulations 2018.
Any reference
to the SFA is a reference to the Securities and Futures Act 2001 of Singapore and a reference to any term as defined in the SFA or any
provision in the SFA is a reference to that term as modified or amended from time to time including by such of its subsidiary legislation
as may be applicable at the relevant time.
Notification
under Section 309B(1)(c) of the SFA: The Company has determined, and hereby notifies all
persons (including relevant persons (as defined in Section 309A(1) of the SFA)) that the ordinary shares are prescribed capital markets
products (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined
in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).
Switzerland
We have not and
will not register with the Swiss Financial Market Supervisory Authority (the “FINMA”) as a foreign collective investment scheme
pursuant to Article 119 of the Federal Act on Collective Investment Scheme of 23 June 2006, as amended (CISA) and accordingly the securities
being offered pursuant to this prospectus have not and will not be approved, and may not be licensable, with FINMA. Therefore, the securities
have not been authorized for distribution by FINMA as a foreign collective investment scheme pursuant to Article 119 CISA and the securities
offered hereby may not be offered to the public (as this term is defined in Article 3 CISA) in or from Switzerland. The securities may
solely be offered to “qualified investors,” as this term is defined in Article 10 CISA, and in the circumstances set out in
Article 3 of the Ordinance on Collective Investment Scheme of 22 November 2006, as amended (the “CISO”), such that there is
no public offer. Investors, however, do not benefit from protection under CISA or CISO or supervision by FINMA. This prospectus and any
other materials relating to the securities are strictly personal and confidential to each offeree and do not constitute an offer to any
other person. This prospectus may only be used by those qualified investors to whom it has been handed out in connection with the offer
described herein and may neither directly or indirectly be distributed or made available to any person or entity other than its recipients.
It may not be used in connection with any other offer and will in particular not be copied or distributed to the public in Switzerland
or from Switzerland. This prospectus does not constitute an issue prospectus as that term is understood pursuant to Article 652a or 1156
of the Swiss Federal Code of Obligations. We have not applied for a listing of the securities on the SIX Swiss Exchange or any other regulated
securities market in Switzerland, and consequently, the information presented in this prospectus does not necessarily comply with the
information standards set out in the listing rules of the SIX Swiss Exchange and corresponding prospectus schemes annexed to the listing
rules of the SIX Swiss Exchange.
EXPENSES OF
THIS OFFERING (USD)
Set
forth below is an itemization of the total expenses, excluding placement agent’s discounts and commissions, that we expect
to incur in connection with this offering. With the exception of the SEC registration fee, the NYSE American listing fee and the FINRA
filing fee, all amounts are estimates and are in USD.
SEC Registration Fee | |
$ | 11,475.90 | |
FINRA Filing Fee | |
| 12,162.50 | |
Legal Fees and Expenses | |
| 250,000 | |
Accounting Fees and Expenses | |
| * | |
Transfer Agent Fee | |
| * | |
Miscellaneous Expenses | |
| * | |
Total | |
$ | 290,000.00 | |
*Fees
are not yet available but estimated to be $16,360.00 in the aggregate.
LEGAL MATTERS
We
are being represented by Jolie Kahn, Esq. with respect to certain legal matters as to United States federal securities and New York State
law. The validity of the warrants will be passed upon by Jolie Kahn, Esq. The validity of the ordinary shares offered in this
offering and certain other matters of Singapore law will be passed upon for us by Allen & Gledhill LLP. The placement agent is
being represented by Katten Muchin Rosenman LLP.
EXPERTS
The consolidated financial statements
of Genius Group Limited and subsidiaries as of December 31, 2022 and 2021, have been included in this registration statement in reliance
upon the report of Marcum LLP, an independent registered public accounting firm, and upon the authority of said firm as experts in accounting
and auditing.
ENFORCEABILITY
OF CIVIL LIABILITIES
We are incorporated
under the laws of the Republic of Singapore, and certain of our officers and directors are residents outside the United States. Moreover,
a majority of our consolidated assets are located outside the United States. Although we are incorporated outside the United States, we
have agreed to accept service of process in the United States through our agent designated for that purpose. Nevertheless, since a majority
of the consolidated assets owned by us are located outside the United States any judgment obtained in the United States against us may
not be enforceable within the United States. There is no treaty between the United States and Singapore providing for the reciprocal recognition
and enforcement of judgments in civil and commercial matters and a final judgment for the payment of money rendered by any federal or
state court in the United States based on civil liability, whether or not predicated solely upon the federal securities laws, would, therefore,
not be automatically enforceable in Singapore.
There is uncertainty
as to whether judgments of courts in the United States based upon the civil liability provisions of the federal securities laws of the
United States would be recognized or enforceable in Singapore. In making a determination as to enforceability of a judgment of the courts
of the United States, the Singapore courts would have regard to whether the judgment was final and conclusive and on the merits of the
case, given by a court of law of competent jurisdiction, and was expressed to be for a fixed sum of money. In general, a foreign judgment
would be enforceable in Singapore unless procured by fraud, or the proceedings in which such judgments were obtained were not conducted
in accordance with principles of natural justice, or the enforcement thereof would be contrary to public policy, or if the judgment would
conflict with earlier judgment(s) from Singapore or earlier foreign judgment(s) recognized in Singapore, or if the judgment would amount
to the direct or indirect enforcement of foreign penal, revenue or other public laws. Civil liability provisions of the federal and state
securities law of the United States permit the award of punitive damages against us, our directors and officers. Singapore courts would
not recognize or enforce judgments against us, our directors and officers to the extent that doing so would amount to the direct or indirect
enforcement of foreign penal, revenue or other public laws. It is uncertain as to whether a judgment of the courts of the United States
under civil liability provisions of the federal securities law of the United States would be regarded by the Singapore courts as being
pursuant to foreign, penal, revenue or other public laws. Such a determination has yet to be made by a Singapore court in a reported decision.
In addition, holders
of book-entry interests in our shares will be required to exchange such interests for certificated shares and to be registered as shareholders
in our shareholder register in order to have standing to bring a shareholder suit and, if successful, to enforce a foreign judgment against
us, our directors or our executive officers in the Singapore courts.
A holder of book-entry
interests in our shares may become a registered shareholder of our Company by exchanging such holder’s interest in our shares for
certificated shares and being registered in our shareholder register. The administrative process of becoming a registered shareholder
could result in delays prejudicial to any legal proceeding or enforcement action.
WHERE YOU CAN
FIND ADDITIONAL INFORMATION
We
have filed a registration statement, including relevant exhibits, with the SEC on Form F-1 under the Securities Act with respect to the
securities to be sold in this offering. This prospectus, which constitutes a part of the registration statement on Form F-1, does
not contain all of the information contained in the registration statement. You should read our registration statement and the exhibits
filed therewith for further information with respect to us and our ordinary shares.
You can read our SEC filings,
including the registration statement, over the Internet at the SEC’s website at www.sec.gov. You may also request a copy
of these filings, at no cost, by writing to us at 8 Amoy Street, #01-01 Singapore 049950, or call us at +65 8940 1200. We also maintain
a website at www.geniusgroup.net, at which, following the completion of this offering, you may access these materials free of
charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained
in, and that can be accessed through, our website is not incorporated into and is not part of this prospectus.
Genius
Group Limited and Subsidiaries
Consolidated
Financial Statements
INDEX
Genius
Group Limited and Subsidiaries
Directors’
Statement
For
the financial year ended December 31, 2022
The
directors are required in terms of the International Business Companies Act of 2016 to maintain adequate accounting records and are responsible
for the content and integrity of the consolidated financial statements and related financial information included in this report. It
is their responsibility to ensure that the consolidated financial statements fairly present the state of affairs of the Group at the
end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and IFRS Interpretations committee
(IFRIC). The external auditors are engaged to express an independent opinion on the consolidated financial statements.
The
consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB) and IFRS Interpretations committee (IFRIC) and are based upon appropriate accounting
policies consistently applied and supported by reasonable and prudent judgements and estimates.
The
directors acknowledge that they are ultimately responsible for the system of internal financial control established by the Group and
place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the
board of directors sets standards for internal control aimed at reducing the risk of error or loss in a cost-effective manner. The standards
include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation
of duties to ensure an acceptable level of risk. These controls are monitored throughout the Group and all employees are required to
maintain the highest ethical standards in ensuring the Group’s business is conducted in a manner that in all reasonable circumstances
is above reproach. The focus of risk management in the Group is on identifying, assessing, managing, and monitoring all known forms of
risk across the Group. While operating risk cannot be fully eliminated, the Group endeavors to minimize it by ensuring that appropriate
infrastructure, controls, systems, and ethical behavior are applied and managed within predetermined procedures and constraints.
The directors are of the opinion, based on the information and explanations
given by management, that the system of internal controls does not provide reasonable assurance that the financial records may be relied
on for the preparation of the consolidated financial statements. However, any system of internal financial control can provide only reasonable,
and not absolute, assurance against material misstatement or loss.
The
directors have reviewed the Group’s cash flow forecast for the year to December 31, 2022, and, in light of this review and the
current financial position, there is substantial doubt about its ability to continue as a going concern within one year after the date
that the consolidated financial statements are issued.
The
external auditors are responsible for independently auditing and reporting on the Group’s consolidated financial statements. The
consolidated financial statements have been examined by the Group’s external auditors and their report is presented on page F-3.
The
consolidated financial statements set out beginning on page F-4, which have been prepared on the going concern basis, were approved by
the board of directors on June 06,2023 and were signed by:
/s/
Roger James Hamilton |
|
Roger
James Hamilton, Director |
|
|
|
/s/
Suraj Naik |
|
Suraj
Naik, Director |
|
|
|
Date:
June 06, 2023 |
|
Report
of Independent Registered Public Accounting Firm
To
the Shareholders and Board of Directors of
Genius
Group Limited and Subsidiaries
Opinion
on the Financial Statements
We have audited the accompanying consolidated statements
of financial position of Genius Group Limited and Subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related
consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the two years in the
period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion,
the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021,
and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with
International Financial Reporting Standards as issued by the International Accounting Standards Board.
Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has incurred
significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial
doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described
in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Restatement of Previously Issued Financial Statements
As discussed in Note 2 to the financial statements,
the accompanying 2021 financial statements have been restated to correct a misstatement. Our opinion is not modified with respect to this
matter.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required
to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are
required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on
the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Marcum llp |
|
|
|
Marcum LLP |
|
|
|
We
have served as the Company’s auditor since 2020. |
|
|
|
Melville,
NY |
|
June 5, 2023 |
|
GENIUS
GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
(Expressed
in US Dollars)
| |
Note | |
2022 | | |
2021 | |
| |
| |
For
the year ended December 31, | |
| |
Note | |
2022 | | |
2021 | |
ASSETS | |
| |
| | | |
| | |
Current
Assets | |
| |
| | | |
| | |
Cash
and cash equivalents | |
| |
$ | 5,720,569 | | |
$ | 1,784,938 | |
Restricted
cash | |
2 | |
| 11,108,816 | | |
| — | |
Accounts
receivable, net | |
2 | |
| 4,856,637 | | |
| 1,018,003 | |
Other
Receivables | |
5 | |
| 120,304 | | |
| 66,000 | |
Income
tax receivable | |
| |
| - | | |
| - | |
Due
from related parties | |
6 | |
| 351,357 | | |
| 44,245 | |
Inventories | |
7 | |
| 1,001,977 | | |
| 92,530 | |
Prepaid
expenses and other current assets | |
8 | |
| 1,090,787 | | |
| 3,490,446 | |
Total
Current Assets | |
| |
| 24,250,447 | | |
| 6,496,162 | |
Property
and equipment, net | |
9 | |
| 563,131 | | |
| 6,776,116 | |
Operating
lease right-of-use asset | |
10 | |
| 12,573,710 | | |
| 1,077,241 | |
Investments
at fair value | |
11 | |
| 29,071 | | |
| 29,069 | |
Goodwill | |
12 | |
| 31,688,887 | | |
| 1,320,100 | |
Intangible
assets, net | |
13 | |
| 16,107,293 | | |
| 1,394,969 | |
Other
receivables | |
5 | |
| 732,716 | | |
| — | |
Due
from related parties | |
6 | |
| 5,288,264 | | |
| — | |
Other
non-current assets | |
15 | |
| 26,108 | | |
| 501,750 | |
Total
Assets | |
| |
$ | 91,259,627 | | |
$ | 17,595,407 | |
| |
| |
| | | |
| | |
LIABILITIES
AND STOCKHOLDERS’ EQUITY | |
| |
| | | |
| | |
Current
Liabilities | |
| |
| | | |
| | |
Accounts
payable | |
| |
$ | 1,672,306 | | |
$ | 1,078,381 | |
Accrued
expenses and other current liabilities | |
16 | |
| 3,809,540 | | |
| 2,064,302 | |
Deferred
revenue | |
17 | |
| 6,391,993 | | |
| 2,561,912 | |
Income
tax payable | |
2 | |
| 355,023 | | |
| — | |
Due
to related parties | |
19 | |
| 2,932,090 | | |
| 425,551 | |
Operating
lease liabilities - current portion | |
10 | |
| 1,590,538 | | |
| 436,271 | |
Loans
payable - current portion | |
18 | |
| 334,391 | | |
| 65,415 | |
Loans
payable – related parties – current portion | |
| |
| 2,932,090 | | |
| | |
Convertible
debt obligations - current portion | |
20 | |
| 5,752,328 | | |
| 507,765 | |
Short
term debt | |
20 | |
| 539,245 | | |
| — | |
Total
Current Liabilities | |
| |
| 23,377,454 | | |
| 7,139,597 | |
Due
to related parties | |
19 | |
| 1,729 | | |
| — | |
Operating
lease liabilities – non-current portion | |
10 | |
| 11,394,337 | | |
| 894,589 | |
Loans
payable – non-current portion | |
18 | |
| 428,025 | | |
| 85,858 | |
Convertible
debt obligations - non-current portion | |
20 | |
| 2,223,523 | | |
| 766,245 | |
Deferred
tax liability | |
14 | |
| 3,391,129 | | |
| 723,122 | |
Derivative
liabilities | |
21 | |
| 36,488,594 | | |
| — | |
Total
Liabilities | |
| |
| 77,304,791 | | |
$ | 9,609,411 | |
Commitments
and Contingencies | |
| |
| - | | |
| - | |
Stockholders’
Equity | |
| |
| | | |
| | |
Contributed
capital | |
22 | |
| 110,534,000 | | |
| 50,924,276 | |
Subscriptions
receivable | |
22 | |
| (1,900,857 | ) | |
| (1,900,857 | ) |
Reserves | |
| |
| (32,933,714 | ) | |
| (31,888,638 | ) |
Accumulated
deficit | |
| |
| (68,539,210 | ) | |
| (13,493,684 | ) |
Capital
and reserves attributable to owners of Genius Group Ltd | |
| |
| 7,160,219 | | |
| 3,641,097 | |
Non-controlling
interest | |
| |
| 6,794,617 | | |
| 4,344,899 | |
Total
Stockholders’ Equity | |
| |
| 13,954,836 | | |
| 7,985,996 | |
Total
Liabilities and Stockholders’ Equity | |
| |
$ | 91,259,627 | | |
$ | 17,595,407 | |
The
accompanying notes are an integral part of these consolidated financial statements.
GENIUS
GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed
in US Dollars)
| |
Note | |
2022 | | |
2021
As
restated (1) | |
| |
| |
For
the year ended December 31, | |
| |
Note | |
2022 | | |
2021
As restated (1) | |
Revenue | |
23 | |
$ | 18,193,616 | | |
$ | 8,294,804 | |
Cost
of revenue | |
2 | |
| (9,554,327 | ) | |
| (5,537,346 | ) |
Gross
profit | |
| |
| 8,639,289 | | |
| 2,757,458 | |
| |
| |
| | | |
| | |
Operating
(Expenses) Income | |
| |
| | | |
| | |
General
and administrative | |
25 | |
| (21,073,794 | ) | |
| (7,211,204 | ) |
Depreciation
and amortization | |
9 | |
| (1,182,413 | ) | |
| (38,864 | ) |
Other
operating income | |
24 | |
| 144,396 | | |
| 490,300 | |
Impairment
loss | |
9,12,13 | |
| (28,246,010 | ) | |
| — | |
Legal expenses | |
| |
| | | |
| | |
(Loss)
gains from foreign currency transactions | |
2 | |
| 135,625 | | |
| (166,174 | ) |
Total
operating expenses | |
| |
| (50,222,196 | ) | |
| (6,925,942 | ) |
Loss
from Operations | |
| |
| (41,582,907 | ) | |
| (4,168,484 | ) |
Other
Expense | |
| |
| | | |
| | |
Other
Income | |
24 | |
| 418,437 | | |
| — | |
Revaluation adjustment of contingent liabilities | |
21 | |
| (13,838,197 | ) | |
| — | |
Interest
expense, net | |
26 | |
| (1,312,476 | ) | |
| (449,566 | ) |
Impairment loss | |
| |
| | | |
| | |
Other expense | |
| |
| | | |
| | |
Total
Other Expense | |
| |
| (14,732,236 | ) | |
| (449,566 | ) |
Loss
Before Income Tax | |
| |
| (56,315,143 | ) | |
| (4,618,050 | ) |
Income
Tax Benefit | |
27 | |
| 1,063,596 | | |
| 128,852 | |
Net
Loss | |
| |
| (55,251,547 | ) | |
| (4,489,198 | ) |
Other
comprehensive income: | |
| |
| | | |
| | |
Foreign
currency translation | |
2 | |
| (1,045,076 | ) | |
| 230,081 | |
Total
Comprehensive Loss | |
| |
$ | (56,296,623 | ) | |
$ | (4,259,117 | ) |
| |
| |
| | | |
| | |
Net Loss is attributed to: | |
28 | |
| | | |
| | |
Owners of Genius Group Ltd | |
| |
| (55,045,526 | ) | |
| (4,315,239 | ) |
Non-controlling interest | |
| |
| (206,021 | ) | |
| (173,959 | ) |
Net Loss | |
| |
| (55,251,547 | ) | |
| (4,489,198 | ) |
| |
| |
| | | |
| | |
Total
Comprehensive Loss is attributable to: | |
| |
| | | |
| | |
Owners
of Genius Group Ltd | |
| |
| (56,090,602 | ) | |
| (4,085,158 | ) |
Non-controlling interest | |
| |
| (206,021 | ) | |
| (173,959 | ) |
Total
Comprehensive Loss | |
| |
$ | (56,296,623 | ) | |
$ | (4,259,117 | ) |
| |
| |
| | | |
| | |
Net
loss per share attributed to common stockholders, basic and diluted | |
| |
$ | (2.44 | ) | |
$ | (0.28 | ) |
Weighted-average
number of shares outstanding, basic, and diluted | |
| |
| 22,634,366 | | |
| 16,155,812 | |
Number
of shares outstanding, basic, and diluted | |
| |
| 27,705,227 | | |
| 16,155,812 | |
1) | Restatement details
in Note 2 |
The
accompanying notes are an integral part of these consolidated financial statements.
GENIUS
GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
AS
OF DECEMBER 31, 2022 AND 2021
(Expressed
in US dollars)
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Comprehensive Loss | |
| |
Contributed Capital | | |
Non-controlling | | |
Subscription | | |
Foreign | | |
| | |
Accumulated | | |
Total | |
| |
Shares | | |
Amount | | |
Interest | | |
Receivable | | |
Currency | | |
Reserves | | |
Deficit | | |
Equity | |
Balance, January 1, 2021 | |
| 16,155,812 | | |
$ | 50,630,439 | | |
$ | 257,154 | | |
$ | (1,900,857 | ) | |
$ | 1,788,051 | | |
$ | (33,900,850 | ) | |
$ | (9,167,848 | ) | |
$ | 7,706,089 | |
Net loss | |
| | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (4,489,198 | ) | |
| (4,489,198 | ) |
Adjustment against capital and retained earnings | |
| | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (16,517 | ) | |
| - | | |
| (16,517 | ) |
Foreign currency translation adjustments | |
| | | |
| - | | |
| - | | |
| - | | |
| 230,081 | | |
| - | | |
| - | | |
| 230,081 | |
Shares issued for cash in GeniusU | |
| | | |
| 3,127,442 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 3,127,442 | |
Shares issued in satisfaction of liability | |
| | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Shares issued for conversion of convertible notes | |
| - | | |
| 181,175 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 181,175 | |
Funds received for shares to be issued | |
| | | |
| - | | |
| 953,087 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 953,087 | |
Share based compensation | |
| - | | |
| 293,837 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 293,837 | |
Non-controlling interest | |
| | | |
| (3,308,617 | ) | |
| 3,134,658 | | |
| - | | |
| 10,597 | | |
| - | | |
| 163,362 | | |
| - | |
Balance, December 31, 2021 | |
| 16,155,812 | | |
$ | 50,924,276 | | |
$ | 4,344,899 | | |
$ | (1,900,857 | ) | |
$ | 2,028,729 | | |
$ | (33,917,367 | ) | |
$ | (13,493,684 | ) | |
$ | 7,985,996 | |
Balance | |
| 16,155,812 | | |
$ | 50,924,276 | | |
$ | 4,344,899 | | |
$ | (1,900,857 | ) | |
$ | 2,028,729 | | |
$ | (33,917,367 | ) | |
$ | (13,493,684 | ) | |
$ | 7,985,996 | |
Net loss | |
| | | |
| - | | |
| (206,021 | ) | |
| - | | |
| - | | |
| - | | |
| (55,045,526 | ) | |
| (55,251,547 | ) |
Foreign currency translation adjustments | |
| | | |
| - | | |
| - | | |
| - | | |
| (1,045,076 | ) | |
| - | | |
| - | | |
| (1,045,076 | ) |
Proceeds from IPO (net) | |
| 3,913,410 | | |
| 15,202,858 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 15,202,858 | |
Share options GG IPO April 2022 | |
| 45,580 | | |
| 270,476 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 270,476 | |
GeniusU Shares issued for cash | |
| | | |
| - | | |
| 2,655,739 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 2,655,739 | |
Shares issued for conversion of convertible notes | |
| 1,554,097 | | |
| 7,829,607 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 7,829,607 | |
Shares issued for IPO acquisition | |
| 5,975,407 | | |
| 35,098,001 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 35,098,001 | |
Shares cancelled in satisfaction of liability, net of derivative liability | |
| (49,002 | ) | |
| (100,002 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (100,002 | ) |
Share based compensation | |
| 109,923 | | |
| 1,308,784 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,308,784 | |
Balance, December 31, 2022 | |
| 27,705,227 | | |
$ | 110,534,000 | | |
$ | 6,794,617 | | |
$ | (1,900,857 | ) | |
$ | 983,653 | | |
$ | (33,917,367 | ) | |
$ | (68,539,210 | ) | |
$ | 13,954,836 | |
Balance | |
| 27,705,227 | | |
$ | 110,534,000 | | |
$ | 6,794,617 | | |
$ | (1,900,857 | ) | |
$ | 983,653 | | |
$ | (33,917,367 | ) | |
$ | (68,539,210 | ) | |
$ | 13,954,836 | |
The
accompanying notes are an integral part of these consolidated financial statements.
GENIUS
GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Expressed
in US Dollars)
| |
2022 | | |
2021 | |
| |
For
the year Ended December 31, | |
| |
2022 | | |
2021 | |
CASH
FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
Net
Loss | |
$ | (55,251,547 | ) | |
$ | (4,489,198 | ) |
Adjustments
to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Stock-based
compensation | |
| 1,308,784 | | |
| 293,837 | |
Depreciation
and amortization | |
| 2,350,640 | | |
| 1,574,913 | |
Deferred
income taxes | |
| (1,284,166 | ) | |
| 105,650 | |
(Gain)
loss on foreign exchange transactions | |
| (135,625 | ) | |
| 166,174 | |
Provision for interest expense | |
| | | |
| | |
Provision
for doubtful accounts | |
| (1,509,486 | ) | |
| (39,108 | ) |
Impairment
loss | |
| 28,246,010 | | |
| — | |
Revaluation
adjustment on contingent liabilities | |
| 13,838,197 | | |
| — | |
Amortization
of debt discount | |
| — | | |
| 140,837 | |
Interest
expense on lease liabilities | |
| 491,336 | | |
| 131,291 | |
Changes
in operating assets and liabilities | |
| | | |
| | |
Accounts
receivable | |
| 1,161,349 | | |
| (30,554 | ) |
Other
receivable | |
| (19,138 | ) | |
| (66,000 | ) |
Prepaid
expenses and other current assets | |
| 1,489,459 | | |
| (1,927,176 | ) |
Inventory | |
| (545,449 | ) | |
| 20,013 | |
Accounts
payable | |
| (107,372 | ) | |
| 256,562 | |
Accrued
expenses and other current liabilities | |
| 751,442 | | |
| 254,080 | |
Deferred
revenue | |
| 996,324 | | |
| 1,015,200 | |
Current
tax provision | |
| 220,570 | | |
| (257,953 | ) |
Income
tax payable | |
| (237,759 | ) | |
| — | |
Other
non-current liabilities | |
| — | | |
| (217,291 | ) |
Other non-current asset | |
| | | |
| | |
Total
Adjustments | |
| 47,015,116 | | |
| 1,420,475 | |
Net
cash used in operations | |
| (8,236,431 | ) | |
| (3,068,723 | ) |
CASH
FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
Internally
developed software | |
| (743,995 | ) | |
| (804,314 | ) |
Acquisitions | |
| (8,843,458 | ) | |
| — | |
Purchase
of equipment | |
| (222,680 | ) | |
| (77,797 | ) |
Acquisition
of intangible | |
| (279,356 | ) | |
| — | |
Deposit on investment in UAV | |
| | | |
| | |
Purchase of investment | |
| | | |
| | |
Net
cash used in investing activities: | |
| (10,089,489 | ) | |
| (882,111 | ) |
CASH
FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
Amount
due to/from related party, net | |
| (221,842 | ) | |
| (154,345 | ) |
Proceeds
from derivative liability, net | |
| (250,000 | ) | |
| — | |
Advance
received for share issuances | |
| | | |
| 953,087 | |
Proceeds
from IPO, net | |
| 17,308,453 | | |
| — | |
Proceeds
from convertible debt, net of issuance costs | |
| 4,184,964 | | |
| — | |
Proceeds
from equity issuances | |
| 2,701,215 | | |
| 3,127,442 | |
Issuance
from convertible debt | |
| (509,311 | ) | |
| — | |
Lease
liabilities | |
| (957,430 | ) | |
| (758,522 | ) |
Proceeds from Loan | |
| 972,593 | | |
| — | |
Repayment of Loan | |
| (1,285,181 | ) | |
| (71,967 | ) |
Net
cash provided by financing activities | |
| 21,943,461 | | |
| 3,095,695 | |
Increase
(decrease) in cash and cash equivalents during the year | |
| 3,617,541 | | |
| (855,139 | ) |
Foreign
exchange impact on cash | |
| 318,090 | | |
| 366,926 | |
Cash
and cash equivalents, beginning of year | |
| 1,784,938 | | |
| 2,273,151 | |
CASH
AND CASH EQUIVALENTS, END OF THE YEAR | |
$ | 5,720,569 | | |
$ | 1,784,938 | |
Supplemental
Disclosures of Cash Flow Information: | |
| | | |
| | |
Cash
paid during the period for interest | |
$ | 847,520 | | |
$ | 202,176 | |
Non-Cash
Investing and Financing Activities | |
| | | |
| | |
Fair value of shares issued in satisfaction of a liability | |
$ | 350,000 | | |
$ | — | |
Fair value of shares issued for the acquisition of entities | |
$ | 35,098,001 | | |
$ | — | |
Fair value of shares issued for conversion of convertible notes | |
$ | 7,829,607 | | |
$ | 293,837 | |
The
accompanying notes are an integral part of these consolidated financial statements.
GENIUS
GROUP LIMITED AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
NOTE
1 — BUSINESS ORGANIZATION AND NATURE OF OPERATIONS
Genius
Group Ltd. (“Company”) is an entrepreneur Edtech and education group, with a mission to disrupt the current education model
with a student-centered, life-long learning curriculum that prepares students with the leadership, entrepreneurial and life skills to
succeed in today’s market.
The
Company operates through its main subsidiaries, GeniusU Ltd (“GU”), Entrepreneur Resorts (“ERL”), Education
Angels (“EA”), University of Antelope Valley (“UAV”), E-Squared Education (“ESQ”), Property and Mastermind
Networks Limited (“PIN”) and Revealed Films (“RF”). The Company owns 100% ownership all of the subsidiaries except 96.5% in GeniusU Ltd and 95.4% in Entrepreneur Resorts.
GU,
a Singapore company, which provides a full entrepreneur education system business development tools and management consultancy services
to entrepreneurs.
ERL
was incorporated in Seychelles, and represents a group of resorts, retreats, and co-working cafes for entrepreneurs. ERL owns resorts
in Bali and South Africa which run entrepreneur retreats and workshops. It also owns Genius Café, an entrepreneur beach club in
Bali, and Genius Central Singapore Pte Ltd, an entrepreneur co-working hub in Singapore.
EA
generates revenue from parents of young children from 0-5 years old paying for an EA trained educator to both educate and care for their
child. EA is required to be approved and in compliance by the New Zealand Ministry of Education (“MOE”) in order to operate
and receive government funding. EA is approved by the MOE and 50% of EA educator fees are paid by the New Zealand Government.
UAV
is an accredited university based on a 10-acre campus in the United States. It offers career-focused on-campus and online programs at
the master’s, bachelor’s, and associate degree level, as well as certificate and continuing education programs in several
high-demand sectors.
ESQ
is an entrepreneur education campus in South Africa, providing a full range of programs from pre-primary through primary school, secondary
school, and vocational college.
PIN
is a United Kingdom private limited company. PIN provides investment education through its fifty city chapters and monthly events in
England, held both virtually and in-person.
RF
is a United States based media production company that specializes in multi-part documentaries that cover topics such as wealth building,
health and nutrition, medical issues, religion, and political matters.
The
three regions the Company operates in are: APAC (Asia Pacific, North Asia, and Australia); EMEA (Europe, Middle East, and Africa); and
NASA (North America and South America).
In
January 2020, the World Health Organization declared the COVID 19 virus an international pandemic. The imposed ‘lock down’
and associated social distancing measures have had a significant effect on economic activity and have hurt in particular businesses in
the travel, entertainment, and leisure sectors. To cater to this unprecedented pandemic scenario, governments across the globe have enacted
many emergency funding and support schemes in order to alleviate the hopefully short-term liquidity difficulties encountered by businesses
and individuals. Such measures include corporate guarantee and liquidity measures, deferral of state taxes and/or suspension for debt
obligations, measures to allow businesses to implement forbearance and furlough measures while the employees receive reasonable proportion
of salaries and benefits. The Company has been able to avail itself of such measures as available to it which has been of assistance
to survive the financial impact of the pandemic.
In
2021, the Group received COVID related government subsidies amounting to $490,300
reported under other operating income (Note 24).
NOTE
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
consolidated financial statements have been prepared on the going concern basis in accordance with, and in compliance with, International
Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), and
International Financial Reporting Interpretations Committee (“IFRIC”) interpretations issued and effective at the time of
preparing these consolidated financial statements and the International Business Companies Act of 2016.
The
consolidated financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes
that funds will be available to finance future operations that the realization of assets and settlement of liabilities, contingent obligations
and commitments will occur in the ordinary course of business.
The
consolidated financial statements have been prepared on the historical cost convention, unless otherwise stated in the accounting policies
which follow and incorporate the principal accounting policies set out below. The presentation currency is United States dollars.
Going Concern
Pursuant to IAS 1, Presentation of Financial
Statements, the Company is required to and does evaluate at each annual and interim period whether there are conditions or events, considered
in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the
consolidated financial statements are issued. Based on the definitions in the relevant accounting standards, and due
to recent changes in the Company’s 2022 convertible loan terms in which company elected to pay all future payments in cash, negative
cash flows, and continued net losses, management has determined that without additional capital raised, in the next twelve months, there
is substantial doubt about the Company’s ability to continue as a going concern
The Company’s consolidated financial
statements as of December 31, 2022 have been prepared on a going concern basis. Although the Company has taken, and plans to continue
to take, proactive measures to enhance its liquidity position and provide additional financial flexibility, including discussions with
lenders and bankers, there can be no assurance that these measures, including the timing and terms thereof, will be successful or sufficient.
Principles
of Consolidation
The
consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries. Subsidiaries are entities
(including structured entities) which are controlled by the Company. The Company has control of an entity when it is exposed to or has
rights to variable returns from involvement with the entity and it has the ability to affect those returns through the of use its power
over the entity. The results of subsidiaries are included in the consolidated financial statements from the effective date of acquisition
to the effective date of disposal. Adjustments are made when necessary to the financial statements of subsidiaries to bring their accounting
policies in line with those of the Company. All inter-company transactions, balances, and unrealized gains on transactions between consolidated
companies are eliminated in full upon consolidation. Unrealized losses on transactions between consolidated companies are also eliminated
upon consolidation unless the transaction provides evidence of an impairment of the asset transferred.
Business
Combinations
The
Company accounts for business combinations using the acquisition method of accounting in accordance with IFRS. The cost of the business
combination is measured as the aggregate of the fair values of assets given, liabilities incurred or assumed, and equity instruments
issued. Costs directly attributable to the business combination are expensed as incurred, except the costs to issue debt which are amortized
as part of the effective interest, and costs to issue equity which are included in stockholders’ equity.
Any
contingent consideration is included in the cost of the business combination at fair value as at the date of acquisition. Subsequent
changes to the assets, liability or equity which arise as a result of the contingent consideration are not affected against goodwill,
unless they are valid measurement period adjustments.
Otherwise,
all subsequent changes to the fair value of contingent consideration that is deemed to be an asset or liability is recognized in either
profit or loss or in other comprehensive income, in accordance with relevant IFRS. Contingent consideration that is classified as equity
is not remeasured, and its subsequent settlement is accounted for within stockholders’ equity.
The
acquiree’s identifiable assets, liabilities and contingent liabilities which meet the recognition conditions of IFRS 3 —
Business Combinations (“IFRS 3”) are recognized at their fair values at acquisition date, except for non-current assets (or
disposal groups) that are classified as held for sale in accordance with IFRS 5 — Non-current Assets Held for Sale and Discontinued
Operations, which are recognized at fair value less costs to sell.
Contingent
liabilities are only included in the identifiable liabilities of the acquiree where there is a present obligation at acquisition date.
On
acquisition, the acquiree’s assets and liabilities are reassessed in terms of classification and are reclassified where the classification
is inappropriate for Company’s reporting purposes. This excludes lease agreements and insurance contracts whose classification remains as per their
inception date.
Non-controlling
interests in the acquiree are measured on an acquisition-by-acquisition basis either at fair value or at the non- controlling interests’
proportionate share in the recognized amounts of the acquiree’s identifiable net assets. This treatment applies to non-controlling
interests which are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in
the event of liquidation. All other components of non-controlling interests are measured at their acquisition date fair values unless
another measurement basis is required by IFRS.
In
cases where the Company held a non-controlling shareholding in the acquiree prior to obtaining control, that interest is measured to
fair value as of the acquisition date. The measurement to fair value is included in profit or loss for the year. Where the existing shareholding
was classified as an available-for-sale financial asset, the cumulative fair value adjustments recognized previously to other comprehensive
income and accumulated in stockholders’ equity are recognized in profit or loss as a reclassification adjustment.
Goodwill
is determined as the consideration paid, plus the fair value of any shares held prior to obtaining control, plus non-controlling interest
and less the fair value of the identifiable assets and liabilities of the acquiree. If, in the case of a bargain purchase, the result
of this formula is negative, then the difference is recognized directly in profit or loss.
Goodwill
is not amortized but is tested on an annual basis for impairment. If goodwill is assessed to be impaired, that impairment is not subsequently
reversed.
Common
control business combinations are outside the scope of IFRS 3. The Company has elected to account for common control business combinations
using the book value method.
Significant
judgments and use of estimates
The
preparation of consolidated financial statements in conformity with IFRS requires management, from time to time, to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income, and expenses.
These estimates and associated assumptions are based on experience and various other factors that are believed to be reasonable under
these circumstances. Actual results may differ from these estimates. The 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.
Critical
judgements in applying accounting policies
Management
did not make critical judgements in the application of accounting policies, apart from those involving estimations, which would significantly
affect the financial statements.
Fair
value estimation
Several
assets and liabilities of the Company are either measured at fair value or disclosure is made of their fair values. Observable market
data is used as inputs to determine fair value, to the extent that such information is available.
Cash
and cash equivalents
For
the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash in hand, bank balances and short-term
deposits with original maturity of three months or less.
Restricted
cash
Restricted
cash represents money that is held at a bank account related to the Company’s 2022 convertible
debt and is not available to the company for immediate or general business use. All the restricted cash as of December 31, 2022 was available
to the Company by April 2023.
Inventories
Inventories
are measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course
of business less the estimated costs of completion and the estimated costs necessary to make the sale.
The
cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their
present location and condition.
The
cost of inventories is assigned using the first-in, first-out (FIFO) formula.
When
inventories are sold, the carrying amount of those inventories are recognized as cost of sales in the period in which the related revenue
is recognized. The amount of any write-down of inventories to net realizable value and all losses of inventories are recognized as an
expense in the period the write-down or loss occurs.
Property
and Equipment
Property
and equipment are tangible assets which the Company holds for its own use, and which are expected to be used for more than one year.
An item of property and equipment is recognized as an asset when it is probable that future economic benefits associated with the item
will flow to the Company, and the cost of the item can be measured reliably. Property and equipment are initially measured at cost. Cost
includes all of the expenditures which are directly attributable to the acquisition or construction of the asset, including the capitalization
of borrowing costs on qualifying assets and adjustments in respect of hedge accounting, where appropriate.
Expenditures
incurred subsequently for major services, additions to or replacements of parts of property and equipment are capitalized if it is probable
that future economic benefits associated with the expenditure will flow to the Company and the cost can be measured reliably. Day-to-day
servicing costs are expensed as incurred. Subsequent to initial recognition, property and equipment are measured at cost less accumulated
depreciation and any accumulated impairment losses.
Depreciation
of an asset commences when the asset is available for use as intended by management. Depreciation is charged to write off the asset’s
carrying amount over its estimated useful life to its estimated residual value, using a method that best reflects the pattern in which
the asset’s economic benefits are consumed by the Company. Depreciation is not charged to an asset if its estimated residual value
exceeds or is equal to its carrying amount. Depreciation of an asset ceases at the earlier of the date that the asset is classified as
held for sale or derecognized.
The
useful lives of items of property and equipment have been assessed as follows:
SCHEDULE
OF USEFUL LIVES OF ITEMS OF PROPERTY AND EQUIPMENT
Category |
|
Depreciation
Method |
|
Useful
Life |
Buildings
|
|
Straight
line |
|
20 years |
Machinery
|
|
Straight
line |
|
5
years |
Furniture
and fixtures |
|
Straight
line |
|
5
years |
Motor
vehicles |
|
Straight
line |
|
5
years |
Office
equipment |
|
Straight
line |
|
5 years |
IT
equipment |
|
Straight
line |
|
3
– 5 years |
Computer
software |
|
Straight
line |
|
2
– 8 years |
Spa
equipment, curtains, crockery, glassware, and linen |
|
Straight
line |
|
5 years |
Leasehold
improvements are amortized over the period of the lease or useful lives of the asset, whichever is shorter.
The
residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting year. If the expectations
differ from previous estimates, the change is accounted for prospectively as a change in accounting estimate. The depreciation charge
for each year is recognized in profit or loss unless it is included in the carrying amount of another asset.
An
item of property or equipment is derecognized upon disposal or when no future economic benefits are expected from its continued use or
disposal. Any gain or loss arising from the derecognition of an item of property or equipment, determined as the difference between the
net disposal proceeds, if any, and the carrying amount of the item, is included in profit or loss when the item is derecognized.
Intangible
assets
An
intangible asset is recognized when it is probable that the expected future economic benefits that are attributable to the asset will
flow to the entity and the cost of the asset can be measured reliably. Intangible assets are initially recognized at cost, less any accumulated
amortization and any impairment losses. Changes in the expected useful life or the expected pattern of consumption of future economic
benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and are treated as changes
in accounting estimates. Refer to Note 4 – Business Combination for additional details on
the acquired intangibles.
The useful life of intangible assets has
been assessed as follows:
SCHEDULE OF USEFUL LIFE OF INTANGIBLE ASSETS
Category | |
Useful Life |
Customer relationships | |
5 years |
Trade names, trademarks, domain names, and licenses | |
Indefinite |
Internally developed software costs on GU are recognized as an intangible asset when:
| ➢ | it
is technologically feasible to complete the asset so that it will be available for use or
sale. |
| | |
| ➢ | there
is an intention to complete and use or sell it. |
| | |
| ➢ | there
is an ability to use or sell it. |
| | |
| ➢ | it
will generate probable future economic benefits. |
| | |
| ➢ | there
are available technical, financial, and other resources to complete the development and to
use or sell the asset. |
| | |
| ➢ | the
expenditure attributable to the asset during its development can be measured reliably. |
Amortization
begins when development is complete, and the asset is available for use. Development costs are amortized based on a useful life of five
years.
Impairment
of Long-Lived Assets
Impairment
tests are performed on property and equipment when there is an indicator that they may be impaired. When the carrying amount of an item
of property and equipment is assessed to be higher than the estimated recoverable amount, an impairment loss is recognized immediately
in profit or loss to bring the carrying amount in line with the recoverable amount.
For
intangible assets, reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite
is an indicator that the asset may be impaired. As a result, the asset is tested for impairment and the remaining carrying amount is
amortized over its useful life.
Management
assesses at each end of the reporting period whether there is any indication that an asset may be impaired. If any such indication exists,
management estimates the recoverable amount of the asset. If it is not possible to estimate the recoverable amount of the individual
asset, the recoverable amount of the cash- generating unit to which the asset belongs is determined.
The
recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use. If
the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount.
That reduction is an impairment loss. An impairment loss of assets carried at cost less any accumulated depreciation or amortization
is recognized immediately in profit or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease.
Goodwill
acquired in a business combination is, from the acquisition date, allocated to each of the cash- generating units, or groups of cash-generating
units, which are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the
acquiree are assigned to those units or groups of units. An impairment loss is recognized for cash-generating units if the recoverable
amount of the unit is less than the carrying amount of the units. The impairment loss is allocated to reduce the carrying amount of the
assets of the unit in the following order:
| ➢ | first,
to reduce the carrying amount of any goodwill allocated to the cash-generating unit and |
| | |
| ➢ | then,
to the other assets of the unit, pro rata on the basis of the carrying amount of each asset
in the unit. |
An
entity assesses at each reporting date whether there is any indication that an impairment loss recognized in prior periods for assets
other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets
are estimated.
The
increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not exceed the carrying
amount that would have been determined had no impairment loss been recognized for the asset in prior periods.
A
reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortization other than goodwill is recognized
immediately in profit or loss. Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase.
Financial
Instruments
Financial
instruments held by the Company are classified in accordance with the provisions of IFRS 9 — Financial Instruments. Broadly, the
classification possibilities, which are adopted by the Company, as applicable, are as follows:
Financial
assets which are equity instruments:
| ➢ | Mandatorily
at fair value through profit or loss; or |
| | |
| ➢ | Designated
as at fair value through other comprehensive income. (This designation is not available to
equity instruments which are held for trading, or which are contingent consideration in a
business combination). |
Financial
assets which are debt instruments:
| ➢ | Amortized
cost. (This category applies only when the contractual terms of the instrument give rise,
on specified dates, to cash flows that are solely payments of principal and interest on principal,
and where the instrument is held under a business model whose objective is met by holding
the instrument to collect contractual cash flows); or |
| | |
| ➢ | Mandatorily
at fair value through profit or loss. (This classification automatically applies to all debt
instruments which do not qualify as at amortized cost or at fair value through other comprehensive
income); or |
| | |
| ➢ | Designated
at fair value through profit or loss. (This classification option can only be applied when
it eliminates or significantly reduces an accounting mismatch. |
Financial
liabilities:
| ➢ | Amortized
cost; |
| | |
| ➢ | Mandatorily
at fair value through profit or loss. (This applies to contingent consideration in a business
combination or to liabilities which are held for trading); or |
| | |
| ➢ | Designated
at fair value through profit or loss. (This classification option can be applied when it
eliminates or significantly reduces an accounting mismatch; |
| | |
| ➢ | the
liability forms part of a group of financial instruments managed on a fair value basis; or
it forms part of a contract containing an embedded derivative and the entire contract is
designated as at fair value through profit or loss). |
Trade
and other receivables
Trade
and other receivables, including amounts due from related parties, are classified as financial assets subsequently measured at amortized
cost. They have been classified in this manner because their contractual terms give rise, on specified dates, to cash flows that are
solely payments of principal and interest on the principal outstanding, and the Company’s business model is to collect the contractual
cash flows on trade and other receivables.
Trade
and other receivables are recognized when the Company becomes a party to the contractual provisions of the receivables. They are measured,
at initial recognition, at fair value plus transaction costs, if any and are subsequently measured at amortized cost. The amortized cost
is the amount recognized on the receivable initially, minus principal repayments, plus cumulative amortization (interest) using the effective
interest method of any difference between the initial amount and the maturity amount, adjusted for any loss allowance.
A
loss allowance for expected credit losses is recognized on trade and other receivables and is updated at each reporting date. The Company
measures the loss allowance for trade and other receivables at an amount equal to lifetime expected credit losses (lifetime ECL), which
represents the expected credit losses that will result from all possible default events over the expected life of the receivable.
A
provision matrix is used as a practical expedient to the determination of expected credit losses on trade and other receivables. The
provision matrix is based on the Company’s historic credit loss experience, adjusted for factors that are specific to the debtors,
general economic conditions, and an assessment of both the current and forecasted direction of conditions at the reporting date, including
the time value of money, where appropriate.
The
loss allowance is calculated on a collective basis for all trade and other receivables in totality. An impairment gain or loss is recognized
in profit or loss with a corresponding adjustment to the carrying amount of trade and other receivables, through use of a loss allowance
account. The impairment loss is included in operating expenses as a movement in credit loss allowance.
Receivables
are written off when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic
prospect of recovery, e.g., when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings. Receivables
written off may still be subject to enforcement activities under the Company’s recovery procedures, considering legal advice where
appropriate. Any recoveries made are recognized in profit or loss.
Investments
in equity instruments
Investments
in equity instruments are presented in Note 11, Investments at Fair Value. Investments in equity instruments are designated as mandatorily
at fair value through profit or loss. As an exception to this classification, the Company may make an irrevocable election, on an instrument-by-instrument
basis, and on initial recognition, to designate certain investments in equity instruments as at fair value through other comprehensive
income. The designation as at fair value through other comprehensive income is never made on investments which are either held for trading
or contingent consideration in a business combination.
Investments
in equity instruments are recognized when the Company becomes a party to the contractual provisions of the instrument. The investments
are measured, at initial recognition, at fair value. Transaction costs are added to the initial carrying amount for those investments
which have been designated as at fair value through other comprehensive income. All other transaction costs are recognized in profit
or loss.
Investments
in equity instruments are subsequently measured at fair value with changes in fair value recognized either in profit or loss or in other
comprehensive income (and accumulated in equity in the reserve for valuation of investments), depending on their classification. Fair
value gains or losses recognized on investments at fair value through profit or loss are included in other operating gains (losses).
Dividends
received on equity investments are recognized in profit or loss when the Company’s right to receive the dividends is established
unless the dividends clearly represent a recovery of part of the cost of the investment. Dividends are included in investment income.
Investments
in equity instruments are subject to impairment provisions.
The
gains or losses which accumulated in equity in the reserve for valuation of investments for equity investments at fair value through
other comprehensive income are not reclassified to profit or loss on derecognition of the related investment. Instead, the cumulative
amount is transferred directly to retained earnings.
Trade
and other payables
Trade
and other payables, excluding VAT and amounts received in advance, are classified as financial liabilities subsequently measured at amortized
cost. They are recognized when the Company becomes a party to the contractual provisions, and are measured, at initial recognition, at
fair value plus transaction costs, if any, and are subsequently measured at amortized cost using the effective interest method. The effective
interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant
period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points
paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through
the expected life of the financial liability, or (where appropriate) a shorter period, to the amortized cost of a financial liability.
If
trade and other payables contain a significant financing component, and the effective interest method results in the recognition of interest
expense, then it is included in profit or loss. Trade and other payables expose the Company to liquidity risk and possibly to interest
rate risk. Refer to Note 30, Financial Risk Management, for details of risk exposure and management thereof.
Loans
payable and convertible debt
Loans
payable are recognized when the Company becomes a party to the contractual provisions of the loan and are classified as financial liabilities
subsequently measured at amortized cost.
The
loans are measured, at initial recognition, at fair value plus transaction costs, if any, and are subsequently measured at amortized
cost using the effective interest method. Interest expense, calculated on the effective interest method, is included in profit or loss.
Borrowings expose the Company to liquidity risk. Refer to Note 30, Financial Risk Management, for details of risk exposure and management
thereof.
Convertible
debt is bifurcated into its liability component and equity or derivative liability component at the date of issue, in accordance with
the substance of the debt agreements. Conversion options that are bifurcated as derivative liabilities are recorded as a debt discount,
which is amortized over the term of the related debt. Derivative liabilities are recorded at fair value at issuance and are marked-to-market
at each statement of financial position date.
Income
taxes
Current
income taxes
Current
income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted
at the reporting date.
Current
income taxes are recognized in profit or loss except to the extent that the tax relates to items recognized outside profit or loss, either
in other comprehensive income or directly in equity. Management evaluates positions taken in the tax returns with respect to situations
in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred
taxes
A
deferred tax asset or liability is recognized for all taxable temporary differences, except to the extent that the deferred tax asset
or liability arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction, affects
neither accounting profit nor taxable profit (tax loss).
A
deferred tax asset is recognized for all deductible temporary differences to the extent that it is probable that taxable profit will
be available against which the deductible temporary difference can be utilized. A deferred tax asset is recognized for the carry forward
of unused tax losses and unused Secondary Tax on Companies (“STC”) credits to the extent that it is probable that future
taxable profit will be available against which the unused tax losses and unused STC credits can be utilized.
Deferred
tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability
is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Current
and deferred taxes are recognized as income or an expense and included in profit or loss for the period, except to the extent that the
tax arises from:
| ➢ | a
transaction or event which is recognized, in the same or a different period, to other comprehensive
income, or |
| | |
| ➢ | a
business combination. |
Current
tax and deferred taxes are charged or credited to other comprehensive income if the tax relates to items that are credited or charged,
in the same or a different period, to other comprehensive income.
Current
tax and deferred taxes are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same
or a different period, directly in equity.
Leases
The
Company accounts for its various operating leases in accordance with IFRS 16, Leases (“IFRS 16’). Management assesses whether
a contract is or contains a lease at the inception of the contract. A contract is or contains a lease if the contract conveys the right
to control the use of an identified asset for a period of time in exchange for consideration.
In
order to assess whether a contract is or contains a lease, management determines whether the asset under consideration is “identified”,
which means that the asset is either explicitly or implicitly specified in the contract and that the supplier does not have a substantial
right of substitution throughout the period of use. Once management has concluded that the contract includes an identified asset, the
right to control the use thereof is considered. To this end, control over the use of an identified asset only exists when the Company
has the right to substantially all of the economic benefits from the use of the asset as well as the right to direct the use of the asset.
Pursuant
to IFRS 16, a lease liability and corresponding right-of-use asset are recognized at the lease commencement date for all lease agreements
for which the Company is a lessee. Details of leasing arrangements where the Company is a lessee are presented in Note 10, Right of Use
Asset and Lease Liability.
Right-of-use
assets
Right-of-use
assets are presented as a separate line item on the consolidated statement of financial position. Lease payments included in the measurement
of the lease liability comprise the following:
| ➢ | the
initial amount of the corresponding lease liability; |
| | |
| ➢ | any
lease payments made at or before the commencement date; |
| | |
| ➢ | any
initial direct costs incurred; |
| | |
| ➢ | any
estimated costs to dismantle and remove the underlying asset or to restore the underlying
asset or the site on which it is located, when the Company incurs an obligation to do so,
unless these costs are incurred to produce inventories; and |
| | |
| ➢ | less
any lease incentives received. |
Right-of-use
assets are subsequently measured at cost less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over
the shorter period of lease term and useful life of the underlying asset. However, if a lease transfers ownership of the underlying asset
or the cost of the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-use asset
is depreciated over the useful life of the underlying asset. Depreciation starts at the commencement date of a lease.
For
right-of-use assets which are depreciated over their useful lives, the useful lives are determined consistently with items of the same
class of property and equipment. Refer to the accounting policy for property and equipment for details of useful lives.
The
residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting year. If the expectations
differ from previous estimates, the change is accounted for prospectively as a change in accounting estimate. Each part of a right-of-use
asset with a cost that is significant in relation to the total cost of the asset is depreciated separately. The depreciation charge for
each year is recognized in profit or loss unless it is included in the carrying amount of another asset.
Lease
liability
The
lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted
by using the rate implicit in the lease. If this rate cannot be readily determined, the Company uses its incremental borrowing rate.
Lease
payments included in the measurement of the lease liability comprise the following:
| ➢ | fixed
lease payments, including in-substance fixed payments, less any lease incentives; |
| | |
| ➢ | variable
lease payments that depend on an index or rate, initially measured using the index or rate
at the commencement date; |
| | |
| ➢ | the
amount expected to be payable by the Company under residual value guarantees; |
| | |
| ➢ | the
exercise price of purchase options if the Company is reasonably certain to exercise the option; |
| | |
| ➢ | lease
payments in an optional renewal period if the Company is reasonably certain to exercise an
extension option, and |
| | |
| ➢ | penalties
for early termination of a lease if the lease term reflects the exercise of an option to
terminate the lease. |
Management
remeasures the lease liability when:
| ➢ | there
has been a change to the lease term, in which case the lease liability is remeasured by discounting
the revised lease payments using a revised discount rate; |
| | |
| ➢ | there
has been a change in the assessment of whether the Company will exercise a purchase, termination,
or extension option, in which case the lease liability is remeasured by discounting the revised
lease payments using a revised discount rate; |
| | |
| ➢ | there
has been a change to the lease payments due to a change in an index or a rate, in which case
the lease liability is remeasured by discounting the revised lease payments using the initial
discount rate (unless the lease payments change is due to a change in a floating interest
rate, in which case a revised discount rate is used); |
| | |
| ➢ | there
has been a change in expected payment under a residual value guarantee, in which case the
lease liability is remeasured by discounting the revised lease payments using the initial
discount rate; |
| | |
| ➢ | a
lease contract has been modified and the lease modification is not accounted for as a separate
lease, in which case the lease liability is remeasured by discounting the revised payments
using a revised discount rate. |
When
the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of- use asset or
is recognized in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Contributed
capital and equity
Contributed
capital represents the aggregate shareholder investment in the Company.
Non-controlling
interest represents the portion of comprehensive income (loss) and net assets attributable to minority shareholders. Non-controlling
interest is identified in the consolidated statements of operations and under equity in the consolidated statements of financial position.
Revenue
from contracts with customers
The
Company recognizes revenue from the following major sources:
| ➢ | Digital
education platform |
| | |
| ➢ | In
person education courses |
| | |
| ➢ | Sales
of goods — retail |
| | |
| ➢ | Service
revenue |
Revenue
is measured based on the consideration to which the Company expects to be entitled in exchange for transferring promised goods or services
to a customer, excluding amounts collected on behalf of third parties. Revenue is recognized when the Company satisfies a performance
obligation by transferring a promised good or service to the customer, which is when the customer obtains control of the good or service.
A performance obligation may be satisfied at a point in time or over time. The amount of revenue recognized is the amount allocated to
the satisfied performance obligation.
A
detailed analysis of performance obligations for each revenue source follows.
Digital
education platform and multi-part documentaries
This
revenue is derived from online workshops, training programs, assessments, courses, accreditations certifications, licenses, and documentaries
provided by both the Company itself and by partners, as well as memberships. Revenue is derived, and performance obligations are fulfilled,
over the course of delivery of the product or service, which may be at the time of sale or may be monthly for up to twelve months. The
company is compensated by way of fees for the product or service as displayed at events or online.
In
person education courses
This
revenue is derived from classes, workshops, training programs and conferences that are delivered in person at the Company’s campuses
or third-party venues. Revenue is derived, and performance obligations are fulfilled, at the time of delivering the event or over the
course of delivery of the product or services. The company is compensated by way of course fees as displayed at events or online.
Sales
of goods — retail
This
revenue is derived by the Company’s campus businesses and includes food and beverage, spa products, merchandise, and ancillary
products. Revenue is derived, and performance obligations are fulfilled, at the point in time of providing the goods; in the case of
food and beverage delivered as part of a pre-paid accommodation package, revenue is recognized daily over the time of guests’ duration
of stay. The company is compensated based on the advertised or agreed price of the goods as part of accommodation packages or on in-house
menus in the case of food and beverage, and on in-house price lists or price tickets in the case of spa products, merchandise, and ancillary
products.
Service
revenue
This
revenue is derived by the Company’s campus businesses and includes accommodation, spa, conferences and events, and memberships.
Revenue is derived, and performance obligations are fulfilled, at the time of providing the services; in the case of accommodation as
part of a pre-paid booking, revenue is recognized daily over the time of guests’ duration of stay, and for memberships revenue
is recognized monthly over the course of delivery of the product or service which may be up to twelve months. The company is compensated
based on the advertised or agreed price of the goods as displayed online by the company or booking agents in the case of accommodation,
on in-house price lists in the case of spa, by tailored quote in the case of conferences and events, and as displayed in-house or online
in the case of memberships.
Deferred
revenue
The
timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A contract asset (accounts
receivable) is recorded when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively,
when payment precedes the provision of the related services, the Company records a contract liability (deferred revenue) until the performance
obligations are satisfied.
Deferred
revenue represents the Company’s contract liability for cash collections received from its customers in advance of performance
under the contract. Deferred revenue is recognized as revenue upon completion of the performance obligation, which generally occurs within
one year.
As
of December 31, 2022, the Company had deferred revenue for remaining unsatisfied performance obligations of $6,391,993 (2021: $2,561,912),
which is expected to be recognized within one year.
During
the year ended December 31, 2022, the Company recognized revenue of $2,349,941 (2021: $758,794) that was included in the deferred revenue
balance at the beginning of the period.
Borrowing
costs
Coupon
interest is recognized in the period in which it is incurred, while other borrow costs (debt discount) are amortized to interest expense
over the expected term of the notes using the interest method.
Foreign
currency transactions
The
Company’s reporting currency is the U.S. dollar. The functional currencies of the Genius Group and its subsidiaries are their local
currencies (Singapore dollar, British pound, Indonesian rupiah and South African Rand, New Zealand Dollar) and the functional currency
of ERL, UAV and RF is the U.S. dollar. The Company engages in foreign currency denominated transactions with customers and suppliers,
as well as between subsidiaries with different functional currencies. Gains and losses resulting from transactions denominated in non-functional
currencies are recognized in earnings.
At
the end of the reporting period, assets and liabilities are translated into U.S. dollars using the exchange rate at the balance sheet
date and revenue and expense accounts are translated at a weighted average exchange rate for the period or for the year then ended. Resulting
translation adjustments are made directly to accumulated other comprehensive income.
Exchange
differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they
were translated on initial recognition during the period, or in previous consolidated financial statements, are recognized in profit
or loss in the period in which they arise.
When
a gain or loss on a non-monetary item is recognized to other comprehensive income and accumulated in equity, any exchange component of
that gain or loss is recognized to other comprehensive income and accumulated in equity. When a gain or loss on a non-monetary item is
recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss. Cash flows arising from transactions
in a foreign currency are recorded in U.S. dollars by applying to the foreign currency amount the exchange rate between the U.S. dollar
and the foreign currency at the date of the cash flow.
Stock-based
compensation
For
service-based awards, compensation expense is measured at the grant date based on the fair value of the award and is recognized on a
straight-line basis over the requisite service period, which is typically the vesting period.
Restatement
of previously issued financial statements
The
Company’s Consolidated Statement of Operations and Comprehensive Income for the year ended December 31, 2021, has been restated
for errors made with regard to revenue recognition and the reporting of gross vs. net revenue.
During
December, 2022, the Company updated its revenue recognition policy memo and uncovered an error in the implementation of accounting treatment
for certain revenue recognition transactions with a third-party sales partner. The Company evaluated the materiality of this inaccurate
accounting treatment, considering both quantitative and qualitative factors in accordance with SAB 99. The Company believes a restatement
is necessary due to its review of the relevant factors. In accordance with IFRS, the restatement records revenue and expense net for
2021 sales transactions where the Company was not the clear principle in the transaction. As a result, the restatement will decrease
revenue by $4,483,458, with corresponding decrease in cost of revenue by $4,483,458. There were no restatements to the
Consolidated Statement of Financial Position, Consolidated Statement of Cash Flows, Consolidated Statement of Changes in Stockholders’
Equity, earnings per share, gross profit, or net loss.
The
Company made restatements in the Consolidated Statement of Operations and Comprehensive Income related to revenues and cost
of revenue with a third-party sales partner. The changes are in revenue and cost of revenue and have been restated from
a gross presentation to a net presentation, please see the table below:
SCHEDULE
OF RESTATEMENTS IN THE CONSOLIDATED
STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
| |
| | |
| | |
| |
| |
For the year ended December 31, 2021 | |
| |
Audited | | |
Restatements | | |
Restated | |
Revenue | |
$ | 12,778,262 | | |
$ | (4,483,458 | ) | |
$ | 8,294,804 | |
Cost of Revenue | |
| (10,020,804 | ) | |
| 4,483,458 | | |
| (5,537,346 | ) |
Gross Profit | |
$ | 2,757,458 | | |
$ | — | | |
$ | 2,757,458 | |
NOTE
3 — RECENT ACCOUNTING PRONOUNCEMENTS
RECENT ACCOUNTING STANDARDS
Recently
Adopted Accounting Standards |
|
Effective
for periods beginning on or after |
|
|
|
Amendments
to IFRS 3 Reference to the Conceptual Framework Relating to Business Combinations |
|
January
1, 2022 |
Amendments
to IAS 37 Onerous Contracts – Cost of Fulfilling a Contract |
|
January
1, 2022 |
Annual
Improvements to IFRS Standards 2018-2021 |
|
January
1, 2022 |
Amendments
to IAS 16 Property, Plant and Equipment – Proceeds before Intended Use |
|
January
1, 2022 |
The
Company’s adoption of the standards above had no material impact on the consolidated financial statements in the year of initial
application.
Recent
Accounting Standards Not Yet Adopted |
|
Effective
for periods beginning on or after |
|
|
|
Amendments
to IAS 1 Classification of Liabilities as Current or Non-current |
|
January
1, 2023 |
Amendments
to IFRS 17 Insurance Contracts |
|
January
1, 2023 |
Amendments
to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors |
|
January
1, 2023 |
Amendments
to IAS 12 Income Taxes |
|
January
1, 2023 |
The
Company expects that the adoption of the standards above will have no material impact on the consolidated financial statements in the
year of initial application.
NOTE
4 — BUSINESS COMBINATIONS
During 2022, the Company acquired Education
Angels, University of Antelope Valley, E-Squared Education, Property and Mastermind Networks Limited and Revealed Films. The Company used
the income approach for the valuation of the acquired intangible assets, the contingent consideration and the options issued.
To account for the acquisition intangibles
the Company used the following valuation methods:
Trade Names, Trademarks, Domain Names
and Licenses: In determining the fair values a present value technique known as the relief-from-royalty method was used. The premise
of this valuation method is that if the trade names, trademarks, domain names, and licenses were licensed to an unrelated party, the
unrelated party would pay a percentage of revenue for use of the them. The trade names, trademarks, domain names, and license owner
is, however, spared this cost. The present value of these cost savings over time, or relief from royalty, represents the
value.
Customer Relationships: The fair value
of the customer relationships was determined utilizing a present value technique involving a discounted cash flow analysis. This method
is based on the notion that the value of a customer contract and related customer relationship is equal to the incremental after-tax
cash flows attributable to the customer contract and related customer relationship after deductions and charges for the economic return
on contributory assets such as working capital, fixed assets and other identifiable intangible assets such as an assembled workforce
To account for the Options and Top Up Consideration
for the acquisitions the Company used the following valuation methods:
Top Up Consideration (excluding Revealed
Films) and the Call Option: The fair values of each were determined utilizing monte carlo simulations to simulate the potential
payoffs. A monte carlo simulation is a problem-solving technique used to approximate the probability of certain outcomes by running
multiple trial runs, called simulations, using random variables.
Put Option: The fair value of the
put option was determined using a closed-form option pricing model commonly referred to as the Black-Scholes option pricing model.
Revealed Films Top Up Consideration: The fair value was determined utilizing
a present value technique involving a discounted cash flow analysis.
Genius
Group Ltd.’s Acquisition of Education Angels
On
April 30, 2022, Genius Group Ltd acquired 100% of the voting equity interest of Education Angels for $1,918,700 of purchase consideration,
made up of 333,687 of Genius Group Ltd ordinary shares. Education Angels operates in New Zealand and provides early education learning
services in New Zealand. The Company utilized an independent third-party to determine the fair value of the acquired intangible assets, fair
value of earn outs, and the fair value of options.
Below
is a summary of the preliminary allocation of the purchase consideration to the fair value of the assets and liabilities associated with
Education Angels at acquisition.
SCHEDULE OF THE ALLOCATION OF THE PURCHASE CONSIDERATION
TO THE FAIR VALUE OF THE ASSETS AND LIABILITIES
| |
Amount | |
Purchase
Price | |
| | |
Value of shares | |
$ | 1,918,700 | |
Less: acquired cash | |
| (26,940 | ) |
Purchase
price, net of acquired cash | |
| 1,891,760 | |
Prepaid
expenses and other current assets | |
| (113,413 | ) |
Fixed
assets | |
| (69,637 | ) |
Intangible assets | |
| (1,640,000 | ) |
Accounts payable, accrued expenses and other liabilities | |
| 804,842 | |
Deferred tax liability | |
| 549,718 | |
Goodwill | |
$ | 1,423,270 | |
The
acquired intangible assets are as follows
SCHEDULE
OF ACQUIRED INTANGIBLE ASSETS ACQUIRED
| |
Amount | |
Trade names, trademarks, domain names and licenses | |
$ | 1,640,000 | |
Genius
Group Ltd.’s Acquisition of Property Investors Network
On
April 30, 2022, Genius Group Ltd acquired 100%
of the voting equity interest of Property Investors Network, and its wholly owned subsidiaries, for $29,655,000
of purchase consideration, made up of 2,959,518
of Genius Group Ltd ordinary shares for $17,017,000,
$1,837,000
in cash, $701,000
in top up consideration payable if the 2x revenue or 10x EBITDA in 2022, 2023 or 2024 exceeds the purchase
price or the previous year’s consideration; the difference between the value will be paid in additional consideration by 90% in
shares and 10% in cash and $10,100,000
in call options. The company has issued a call option to the seller of Property Investors
Network which allows the seller to exercise the call option to repurchase the company from the buyer, if the value of Company’s
shares held by the seller is below GBP 10.2 million. The validity of such option is one year from the first anniversary of the acquisition
close date. The Company utilized an independent third-party to determine the fair value of the acquired intangible assets, fair
value of earn outs, and the fair value of options. Property Investors Network is a United Kingdom based entity which delivers events
and education programs to the property investors.
Below
is a summary of the preliminary allocation of the purchase consideration to the fair value of the assets and liabilities associated with
Property Investors network at acquisition.
SCHEDULE
OF THE ALLOCATION OF THE PURCHASE CONSIDERATION TO THE FAIR VALUE OF THE ASSETS AND LIABILITIES
| |
Amount | |
Purchase
price | |
| |
Value of shares | |
$ | 17,017,000 | |
Cash | |
| 1,837,000 | |
Top-up share options | |
| 701,000 | |
Call / Put option | |
| 10,100,000 | |
Total purchase price | |
| 29,655,000 | |
Less: acquired cash | |
| (347,952 | ) |
Purchase
price, net of acquired cash | |
| 29,307,048 | |
Accounts receivable | |
| (461,249 | ) |
Prepaid expenses and other
current assets | |
| (6,111,957 | ) |
Fixed assets | |
| (24,994 | ) |
Intangible assets | |
| (4,980,000 | ) |
Accounts payable, accrued
expenses and other liabilities | |
| 2,833,718 | |
Deferred tax liability | |
| 1,171,555 | |
Goodwill | |
$ | 21,734,121 | |
The acquired
intangible assets are as follows
SCHEDULE
OF ACQUIRED INTANGIBLE ASSETS ACQUIRED
| |
Amount | |
Trade
names, trademarks, domain names and licenses | |
$ | 4,900,000 | |
Customer
relationship | |
| 80,000 | |
Total | |
$ | 4,980,000 | |
Genius
Group Ltd.’s Acquisition of E-Square
On
May 31, 2022, Genius Group Ltd acquired 100%
of the voting equity interest of E-Square, and its wholly owned subsidiaries, for $3,845,000
of purchase consideration, made up of 328,236
of Genius Group Ltd ordinary shares for $2,692,000,
$403,000
in cash, loans payable of $299,000,
and $451,000
in put option. The company has also issued a put option to the seller of E-Squared Enterprises Ltd which allows the seller to
exercise the put option and repurchase the company from the buyer, if the Company’s shares trade below $5.81 ($34.87
pre-split) at any given point of time from the date of commencement to two years. The Company has agreed to pay top up consideration
for the year 2022 and 2023 for the positive difference between 2x annual revenue or 10x EBITDA for the financial year minus the
hurdle amount which is the revenue or EBITDA for the previous year. The value of top up consideration is zero as of the acquisition
date. Company utilized an independent third-party to determine the fair value of the acquired intangible assets, fair value of earn
outs, and the fair value of options. E-Square operates as a primary school, secondary school, and vocational college provider in
South Africa.
Below
is a summary of the preliminary allocation of the purchase consideration to the fair value of the assets and liabilities associated with
E-Square at acquisition.
SCHEDULE
OF THE ALLOCATION OF THE PURCHASE CONSIDERATION TO THE FAIR VALUE OF THE ASSETS AND LIABILITIES
| |
Amount | |
Purchase price | |
| | |
Value of shares | |
$ | 2,692,000 | |
Cash | |
| 403,000 | |
Deferred payment | |
| 299,000 | |
Call / Put option | |
| 451,000 | |
Total purchase price | |
| 3,845,000 | |
Less: acquired cash | |
| (262,518 | ) |
Purchase price, net of acquired cash | |
| 3,582,482 | |
Accounts receivable | |
| (178,081 | ) |
Prepaid expenses and other current assets | |
| (31,242 | ) |
Fixed assets | |
| (272,348 | ) |
Intangible assets | |
| (100,000 | ) |
Accounts payable, accrued expenses and other liabilities | |
| 722,275 | |
Deferred tax liability | |
| 37,838 | |
Goodwill | |
$ | 3,760,924 | |
The
acquired intangible assets are as follows
SCHEDULE
OF ACQUIRED INTANGIBLE ASSETS ACQUIRED
| |
Amount | |
Trade names, trademarks, domain names and licenses | |
$ | 100,000 | |
Total | |
$ | 100,000 | |
Genius
Group Ltd.’s Acquisition of University of Antelope Valley
On
July 7, 2022, Genius Group Ltd acquired 100%
of the voting equity interest of University of Antelope Valley for $14,487,000
of purchase consideration, made up of 1,000,000
of Genius Group Ltd ordinary shares for $6,470,000,
$7,000,000
of cash and $1,017,000
in top up consideration. The top up consideration
requires that within seven days after Genius Group files its tax return for the years 2022, 2023 and 2024, the Company and the seller
will review the total revenue for the respective years. If the amount of University of Antelope Valley total revenue in 2022, 2023 and
2024 is an increase over $9,000,000
or the subsequent year’s total revenue,
then the Company shall pay to the seller additional cash consideration in an amount equal to: (a) The 2022, 2023 or 2024 total revenue
less the higher of either $9,000,000
or the previous year’s total revenue, (b)
multiplied by two, (collectively over the three-year period). The consideration is payable in cash. The Company utilized an independent
third-party to determine the fair value of the acquired intangible assets, fair value of earn outs, and the fair value of options. University
of Antelope Valley delivers its certification and degree programs to the students who physically enroll at their location in Lancaster,
California.
Below
is a summary of the preliminary allocation of the purchase consideration to the fair value of the assets and liabilities associated with
University of Antelope Valley at acquisition.
SCHEDULE
OF THE ALLOCATION OF THE PURCHASE CONSIDERATION TO THE FAIR VALUE OF THE ASSETS AND LIABILITIES
| |
Amount | |
Purchase price | |
| | |
Value of shares | |
$ | 6,470,000 | |
Cash | |
| 7,000,000 | |
Top-up share options | |
| 1,017,000 | |
Total purchase price | |
| 14,487,000 | |
Less: acquired cash | |
| (1,620,734 | ) |
Purchase price, net of acquired cash | |
| 12,866,266 | |
Accounts receivable | |
| (3,082,589 | ) |
Prepaid expenses and other current assets | |
| (492,404 | ) |
Fixed assets | |
| (1,051,934 | ) |
Accounts payable, accrued expenses and other liabilities | |
| 1,935,533 | |
Goodwill | |
$ | 10,174,872 | |
Genius
Group Ltd.’s Acquisition of Revealed Films
On
October 4, 2022, Genius Group Ltd acquired 100%
of the voting equity interest of Revealed Films for $20,380,397
of purchase consideration, made up of 1,353,966
of Genius Group Ltd ordinary shares for $7
million, $1
million in cash, $2
million of loans payable and $10,380,397
in top up consideration payable upon achieving the pre-agreed milestones. The loans payable of $2 million was paid to the sellers during Q1 2023.
The Company has agreed to pay top up consideration of 1.5X the difference between the revenue in 2023, 2024 and 2025 if the revenue growth
is higher than $7 million and a profit of at least 7%. The revenue growth is calculated as revenue during the year minus $7 million or
previous year’s revenue if the target was met. The acquisition of Revealed Films occurred in the 4th
quarter of the year and the valuation will be reviewed and finalized by an independent third-party in the first half of 2023.
Revealed Films is a film production company based in Utah.
Below
is a summary of the preliminary allocation of the purchase consideration to the fair value of the assets and liabilities associated with
Revealed Films at acquisition.
SCHEDULE OF THE ALLOCATION OF THE PURCHASE CONSIDERATION
TO THE FAIR VALUE OF THE ASSETS AND LIABILITIES
| |
Amount | |
Purchase price | |
| | |
Value of shares | |
$ | 7,000,000 | |
Cash | |
| 1,000,000 | |
Deferred payment | |
| 2,000,000 | |
Top-up share options | |
| 10,380,397 | |
Total purchase price | |
| 20,380,397 | |
Less: acquired cash | |
| (145,532 | ) |
Purchase price, net of acquired cash | |
| 20,234,865 | |
Accounts receivable | |
| (152,920 | ) |
Prepaid expenses and other current assets | |
| (745,521 | ) |
Goodwill | |
| (1,008,694 | ) |
Intangible assets | |
| (8,884,000 | ) |
Accounts payable, accrued expenses and other liabilities | |
| 1,660,727 | |
Deferred tax liability | |
| 2,202,088 | |
Goodwill | |
$ | 13,306,545 | |
The
acquired intangible assets are as follows
SCHEDULE
OF ACQUIRED INTANGIBLE ASSETS ACQUIRED
| |
Amount | |
Customer relationship | |
| 8,884,000 | |
NOTE 5 — OTHER RECEIVABLES
SCHEDULE OF OTHER RECEIVABLES
| |
| | | |
| | |
| |
As of December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Other receivables (Short term) | |
| | | |
| | |
GST receivable | |
$ | 64,254 | | |
$ | — | |
Due from utility companies | |
| 45,570 | | |
$ | — | |
Other | |
| 10,480 | | |
| 66,000 | |
Other receivables (short term) | |
$ | 120,304 | | |
$ | 66,000 | |
| |
| | | |
| | |
Other receivables (Long term) | |
| | | |
| | |
PJ Finn | |
$ | 718,198 | | |
$ | — | |
Richard Evans | |
| 14,518 | | |
| — | |
Other Receivables (long term) | |
$ | 732,716 | | |
$ | — | |
Total Other Receivables | |
$ | 853,020 | | |
$ | 66,000 | |
NOTE
6 — DUE FROM RELATED PARTY
Due
from related parties as of December 31, 2022 and 2021 represents amounts receivable from related entities of
the Company. The receivables are unsecured, bear no interest and are due on demand. The due from related parties (Long term) are recoverable within average life of three years.
SCHEDULE OF DUE FROM RELATED PARTIES
| |
2022 | | |
2021 | |
| |
As
of December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Due
from related parties (Short term) | |
| | | |
| | |
Accounts
Receivable – Shareholders | |
$ | 60,280 | | |
$ | 20,550 | |
Due
from MSJ Foundation | |
| 102,356 | | |
| — | |
Others | |
| 188,721 | | |
| 23,695 | |
Total
due from related parties (short term) | |
$ | 351,357 | | |
$ | 44,245 | |
| |
| | | |
| | |
Due
from related parties (Long term) | |
| | | |
| | |
BMV
Finance | |
$ | 1,973,144 | | |
$ | — | |
Simon
Zutshi | |
| 1,268,094 | | |
| — | |
BG3
Ltd. | |
| 703,743 | | |
| — | |
Zutshi
LLP | |
| 380,121 | | |
| — | |
Vision1
Investments | |
| 279,845 | | |
| — | |
Crowd
Property | |
| 260,124 | | |
| — | |
Throckley | |
| 208,998 | | |
| — | |
Others | |
| 98,187 | | |
| — | |
Property
Mastermind International | |
| 116,008 | | |
| — | |
Total
due from related parties (long term) | |
$ | 5,288,264 | | |
$ | — | |
Due
from related parties | |
$ | 5,639,621 | | |
$ | 44,245 | |
NOTE
7 — INVENTORIES
As
of December 31, 2022, and 2021 inventories consist of:
SCHEDULE OF INVENTORIES
| |
2022 | | |
2021 | |
| |
As
of December 31, | |
| |
2022 | | |
2021 | |
Movie
production costs | |
$ | 648,337 | | |
$ | — | |
Books
and periodicals | |
| 258,497 | | |
| — | |
Food
and beverage | |
| 48,677 | | |
| 38,500 | |
Merchandise | |
| 45,350 | | |
| 51,777 | |
Consumables | |
| 1,116 | | |
| 2,253 | |
Total
inventories | |
$ | 1,001,977 | | |
$ | 92,530 | |
NOTE
8 — PREPAID EXPENSES AND OTHER CURRENT ASSETS
As
of December 31, 2022, and 2021, prepaid expenses and other current assets consist of:
SUMMARY OF PREPAID EXPENSES AND OTHER CURRENT ASSETS
| |
2022 | | |
2021 | |
| |
As
of December 31, | |
| |
2022 | | |
2021 | |
Prepaid
expenses | |
$ | 798,140 | | |
$ | 3,349,990 | |
Deposits | |
| 165,868 | | |
| 59,925 | |
Other
current assets | |
| 126,779 | | |
| 80,531 | |
Total | |
$ | 1,090,787 | | |
$ | 3,490,446 | |
NOTE
9 — PROPERTY AND EQUIPMENT
Property
and equipment consist of the following as of December 31, 2022, and 2021:
SCHEDULE OF PROPERTY
AND EQUIPMENT
| |
2022 | | |
2021 | |
| |
| | |
Accumulated | | |
|
|
|
Carrying | | |
| | |
Accumulated | | |
Carrying | |
| |
Cost | | |
Depreciation | | |
Impairment |
|
|
Value | | |
Cost | | |
Depreciation | | |
Value | |
Land | |
$ | 1,486,718 | | |
$ | — | | |
$ |
(1,486,718 |
) |
|
$ | — | | |
$ | 1,486,718 | | |
$ | — | | |
$ | 1,486,718 | |
Buildings | |
| 4,541,374 | | |
| (1,289,314 | ) | |
|
(3,252,060 |
) |
|
| — | | |
| 4,401,241 | | |
| (989,085 | ) | |
| 3,412,156 | |
Leasehold
property | |
| 5,136,738 | | |
| (2,999,931 | ) | |
|
(2,134,654 |
) |
|
| 2,153 | | |
| 4,261,623 | | |
| (2,770,810 | ) | |
| 1,490,813 | |
Plant
and machinery | |
| 147,887 | | |
| (92,197 | ) | |
|
(55,690 |
) |
|
| — | | |
| 136,692 | | |
| (87,050 | ) | |
| 49,642 | |
Furniture
and fixtures | |
| 647,046 | | |
| (385,473 | ) | |
|
(108,736 |
) |
|
| 152,837 | | |
| 537,964 | | |
| (330,476 | ) | |
| 207,488 | |
Motor
vehicles | |
| 384,643 | | |
| (319,993 | ) | |
|
(12,808 |
) |
|
| 51,842 | | |
| 320,103 | | |
| (281,587 | ) | |
| 38,516 | |
Office
equipment | |
| 99,739 | | |
| (29,726 | ) | |
|
(7,975 |
) |
|
| 62,038 | | |
| 26,287 | | |
| (19,528 | ) | |
| 6,759 | |
IT
equipment | |
| 142,100 | | |
| (113,795 | ) | |
|
(3,589 |
) |
|
| 24,716 | | |
| 113,790 | | |
| (88,274 | ) | |
| 25,516 | |
Computer
equipment | |
| 53,661 | | |
| (14,780 | ) | |
|
— |
| |
| 38,881 | | |
| 4,456 | | |
| (4,456 | ) | |
| — | |
Programs
and textbooks | |
| 16,594 | | |
| — | | |
|
— |
| |
| 16,594 | | |
| — | | |
| — | | |
| — | |
Spa
equipment, curtains, crockery, glassware, and linen | |
| 487,980 | | |
| (228,636 | ) | |
|
(45,274 |
) |
|
| 214,070 | | |
| 255,434 | | |
| (196,926 | ) | |
| 58,508 | |
| |
$ | 13,144,480 | | |
$ | (5,473,845 | ) | |
$ |
(7,107,504 |
) |
|
$ | 563,131 | | |
$ | 11,544,308 | | |
$ | (4,768,192 | ) | |
$ | 6,776,116 | |
Reconciliation
of property and equipment — 2022
SCHEDULE OF RECONCILIATION OF PROPERTY AND EQUIPMENT
| |
Opening
Balance | | |
Additions
(Acquisitions) | | |
Additions | | |
Disposals | | |
Translation | | |
Depreciation | | |
Impairment | | |
Closing
Balance | |
Land | |
$ | 1,486,718 | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | (1,486,718 | ) | |
$ | — | |
Buildings | |
| 3,412,156 | | |
| 147,296 | | |
| — | | |
| — | | |
| (7,164 | ) | |
| (300,228 | ) | |
| (3,252,060 | ) | |
| — | |
Leasehold property | |
| 1,490,813 | | |
| 798,702 | | |
| 76,873 | | |
| — | | |
| (460 | ) | |
| (229,121 | ) | |
| (2,134,654 | ) | |
| 2,153 | |
Plant and machinery | |
| 49,642 | | |
| — | | |
| 11,195 | | |
| — | | |
| — | | |
| (5,147 | ) | |
| (55,690 | ) | |
| — | |
Furniture and fixtures | |
| 207,488 | | |
| 16,083 | | |
| 92,849 | | |
| — | | |
| 150 | | |
| (54,997 | ) | |
| (108,736 | ) | |
| 152,837 | |
Motor vehicles | |
| 38,516 | | |
| 66,244 | | |
| — | | |
| (1,163 | ) | |
| (541 | ) | |
| (38,406 | ) | |
| (12,808 | ) | |
| 51,842 | |
Office equipment | |
| 6,759 | | |
| 50,955 | | |
| 22,496 | | |
| — | | |
| — | | |
| (10,197 | ) | |
| (7,975 | ) | |
| 62,038 | |
IT equipment | |
| 25,516 | | |
| 24,721 | | |
| — | | |
| — | | |
| 3,588 | | |
| (25,520 | ) | |
| (3,589 | ) | |
| 24,716 | |
Computer equipment | |
| — | | |
| 47,071 | | |
| 3,907 | | |
| — | | |
| (1,772 | ) | |
| (10,325 | ) | |
| — | | |
| 38,881 | |
Programs and textbooks | |
| — | | |
| 16,594 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 16,594 | |
Spa
equipment, curtains, crockery, glassware and linen | |
| 58,508 | | |
| 253,219 | | |
| 15,360 | | |
| — | | |
| (36,033 | ) | |
| (31,710 | ) | |
| (45,274 | ) | |
| 214,070 | |
| |
$ | 6,776,116 | | |
$ | 1,420,885 | | |
$ | 222,680 | | |
$ | (1,163 | ) | |
$ | (42,232 | ) | |
$ | (705,651 | ) | |
$ | (7,107,504 | ) | |
$ | 563,131 | |
Reconciliation
of property and equipment — 2021
| |
Opening
Balance | | |
Additions | | |
Translation | | |
Depreciation | | |
Closing
Balance | |
Land | |
$ | 1,486,718 | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | 1,486,718 | |
Buildings | |
| 3,950,627 | | |
| — | | |
| (215,291 | ) | |
| (323,180 | ) | |
| 3,412,156 | |
Leasehold
Property | |
| 1,655,128 | | |
| — | | |
| 9,777 | | |
| (174,092 | ) | |
| 1,490,813 | |
Plant
& Machinery | |
| 84,685 | | |
| 9,981 | | |
| (37,427 | ) | |
| (7,597 | ) | |
| 49,642 | |
Furniture
and Fixtures | |
| 189,373 | | |
| 65,127 | | |
| (6,558 | ) | |
| (53,570 | ) | |
| 207,488 | |
Motor
Vehicles | |
| 93,325 | | |
| — | | |
| (21,803 | ) | |
| (33,006 | ) | |
| 38,516 | |
Office
Equipment | |
| 10,435 | | |
| 2,688 | | |
| — | | |
| (6,364 | ) | |
| 6,759 | |
IT
Equipment | |
| 32,989 | | |
| — | | |
| — | | |
| (7,473 | ) | |
| 25,516 | |
Spa
Equipment, curtains, crockery, glassware and linen | |
| 93,710 | | |
| — | | |
| — | | |
| (35,202 | ) | |
| 58,508 | |
| |
$ | 7,596,990 | | |
$ | 77,797 | | |
$ | (258,186 | ) | |
$ | (640,485 | ) | |
$ | 6,776,116 | |
NOTE
10 — RIGHT OF USE ASSET AND LEASE LIABILITY
Net
carrying amounts of right-of-use assets
The
carrying amounts of right-of-use assets are as follows:
SCHEDULE OF CARRYING AMOUNTS OF RIGHT-OF-USE ASSETS
| |
2022 | | |
2021 | |
| |
As
of December 31, | |
| |
2022 | | |
2021 | |
Right
of use asset – Buildings | |
$ | 2,541,123 | | |
$ | 1,378,312 | |
Right of use asset – Buildings (related party) | |
| 11,149,101 | | |
| - | |
Right
of use asset – Leasehold | |
| 992,410 | | |
| 992,410 | |
Right
of use asset – Office space | |
| 58,412 | | |
| 58,412 | |
Foreign
currency translation | |
| (119,182 | ) | |
| (117,959 | ) |
Accumulated
depreciation of right of use assets | |
| (1,723,114 | ) | |
| (1,233,934 | ) |
Accumulated depreciation of right of use assets (related party) | |
| (325,040 | ) | |
| - | |
Right
of use asset | |
$ | 12,573,710 | | |
$ | 1,077,241 | |
During
the year ended December 31, 2022, the Company recorded depreciation of right-of-use assets of $814,220 (2021 — $507,688).
During July 2022, the Company
signed two lease agreements for University of Antelope Valley’s buildings with the former owners, a related party, both with 12-year
terms. A right of use asset and a lease liability of $11,149,101
was booked to the Consolidated Statements of Financial Condition for the leases.
Lease
liabilities
The
maturity analysis of lease liabilities is as follows:
SCHEDULE OF MATURITY ANALYSIS OF LEASE LIABILITIES
| |
| | | |
| | |
| |
As
of December 31, | |
| |
2022 | | |
2021 | |
Within
one year | |
$ | 1,664,966 | | |
$ | 436,270 | |
Two
to five years | |
| 6,280,716 | | |
| 298,594 | |
Thereafter | |
| 17,871,937 | | |
| 9,007,645 | |
Gross
lease liabilities | |
| 25,817,619 | | |
| 9,742,509 | |
Less:
Finance Charges component | |
| (12,832,744 | ) | |
| (8,411,649 | ) |
Lease
liabilities | |
$ | 12,984,875 | | |
$ | 1,330,860 | |
| |
| | | |
| | |
Lease
liabilities – Current | |
$ | 1,590,538 | | |
$ | 436,271 | |
Lease
liabilities - Non-Current | |
| 11,394,337 | | |
| 894,589 | |
Lease
liabilities | |
$ | 12,984,875 | | |
$ | 1,330,860 | |
The
weighted average discount rate utilized to calculate the present value of the lease liabilities was 7.71%. The average remaining life of the leases is 22 years.
NOTE
11 — INVESTMENTS AT FAIR VALUE
As
of December 31, 2022, and 2021, investments at fair value consist of:
SCHEDULE
OF INVESTMENT AT FAIR VALUE
| |
| | | |
| | |
| |
As
of December 31, | |
| |
2022 | | |
2021 | |
Investments
in YouGo World | |
$ | 28,698 | | |
$ | 28,698 | |
Others | |
| 373 | | |
| 371 | |
Investment
at fair value, Total | |
$ | 29,071 | | |
$ | 29,069 | |
On
September 11, 2017, the Company entered into an agreement to purchase a 2.5% interest in YouGo World ltd., a start-up company focusing
on mixed reality platforms, content, and services.
NOTE
12 — GOODWILL
Changes
in goodwill are as follows during the years ended December 31, 2022 and 2021:
SCHEDULE
OF CHANGES IN GOODWILL
Balance
as of December 31, 2020 | |
$ | 1,209,953 | |
Additions
- Foreign currency translation | |
| 110,147 | |
Balance
as of December 31, 2021 | |
| 1,320,100 | |
Less:
Foreign currency translation | |
| (113,150 | ) |
Additions
- Goodwill on new acquisitions | |
| 50,399,733 | |
Less:
Impairment | |
| (20,053,893 | ) |
Less: Goodwill tax adjustment | |
| 136,097 | |
| |
$ | 31,688,887 | |
Goodwill
is allocated to the Company’s cash-generating units. The recoverable amounts of these cash- generating units have been
determined based on value in use calculations. Other assumptions included in value in use calculations are closely linked to
entity-specific key performance indicators. Based on the discounted cash flows of the cash generating units, the Company wrote off
$20.1
million as of December 31, 2022. The cash generating units impaired were Property Investors Network of $5.8
million, University of Antelope Valley of $10.4
million, E-Squared Education of $2.3
million and Entrepreneurs Resort Ltd of $1.6
million due to a decrease in the fair value of the subsidiary based on a discounted cash flow model. See Note 4 — Business
Combinations for additional details related to goodwill.
NOTE
13 — INTANGIBLE ASSETS
The
Company’s intangible assets consist of costs incurred in connection with the development of the Company’s digital education
software platform, the acquisition of customer relationships and trademarks.
A
reconciliation of intangible assets for the years ended December 31, 2022 and 2021 are as follows:
SCHEDULE OF RECONCILIATION OF INTANGIBLE ASSETS
| |
Balance
as
of
December 31,
2021 | | |
Software
Development
Additions | | |
Acquisition of
Intangibles | | |
Amortization
Expense | |
|
Impairment |
| |
Foreign
Currency
Translation | | |
Balance
as
of
December 31,
2022 | |
GeniusU
software platform | |
$ | 2,811,496 | | |
$ | 743,995 | | |
$ | — | | |
$ | — | |
|
$ |
(1,084,613 |
) | |
$ | — | | |
$ | 2,470,878 | |
Trade names, trademarks and domain names | |
| 13,234 | | |
| — | | |
| 6,919,356 | | |
| — | |
|
|
— |
| |
| 355 | | |
| 6,932,945 | |
Customer Relationship | |
| | | |
| — | | |
| 8,964,000 | | |
| (321,832 | ) |
|
|
— |
| |
| | | |
| 8,642,168 | |
Accumulated
amortization | |
| (1,429,761 | ) | |
| — | | |
| — | | |
| (508,937 | ) |
|
|
— |
| |
| — | | |
| (1,938,698 | ) |
Net
carrying value | |
$ | 1,394,969 | | |
$ | 743,995 | | |
$ | 15,883,356 | | |
$ | (830,769 | ) |
|
$ |
(1,084,613 |
) | |
$ | 355 | | |
$ | 16,107,293 | |
| |
Balance
as
of
December 31,
2020 | | |
Software
Development
Additions | | |
Acquisition
of
Intangibles | | |
Amortization
Expense | | |
Foreign
Currency
Translation | | |
Balance
as
of
December 31,
2021 | |
GeniusU
software platform platform | |
$ | 2,007,182 | | |
$ | 804,314 | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | 2,811,496 | |
Trademarks | |
| 13,234 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 13,234 | |
Accumulated
amortization | |
| (1,015,502 | ) | |
| — | | |
| — | | |
| (424,080 | ) | |
| 9,821 | | |
| (1,429,761 | ) |
Net
carrying value | |
$ | 1,004,914 | | |
$ | 804,314 | | |
$ | — | | |
$ | (424,080 | ) | |
$ | 9,821 | | |
$ | 1,394,969 | |
During
the years ended December 31, 2022 and 2021, the Company recorded amortization of intangible assets in the amount of $830,769 and $424,080
respectively. The Company impaired $1.1 million of developed software at GeniusU due to a decrease in the fair value of the subsidiary
based on a discounted cash flow model.
Annual estimated total amortization expense is $1.5 million, $1.42 million, $1.33 million for 2023 through 2025 and $12.93 million thereafter.
NOTE
14 — DEFERRED TAX ASSETS AND LIABILITIES
Deferred
tax assets and (liabilities) as of December 31, 2022 and 2021 and the related activity for the years ended December 31, 2022 and 2021
are as follows:
SUMMARY OF DEFERRED TAX ASSETS AND LIABILITIES
| |
Balance
as of
December 31,
2021 | | |
Recognized
in
Business
Combination | | |
Recognized
in
Provision for
Income Taxes | | |
Balance
as of
December 31,
2022 | |
Non-current
assets: | |
| | | |
| | | |
| | | |
| | |
Intangible
Assets | |
$ | — | | |
$ | (4,425,990 | ) | |
$ | 524,565 | | |
$ | (3,901,425 | ) |
Property,
plant, and equipment | |
| (883,075 | ) | |
| (341,825 | ) | |
| 1,137,205 | | |
| (87,695 | ) |
Other | |
| — | | |
| — | | |
| (2,240 | ) | |
| (2,240 | ) |
| |
| (883,075 | ) | |
| (4,767,815 | ) | |
| 1,659,530 | | |
| (3,991,360 | ) |
| |
| | | |
| | | |
| | | |
| | |
Current
assets: | |
| | | |
| | | |
| | | |
| | |
Receivables | |
| — | | |
| — | | |
| — | | |
| — | |
Prepaid
expenses | |
| (17,195 | ) | |
| — | | |
| 17,195 | | |
| — | |
Other
(Section 24C allowance) | |
| 50,019 | | |
| 799,647 | | |
| (715,276 | ) | |
| 134,390 | |
| |
| 32,824 | | |
| 799,647 | | |
| (698,081 | ) | |
| 134,390 | |
| |
| | | |
| | | |
| | | |
| | |
Current
liabilities: | |
| | | |
| | | |
| | | |
| | |
Depreciation | |
| — | | |
| — | | |
| — | | |
| — | |
Income
in Advance | |
| 127,129 | | |
| — | | |
| 238,248 | | |
| 365,377 | |
Tax
Losses | |
| — | | |
| 15,995 | | |
| 84,469 | | |
| 100,464 | |
Net
deferred tax assets and (liabilities) | |
$ | (723,122 | ) | |
$ | (3,952,173 | ) | |
$ | 1,284,166 | | |
$ | (3,391,129 | ) |
| |
Balance
as of
December 31,
2020 | | |
Recognized
in
Business
Combination | | |
Recognized
in
Provision for
Income Taxes | | |
Balance
as of
December 31,
2021 | |
Non-current
assets: | |
| | | |
| | | |
| | | |
| | |
Intangible
Assets | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
Property,
plant, and equipment | |
| (979,612 | ) | |
| — | | |
| 96,537 | | |
| (883,075 | ) |
Other | |
| (8,431 | ) | |
| — | | |
| 8,431 | | |
| — | |
| |
| (988,043 | ) | |
| | | |
| 104,968 | | |
| (883,075 | ) |
| |
| | | |
| | | |
| | | |
| | |
Current
assets: | |
| | | |
| | | |
| | | |
| | |
Receivables | |
| — | | |
| — | | |
| — | | |
| — | |
Prepaid
expenses | |
| (11,849 | ) | |
| — | | |
| (5,346 | ) | |
| (17,195 | ) |
Other
(Section 24C allowance) | |
| 26,452 | | |
| 23,451 | | |
| 116 | | |
| 50,019 | |
| |
| 14,603 | | |
| 23,451 | | |
| (5,230 | ) | |
| 32,824 | |
| |
| | | |
| | | |
| | | |
| | |
Current
liabilities: | |
| | | |
| | | |
| | | |
| | |
Depreciation | |
| — | | |
| — | | |
| — | | |
| — | |
Income
in Advance | |
| 98,015 | | |
| — | | |
| 29,114 | | |
| 127,129 | |
Tax
Losses | |
| — | | |
| — | | |
| — | | |
| — | |
Net
deferred tax assets and (liabilities) | |
$ | (875,425 | ) | |
$ | 23,451 | | |
$ | 128,852 | | |
$ | (723,122 | ) |
Unused
tax losses for which no deferred tax assets have been recognized as of December 31, 2022 and 2021 are as follows:
SUMMARY OF UNUSED TAX LOSSES FOR WHICH NO DEFERRED TAX ASSETS HAVE BEEN RECOGNIZED
| |
| | | |
| | |
| |
| As
of December 31, | |
| |
| 2022 | | |
| 2021 | |
| |
| | | |
| | |
Unused
tax losses for which no deferred tax assets has been recognized | |
$ | (29,195,914 | ) | |
$ | (9,982,291 | ) |
Potential
tax benefit of such unused tax losses at applicable statutory tax rates | |
$ | (6,338,526 | ) | |
$ | (2,050,255 | ) |
Unused tax losses | |
$ | (6,338,526 | ) | |
$ | (2,050,255 | ) |
Management
has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s financial
statements as of December 31, 2022 and 2021.
No
tax audits were commenced or were in process during the years ended December 31, 2022 and 2021 and no tax related interest or penalties
were incurred during those years.
The
following jurisdictions and tax years are open to audit:
SUMMARY OF JURISDICTIONS AND TAX YEARS
Jurisdiction |
|
Open
Tax Years |
Indonesia |
|
2018
- 2022 |
New
Zealand |
|
2019
- 2022 |
Singapore |
|
2019
- 2022 |
South
Africa |
|
2018
- 2022 |
United
Kingdom |
|
2021 |
United
States |
|
2020
- 2022 |
NOTE
15 — OTHER NON-CURRENT ASSETS
As
of December 31, 2022 and 2021, other non-current assets were $26,108 and $501,750, respectively.
NOTE
16 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
As
of December 31, 2022 and 2021, accrued expenses and other current liabilities consist of:
SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
| |
| | | |
| | |
| |
As
of December 31, | |
| |
2022 | | |
2021 | |
Accrued
expenses | |
$ | 1,539,791 | | |
$ | 390,138 | |
Sundry
payables | |
| 1,007,222 | | |
| 165,307 | |
North
West Parks Board | |
| 955,591 | | |
| 1,177,050 | |
VAT | |
| 184,977 | | |
| 48,493 | |
Other
taxation payable | |
| 121,959 | | |
| 33,314 | |
Derivative
liability | |
| — | | |
| 250,000 | |
Total | |
$ | 3,809,540 | | |
$ | 2,064,302 | |
The
North West Parks Board accrual represents the amounts owed related to the Company’s Tau Game Lodge. The amount owed is related to turnover fees, concession fees and interest payable.
NOTE
17 — DEFERRED REVENUE
As
of December 31, 2022 and 2021, deferred revenue consists of:
SUMMARY OF DEFERRED REVENUE
| |
| | | |
| | |
| |
As
of December 31, | |
| |
2022 | | |
2021 | |
Educational
revenue paid in advance | |
$ | 5,594,979 | | |
$ | 1,630,723 | |
Other
prepaid income | |
| 583,797 | | |
| 638,473 | |
Advance
bookings for lodges | |
| 213,217 | | |
| 292,716 | |
Total | |
$ | 6,391,993 | | |
$ | 2,561,912 | |
A reconciliation of deferred revenue for
the years ended December 31, 2022 and 2021 are as follows:
SCHEDULE
OF RECONCILIATION OF DEFERRED REVENUE
| |
2022 | | |
2021 | |
| |
As of December 31, | |
| |
2022 | | |
2021 | |
Deferred revenue, beginning balance | |
$ | 2,561,912 | | |
$ | 1,546,712 | |
Addition | |
| 6,180,022 | | |
| 1,773,994 | |
Revenue earned | |
| (2,349,941 | ) | |
| (758,794 | ) |
Deferred revenue, ending balance | |
$ | 6,391,993 | | |
$ | 2,561,912 | |
NOTE
18 — LOANS PAYABLE
As
of December 31, 2022 and 2021, loans payable consisted of:
SUMMARY OF LOANS PAYABLE
| |
| | | |
| | |
| |
As
of December 31, | |
| |
2022 | | |
2021 | |
Loans
payable – current portion | |
$ | 334,391 | | |
$ | 65,415 | |
Loans
payable – non-current portion | |
| 428,025 | | |
| 85,858 | |
Total | |
$ | 762,416 | | |
$ | 151,273 | |
In
September of 2019, the Company obtained lines of credit in the aggregate amount of S$400,000 (approximately $296,912 at the 2019 exchange
rate) for working capital and business expansions requirements in Wealth Dynamics Pte Ltd, which the Company drew down on in full. Loans
in the amount of S$100,000 (approximately $74,228 at the 2019 exchange rate) shall be repaid over 36 monthly installments including both
principal and the respective accrued interest. Interest on such principal shall bear at a rate of 8% per annum plus a margin of 0.88%,
subject to adjustment. The Company has the option to prepay the loan before its maturity date, subject to a fee of 6.88% if paid within
twelve months from the drawdown date. Loans in the amount of S$300,000 (approximately $222,684 at the 2019 exchange rate) shall be repaid
over 60 monthly installments including both principal and the respective accrued interest. Interest on such principal shall bear at a
rate of 6.25% per annum, subject to adjustment. The loans are secured by personal guarantees of the Director. During the year ended December
31, 2022, the Company repaid an aggregate of S$98,589, approximately $72,492 at the 2022 exchange rate (2021 — S$91,063 approximately
$67,220 at the 2021 exchange rate) of principal plus the respective accrued interest.
Education
Angels has obtained line of credit for working capital requirement in 2020, 2021 and 2022. The loans are secured by the guarantees of the Director and do not have
covenant clauses. The outstanding principal as of December 31,
2022 is as follows:
SCHEDULE
OF LINE OF CREDIT FOR WORKING CAPITAL REQUIREMENT
Loan
Type | |
Start
Date | | |
Loan
Amount | | |
Tenure | | |
Interest
Rate | | |
Outstanding
as
of December 31,
2022 | |
IRD
Loan | |
| 2020 | | |
$ | 20,063 | | |
| 60
Months | | |
| 3.25 | % | |
$ | 16,900 | |
Juke
NWN765 | |
| 2021 | | |
$ | 19,679 | | |
| 36
Months | | |
| 1.30 | % | |
$ | 12,254 | |
Qashqai
NWN767 | |
| 2021 | | |
$ | 22,258 | | |
| 36
Months | | |
| 1.20 | % | |
$ | 13,886 | |
Qashqai
NWN766 | |
| 2022 | | |
$ | 22,258 | | |
| 36
Months | | |
| 1.20 | % | |
$ | 14,475 | |
Mastermind
Principles and Property Investors Network has obtained line of credit for the working capital requirement in 2020 and 2022. The loans are secured by the guarantees of the Director and do not have
covenant clauses. The outstanding
principal amount as of December 31, 2022 is as follows –
Loan
Type | |
Start
Date | | |
Loan Amount | | |
Tenure | | |
Interest Rate | | |
Outstanding
as
of December 31,
2022 | |
Lloyds
CBIL (MPL) | |
| 2020 | | |
$ | 239,540 | | |
| 60
Months | | |
| 2.80 | % | |
$ | 167,678 | |
Funding
Circle Loan (MPL) | |
| 2022 | | |
$ | 380,804 | | |
| 48
Months | | |
| 9.30 | % | |
$ | 305,787 | |
The
Funding Circle (PIN) | |
| 2022 | | |
$ | 116,054 | | |
| 48
Months | | |
| 9.30 | % | |
$ | 93,193 | |
Lloyds
Bounceback Loan | |
| 2022 | | |
$ | 51,378 | | |
| 72
Months | | |
| 2.50 | % | |
$ | 41,335 | |
Annual estimated total principal repayments are $361,019 in 2023, $237,970
in 2024, $146,893 in 2025, $8,267 in 2026 and $8,267 in 2027.
NOTE
19 — LOANS PAYABLE — RELATED PARTIES
Loans
from related parties as of December 31, 2022 and 2021 consist of the following:
SCHEDULE OF LOANS FROM RELATED PARTIES
| |
| | | |
| | |
| |
As
of December 31, | |
| |
2022 | | |
2021 | |
Loan
payable to related parties for the acquisition of Wealth Dynamics Current portion | |
$ | — | | |
$ | 425,551 | |
Non-current
portion. | |
| — | | |
| — | |
Subtotal | |
| — | | |
| 425,551 | |
Other
loans payable to related parties, current | |
| 2,932,090 | | |
| — | |
Other
loans payable to related parties, non-current | |
| 1,729 | | |
| — | |
Total
loans payable to related parties | |
$ | 2,933,819 | | |
$ | 425,551 | |
The
loan payable to related party for the acquisition of Revealed Films is non-interest bearing with $2,000,000 payable on or before March
31, 2023. The loan is payable to the previous shareholder of Revealed Films. This loan was paid in full during March 2023.
The
loan payable to related party for the acquisition of E-Squared Education Enterprises Pty Ltd is non-interest bearing with ZAR 3,600,000
(Approximately $299,231) payable on or before Nov 30, 2022. Company has agreed to repay the same in Q1 2023 and the loan was repaid in
March, 2023.
The
loan payable to the pre-acquisition owners of Revealed Films of $500,000
is non-interest bearing and is due to the operational funding by the owner of $250,000
by Jeff Hays and $250,000
by Patrick Gentempo in accordance with the acquisition agreement to continue the operations of Revealed Films and to assist with
financing the company.
The
loan payable to related parties for the acquisition of Entrepreneurs Institute is non-interest bearing, with $400,000 payable on each
of the first and second anniversaries of the acquisition date. Other loans payable to related parties represent unsecured loans from
shareholders, which bear no interest and are payable on demand. The loan was repaid in 2022.
The
Company pays fees to Entrepreneurs Institute Australia Pty Ltd (“EIA”), an Australian company controlled and ultimately
owned by Roger Hamilton and Sandra Morrell, directors of the Group. The total in 2022 was $325,243
(2021: $319,464).
The sole purpose of the entity is to engage local team and physical resources to provide day to day support to the Group with its
own business requirements as well as catering to external clients. EIA on-charges its costs and does not record a material profit or
loss, therefore the related party shareholders do not receive any financial benefit from this arrangement. Unpaid fees are recorded
as a related party loan payable and is not-interest bearing.
The
Company pays fees to GeniusU Web Services India Pvt Ltd (“GU India”), an Indian company controlled and ultimately owned
by Suraj Naik, an employee of the Group, and a family member of Suraj Naik. The total in 2022 was $209,322
(2021: $162,930).
The sole purpose of the entity is to engage local team and physical resources to provide day to day support to the Group with its
own business requirements as well as catering to external clients. GU India on-charges its costs and does not record a material
profit or loss, therefore the related party shareholders do not receive any financial benefit from this arrangement.
Unpaid
fees are recorded as a related party loan payable and is not-interest bearing.
NOTE
20 — CONVERTIBLE DEBT OBLIGATIONS
As
of December 31, 2022 and 2021, the Company’s convertible obligations consisted of the following:
SCHEDULE OF CONVERTIBLE DEBT OBLIGATIONS
| |
2022 | | |
2021 | |
| |
As
of December 31, | |
| |
2022 | | |
2021 | |
Convertible
debt obligations, beg, gross | |
$ | 1,274,010 | | |
$ | 1,531,639 | |
Addition | |
| 9,599,390 | | |
| — | |
Converted
to equity | |
| (459,370 | ) | |
| (257,629 | ) |
Converted to short term debt | |
| (539,245 | ) | |
| — | |
Repayment | |
| (509,311 | ) | |
| — | |
Deferred
debt discount and Cost of Fund Raise | |
| (1,389,623 | ) | |
| — | |
Convertible
debt obligations, end, net | |
$ | 7,975,851 | | |
$ | 1,274,010 | |
Convertible
debt obligations, current portion | |
$ | 5,752,328 | | |
$ | 507,765 | |
Convertible
debt obligations, non-current portion | |
$ | 2,223,523 | | |
$ | 766,245 | |
During
the year ended 2019, Entrepreneur Resorts issued 36-month convertible loans in the principal amount of $2,256,178 which bear interest
at rates between 10% to 12% per annum, payable monthly, quarterly, annually or at maturity depending upon the convertible note (the “2019
Convertible Notes). The notes are converted based on the offer by the Company at the market price and upon acceptance by the note holder.
During
the year ended December 31, 2020, Genius Group Ltd issued 36-month convertible loans in the principal amount of $1,819,145
which bear interest at rates between 10%
to 12%
per annum, payable quarterly, annually or at maturity depending upon the convertible note (the “2019 Convertible
Notes”). The convertible notes are convertible at the end of the term at the market price. Additionally, in connection with
the convertible note issuances, the Company incurred $36,383
of debt issuance costs which are being accounted for as interest expenses. The notes are converted based on the offer by the Company at the market price and upon acceptance by the note holder.
During
the year ended 2022, Genius Group Ltd entered into a Securities Purchase Agreement to issue convertible loan in the principal amount
of $18,130,000 in face amount of a senior secured convertible note purchased for $17,000,000 by the selling shareholder or its affiliates
or assigns in a transaction that closed on August 26, 2022, which is convertible into our ordinary shares at an initial fixed price of
$5.17, subject to adjustment for stock dividends, stock splits, anti-dilution and other customary adjustment events. The ordinary shares
issuable upon conversion of the convertible note are being registered and will be sold pursuant to the agreement by the selling shareholder.
In addition, subject to the satisfaction of equity conditions, we may, at our election, make monthly principal amortization payments
in our ordinary shares. If we elect to make amortization payments in ordinary shares, such ordinary shares will be valued at the lowest
of (x) the fixed conversion price, (y) 90% of the volume weighted average price of our ordinary shares on the trading day preceding the
amortization payment date and (z) 90% of the average of the three lowest volume weighted average prices for our ordinary shares during
the 20 trading days preceding the amortization payment date.
During
the year ended December 31, 2022, the company and holder of 2019 Convertible Notes in the aggregate amount of $503,311 was repaid and
$4,454 along with the accrued interest of $18 were converted to into 743 Genius Group shares pursuant to conversion offer extended by
Genius Group Ltd. The conversion was recorded as reduction in the liability and an increase to equity. The interest was charged to
the profit and loss statement under interest expenses. The unpaid amount as of December 31, 2022 was nil (2021: $207,765) under the 2019
Convertible Notes.
During
the year ended December 31, 2022, the company and holder of 2020 Convertible Notes in the agreement amount of $6,000 was repaid and $221,000
along with the accrued interest of $3,764 were converted into 37,463 Genius Group shares pursuant to conversion offer extended by Genius
Group Ltd. The conversion was recorded as reduction in the liability and an increase to equity. The interest was charged to
the profit and loss statement under interest expenses. The unpaid amount as of December 31, 2022 was $539,245 (2021: $766,245) under the
2020 Convertible Notes plan and is classified as Short term debt.
During
the year ended December 31, 2022, the company and holder of 2022 Convertible Note converted aggregate amount of $707,306
including the accrued interest of $235,146
into the equity of Genius Group based on the share price calculated as per the agreement. The company issued 1,515,891
Genius Group Shares to fulfill the conversion request. The conversion was recorded as reduction in the liability and an increase to
equity. The interest was charged to the profit and loss statement under interest expenses. The unpaid amount as of December 31, 2022
was $7,975,851 (2021: $0) and is classified as convertible debt obligations.
During
the year ended December 31, 2021, the Company, and holders of 2020 Convertible Notes in the aggregate principal amount of $161,500 and
$6,170 of accrued interest were converted into 13,306 GeniusU Limited ordinary shares pursuant to conversion offers extended by Genius
Group Ltd at exercise prices equal to the fair value of a GeniusU Limited ordinary share at the time of conversion, or between $10 and
$15 per GeniusU Limited ordinary share. The Company recorded the conversions by reclassifying the carrying value of the 2021 Convertible
Notes to equity.
NOTE
21 — DERIVATIVE LIABILITIES
Derivative
liabilities as of December 31, 2022 consist of the following:
SCHEDULE OF DERIVATIVE LIABILITIES
| |
As
of
December 31,
2022 | |
Options | |
$ | 24,041,198 | |
Contingent
consideration | |
| 12,447,396 | |
Derivative
liabilities | |
$ | 36,488,594 | |
To
account for the Options and Top Up Consideration for the acquisitions the Company used the following income approach valuation methods:
Top
Up Consideration (excluding Revealed Films) and Call Option: The fair values of each were determined utilizing monte carlo simulations
to simulate the potential payoffs. A monte carlo simulation is a problem-solving technique used to approximate the probability
of certain outcomes by running multiple trial runs, called simulations, using random variables.
Put
Option: The fair value of the put option was determined using a closed-form option pricing model commonly referred to as the Black-Scholes
option pricing model.
Revealed
Films Top Up Consideration: The fair value was determined utilizing a present value technique involving a discounted cash flow analysis.
The Company utilized an independent third-party to determine the fair value
of the fair value of the contingent earn outs and the fair value of options. A
reconciliation of derivative liabilities for the year ended December 31, 2022 is as follows:
Options
SCHEDULE
OF DERIVATIVE LIABILITIES OPTIONS EXPLANATORY
| |
Acquisition Value | | |
Adjustments | | |
Closing Value | |
PIN | |
$ | 10,100,000 | | |
$ | 12,250,000 | | |
$ | 22,350,000 | |
ESQ | |
| 451,000 | | |
| 1,240,198 | | |
| 1,691,198 | |
| |
$ | 10,551,000 | | |
$ | 13,490,198 | | |
$ | 24,041,198 | |
The
company has recorded the derivative liability for issuance of options as follows:
The
company has issued a call option to the seller of Property Investors Network which allows the seller to exercise the call option to repurchase
the company from the buyer, if the value of Company’s shares held by the seller is below GBP 10.2 million. To repurchase the company the Genius Group shares held by the seller, Simon
Zushi, must be transferred back to the Company, the seller must pay back £3 million to Genius Group, less any cash taken out of
Property Investors Network by Genius Group during the period commencing on the acquisition closing date and ending on the call completion
date. The validity of such option is one year from the first anniversary of the acquisition close date. The change
in the fair value of the call option is recorded as a gain or loss to Revaluation adjustment of contingent liabilities on the
Statement of Operations and Comprehensive Loss during the year 2022.
The
company has also issued a put option to the seller of E-Squared Enterprises Ltd which allows the seller to exercise the put option
in return for the cash consideration, if
the Company’s shares trade below $5.81 ($34.87 pre-split) at the agreed value of $1,907,598 at any given point of time from
the date of commencement to two years. The change in the fair value of the put option is recorded as a gain or loss to revaluation
adjustment of contingent liabilities on the Statement of Operations and Comprehensive Loss during the year 2022.
Contingent
Consideration
SCHEDULE
OF CONTINGENT CONSIDERATION EXPLANATORY
| |
Acquisition Value | | |
Adjustments | | |
Closing Value | |
RF | |
$ | 10,380,396 | | |
$ | - | | |
$ | 10,380,396 | |
UAV | |
| 1,017,000 | | |
| 191,000 | | |
| 1,208,000 | |
PIN | |
| 701,000 | | |
| 158,000 | | |
| 859,000 | |
| |
$ | 12,098,396 | | |
$ | 349,000 | | |
$ | 12,447,396 | |
The
company has recorded contingent consideration related to the acquisition companies. The company has agreed
to pay the additional consideration to the seller of each companies listed on the table above upon achieving the pre-agreed milestones.
The change in the fair value of contingent consideration is recorded as gain or loss to revaluation adjustment of contingent liabilities on
the Statement of Operations and Comprehensive Loss during the year 2022. The details of each contingent
considerations are as follows:
Revealed
Films – The company has agreed to pay top up consideration of 1.5X the difference between the revenue in 2023, 2024 and 2025 if
the revenue growth is higher than $7 million and a profit of at least 7%. The revenue growth is calculated as revenue during the year
minus $7 million or previous year’s revenue if the target was met. The consideration will be paid by issuing Company shares in
the assigned ratio for each of the sellers.
University
of Antelope Valley – The
company has agreed to the seller of UAV if the amount of UAV’s total revenue in 2022, 2023 and 2024 is an increase over $9
million during each of the year or subsequent year’s total revenue, then the purchaser shall pay an additional cash of an
amount equal to the total revenue minus $9 million or previous year’s revenue multiplied by two. The consideration is payable
in cash.
Property
Investors Network – The company has agreed to pay the top up consideration if the 2x revenue or 10x EBITDA in 2022, 2023 or 2024
exceeds the purchase price or the previous year’s consideration; the difference between the value will be paid in additional consideration
by 90% in shares and 10% in cash.
E-Squared
Enterprises – The company has agreed to pay top up consideration for the year 2022 and 2023 for the positive difference between
2x annual revenue or 10x EBITDA for the financial year minus the hurdle amount which is the revenue or EBITDA for the previous year.
NOTE
22 — EQUITY
Contributed
Capital
Equity
Issued
During
the years ended December 31, 2022 and 2021, the Company issued ordinary shares for net cash proceeds of $15,473,334 and $3,127,442,
respectively.
During
the year ended December 31, 2022, the Company issued the company ordinary shares with a gross value of $22,581,816
(net $15,202,858)
from the IPO proceeds. The company also raised cash proceed of $270,476
from the share issuance during the IPO. GeniusU Limited issued ordinary shares with a value of $2,655,739
(2021 - $3,308,617)
in exchange of cash and conversion from a loan to equity.
During
the year ended December 31, 2022, Genius Group Ltd entered into a Securities Purchase Agreement to issue convertible loan in the principal
amount of $18,130,000 in face amount of a senior secured convertible note purchased for $17,000,000. In relation to the offering, the
company has classified the equity portion of the debt note valued at $6,893,064 net of debt discount and cost of fund raise.
During
the year ended December 31, 2022, the Company issued Genius Group Ltd ordinary shares with a value of $35,098,001 in exchange for the
5 acquisitions that the company closed. Genius Group Ltd shares were valued using the market approach based on the price per share paid
by third parties for Genius Group Ltd shares as of the acquisition date and share delivery date.
See
below for discussions regarding additional equity issuances.
Shares
Issued Related to Debt Conversions
During
the year December 31, 2022, convertible debt obligations consisting of $936,543 (2021-$177,689) of principal and accrued interest were
converted into Genius Group shares pursuant to conversion offers extended by Genius Group Ltd and Entrepreneur Resorts Limited. See Note
20 — Convertible Debt Obligations for additional information.
Shares
Issued in Satisfaction of a Liability
During
the year December 31, 2020, the Company issued $350,000
of Genius Group Ltd ordinary shares as partial
settlement of a loan with the seller of Tau Game Lodge. The Company also granted a put option over shares issued in satisfaction of this
liability and reported a liability of $250,000 payable in cash upon exercise. The seller of Tau Game Lodge exercised the put option in
2022 and the Company cancelled the shares valued at $350,000
and paid the liability of $250,000
in
cash.
Stock-Based
Compensation
During
the year ended December 31, 2022 and 2021, the Company granted 560,188
and 14,306
Genius Group share options. The fair value of
the options granted in 2022 was $2,189,351
and 2021 was $181,559,
with the fair value expensed over the vesting period. During the year ended December 31, 2022, the Company issued 1,511,664 Restricted
Stock Units (RSUs) to new hires. The RSUs fair value of $2,600,000
is being expensed over the applicable vesting period.
The
Company values stock options using the Black-Scholes option pricing model and used the following assumptions during the reporting periods:
SCHEDULE OF STOCK OPTIONS USING THE BLACK-SCHOLES OPTION PRICING MODEL AND USED THE ASSUMPTIONS
| |
2022 | | |
2021 | |
| |
Years
Ended December 31, | |
| |
2022 | | |
2021 | |
Risk-free
interest rate | |
| 4.41 | % | |
| 0.73 | % |
Contractual
term (years) | |
| 1-3 | | |
| 1-3 | |
Expected
volatility | |
| 177.30 | % | |
| 66.00 | % |
Expected
dividends | |
| 0.00 | % | |
| 0.00 | % |
A
summary of the option activity during the year ended December 31, 2022 was as follows:
SUMMARY OF OPTION ACTIVITY
| |
No
of Options | | |
Weighted
Average Share Price | | |
Weighted
Average Remaining Life | | |
Aggregate
Intrinsic Value | |
Outstanding
as of January 1, 2022 | |
| 539,760 | | |
$ | 4.74 | | |
| 1 | | |
$ | 0 | |
Granted | |
| 560,188 | | |
| 4.22 | | |
| 3 | | |
| 0 | |
Exercised | |
| (73,428 | ) | |
| 5.81 | | |
| - | | |
| 0 | |
Outstanding
as of December 31, 2022 | |
| 1,026,520 | | |
$ | 4.38 | | |
| 2 | | |
$ | 0 | |
SCHEDULE OF INFORMATION RELATED TO OPTIONS OUTSTANDING
| |
Options
Outstanding | | |
| | |
Options
Exercisable | |
Year | |
Exercise
Price | | |
Outstanding
Number of Options | | |
Underlying
Common Stock | | |
Weighted
Average Remaining Life in Years | | |
Exercisable
Number of Warrants | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
2019
Share Option | |
$ | 3.56 | | |
| 257,478 | | |
| GNS | | |
| 1 | | |
$ | 257,478 | |
2020
Share Option | |
| 5.81 | | |
| 74,640 | | |
| GNS | | |
| 1 | | |
| 74,640 | |
2021
Share Options | |
| 5.81 | | |
| 134,214 | | |
| GNS | | |
| 3 | | |
| 134,214 | |
2022
Employee Grants (Options) | |
| 4.22 | | |
| 560,188 | | |
| GNS | | |
| 3 | | |
| 0 | |
| |
$ | 4.38 | | |
| 1,026,520 | | |
| | | |
| 2 | | |
$ | 466,332 | |
The
Company recorded stock-based compensation in the amount of $1,308,784
and $293,837
during the years ended December 31, 2022 and
2021, respectively, in connection with the amortization of the grant date value of the stock options. The amount of $3,975,722
to be recognized as stock-based compensation
expense over the period 2023, 2024 and 2025.
NOTE
23 — REVENUES
The
breakdown of revenues for the years ended December 31, 2022 and 2021 are shown below. The revenue is disaggregated into the categories
the Company believes depict how and the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
SCHEDULE OF DISAGGREGATION OF REVENUE
| |
2022 | | |
2021 As
restated | |
| |
Years
Ended December 31, | |
| |
2022 | | |
2021 As
restated | |
Campus
Revenue | |
| | | |
| | |
–
Sale of goods | |
$ | 2,527,590 | | |
$ | 3,102,210 | |
–
Rendering of services | |
| 2,110,531 | | |
| — | |
Campus
sub-total | |
| 4,638,121 | | |
| 3,102,210 | |
Education
Revenue | |
| | | |
| | |
–
Digital | |
| 8,011,319 | | |
| 5,192,594 | |
–
In-Person | |
| 5,544,176 | | |
| — | |
Education
sub-total | |
| 13,555,495 | | |
| 5,192,594 | |
Total
Revenue | |
$ | 18,193,616 | | |
$ | 8,294,804 | |
NOTE
24 — OTHER OPERATING INCOME
For
the years ended December 31, 2022 and 2021, other operating income consists of:
SCHEDULE OF OTHER OPERATING INCOME
| |
2022 | | |
2021 | |
| |
Years
Ended December 31, | |
| |
2022 | | |
2021 | |
Other
income | |
$ | 144,396 | | |
$ | — | |
Subsidy
from government | |
| — | | |
| 490,300 | |
Other
operating income | |
$ | 144,396 | | |
$ | 490,300 | |
NOTE
25 — GENERAL AND ADMINISTRATIVE EXPENSES
General
and administrative expenses for the years ended December 31, 2022 and 2021 include the following:
SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES
| |
2022 | | |
2021 | |
| |
Years
Ended December 31, | |
| |
2022 | | |
2021 | |
Salaries,
wages, bonuses, and other benefits | |
$ | 8,909,585 | | |
$ | 4,197,397 | |
Professional
and consulting fees | |
| 2,284,436 | | |
| 660,117 | |
Marketing | |
| 1,917,377 | | |
| 73,277 | |
Other | |
| 1,559,591 | | |
| 1,151,991 | |
Provision
for doubtful debts | |
| 1,509,486 | | |
| (39,108 | ) |
Stock-based
compensation | |
| 1,308,784 | | |
| 293,837 | |
Utilities | |
| 952,056 | | |
| 142,019 | |
Travel | |
| 851,139 | | |
| 13,356 | |
Development
charges | |
| 847,068 | | |
| 456,180 | |
Rent
expense | |
| 351,730 | | |
| 250,994 | |
Repairs
and maintenance | |
| 304,938 | | |
| 11,144 | |
Athletic
program expenses | |
| 277,604 | | |
| — | |
Total
general and administrative expenses | |
$ | 21,073,794 | | |
$ | 7,211,204 | |
NOTE
26 — INTEREST EXPENSE, NET
For
the years ended December 31, 2022 and 2021, the Company earned interest income and incurred interest expense as follows:
SCHEDULE
OF COMPANY EARNED INTEREST INCOME AND INCURRED INTEREST EXPENSE
| |
2022 | | |
2021 | |
| |
Years
Ended December 31, | |
| |
2022 | | |
2021 | |
Interest
(expense) income | |
| | | |
| | |
Bank
and other cash | |
$ | 26,380 | | |
$ | (74,081 | ) |
Total
interest (expense) income | |
| 26,380 | | |
| (74,081 | ) |
| |
| | | |
| | |
Interest
expense/finance costs | |
| | | |
| | |
Lease
liabilities | |
| (491,336 | ) | |
| (131,291 | ) |
Other
interest paid – loans | |
| (847,520 | ) | |
| (103,357 | ) |
Amortization
of debt discount | |
| — | | |
| (140,837 | ) |
Total
interest expense/ finance costs | |
| (1,338,856 | ) | |
| (375,485 | ) |
Total
interest (expense), net | |
$ | (1,312,476 | ) | |
$ | (449,566 | ) |
NOTE
27 — INCOME TAX EXPENSE
The
Company is subject to income taxes in the countries of Indonesia, Singapore, New Zealand, United States, United Kingdom and South
Africa.
The
provision for income taxes consists of the following provisions (benefits):
SCHEDULE OF PROVISION FOR INCOME TAXES PROVISIONS (BENEFITS)
| |
2022 | | |
2021 | |
| |
Years
ended December 31, | |
| |
2022 | | |
2021 | |
Current
tax: | |
| | | |
| | |
Current
tax on profits for the year | |
$ | 220,570 | | |
$ | — | |
Total
Current tax | |
| 220,570 | | |
| — | |
Deferred
income tax: | |
| | | |
| | |
(Increase)
decrease in deferred tax assets | |
| 29,240 | | |
| (29,230 | ) |
Decrease
in deferred tax liabilities | |
| (1,313,406 | ) | |
| (99,622 | ) |
Deferred
income tax | |
| (1,284,166 | ) | |
| (128,852 | ) |
(Benefit
from) Provision for income taxes | |
$ | (1,063,596 | ) | |
$ | (128,852 | ) |
The
provision for income taxes by country consists of the following provisions (benefits):
| |
INDONESIA | | |
NEW
ZEALAND | | |
SINGAPORE | | |
SOUTH
AFRICA | | |
UK | | |
USA | | |
CONSOLIDATED | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Current Expense | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Foreign | |
$ | (29,039 | ) | |
$ | 6,050 | | |
$ | - | | |
$ | 46,129 | | |
$ | 197,430 | | |
$ | - | | |
$ | 220,570 | |
Total Current
Tax Expense | |
| (29,039 | ) | |
| 6,050 | | |
| - | | |
| 46,129 | | |
| 197,430 | | |
| - | | |
| 220,570 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Deferred Expense | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Federal | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (124,478 | ) | |
| (124,478 | ) |
State | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (24,010 | ) | |
| (24,010 | ) |
Foreign | |
| (145,289 | ) | |
| (54,100 | ) | |
| 29,503 | | |
| (607,462 | ) | |
| (358,330 | ) | |
| - | | |
| (1,135,678 | ) |
Total Deferred
Tax Expense | |
| (145,289 | ) | |
| (54,100 | ) | |
| 29,503 | | |
| (607,462 | ) | |
| (358,330 | ) | |
| (148,488 | ) | |
| (1,284,166 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
(Benefit
from) Provision for Income Taxes | |
$ | (174,328 | ) | |
$ | (48,050 | ) | |
$ | 29,503 | | |
$ | (561,333 | ) | |
$ | (160,900 | ) | |
$ | (148,488 | ) | |
$ | (1,063,596 | ) |
The
reconciliation of income taxes at the statutory rate of Singapore to the effective tax rates for the years ended December 31, 2022 and
2021 is as follows:
SCHEDULE OF RECONCILIATION OF INCOME TAXES AT THE STATUTORY RATE
| |
2022 | | |
2021 | |
| |
Years
ended December 31, | |
| |
2022 | | |
2021 | |
Loss from continuing operations before provision for income taxes | |
$ | (56,315,143 | ) | |
$ | (4,618,050 | ) |
Tax
at the Singapore rate of 17% | |
| (9,573,574 | ) | |
| (785,069 | ) |
Reconciling
items: | |
| | | |
| | |
Permanent
differences | |
| 5,867,054 | | |
| 31,272 | |
Current
period net operating losses not recognized as a deferred tax asset | |
| 3,019,483 | | |
| 743,997 | |
Rate
differential – non-Singapore entities | |
| (736,092 | ) | |
| (55,045 | ) |
Other
deferred tax activity | |
| 359,533 | | |
| (64,007 | ) |
(Benefit
from) Provision for income taxes | |
$ | (1,063,596 | ) | |
$ | (128,852 | ) |
NOTE
28 — EARNINGS PER SHARE
SUMMARY OF EARNINGS PER SHARE
| |
2022 | | |
2021 | |
| |
Years
ended December 31, | |
| |
2022 | | |
2021 | |
Loss per share, basic and diluted | |
$ | (2.44 | ) | |
$ | (0.28 | ) |
The
calculation of basic and diluted loss per share has been based on the following loss attributable to ordinary shareholders and
the weighted average number of ordinary shares | |
| | | |
| | |
Net
Loss | |
$ | (55,251,547 | ) | |
$ | (4,489,198 | ) |
Non-Controlling
Interest | |
| (206,021 | ) | |
| (173,959 | ) |
Loss
Attributed to Ordinary Shareholders | |
$ | (55,045,526 | ) | |
$ | (4,315,239 | ) |
| |
| | | |
| | |
Weighted
Average Number of Ordinary Shares | |
| | | |
| | |
Issued
at the beginning of the year | |
| 16,155,812 | | |
| 16,155,812 | |
Issued
in current Year | |
| 11,549,415 | | |
| — | |
Issued
at the end of the year | |
| 27,705,227 | | |
| 16,155,812 | |
Weighted
Average | |
| 22,634,366 | | |
| 16,155,812 | |
| |
| | | |
| | |
Diluted
earnings (loss) per share: | |
| | | |
| | |
There
are no dilutive instruments and therefore diluted earnings per share is the same as basic earnings per share | |
| | | |
| | |
| |
| | | |
| | |
Instruments
that could potentially dilute basic earnings per share in the future, but were not included in the calculation of diluted earnings
per share because they are antidilutive: | |
| | | |
| | |
| |
| | | |
| | |
Share
Options and RSUs | |
| 1,511,664 | | |
| 7,138,140 | |
NOTE
29 — FAIR VALUE INFORMATION
Fair
value hierarchy
The
table below analyses assets and liabilities carried at fair value. The different levels are defined as follows:
Level
1: Quoted unadjusted prices in active markets for identical assets or liabilities that the Company can access at measurement date.
Level
2: Inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly or indirectly.
Level
3: Unobservable inputs for the asset or liability.
As
of December 31, 2022 and 2021, the Company’s financial assets and liabilities by level within the fair value hierarchy are as follows:
SUMMARY OF FINANCIAL ASSETS AND LIABILITIES BY LEVEL WITHIN THE FAIR VALUE HIERARCHY
| |
Level
1 | | |
Level
2 | | |
Level
3 | | |
Total | |
| |
As
of December 31, 2022 | |
| |
Level
1 | | |
Level
2 | | |
Level
3 | | |
Total | |
FINANCIAL
ASSETS | |
| | | |
| | | |
| | | |
| | |
Cash
and Restricted Cash | |
$ | 16,829,385 | | |
$ | — | | |
$ | — | | |
$ | 16,829,385 | |
| |
| | | |
| | | |
| | | |
| | |
FINANCIAL
LIABILITIES | |
| | | |
| | | |
| | | |
| | |
Contingent
liabilities | |
| — | | |
| — | | |
| 36,488,594 | | |
| 36,488,594 | |
| |
Level
1 | | |
Level
2 | | |
Level
3 | | |
Total | |
| |
As
of December 31, 2021 | |
| |
Level
1 | | |
Level
2 | | |
Level
3 | | |
Total | |
FINANCIAL
ASSETS | |
| | | |
| | | |
| | | |
| | |
Cash | |
$ | 1,784,938 | | |
$ | — | | |
$ | — | | |
$ | 1,784,938 | |
Financial Assets | |
$ | 1,784,938 | | |
$ | — | | |
$ | — | | |
$ | 1,784,938 | |
Financial
liabilities | |
| — | | |
| — | | |
| 36,488,594 | | |
| 36,488,594 | |
NOTE
30 — FINANCIAL RISK MANAGEMENT
The
Company’s activities expose it to certain financial risks mainly related to:
| ➢ | market
risk (currency risk, interest rate risk and price risk); |
| | |
| ➢ | credit
risk, and |
| | |
| ➢ | liquidity
risk. |
The
board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The
board has established the risk committee, which is responsible for developing and monitoring the Company’s risk management policies.
The committee reports quarterly to the board of directors on its activities.
The
Group’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect
changes in market conditions and the Company’s activities.
The
Group’s board of directors oversees how management monitors compliance with the risk management policies and procedures and reviews
the adequacy of the risk management framework in relation to the risks faced by the Company.
Market
risk
Interest
rate risk
Fluctuations
in interest rates impact on the value of investments and financing activities, giving rise to interest rate risk.
The
debt of the Company is comprised of different instruments, which bear interest at either fixed or floating interest rates. The ratio
of fixed and floating rate instruments in the loan portfolio is monitored and managed, by incurring either variable rate bank loans or
fixed rate bonds as necessary.
The
Company policy with regards to financial assets, is to invest cash at floating rates of interest and to maintain cash reserves in short-term
investments in order to maintain liquidity, while also achieving a satisfactory return for shareholders.
Foreign
currency risk
The
Company is exposed to foreign currency risk as a result of certain transactions and borrowings which are denominated in foreign
currencies. The foreign currencies in which the Company deals primarily are US Dollars, Singapore Dollars, Indonesian Rupees and
South African Rands.
Credit
risk
Credit
risk arises from the potential default of a counterparty to an agreement or financial instrument, resulting in financial loss. The Company
is exposed to credit risk in its operating activities (mainly in connection with trade receivables) and financial activities, including
deposits with banks and other financial institutions and other financial instruments contracted.
To
mitigate risks associated with trade receivables, management makes use of credit approvals, limits, and monitoring, and only deals with
reputable counterparties with consistent payment histories. Sufficient collateral or guarantees are also obtained when necessary. Each
counterparty is analyzed individually for creditworthiness before terms and conditions are offered. The analysis involves making use
of information submitted by the counterparties as well as external bureau data (where available). Counterparty credit limits are in place
and are reviewed and approved by credit management committees. The exposure to credit risk and the creditworthiness of counterparties
is continuously monitored.
Credit
loss allowances for expected credit losses are recognized for all debt instruments except those measured at fair value through profit
or loss. Credit loss allowances are also recognized for loan commitments and financial guarantee contracts. For trade receivables and
contract assets which do not contain a significant financing component, the loss allowance is determined as the lifetime expected credit
losses of the instruments. For all other trade receivables, contract assets and lease receivables, IFRS 9 permits the determination of
the credit loss allowance by either determining whether there was a significant increase in credit risk since initial recognition or
by always making use of lifetime expected credit losses. Management has chosen as an accounting policy, to make use of lifetime expected
credit losses. Management does therefore not make the annual assessment of whether the credit risk has increased significantly since
initial recognition for trade receivables, contract assets or lease receivables.
Liquidity
risk
The
Company is exposed to liquidity risk, which is the risk that the Company will encounter difficulties in meeting its obligations as they
become due.
The Company has incurred significant losses and needs to raise additional
funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to
continue as a going concern. Management’s plans in regard to these matters are also described in Note 2.
NOTE
31 — RELATED PARTIES
Relationships |
|
Name of
related party |
|
|
|
Board members and key management |
|
Roger James Hamilton |
|
|
|
|
|
Suraj Naik |
|
|
Patrick
Grove
Nic
Lim
Anna
Gong
Richard
Berman |
|
|
Timothy
Murphy
Erez
Simha
Ravinder
Karwal
Simon
Zutshi |
|
|
Lilian
Niemann
Angela
Stead |
|
|
Jeff
Hays
Patrick
Gentempo |
Related entity |
|
GeniusU Web Services Pvt
Ltd |
|
|
Entrepreneur Institute
Australia Pty Ltd |
|
|
Health 360 Pte Ltd |
|
|
The Genius Movement Pte
Ltd |
|
|
World Game Pte Ltd |
|
|
Health Dynamics |
|
|
Wealth Dynamics America |
|
|
BG2 Ltd |
|
|
BG3 Ltd |
|
|
BG4 Ltd |
|
|
BMV Finance |
|
|
Crowd Property |
|
|
Hatfield House |
|
|
Property Mastermind International |
|
|
Zutshi LLP |
|
|
Vision 1 Investments |
|
|
Throckley |
|
|
MSJ Foundation |
See
Note 19 — Loans Payable, Related Parties for information on related party balances.
NOTE
32 — KEY MANAGEMENT COMPENSATION
The
following tables set forth information regarding compensation awarded to or earned by our Executive Officers and Board of Directors during
the years ended December 31, 2022 and 2021:
SUMMARY OF COMPENSATION AWARDED TO OR EARNED BY OUR EXECUTIVE OFFICERS AND BOARD OF DIRECTORS
| |
2022 | | |
2021 | |
| |
Salary | | |
Stock
Based | | |
Total | | |
Salary | | |
Stock
Based | | |
Total | |
Key
management compensation | |
$ | 1,184,506 | | |
$ | 553,987 | | |
$ | 1,738,493 | | |
$ | 975,110 | | |
$ | 43,640 | | |
$ | 1,018,750 | |
NOTE
33 — SEGMENT REPORTING
Each
of the Company’s business segments offer different, but synergistic products and services, and are managed separately. Discrete
financial information is available for each segment, and segment performance is evaluated based on operating results. Adjustments to
reconcile segment results to consolidated results are included under the caption “Intercompany” which eliminates the effect
of transactions between the segments.
The
Company’s business consists of two reportable business segments:
| ➢ | Education
— entrepreneur education, management consultancy and business development tools. |
| | |
| ➢ | Campus
— resorts, retreats, and co-working cafes for entrepreneurs. |
The
detailed segment information of the Company is as follows:
SUMMARY OF DETAILED SEGMENT INFORMATION
| |
Education | | |
Campus | | |
Total | | |
Education | | |
Campus | | |
Total | |
| |
For
the Years Ended December 31 | |
| |
2022 | | |
2021 | |
| |
Education | | |
Campus | | |
Total | | |
Education | | |
Campus | | |
Total | |
Revenues | |
$ | 13,555,495 | | |
$ | 4,638,121 | | |
$ | 18,193,616 | | |
$ | 5,192,594 | | |
$ | 3,102,210 | | |
$ | 8,294,804 | |
Depreciation
and amortization(1)(2) | |
$ | 1,245,215 | | |
$ | 1,105,425 | | |
$ | 2,350,640 | | |
$ | 426,740 | | |
$ | 1,148,173 | | |
$ | 1,574,913 | |
Depreciation
and amortization(1)(2) | |
$ | 1,245,215 | | |
$ | 1,105,425 | | |
$ | 2,350,640 | | |
$ | 426,740 | | |
$ | 1,148,173 | | |
$ | 1,574,913 | |
Loss
from operations | |
$ | (31,836,870 | ) | |
$ | (9,746,037 | ) | |
$ | (41,582,907 | ) | |
$ | (2,153,975 | ) | |
$ | (2,014,509 | ) | |
$ | (4,168,484 | ) |
Net
Loss | |
$ | (45,358,626 | ) | |
$ | (9,892,921 | ) | |
$ | (55,251,547 | ) | |
$ | (2,252,795 | ) | |
$ | (2,365,255 | ) | |
$ | (4,618,050 | ) |
Interest
Expense, net | |
$ | (943,916 | ) | |
$ | (368,560 | ) | |
$ | (1,312,476 | ) | |
$ | (98,819 | ) | |
$ | (350,747 | ) | |
$ | (449,566 | ) |
Capital
Expenditures | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
Property
and equipment, net | |
$ | 563,131 | | |
$ | — | | |
$ | 563,131 | | |
$ | 15,442 | | |
$ | 6,760,674 | | |
$ | 6,776,116 | |
Total
Assets | |
$ | 88,120,390 | | |
$ | 3,139,237 | | |
$ | 91,259,627 | | |
$ | 5,122,967 | | |
$ | 12,472,440 | | |
$ | 17,595,407 | |
Total
Liabilities | |
$ | 71,656,141 | | |
$ | 5,648,650 | | |
$ | 77,304,791 | | |
$ | 3,589,315 | | |
$ | 6,020,096 | | |
$ | 9,609,411 | |
(1) | Consists
of $577,998 (2021-$426,740) of Education segment depreciation and amortization which is included
in cost of revenue and $667,217 (2021-$0) which is included in operating expenses in the
accompanying statements of operations |
| |
(2) | Consists of $590,228 (2021-$1,109,309) of Campus segment depreciation and amortization which is included in cost of revenue and $515,197 (2021-$38,864) which is included in operating expenses in the accompanying statements of operations |
A
summary of non-current assets (other than financial instruments) by geographic location appears below:
SUMMARY OF REVENUE AND NON-CURRENT ASSETS BY GEOGRAPHIC LOCATION
| |
Education | | |
Campus | | |
Total | | |
Education | | |
Campus | | |
Total | |
| |
For
the Years Ended December 31, | |
| |
2022 | | |
2021 | |
| |
Education | | |
Campus | | |
Total | | |
Education | | |
Campus | | |
Total | |
Europe
/ Middle East / Africa | |
$ | 12,792,087 | | |
$ | 3,473,507 | | |
$ | 16,265,594 | | |
$ | 602 | | |
$ | 8,476,791 | | |
$ | 8,477,393 | |
Asia
/ Pacific | |
| 24,799,301 | | |
| 4,112,755 | | |
| 28,912,056 | | |
| — | | |
| 2,120,102 | | |
| 2,120,102 | |
North
America / South America | |
| 21,831,530 | | |
| — | | |
| 21,831,530 | | |
| 501,750 | | |
| — | | |
| 501,750 | |
Non-current assets | |
$ | 59,422,918 | | |
$ | 7,586,262 | | |
$ | 67,009,180 | | |
$ | 502,352 | | |
$ | 10,596,893 | | |
$ | 11,099,245 | |
A
summary of revenue by geographic location appears below:
| |
Education | | |
Campus | | |
Total | | |
Education | | |
Campus | | |
Total | |
| |
For
the Years Ended December 31, | |
| |
2022 | | |
2021 | |
| |
Education | | |
Campus | | |
Total | | |
Education | | |
Campus | | |
Total | |
Europe
/ Middle East / Africa | |
$ | 3,857,193 | | |
$ | 2,403,570 | | |
$ | 6,260,763 | | |
$ | 1,948,567 | | |
$ | 1,554,828 | | |
$ | 3,503,395 | |
Asia
/ Pacific | |
| 2,073,866 | | |
| 2,234,551 | | |
| 4,308,417 | | |
| 1,795,863 | | |
| 1,547,382 | | |
| 3,343,245 | |
North
America / South America | |
| 7,624,436 | | |
| - | | |
| 7,624,436 | | |
| 1,448,164 | | |
| — | | |
| 1,448,164 | |
Revenue | |
$ | 13,555,495 | | |
$ | 4,638,121 | | |
$ | 18,193,616 | | |
$ | 5,192,594 | | |
$ | 3,102,210 | | |
$ | 8,294,804 | |
NOTE
34 — EVENTS AFTER THE REPORTING PERIOD
Convertible
Debt Obligations
Subsequent
to December 31, 2022 and prior to the issuance of these financial statements, convertible debt obligations consisting of $5.9 million
of principal and accrued interest were converted into 17.3 million shares of Genius Group Ltd pursuant to conversion offers extended
by the Company. On March 29, 2023, the Company and Ayrton Capital amended the convertible debt agreement as follows:
|
● |
The
Company will make the remainder of monthly payments it owes on the $18.0 million convertible note in cash over time, to ensure no
further dilution of shares. As such, the Company will not be subject to any future installment-related accelerations at a variable
price from the note, unless consented to by the Company. |
|
|
|
|
● |
The
Company will deliver to Ayrton Capital, 13.0 million ordinary shares relating to the redemption of convertible notes due for the
period from January 2023 to March 2023. |
|
|
|
|
● |
Ayrton
Capital released the remaining restricted cash held in deposit to the Company during April 2023. |
On
July 26, 2023, Genius Group Ltd. (the “Company”) executed and delivered a bridge note with an accredited investor
in the face amount of $3.2
million, which has a $200,000
original issue discount. Pursuant to the bridge
note, $1,000,000
shall be delivered to a bank account identified
by the Company upon closing and the Company shall keep $2,000,000
of the Loan Proceeds on deposit in a blocked
account subject to an account control agreement with the investor. The proceeds held in the blocked account may be released at the investor’s
discretion on each of August 24, 2023 and September 24, 2023. The maturity date of the bridge note is the earlier of November 24, 2023
and the date of entry into definitive documentation or funding of a Subsequent Financing. Simultaneously with the execution of the bride
note, the Company’s entered into an amendment agreement with investor with respect to the original note with the accredited investor
issued on August 26, 2022, and due February 26, 2025 (“Note”) was reverted to its original terms prior to the amendments
previously announced on March 28, 2023, with certain modifications permitting the Company to consummate its previously announced spin
off and future financings pursuant to a registration statement to be filed in conjunction therewith. The investor and the Company agree
to that the investor may accelerate monthly installment payments under the Note with respect to current and future monthly installments
in accordance with Section 8(e) of the Note, provided that Holder agrees that it will no longer accelerate any Installment Amount pursuant
to Section 8(e) of the Note as amended by this Amendment following the earlier to occur of (A) the date that the Company consummates
a public offering of its Ordinary Shares, or units comprised of Ordinary Shares and warrants to purchase its Ordinary Shares, which results
in aggregate Net Proceeds to the Company equal to at least 130% of the sum of (x) the entire outstanding Conversion Amount of the Notes
and (y) the entire outstanding principal balance of the Bridge Loan (such sum of (x) and (y), the “Aggregate Debt”) measured
as of the Trading Day prior to the consummation of such public offering and (B) such time that the Aggregate Debt is less than $4,000,000
(all capitalized terms used and not defined herein
are used as defined in the Note).
Entrepreneur
Resorts Ltd Proposed Spinoff
Subsequent
to December 31, 2022, and prior to the issuance of these financial statements, shareholders have passed the resolution to authorize the
spinoff of its subsidiary Entrepreneur Resorts Ltd (ERL) and adoption of new Company constitution. ERL is a public listed company on
the Seychelles MERJ Stock Exchange, with 95%
of outstanding shares owned by Genius Group.
Shareholders
Resolution for Share Consolidation and Share Buyback
Subsequent
to December 31, 2022, and prior to the issuance of these financial statements, shareholders have passed the resolution to authorize board
to execute a share repurchase mandate and to execute a share consolidation as they deem fit.
Genius
Group Limited and Subsidiaries
Directors’
Statement
For
the financial period ended June 30, 2023 and 2022
The
directors are required in terms of the International Business Companies Act of 2016 to maintain adequate accounting records and are responsible
for the content and integrity of the consolidated financial statements and related financial information included in this report. It
is their responsibility to ensure that the consolidated financial statements fairly present the state of affairs of the Group at the
end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and IFRS Interpretations committee
(IFRIC).
The
consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB) and IFRS Interpretations committee (IFRIC) and are based upon appropriate accounting
policies consistently applied and supported by reasonable and prudent judgements and estimates.
The
directors acknowledge that they are ultimately responsible for the system of internal financial control established by the Group and
place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the
board of directors sets standards for internal control aimed at reducing the risk of error or loss in a cost-effective manner. The standards
include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation
of duties to ensure an acceptable level of risk. These controls are monitored throughout the Group and all employees are required to
maintain the highest ethical standards in ensuring the Group’s business is conducted in a manner that in all reasonable circumstances
is above reproach. The focus of risk management in the Group is on identifying, assessing, managing, and monitoring all known forms of
risk across the Group. While operating risk cannot be fully eliminated, the Group endeavors to minimize it by ensuring that appropriate
infrastructure, controls, systems, and ethical behavior are applied and managed within predetermined procedures and constraints.
The
directors are of the opinion, based on the information and explanations given by management, that the system of internal controls does
not provide reasonable assurance that the financial records may be relied on for the preparation of the consolidated financial statements.
However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement
or loss.
The
directors have reviewed the Group’s cash flow forecast for the year to June 30, 2024, and, in light of this review and the
current financial position, there is substantial doubt about its ability to continue as a going concern within one year after the date
that the consolidated financial statements are issued.
The directors acknowledge that the Company’s
Consolidated Statement of Operations and Comprehensive Income for the period ended June 30, 2022, has been restated for errors made with
regard to revenue recognition and the reporting of gross vs. net revenue. In accordance with IFRS, the restatement records revenue and
expense net for the first of 2022 sales transactions where the Company was not the clear principle in the transaction. There were no
restatements to the Consolidated Statement of Financial Position, Consolidated Statement of Cash Flows, Consolidated Statement of Changes
in Stockholders’ Equity, earnings per share, gross profit, or net loss.
The
consolidated financial statements set out beginning on page F-4, which have been prepared on the going concern basis, were approved by
the board of directors on November 07, 2023 and were signed by:
/s/
Roger James Hamilton |
|
Roger
James Hamilton, Director |
|
|
|
/s/
Suraj Naik |
|
Suraj
Naik, Director |
|
|
|
Date:
November 07, 2023 |
|
GENIUS
GROUP LIMITED AND SUBSIDIARIES
CONDENDED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In
US Dollars)
| |
| | |
As of June 30, | | |
As of December 31, | |
| |
Note | | |
2023 | | |
2022 | |
| |
| | |
(Unaudited) | | |
(Audited) | |
Assets | |
| | |
| | | |
| | |
Current Assets | |
| | |
| | | |
| | |
Cash and cash equivalents | |
| | |
$ | 2,624,432 | | |
$ | 5,720,569 | |
Restricted cash | |
| | |
| - | | |
| 11,108,816 | |
Accounts receivable, net | |
| | |
| 3,843,414 | | |
| 4,856,637 | |
Other receivables | |
3 | | |
| 88,594 | | |
| 120,304 | |
Income tax receivable | |
| | |
| 130,957 | | |
| - | |
Due from related parties | |
4 | | |
| 252,060 | | |
| 351,357 | |
Inventories | |
5 | | |
| 1,171,728 | | |
| 1,001,977 | |
Prepaid expenses and other current assets | |
6 | | |
| 1,238,196 | | |
| 1,090,787 | |
Total Current Assets | |
| | |
| 9,349,381 | | |
| 24,250,447 | |
Property and equipment, net | |
7 | | |
| 203,934 | | |
| 563,131 | |
Operating lease right-of-use asset | |
8 | | |
| 12,344,687 | | |
| 12,573,710 | |
Investments at fair value | |
9 | | |
| 44,413 | | |
| 29,071 | |
Other receivables | |
3 | | |
| 767,982 | | |
| 732,716 | |
Due from related parties | |
4 | | |
| 5,566,247 | | |
| 5,288,264 | |
Goodwill | |
10 | | |
| 31,677,406 | | |
| 31,688,887 | |
Intangible assets, net | |
11 | | |
| 15,421,531 | | |
| 16,107,293 | |
Other non-current assets | |
13 | | |
| 26,286 | | |
| 26,108 | |
Total Assets | |
| | |
| 75,401,867 | | |
| 91,259,627 | |
Liabilities and Stockholders’ Equity | |
| | |
| | | |
| | |
Current Liabilities | |
| | |
| | | |
| | |
Accounts payable | |
| | |
| 2,224,294 | | |
| 1,672,306 | |
Accrued expenses and other current liabilities | |
14 | | |
| 3,391,966 | | |
| 3,809,540 | |
Deferred revenue | |
15 | | |
| 5,050,855 | | |
| 6,391,993 | |
Operating lease liabilities – current portion | |
8 | | |
| 1,325,839 | | |
| 1,590,538 | |
Income tax payable | |
| | |
| - | | |
| 355,023 | |
Loans payable – current portion | |
16 | | |
| 330,108 | | |
| 334,391 | |
Loans payable – related parties – current portion | |
17 | | |
| 1,018,628 | | |
| 2,932,090 | |
Convertible debt obligations, current portion | |
18 | | |
| 3,773,790 | | |
| 5,752,328 | |
Short term debt | |
18 | | |
| 369,245 | | |
| 539,245 | |
Total Current Liabilities | |
| | |
| 17,484,725 | | |
| 23,377,454 | |
Due to related parties | |
17 | | |
| 1,812 | | |
| 1,729 | |
Operating lease liabilities – non-current portion | |
8 | | |
| 11,436,814 | | |
| 11,394,337 | |
Loans payable – non-current portion | |
16 | | |
| 412,121 | | |
| 428,025 | |
Convertible debt obligations, non-current portion | |
18 | | |
| 137,500 | | |
| 2,223,523 | |
Deferred tax liability | |
12 | | |
| 3,300,516 | | |
| 3,391,129 | |
Derivative liabilities | |
19 | | |
| 36,488,594 | | |
| 36,488,594 | |
Total Liabilities | |
| | |
| 69,262,082 | | |
| 77,304,791 | |
Commitments and Contingencies | |
| | |
| - | | |
| - | |
Stockholders’ Equity: | |
| | |
| | | |
| | |
Contributed capital | |
20 | | |
| 114,218,578 | | |
| 110,534,000 | |
Subscriptions receivable | |
20 | | |
| (1,900,857 | ) | |
| (1,900,857 | ) |
Reserves | |
| | |
| (33,697,262 | ) | |
| (32,933,714 | ) |
Accumulated deficit | |
| | |
| (78,522,639 | ) | |
| (68,539,210 | ) |
Capital and reserves attributable to owners of Genius Group Ltd | |
| | |
| 97,820 | | |
| 7,160,219 | |
Non controlling interest | |
| | |
| 6,041,965 | | |
| 6,794,617 | |
Total Stockholders’ Equity | |
| | |
| 6,139,785 | | |
| 13,954,836 | |
Total Liabilities and Stockholders’ Equity | |
| | |
| 75,401,867 | | |
| 91,259,627 | |
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
GENIUS
GROUP LIMITED AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In
US Dollars)
|
|
|
|
|
June 30, 2023 |
|
|
June 30, 2022 (Restated) |
|
| |
Note | | |
(Unaudited) | | |
(Unaudited) | |
Revenue | |
21 | | |
$ | 11,795,714 | | |
$ | 5,343,247 | |
Cost of revenue | |
2 | | |
| (5,593,340 | ) | |
| (3,112,654 | ) |
Gross profit | |
| | |
| 6,202,374 | | |
| 2,230,593 | |
Operating (Expenses) Income | |
| | |
| | | |
| | |
General and administrative | |
23 | | |
| (13,672,668 | ) | |
| (5,249,054 | ) |
Depreciation and amortization | |
7,8,11 | | |
| (919,568 | ) | |
| (178,807 | ) |
Other operating income | |
22 | | |
| 1,213 | | |
| 166,001 | |
Legal expenses | |
| | |
| (776,867 | ) | |
| - | |
Loss from foreign currency transactions | |
| | |
| 2,425 | | |
| 58,759 | |
Total operating expenses | |
| | |
| (15,365,465 | ) | |
| (5,203,101 | ) |
Loss from Operations | |
| | |
| (9,163,091 | ) | |
| (2,972,508 | ) |
(Expense) Income | |
| | |
| | | |
| | |
Interest expense, net | |
24 | | |
| (1,999,361 | ) | |
| (99,298 | ) |
Impairment loss | |
| | |
| - | | |
| (480,372 | ) |
Other expense | |
| | |
| (5,227 | ) | |
| - | |
Other income | |
| | |
| 68,311 | | |
| 30,713 | |
Total Other Expense | |
| | |
| (1,936,277 | ) | |
| (548,957 | ) |
Loss Before Income Tax | |
| | |
| (11,099,368 | ) | |
| (3,521,465 | ) |
Income Tax Benefit | |
25 | | |
| 324,666 | | |
| 24,238 | |
Net Loss | |
| | |
| (10,774,702 | ) | |
| (3,497,227 | ) |
Other comprehensive income: | |
| | |
| | | |
| | |
Foreign currency translation | |
2 | | |
| (599,818 | ) | |
| (69,375 | ) |
Total Comprehensive Loss | |
| | |
| (11,374,520 | ) | |
| (3,566,602 | ) |
Total Comprehensive Loss is attributable to: | |
| | |
| | | |
| | |
Owners of Genius Group Ltd | |
26 | | |
| (10,746,977 | ) | |
| (3,420,929 | ) |
Non controlling interest | |
| | |
| (627,543 | ) | |
| (145,673 | ) |
Total Comprehensive Loss | |
| | |
| (11,374,520 | ) | |
| (3,566,602 | ) |
Weighted-average number of shares outstanding, basic and diluted | |
| | |
| 33,668,483 | | |
| 17,794,634 | |
Basic and diluted earnings (loss) per share from continuing operations | |
| | |
| (0.32 | ) | |
| (0.20 | ) |
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
GENIUS
GROUP LIMITED AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
AS
OF JUNE 30, 2023, AND JUNE 30, 2022
(In
US dollars)
| |
| | |
Contributed | | |
Non-controlling | | |
Subscriptions | | |
Foreign | | |
| | |
Accumulated | | |
Total | |
| |
Shares | | |
Capital | | |
Interest | | |
Receivable | | |
Currency | | |
Reserves | | |
Deficit | | |
Equity | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance, January 1, 2023 | |
| 27,705,227 | | |
| 110,534,000 | | |
| 6,794,617 | | |
| (1,900,857 | ) | |
| 983,653 | | |
| (33,917,367 | ) | |
| (68,539,210 | ) | |
| 13,954,836 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
| — | | |
| — | | |
| (627,543 | ) | |
| — | | |
| — | | |
| — | | |
| (10,147,159 | ) | |
| (10,774,702 | ) |
Foreign currency translation adjustments | |
| — | | |
| — | | |
| — | | |
| — | | |
| (763,548 | ) | |
| — | | |
| 163,730 | | |
| (599,818 | ) |
Shares issued for conversion of convertible notes | |
| 23,045,670 | | |
| 6,994,299 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 6,994,299 | |
Convertible loan adjustment for outstanding note, net | |
| — | | |
| (3,837,395 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (3,837,395 | ) |
Shares issued by conversion from ERL and GeniusU | |
| 149,160 | | |
| 125,109 | | |
| (125,109 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Share based compensation | |
| — | | |
| 402,565 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 402,565 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, June 30, 2023 | |
| 50,900,057 | | |
| 114,218,578 | | |
| 6,041,965 | | |
| (1,900,857 | ) | |
| 220,105 | | |
| (33,917,367 | ) | |
| (78,522,639 | ) | |
| 6,139,785 | |
| |
| | |
Contributed | | |
Non-controlling | | |
Subscriptions | | |
Foreign | | |
| | |
Accumulated | | |
Total | |
| |
Shares | | |
Capital | | |
Interest | | |
Receivable | | |
Currency | | |
Reserves | | |
Deficit | | |
Equity | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance, January 1, 2022 | |
| 16,155,812 | | |
| 50,924,276 | | |
| 4,344,899 | | |
| (1,900,857 | ) | |
| 2,028,729 | | |
| (33,917,367 | ) | |
| (13,493,684 | ) | |
| 7,985,996 | |
Balance, value | |
| 16,155,812 | | |
| 50,924,276 | | |
| 4,344,899 | | |
| (1,900,857 | ) | |
| 2,028,729 | | |
| (33,917,367 | ) | |
| (13,493,684 | ) | |
| 7,985,996 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
| — | | |
| — | | |
| (135,248 | ) | |
| — | | |
| — | | |
| — | | |
| (3,361,979 | ) | |
| (3,497,227 | ) |
Foreign currency translation adjustments | |
| — | | |
| — | | |
| — | | |
| — | | |
| 69,375 | | |
| — | | |
| — | | |
| 69,375 | |
Proceeds from IPO (net) | |
| 3,913,412 | | |
| 15,402,858 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 15,402,858 | |
Share options Genius Group IPO April 2022 | |
| 45,578 | | |
| 273,476 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 273,476 | |
Shares issued for cash | |
| — | | |
| — | | |
| 2,556,739 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 2,556,739 | |
Shares issued for conversion of convertible notes | |
| 38,206 | | |
| 229,237 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 229,237 | |
Share issued for IPO acquisition | |
| 4,621,441 | | |
| 27,046,599 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 27,046,599 | |
Adjustment against capital and retained earnings | |
| — | | |
| (23 | ) | |
| 89,076 | | |
| (53,558 | ) | |
| (10,566 | ) | |
| (2,979,276 | ) | |
| 331,854 | | |
| (2,622,493 | ) |
2021 Genius Group Employee Share option | |
| — | | |
| 45,390 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 45,390 | |
2022 Management Options | |
| — | | |
| (1,758 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,758 | ) |
Share based compensation | |
| — | | |
| 106,685 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 106,685 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, June 30, 2022 | |
| 24,774,449 | | |
| 94,026,740 | | |
| 6,855,466 | | |
| (1,954,415 | ) | |
| 2,087,538 | | |
| (36,896,643 | ) | |
| (16,523,809 | ) | |
| 47,594,877 | |
Balance, value | |
| 24,774,449 | | |
| 94,026,740 | | |
| 6,855,466 | | |
| (1,954,415 | ) | |
| 2,087,538 | | |
| (36,896,643 | ) | |
| (16,523,809 | ) | |
| 47,594,877 | |
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
GENIUS
GROUP LIMITED AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In
US Dollars)
Cash Flows From Operating Activities | |
| | | |
| | |
| |
For the Six months Ended | |
| |
June 30, 2023 | | |
June 30, 2022 | |
| |
(Unaudited) | | |
(Unaudited) | |
Cash Flows From Operating Activities | |
| | | |
| | |
Net loss | |
$ | (10,774,702 | ) | |
$ | (3,497,227 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Stock-based compensation | |
| 402,565 | | |
| 150,317 | |
Depreciation and amortization | |
| 1,208,772 | | |
| 835,757 | |
Provision for interest expense | |
| 1,277,162 | | |
| — | |
Provision for doubtful accounts | |
| 170,318 | | |
| — | |
Deferred income taxes | |
| (90,613 | ) | |
| (29,679 | ) |
Impairment loss | |
| — | | |
| 480,372 | |
Gain on foreign exchange transactions | |
| (2,425 | ) | |
| (58,759 | ) |
Interest expense on lease liabilities | |
| 444,553 | | |
| 58,026 | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Accounts receivable | |
| 842,905 | | |
| (480,438 | ) |
Other receivable | |
| (3,556 | ) | |
| — | |
Prepaid expenses and other current assets | |
| (147,407 | ) | |
| (1,840,348 | ) |
Inventory | |
| (169,751 | ) | |
| (3,651 | ) |
Accounts payable | |
| 551,988 | | |
| 430,633 | |
Accrued expenses and other current liabilities | |
| (417,574 | ) | |
| (609,406 | ) |
Deferred revenue | |
| (1,341,138 | ) | |
| 82,841 | |
Income tax payable | |
| (485,980 | ) | |
| — | |
Other non-current asset | |
| 178 | | |
| — | |
Total adjustments | |
| 2,239,996 | | |
| (984,335 | ) |
Net Cash Used In Operating Activities | |
| (8,534,705 | ) | |
| (4,481,562 | ) |
Cash Flows From Investing Activities | |
| | | |
| | |
Internally developed software | |
| (322,419 | ) | |
| (313,876 | ) |
Purchase of equipment | |
| (111,151 | ) | |
| (79,455 | ) |
Acquisitions | |
| (2,299,231 | ) | |
| (2,116,456 | ) |
Deposit on investment in UAV | |
| | | |
| (6,604,194 | ) |
Purchase of investment | |
| (20,000 | ) | |
| (80,514 | ) |
Net Cash Used In Investing Activities | |
| (2,752,801 | ) | |
| (9,194,496 | ) |
Cash Flows From Financing Activities | |
| | | |
| | |
Amount due to/from related party, net | |
| 726,649 | | |
| (338,280 | ) |
Proceeds from IPO, net | |
| | | |
| 18,060,447 | |
Proceeds from convertible debt, net of issuance costs | |
| 8,923,994 | | |
| - | |
Proceeds from equity issuances | |
| — | | |
| 2,605,215 | |
Issuance from convertible debt | |
| — | | |
| (147,582 | ) |
Lease liabilities | |
| (639,096 | ) | |
| (306,811 | ) |
Repayment of loan | |
| (170,000 | ) | |
| (192,465 | ) |
Net Cash Provided By Financing Activities | |
| 8,841,547 | | |
| 19,680,524 | |
Effect of Exchange Rate Changes on Cash | |
| (650,096 | ) | |
| (212,817 | ) |
Net (Decrease) Increase In Cash | |
| (3,096,137 | ) | |
| 5,791,649 | |
Cash – Beginning of year | |
| 5,720,569 | | |
| 1,784,938 | |
Cash – End of period | |
| 2,624,432 | | |
| 7,576,587 | |
GENIUS
GROUP LIMITED AND SUBSIDIARIES
Notes
to Condensed Consolidated Financial Statements
NOTE
1 — BUSINESS ORGANIZATION AND NATURE OF OPERATIONS
Genius
Group Ltd. (“Company”) is an entrepreneur Edtech and education group, with a mission to disrupt the current education model
with a student-centered, life-long learning curriculum that prepares students with the leadership, entrepreneurial and life skills to
succeed in today’s market.
The
Company operates through its main subsidiaries, GeniusU Ltd (“GU”), Entrepreneur Resorts (“ERL”), Education Angels
(“EA”), University of Antelope Valley (“UAV”), E-Squared Education (“ESQ”), Property and Mastermind
Networks Limited (“PIN”) and Revealed Films (“RF”). The Company owns 100% ownership all of the subsidiaries except
96.5% in GeniusU Ltd and 95.4% in Entrepreneur Resorts.
GU,
a Singapore company, which provides a full entrepreneur education system business development tools and management consultancy services
to entrepreneurs.
ERL
was incorporated in Seychelles, and represents a group of resorts, retreats, and co-working cafes for entrepreneurs. ERL owns resorts
in Bali and South Africa which run entrepreneur retreats and workshops. It also owns Genius Café, an entrepreneur beach club in
Bali, and Genius Central Singapore Pte Ltd, an entrepreneur co-working hub in Singapore.
EA
generates revenue from parents of young children from 0-5 years old paying for an EA trained educator to both educate and care for their
child. EA is required to be approved and in compliance by the New Zealand Ministry of Education (“MOE”) in order to operate
and receive government funding. EA is approved by the MOE and 50% of EA educator fees are paid by the New Zealand Government.
UAV
is an accredited university based on a 10-acre campus in the United States. It offers career-focused on-campus and online programs at
the master’s, bachelor’s, and associate degree level, as well as certificate and continuing education programs in several
high-demand sectors.
ESQ
is an entrepreneur education campus in South Africa, providing a full range of programs from pre-primary through primary school, secondary
school, and vocational college.
PIN
is a United Kingdom private limited company. PIN provides investment education through its fifty city chapters and monthly events in
England, held both virtually and in-person.
RF
is a United States based media production company that specializes in multi-part documentaries that cover topics such as wealth building,
health and nutrition, medical issues, religion, and political matters.
The
three regions the Company operates in are: APAC (Asia Pacific, North Asia, and Australia); EMEA (Europe, Middle East, and Africa); and
NASA (North America and South America).
In
January 2020, the World Health Organization declared the COVID 19 virus an international pandemic. The imposed ‘lock down’
and associated social distancing measures have had a significant effect on economic activity and have hurt in particular businesses in
the travel, entertainment, and leisure sectors. To cater to this unprecedented pandemic scenario, governments across the globe have enacted
many emergency funding and support schemes in order to alleviate the hopefully short-term liquidity difficulties encountered by businesses
and individuals. Such measures include corporate guarantee and liquidity measures, deferral of state taxes and/or suspension for debt
obligations, measures to allow businesses to implement forbearance and furlough measures while the employees receive reasonable proportion
of salaries and benefits. The Company has been able to avail itself of such measures as available to it which has been of assistance
to survive the financial impact of the pandemic.
NOTE
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
condensed consolidated financial statements have been prepared on the going concern basis in accordance with, and in compliance with,
International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”),
and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations issued and effective at the time
of preparing these consolidated financial statements and the International Business Companies Act of 2016.
These
interim consolidated financial statements for the six months ended June 30, 2023 and 2022 have been prepared in accordance with
IAS 34 Interim Financial Reporting, and should be read in conjunction with the Group’s last annual consolidated financial statements
as at and for the year ended December 31, 2022 (‘last annual financial statements’). They do not include all of the information
required for a complete set of financial statements prepared in accordance with IFRS Standards. However, selected explanatory notes are
included to explain events and transactions that are significant to an understanding of the changes in the Group’s financial position
and performance since the last annual financial statements.
The
presentation currency is United States dollars.
Going
Concern
Pursuant
to IAS 1, Presentation of Financial Statements, the Company is required to and does evaluate at each annual and interim period whether
there are conditions or events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern
within one year after the date that the consolidated financial statements are issued. Based on the definitions in the relevant accounting
standards, and due to the Company’s cash continuing to decrease, is currently in a net-working deficit position, has negative cash
flows, negative net operating profit and continued net losses, management has determined that without additional capital raised, in the
next twelve months, there is substantial doubt about the Company’s ability to continue as a going concern.
The
Company’s consolidated financial statements as of June 30, 2022 have been prepared on a going concern basis. Although the Company
has taken, and plans to continue to take, proactive measures to enhance its liquidity position and provide additional financial flexibility,
including discussions with lenders and bankers, there can be no assurance that these measures, including the timing and terms thereof,
will be successful or sufficient.
Business
Combinations
The
Company accounts for business combinations using the acquisition method of accounting in accordance with IFRS. The cost of the business
combination is measured as the aggregate of the fair values of assets given, liabilities incurred or assumed, and equity instruments
issued. Costs directly attributable to the business combination are expensed as incurred, except the costs to issue debt which are amortized
as part of the effective interest, and costs to issue equity which are included in stockholders’ equity.
Any
contingent consideration is included in the cost of the business combination at fair value as at the date of acquisition. Subsequent
changes to the assets, liability or equity which arise as a result of the contingent consideration are not affected against goodwill,
unless they are valid measurement period adjustments.
Otherwise,
all subsequent changes to the fair value of contingent consideration that is deemed to be an asset or liability is recognized in either
profit or loss or in other comprehensive income, in accordance with relevant IFRS. Contingent consideration that is classified as equity
is not remeasured, and its subsequent settlement is accounted for within stockholders’ equity.
The
acquiree’s identifiable assets, liabilities and contingent liabilities which meet the recognition conditions of IFRS 3 —
Business Combinations (“IFRS 3”) are recognized at their fair values at acquisition date, except for non-current assets (or
disposal groups) that are classified as held for sale in accordance with IFRS 5 — Non-current Assets Held for Sale and Discontinued
Operations, which are recognized at fair value less costs to sell.
Contingent
liabilities are only included in the identifiable liabilities of the acquiree where there is a present obligation at acquisition date.
On
acquisition, the acquiree’s assets and liabilities are reassessed in terms of classification and are reclassified where the classification
is inappropriate for Company’s reporting purposes. This excludes lease agreements and insurance contracts whose classification
remains as per their inception date.
Non-controlling
interests in the acquiree are measured on an acquisition-by-acquisition basis either at fair value or at the non- controlling interests’
proportionate share in the recognized amounts of the acquiree’s identifiable net assets. This treatment applies to non-controlling
interests which are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in
the event of liquidation. All other components of non-controlling interests are measured at their acquisition date fair values unless
another measurement basis is required by IFRS.
In
cases where the Company held a non-controlling shareholding in the acquiree prior to obtaining control, that interest is measured to
fair value as of the acquisition date. The measurement to fair value is included in profit or loss for the year. Where the existing shareholding
was classified as an available-for-sale financial asset, the cumulative fair value adjustments recognized previously to other comprehensive
income and accumulated in stockholders’ equity are recognized in profit or loss as a reclassification adjustment.
Goodwill
is determined as the consideration paid, plus the fair value of any shares held prior to obtaining control, plus non-controlling interest
and less the fair value of the identifiable assets and liabilities of the acquiree. If, in the case of a bargain purchase, the result
of this formula is negative, then the difference is recognized directly in profit or loss.
Goodwill
is not amortized but is tested on an annual basis for impairment. If goodwill is assessed to be impaired, that impairment is not subsequently
reversed.
Common
control business combinations are outside the scope of IFRS 3. The Company has elected to account for common control business combinations
using the book value method.
Significant
judgments and use of estimates
The
preparation of consolidated financial statements in conformity with IFRS requires management, from time to time, to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income, and expenses.
These estimates and associated assumptions are based on experience and various other factors that are believed to be reasonable under
these circumstances. Actual results may differ from these estimates. The 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.
Critical
judgements in applying accounting policies
Management
did not make critical judgements in the application of accounting policies, apart from those involving estimations, which would significantly
affect the financial statements.
Fair
value estimation
Several
assets and liabilities of the Company are either measured at fair value or disclosure is made of their fair values. Observable market
data is used as inputs to determine fair value, to the extent that such information is available.
Restatement
of previously issued financial statements
The
Company’s Consolidated Statement of Operations and Comprehensive Loss for the half year ended June 30, 2022, has been restated
for errors made with regard to revenue recognition and the reporting of gross vs. net revenue.
During
June, 2022, the Company updated its revenue recognition policy memo and uncovered an error in the implementation of accounting treatment
for certain revenue recognition transactions with a third-party sales partner. The Company evaluated the materiality of this inaccurate
accounting treatment, considering both quantitative and qualitative factors in accordance with SAB 99. The Company believes a restatement
is necessary due to its review of the relevant factors. In accordance with IFRS, the restatement records revenue and expense net for
first half of 2022 sales transactions where the Company was not the clear principle in the transaction. As a result, the restatement
will decrease revenue by $2,099,983, with corresponding decrease in cost of revenue by $2,099,983. There were no restatements to the
Consolidated Statement of Financial Position, Consolidated Statement of Cash Flows, Consolidated Statement of Changes in Stockholders’
Equity, earnings per share, gross profit, or net loss.
The
Company made restatements in the Consolidated Statement of Operations and Comprehensive Loss related to revenues and cost of revenue
with a third-party sales partner. The changes are in revenue and cost of revenue and have been restated from a gross presentation to
a net presentation, please see the table below:
SCHEDULE
OF RESTATEMENTS IN THE CONSOLIDATED
STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
| |
Unaudited | | |
Restatements | | |
Restated | |
| |
For the six months ended June 30, 2022 | |
| |
Unaudited | | |
Restatements | | |
Restated | |
Revenue | |
$ | 7,443,230 | | |
$ | (2,099,983 | ) | |
$ | 5,343,247 | |
Cost of Revenue | |
| (5,212,637 | ) | |
| 2,099,983 | | |
| (3,112,654 | ) |
Gross Profit | |
$ | 2,230,593 | | |
$ | — | | |
$ | 2,230,593 | |
NOTE
3 — OTHER RECEIVABLES
SCHEDULE OF OTHER RECEIVABLES
| |
June
30. 2023 | | |
December 31, 2022 | |
| |
| | |
| |
Other receivables (Short term) | |
| | | |
| | |
GST receivable | |
$ | 33,424 | | |
$ | 64,254 | |
Due from utility companies | |
| 45,570 | | |
$ | 45,570 | |
Other | |
| 9,600 | | |
| 10,480 | |
Other receivables (short term) | |
$ | 88,594 | | |
$ | 120,304 | |
| |
| | | |
| | |
Other receivables (Long term) | |
| | | |
| | |
PJ Finn | |
$ | 752,765 | | |
$ | 718,198 | |
Richard Evans | |
| 15,216 | | |
| 14,518 | |
Other Receivables (long term) | |
$ | 767,982 | | |
$ | 732,716 | |
Total Other Receivables | |
$ | 856,576 | | |
$ | 853,020 | |
NOTE
4 — DUE FROM RELATED PARTY
Due
from related parties as of June 30, 2023 and December 31, 2022 represents amounts receivable from related entities of the Company. The
receivables are unsecured, bear no interest and are due on demand. The due from related parties (Long term) are recoverable within average
life of three years.
SCHEDULE
OF DUE FROM RELATED PARTIES
| |
As
of June 30,
2023 | | |
As of December 31, 2022 | |
| |
| | |
| |
Due from related parties (Short term) | |
| | | |
| | |
Accounts Receivable – Shareholders | |
$ | 86,200 | | |
$ | 60,280 | |
Due from MSJ Foundation | |
| 21,302 | | |
| 102,356 | |
Others | |
| 144,558 | | |
| 188,721 | |
Total due from related parties (short term) | |
$ | 252,060 | | |
$ | 351,357 | |
| |
| | | |
| | |
Due from related parties (Long term) | |
| | | |
| | |
BMV Finance | |
$ | 2,068,113 | | |
$ | 1,973,144 | |
Simon Zutshi | |
| 1,350,206 | | |
| 1,268,094 | |
BG3 Ltd. | |
| 737,614 | | |
| 703,743 | |
Zutshi LLP | |
| 398,417 | | |
| 380,121 | |
Vision1 Investments | |
| 293,313 | | |
| 279,845 | |
Crowd Property | |
| 272,644 | | |
| 260,124 | |
Throckley | |
| 219,057 | | |
| 208,998 | |
Others | |
| 103,114 | | |
| 98,187 | |
Property Mastermind International | |
| 123,769 | | |
| 116,008 | |
Total due from related parties (long term) | |
$ | 5,566,247 | | |
$ | 5,288,264 | |
Due from related parties | |
$ | 5,818,307 | | |
$ | 5,639,621 | |
NOTE
5 — INVENTORIES
As
of June 30, 2023, and December 31, 2022 inventories consist of:
SCHEDULE OF INVENTORIES
| |
As of June 30, 2023 | | |
As of
December 31, 2022 | |
Movie production costs | |
$ | 744,847 | | |
$ | 648,337 | |
Books and periodicals | |
| 312,884 | | |
| 258,497 | |
Food and beverage | |
| 52,430 | | |
| 48,677 | |
Merchandise | |
| 60,584 | | |
| 45,350 | |
Consumables | |
| 983 | | |
| 1,116 | |
Total inventories | |
$ | 1,171,728 | | |
$ | 1,001,977 | |
NOTE
6 — PREPAID EXPENSES AND OTHER CURRENT
ASSETS
As
of June 30, 2023 and December 31, 2022, prepaid expenses and other current assets consist of:
SUMMARY OF PREPAID EXPENSES AND OTHER CURRENT ASSETS
| |
As of June 30, 2023 | | |
As of
December 30, 2022 | |
Prepaid expenses | |
$ | 928,511 | | |
$ | 798,140 | |
Deposits | |
| 158,113 | | |
| 165,868 | |
Other current assets | |
| 151,572 | | |
| 126,779 | |
Total | |
$ | 1,238,196 | | |
$ | 1,090,787 | |
NOTE
7 — PROPERTY AND EQUIPMENT
During
the six months ended June 30, 2023, the Company acquired assets with a cost of $111,151 (June 2022 — $79,455). There were no disposals.
During the six months ended June 30, 2023, the Company recorded depreciation of $25,038 (June 2022 — $325,470), of which $0 (June
2022 — $146,663) is included in cost of revenue on the accompanying statements of operations and comprehensive loss.
NOTE
8 — RIGHT OF USE ASSET AND LEASE LIABILITY
Net
carrying amounts of right-of-use assets
The
carrying amounts of right-of-use assets are as follows:
SCHEDULE OF CARRYING AMOUNTS OF RIGHT-OF-USE ASSETS
| |
As of June 30, 2023 | | |
As of
December 31, 2022 | |
Right of use asset – Buildings | |
$ | 2,541,123 | | |
$ | 2,541,123 | |
Right of use asset – Buildings (related party) | |
| 11,149,101 | | |
| 11,149,101 | |
Right of use asset – Leasehold | |
| 992,410 | | |
| 992,410 | |
Right of use asset – Office space | |
| 58,412 | | |
| 58,412 | |
Foreign currency translation | |
| (93,961 | ) | |
| (119,182 | ) |
Accumulated depreciation of right of use assets | |
| (1,751,347 | ) | |
| (1,723,114 | ) |
Accumulated depreciation of right of use assets (related party) | |
| (551,051 | ) | |
| (325,040 | ) |
Right of use asset | |
$ | 12,344,687 | | |
$ | 12,573,710 | |
During
the half year ended June 30, 2023, the Company recorded depreciation of right-of-use assets of $254,244 (June 2022 — $245,035).
Lease
liabilities
The
maturity analysis of lease liabilities is as follows:
SCHEDULE OF MATURITY ANALYSIS OF LEASE LIABILITIES
| |
As of June 30 2023 | | |
As of
December 31, 2022 | |
Within one year | |
$ | 1,702,541 | | |
$ | 1,664,966 | |
Two to five years | |
| 6,144,383 | | |
| 6,280,716 | |
Thereafter | |
| 16,280,925 | | |
| 17,871,937 | |
Gross lease liabilities | |
| 24,127,849 | | |
| 25,817,619 | |
Less: Finance Charges component | |
| (11,365,196 | ) | |
| (12,832,744 | ) |
Lease liabilities | |
$ | 12,762,653 | | |
$ | 12,984,875 | |
| |
| | | |
| | |
Lease liabilities – Current | |
$ | 1,325,839 | | |
$ | 1,590,538 | |
Lease liabilities - Non-Current | |
| 11,436,814 | | |
| 11,394,337 | |
Lease liabilities | |
$ | 12,762,653 | | |
$ | 12,984,875 | |
NOTE
9 — INVESTMENTS AT FAIR VALUE
As
of June 30, 2023, and December 31, 2022, investments at fair value consist of:
SCHEDULE
OF INVESTMENT AT FAIR VALUE
| |
As of June 30, 2023 | | |
As of
December 31, 2022 | |
Investments in YouGo World | |
$ | 28,698 | | |
$ | 28,698 | |
Others | |
| 15,715 | | |
| 373 | |
Investment at fair value,
Total | |
$ | 44,413 | | |
$ | 29,071 | |
NOTE
10 — GOODWILL
Goodwill
is allocated to the Company’s cash-generating units. The recoverable amounts of these cash generating units have been determined
based on value in use calculations. The Company’s Cash Generating Units were not tested for impairment because there were no impairment
indicators at that level as of June 30, 2023.
NOTE
11 — INTANGIBLE ASSETS
The
Company’s intangible assets consist of costs incurred in connection with the development of the Company’s digital education
software platform, trademarks, and assets identified as part of business acquisitions. During the six months ended June 30, 2023, the
Company incurred $322,419 (June 2022 — $313,876) of software development costs. There were no acquisitions or disposals of other
intangible assets. During the six months ended June 30, 2023, the Company recorded amortization of $929,490 (June 2022 — $247,693)
NOTE
12 — DEFERRED TAX ASSETS AND LIABILITIES
Management
has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s financial
statements as of June 30, 2023 and 2022.
No
tax audits were commenced or were in process during the periods ended June 30, 2023 and 2022 and no tax related interest or penalties
were incurred during those years.
NOTE
13 — OTHER NON-CURRENT ASSETS
As
of June 30, 2023 and December 31, 2022, other non-current assets were $26,286 and $26,108, respectively.
NOTE
14 — ACCRUED EXPENSES AND OTHER CURRENT
LIABILITIES
As
of June 30, 2023 and December 31, 2022, accrued expenses and other current liabilities consist of:
SCHEDULE
OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
| |
As of June 30, 2023 | | |
As of
December 31, 2022 | |
Accrued expenses | |
$ | 1,152,674 | | |
$ | 1,539,791 | |
Sundry payables | |
| 1,164,801 | | |
| 1,007,222 | |
North West Parks Board | |
| 798,860 | | |
| 955,591 | |
VAT | |
| 246,318 | | |
| 184,977 | |
Other taxation payable | |
| 29,313 | | |
| 121,959 | |
Total | |
$ | 3,391,966 | | |
$ | 3,809,540 | |
The
North West Parks Board accrual represents the amounts owed related to the Company’s Tau Game Lodge. The amount owed is related
to turnover fees, concession fees and interest payable.
NOTE
15 — DEFERRED REVENUE
As
of June 30, 2023 the nature of deferred revenue is substantially similar to December 31, 2022
NOTE
16 — LOANS PAYABLE
As
of June 30, 2023 and December 31, 2022, loans payable consisted of:
SUMMARY
OF LOANS PAYABLE
| |
As of June 30, 2023 | | |
As of
December 31, 2022 | |
Loans payable – current portion | |
$ | 330,108 | | |
$ | 334,391 | |
Loans payable – non-current portion | |
| 412,121 | | |
| 428,025 | |
Total | |
$ | 742,229 | | |
$ | 762,416 | |
NOTE
17 — LOANS PAYABLE — RELATED
PARTIES
Loans
from related parties as of June 30, 2023 and December 31, 2022 consist of the following:
SCHEDULE OF LOANS FROM RELATED PARTIES
| |
As of June 30, 2023 | | |
As of December 31, 2022 | |
Loan payable to related parties for the acquisition of Wealth Dynamics Current portion | |
$ | — | | |
$ | — | |
Non-current portion. | |
| — | | |
| — | |
Subtotal | |
| — | | |
| — | |
Other loans payable to related parties, current | |
| 1,018,628 | | |
| 2,932,090 | |
Other loans payable to related parties, non-current | |
| 1,812 | | |
| 1,729 | |
Total loans payable to related parties | |
$ | 1,020,440 | | |
$ | 2,933,819 | |
The
details of loan payable to the related parties is as follows:
SCHEDULE
OF LOAN PAYABLE TO RELATED PARTIES
| |
As
of June
30, 2023 | | |
As
of December
31, 2022 | |
Loan Payable for E-Squared Acquisition | |
$ | — | | |
$ | 299,231 | |
Loan payable for RF acquisition | |
| — | | |
| 2,000,000 | |
Le Roux Niemann | |
| 89,476 | | |
| 55,555 | |
Jeff Hays | |
| 435,000 | | |
| 250,000 | |
Patrick Gentempo | |
| 435,000 | | |
| 250,000 | |
Amount due to EIA | |
| 16,844 | | |
| 35,305 | |
Others | |
| 44,120 | | |
| 43,728 | |
Total | |
$ | 1,020,440 | | |
$ | 2,933,819 | |
The
loan payable to related party for the acquisition of Revealed Films is non-interest bearing with $2,000,000 payable on or before March
31, 2023. The loan is payable to the previous shareholder of Revealed Films. This loan was paid in full during March 2023.
The
loan payable to related party for the acquisition of E-Squared Education Enterprises Pty Ltd is non-interest bearing with ZAR 3,600,000
(Approximately $299,231) payable on or before Nov 30, 2022. Company has agreed to repay the same in Q1 2023 and the loan was repaid in
March, 2023.
The
loan payable to the pre-acquisition owners of Revealed Films of $870,000 is non-interest bearing and is due to the operational
funding by the owner of $435,000 by Jeff Hays and $435,000 by Patrick Gentempo in accordance with the acquisition agreement
to continue the operations of Revealed Films and to assist with financing the company.
The
loan payable to related parties for the acquisition of Entrepreneurs Institute is non-interest bearing, with $400,000 payable on each
of the first and second anniversaries of the acquisition date. Other loans payable to related parties represent unsecured loans from
shareholders, which bear no interest and are payable on demand. The loan was repaid in 2022.
The
Company pays fees to Entrepreneurs Institute Australia Pty Ltd (“EIA”), an Australian company controlled and ultimately
owned by Roger Hamilton and Sandra Morrell, directors of the Group. The total in 2023 was $107,636
(2022: $325,243).
The sole purpose of the entity is to engage local team and physical resources to provide day to day support to the Group with its
own business requirements as well as catering to external clients. EIA on-charges its costs and does not record a material profit or
loss, therefore the related party shareholders do not receive any financial benefit from this arrangement. Unpaid fees are recorded
as a related party loan payable and is not-interest bearing.
The
Company pays fees to GeniusU Web Services India Pvt Ltd (“GU India”), an Indian company controlled and ultimately owned
by Suraj Naik, an employee of the Group, and a family member of Suraj Naik. The total in 2023 was $103,838
(2022: $209,322).
The sole purpose of the entity is to engage local team and physical resources to provide day to day support to the Group with its
own business requirements as well as catering to external clients. GU India on-charges its costs and does not record a material
profit or loss, therefore the related party shareholders do not receive any financial benefit from this arrangement.
Unpaid
fees are recorded as a related party loan payable and is not-interest bearing.
NOTE
18 — CONVERTIBLE DEBT OBLIGATIONS
As
of June 30, 2023 and December 31, 2022, the Company’s convertible obligations consisted of the following:
SCHEDULE OF CONVERTIBLE DEBT OBLIGATIONS
| |
As of
June 30, 2023 | | |
As of
December 31, 2022 | |
Convertible debt obligations, end, gross | |
$ | 3,911,290 | | |
$ | 7,975,851 | |
Convertible debt obligations, end, current portion | |
| 3,773,790 | | |
| 5,752,328 | |
Convertible debt obligations, end, non-current portion | |
| 137,500 | | |
| 2,223,523 | |
During
the six-months ended June 30, 2023, the convertible loan 2022 amount of $6,147,954 was converted into 23,046,941 shares of Genius Group
Ltd ordinary shares pursuant to conversion offers extended by Genius Group Ltd. The company also repaid the principal amount of $2,004,822
of the Convertible Loan 2022. The outstanding convertible debt balance was $3,911,290 as of June 30, 2023 and $7,975,851 as of December
31, 2022.
During
the six months ended June 30, 2023, the convertible loan 2020 amount of $170,000 was repaid to the holder of convertible loan.
NOTE
19 — DERIVATIVE LIABILITIES
There
are no changes in composition nor any adjustments recognized in the current period relating to derivative liabilities effected in prior
periods.
NOTE
20 — EQUITY
Contributed
Capital
Equity
Issued
During
the period ended June 30, 2023 and 2022, the Company issued ordinary shares for net cash proceeds of $0 and $15,676,334, respectively.
During
the period ended June 30, 2022, the Company issued the ordinary shares with a gross value of $22,581,816 (net $15,402,858) from the IPO
proceeds. The Company also raised cash proceeds of $273,476 from the share issuance during the IPO. GeniusU Limited issued ordinary shares
with a value of $2,556,739 in exchange of cash and conversion from a loan to equity.
During
August 2022, Genius Group Ltd entered into a Securities Purchase Agreement to issue convertible loan in the principal amount of $18,130,000
in face amount of a senior secured convertible note purchased for $17,000,000. In relation to the offering, the company has classified
the equity portion of the debt note valued at $3,867,850 net of debt discount and cost of fund raise.
During
the six months ended June 30, 2023, Genius Group Ltd converted $6,147,954 in principal and $846,345 in the accrued interest and issued
23,046,941 ordinary shares. The Company also issued 79,133 and 70,047 Genius Group ordinary shares by converting $65,109 of Entrepreneur
Resorts shares and $60,000 of GeniusU Ltd shares.
During
the period ended June 30, 2022, the Company issued Genius Group Ltd ordinary shares with a value of $27,046,599 in exchange for the 4
acquisitions that the company closed. Genius Group Ltd shares were valued using the market approach based on the price per share paid
by third parties for Genius Group Ltd shares as of the acquisition date and share delivery date.
See
below for discussions regarding additional equity issuances.
Shares
Issued Related to Debt Conversions
During
the six months ended June 30, 2023, Genius Group Ltd converted $6,147,954 in principal and $846,345 in the accrued interest and issued
23,046,941 ordinary shares.
Stock-Based
Compensation
During
the six months ended June 30, 2023, the Company granted 842,127 Genius Group share options with the grant date value of $646,922 to be
expensed over the vesting period.
The
Company values stock options using the Black-Scholes option pricing model and used the following assumptions during the reporting periods:
SCHEDULE OF STOCK OPTIONS USING THE BLACK-SCHOLES OPTION PRICING MODEL AND USED THE ASSUMPTIONS
| |
June 30, 2023 | | |
June 30, 2022 | |
| |
For the period ended | |
| |
June 30, 2023 | | |
June 30, 2022 | |
Risk-free interest rate | |
| 4.88 | % | |
| 4.41 | % |
Contractual term (years) | |
| 2-4 | | |
| 1-3 | |
Expected volatility | |
| 177.30 | % | |
| 66.00 | % |
Expected dividends | |
| 0.00 | % | |
| 0.00 | % |
A
summary of the option activity during the period ended June 30, 2023 was as follows:
SUMMARY OF OPTION ACTIVITY
| |
No of Options | | |
Weighted Average Share Price | | |
Weighted
Average
Remaining
Life | | |
Aggregate
Intrinsic
Value | |
Outstanding as of December 31, 2022 | |
| 1,026,520 | | |
$ | 4.38 | | |
| 2 | | |
$ | 0 | |
Granted | |
| 842,127 | | |
| 0.83 | | |
| 4 | | |
| 0 | |
Exercised / Cancelled | |
| (200,000 | ) | |
| 2.21 | | |
| - | | |
| 0 | |
Outstanding as of June 30, 2023 | |
| 1,668,647 | | |
$ | 2.85 | | |
| 3 | | |
$ | 0 | |
SCHEDULE OF INFORMATION RELATED TO OPTIONS OUTSTANDING
| |
Options Outstanding | | |
| |
Options Exercisable | |
Year | |
Exercise Price | | |
Outstanding Number of Options | | |
Underlying Common Stock | |
Weighted Average Remaining Life in Years | | |
Exercisable Number of Warrants | |
| |
| | |
| | |
| |
| | |
| |
2019 Share Option | |
$ | 3.56 | | |
| 257,478 | | |
GNS | |
| 1 | | |
$ | 257,478 | |
2020 Share Option | |
| 5.81 | | |
| 74,640 | | |
GNS | |
| 1 | | |
| 74,640 | |
2021 Share Options | |
| 5.81 | | |
| 134,214 | | |
GNS | |
| 3 | | |
| 134,214 | |
2022 Employee Grants (Options) | |
| 4.22 | | |
| 360,188 | | |
GNS | |
| 3 | | |
| 0 | |
2023 Employee Grants (Options) | |
| 0.83 | | |
| 842,127 | | |
GNS | |
| 3 | | |
| 0 | |
| |
$ | 2.85 | | |
| 1,668,647 | | |
| |
| 2 | | |
$ | 466,332 | |
The
Company recorded stock-based compensation in the amount of $402,565
for the six months ended June 30, 2023 and $150,317
for the six months ended June 30, 2022, in connection
with the amortization of the grant date value of the stock options. The amount of $2,212,699
to be recognized as stock-based compensation
expense over the period 2023, 2024 and 2025.
NOTE
21 — REVENUES
The
breakdown of revenues for the years ended June 30, 2023 and 2022 are shown below. The revenue is disaggregated into the categories the
Company believes depict how and the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
SCHEDULE OF DISAGGREGATION OF REVENUE
| |
2023 | | |
2022 As restated | |
| |
Six months Ended June 30, | |
| |
2023 | | |
2022 As restated | |
Campus Revenue | |
| | | |
| | |
– Sale of goods | |
$ | 1,102,187 | | |
$ | 1,074,744 | |
– Rendering of services | |
| 1,731,747 | | |
| 815,984 | |
Campus sub-total | |
| 2,833,934 | | |
| 1,890,728 | |
Education Revenue | |
| | | |
| | |
– Digital | |
| 4,990,143 | | |
| 3,280,664 | |
– In-Person | |
| 3,971,637 | | |
| 171,855 | |
Education sub-total | |
| 8,961,780 | | |
| 3,452,519 | |
Total Revenue | |
$ | 11,795,714 | | |
$ | 5,343,247 | |
NOTE
22 — OTHER OPERATING INCOME
For
the six months ended June 30, 2023 and 2022, other operating income consists of:
SCHEDULE OF OTHER OPERATING INCOME
| |
2023 | | |
2022 | |
| |
Six months Ended June 30, | |
| |
2023 | | |
2022 | |
Other income | |
$ | 1,213 | | |
$ | 166,001 | |
Other
operating income | |
$ | 1,213 | | |
$ | 166,001 | |
NOTE
23 — GENERAL AND ADMINISTRATIVE EXPENSES
General
and administrative expenses for the six months ended June 30, 2023 and 2022 include the following:
SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES
| |
2023 | | |
2022 | |
| |
Six months ended June 30, | |
| |
2023 | | |
2022 | |
Salaries, wages, bonuses, and other benefits | |
$ | 5,509,045 | | |
$ | 3,218,370 | |
Professional and consulting fees | |
| 2,809,490 | | |
| 482,895 | |
Marketing | |
| 1,098,631 | | |
| 86,053 | |
Other | |
| 1,389,299 | | |
| 272,445 | |
Provision for doubtful debts | |
| 170,318 | | |
| - | |
Stock-based compensation | |
| 402,565 | | |
| 150,317 | |
Utilities | |
| 619,954 | | |
| 378,714 | |
Travel | |
| 436,940 | | |
| 148,176 | |
Development charges | |
| 406,083 | | |
| 279,527 | |
Rent expense | |
| 381,062 | | |
| 120,352 | |
Repairs and maintenance | |
| 240,532 | | |
| 112,205 | |
Athletic program expenses | |
| 208,749 | | |
| — | |
Total
general and administrative expenses | |
$ | 13,672,668 | | |
$ | 5,249,054 | |
NOTE
24 — INTEREST EXPENSE, NET
For
the six months ended June 30, 2023 and June 30, 2022, the Company earned interest income and incurred interest expense as follows:
SCHEDULE
OF COMPANY EARNED INTEREST INCOME AND INCURRED INTEREST EXPENSE
| |
2023 | | |
2022 | |
| |
Six months Ended June 30, | |
| |
2023 | | |
2022 | |
Interest (expense) income | |
| | | |
| | |
Bank and other cash | |
$ | 32,328 | | |
$ | 10,418 | |
Total interest (expense) income | |
| 32,328 | | |
| 10,418 | |
| |
| | | |
| | |
Interest expense/finance costs | |
| | | |
| | |
Lease liabilities | |
| (427,134 | ) | |
| (58,026 | ) |
Other interest paid – loans | |
| (1,604,555 | ) | |
| (51,690 | ) |
Amortization of debt discount | |
| — | | |
| — | |
Total interest expense/ finance costs | |
| (2,031,689 | ) | |
| (109,716 | ) |
Total
interest (expense), net | |
$ | (1,999,361 | ) | |
$ | (99,298 | ) |
NOTE
25 — INCOME TAX EXPENSE
The
Company is subject to income taxes in the countries of Indonesia, Singapore, New Zealand, United States, United Kingdom and South Africa.
For the six months ended June 30, 2023 and 2022, income tax benefit is recognized as: the tax effect of management’s estimates of
temporary and permanent differences.
NOTE
26 — EARNINGS PER SHARE
SUMMARY
OF EARNINGS PER SHARE
| |
2023 | | |
2022 | |
| |
Six months ended June 30, | |
| |
2023 | | |
2022 | |
Loss per share, basic and diluted | |
$ | (0.32 | ) | |
$ | (0.20 | ) |
Loss per share, basic | |
$ | (0.32 | ) | |
$ | (0.20 | ) |
The calculation of basic and diluted loss per share has been based on the following loss attributable to ordinary shareholders and the weighted average number of ordinary shares | |
| | | |
| | |
Net Loss | |
$ | (10,774,702 | ) | |
$ | (3,497,227 | ) |
Non-Controlling Interest | |
| (627,543 | ) | |
| (145,673 | ) |
Loss Attributed to Ordinary Shareholders | |
$ | (10,147,159 | ) | |
$ | (3,351,554 | ) |
| |
| | | |
| | |
Weighted Average Number of Ordinary Shares | |
| | | |
| | |
Issued at the beginning of the year | |
| 27,705,227 | | |
| 16,155,812 | |
Issued in current Year | |
| 23,194,830 | | |
| 8,618,637 | |
Issued at the end of the year | |
| 50,900,057 | | |
| 24,774,449 | |
Weighted Average | |
| 33,668,483 | | |
| 17,794,634 | |
| |
| | | |
| | |
Diluted earnings (loss) per share: | |
| | | |
| | |
There are no dilutive instruments and therefore diluted earnings per share is the same as basic earnings per share | |
| | | |
| | |
| |
| | | |
| | |
Instruments that could potentially dilute basic earnings per share in the future, but were not included in the calculation of diluted earnings per share because they are antidilutive: | |
| | | |
| | |
| |
| | | |
| | |
Share Options and RSUs | |
| 1,668,647 | | |
| 202,639 | |
NOTE
27 — FAIR VALUE INFORMATION
Fair
value hierarchy
The
table below analyses assets and liabilities carried at fair value. The different levels are defined as follows:
Level
1: Quoted unadjusted prices in active markets for identical assets or liabilities that the Company can access at measurement date.
Level
2: Inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly or indirectly.
Level
3: Unobservable inputs for the asset or liability.
As
of June 30, 2023 and December 31, 2022, the Company’s financial assets and liabilities by level within the fair value hierarchy
are as follows:
SUMMARY OF FINANCIAL ASSETS AND LIABILITIES BY LEVEL WITHIN THE FAIR VALUE HIERARCHY
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| |
As of June 30, 2023 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
FINANCIAL ASSETS | |
| | | |
| | | |
| | | |
| | |
Cash | |
$ | 2,624,432 | | |
$ | — | | |
$ | — | | |
$ | 2,624,432 | |
| |
| | | |
| | | |
| | | |
| | |
FINANCIAL LIABILITIES | |
| | | |
| | | |
| | | |
| | |
Contingent liabilities | |
| — | | |
| — | | |
| 36,488,594 | | |
| 36,488,594 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| |
As of December 31, 2022 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
FINANCIAL ASSETS | |
| | | |
| | | |
| | | |
| | |
Cash and Restricted Cash | |
$ | 16,829,385 | | |
$ | — | | |
$ | — | | |
$ | 16,829,385 | |
| |
| | | |
| | | |
| | | |
| | |
FINANCIAL LIABILITIES | |
| | | |
| | | |
| | | |
| | |
Contingent liabilities | |
| — | | |
| — | | |
| 36,488,594 | | |
| 36,488,594 | |
The
fair value of contingent consideration was reviewed during the period ended June 30, 2023. The various methodologies were reassessed
using a consistent approach which are based on significant inputs that are not observable in the market and include key assumptions such
as assessing the probability of meeting certain milestones required to earn the contingent consideration. As a result of these assessments,
there were no significant changes in the aggregate that required an update from December 31, 2022.
NOTE
28 — FINANCIAL RISK MANAGEMENT
The
Company’s activities expose it to certain financial risks mainly related to:
|
➢ |
market
risk (currency risk, interest rate risk and price risk); |
|
|
|
|
➢ |
credit
risk, and |
|
|
|
|
➢ |
liquidity
risk. |
The
board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The
board has established the risk committee, which is responsible for developing and monitoring the Company’s risk management policies.
The committee reports quarterly to the board of directors on its activities.
The
Group’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect
changes in market conditions and the Company’s activities.
The
Group’s board of directors oversees how management monitors compliance with the risk management policies and procedures and reviews
the adequacy of the risk management framework in relation to the risks faced by the Company.
Market
risk
Interest
rate risk
Fluctuations
in interest rates impact on the value of investments and financing activities, giving rise to interest rate risk.
The
debt of the Company is comprised of different instruments, which bear interest at either fixed or floating interest rates. The ratio
of fixed and floating rate instruments in the loan portfolio is monitored and managed, by incurring either variable rate bank loans or
fixed rate bonds as necessary.
The
Company policy with regards to financial assets, is to invest cash at floating rates of interest and to maintain cash reserves in short-term
investments in order to maintain liquidity, while also achieving a satisfactory return for shareholders.
Foreign
currency risk
The
Company is exposed to foreign currency risk as a result of certain transactions and borrowings which are denominated in foreign currencies.
The foreign currencies in which the Company deals primarily are US Dollars, Singapore Dollars, Indonesian Rupees and South African Rands.
Credit
risk
Credit
risk arises from the potential default of a counterparty to an agreement or financial instrument, resulting in financial loss. The Company
is exposed to credit risk in its operating activities (mainly in connection with trade receivables) and financial activities, including
deposits with banks and other financial institutions and other financial instruments contracted.
To
mitigate risks associated with trade receivables, management makes use of credit approvals, limits, and monitoring, and only deals with
reputable counterparties with consistent payment histories. Sufficient collateral or guarantees are also obtained when necessary. Each
counterparty is analyzed individually for creditworthiness before terms and conditions are offered. The analysis involves making use
of information submitted by the counterparties as well as external bureau data (where available). Counterparty credit limits are in place
and are reviewed and approved by credit management committees. The exposure to credit risk and the creditworthiness of counterparties
is continuously monitored.
Credit
loss allowances for expected credit losses are recognized for all debt instruments except those measured at fair value through profit
or loss. Credit loss allowances are also recognized for loan commitments and financial guarantee contracts. For trade receivables and
contract assets which do not contain a significant financing component, the loss allowance is determined as the lifetime expected credit
losses of the instruments. For all other trade receivables, contract assets and lease receivables, IFRS 9 permits the determination of
the credit loss allowance by either determining whether there was a significant increase in credit risk since initial recognition or
by always making use of lifetime expected credit losses. Management has chosen as an accounting policy, to make use of lifetime expected
credit losses. Management does therefore not make the annual assessment of whether the credit risk has increased significantly since
initial recognition for trade receivables, contract assets or lease receivables.
Liquidity
risk
The
Company is exposed to liquidity risk, which is the risk that the Company will encounter difficulties in meeting its obligations as they
become due.
The
Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These
conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard
to these matters are also described in Note 2.
NOTE
29 — RELATED PARTIES
Relationships |
|
Name
of related party |
|
|
|
Board
members and key management |
|
Roger
James Hamilton |
|
|
Suraj
Naik |
|
|
Nic
Lim
Anna
Gong
Richard
Berman |
|
|
Erez
Simha
Simon
Zutshi |
|
|
Lilian
Niemann
Angela
Stead |
|
|
Jeff
Hays
Patrick
Gentempo |
Related
entity |
|
GeniusU
Web Services Pvt Ltd |
|
|
Entrepreneur
Institute Australia Pty Ltd |
|
|
Health
360 Pte Ltd |
|
|
The
Genius Movement Pte Ltd |
|
|
World
Game Pte Ltd |
|
|
Health
Dynamics |
|
|
Wealth
Dynamics America |
|
|
BG2
Ltd |
|
|
BG3
Ltd |
|
|
BG4
Ltd |
|
|
BMV
Finance |
|
|
Crowd
Property |
|
|
Hatfield
House |
|
|
Property
Mastermind International |
|
|
Zutshi
LLP |
|
|
Vision
1 Investments |
|
|
Throckley |
|
|
MSJ
Foundation |
See
Note 17 — Loans Payable, Related Parties for information on related party balances.
NOTE
30 — KEY MANAGEMENT COMPENSATION
The
following tables set forth information regarding compensation awarded to or earned by our Executive Officers and Board of Directors during
the six months ended June 30, 2023 and 2022:
SUMMARY OF COMPENSATION AWARDED TO OR EARNED BY OUR EXECUTIVE OFFICERS AND BOARD OF DIRECTORS
| |
2023 | | |
2022 | |
| |
Salary | | |
Stock Based | | |
Total | | |
Salary | | |
Stock Based | | |
Total | |
Key management compensation | |
$ | 991,278 | | |
$ | 399,537 | | |
$ | 1,390,815 | | |
$ | 497,911 | | |
$ | 17,669 | | |
$ | 515,580 | |
NOTE
31 — SEGMENT REPORTING
Each
of the Company’s business segments offer different, but synergistic products and services, and are managed separately. Discrete
financial information is available for each segment, and segment performance is evaluated based on operating results. Adjustments to
reconcile segment results to consolidated results are included under the caption “Intercompany” which eliminates the effect
of transactions between the segments.
The
Company’s business consists of two reportable business segments:
|
➢ |
Education
— entrepreneur education, management consultancy and business development tools. |
|
|
|
|
➢ |
Campus
— resorts, retreats, and co-working cafes for entrepreneurs. |
The
detailed segment information of the Company is as follows:
SUMMARY OF DETAILED SEGMENT INFORMATION
| |
Education | | |
Campus | | |
Total | | |
Education | | |
Campus | | |
Total | |
| |
For the Six months Ended June 30 | |
| |
2023 | | |
2022 | |
| |
Education | | |
Campus | | |
Total | | |
Education | | |
Campus | | |
Total | |
Revenues | |
$ | 8,961,780 | | |
$ | 2,833,934 | | |
$ | 11,795,714 | | |
$ | 3,452,519 | | |
$ | 1,890,728 | | |
$ | 5,343,247 | |
Depreciation and amortization | |
$ | 1,178,764 | | |
$ | 30,008 | | |
$ | 1,208,772 | | |
$ | 252,530 | | |
$ | 583,227 | | |
$ | 835,757 | |
Income/Loss from operations | |
$ | (9,417,704 | ) | |
$ | 254,613 | | |
$ | (9,163,091 | ) | |
$ | (2,082,656 | ) | |
$ | (889,852 | ) | |
$ | (2,972,508 | ) |
Net Income/Loss | |
$ | (11,013,619 | ) | |
$ | 238,917 | | |
$ | (10,774,702 | ) | |
$ | (2,075,692 | ) | |
$ | (1,421,535 | ) | |
$ | (3,497,227 | ) |
Interest Expense, net | |
$ | (1,944,787 | ) | |
$ | (54,574 | ) | |
$ | (1,999,361 | ) | |
$ | (27,534 | ) | |
$ | (71,764 | ) | |
$ | (99,298 | ) |
|
|
Education |
|
|
Campus |
|
|
Total |
|
|
Education |
|
|
Campus |
|
|
Total |
|
|
|
For
the period ended June 30, 2023 |
|
|
For
the Year ended December 31, 2022 |
|
|
|
Education |
|
|
Campus |
|
|
Total |
|
|
Education |
|
|
Campus |
|
|
Total |
|
Capital
Expenditures |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Property
and equipment, net |
|
$ |
203,934 |
|
|
$ |
— |
|
|
$ |
203,934 |
|
|
$ |
563,131 |
|
|
$ |
— |
|
|
$ |
563,131 |
|
Total
Assets |
|
$ |
72,616,102 |
|
|
$ |
2,785,765 |
|
|
$ |
75,401,867 |
|
|
$ |
88,120,390 |
|
|
$ |
3,139,237 |
|
|
$ |
91,259,627 |
|
Total
Liabilities |
|
$ |
64,050,409 |
|
|
$ |
5,211,673 |
|
|
$ |
69,262,082 |
|
|
$ |
71,656,141 |
|
|
$ |
5,648,650 |
|
|
$ |
77,304,791 |
|
SUMMARY
OF REVENUE AND NON-CURRENT ASSETS BY GEOGRAPHIC LOCATION
| |
Education | | |
Campus | | |
Total | | |
Education | | |
Campus | | |
Total | |
| |
For
the Years Ended December 31, | |
| |
2022 | | |
2021 | |
| |
Education | | |
Campus | | |
Total | | |
Education | | |
Campus | | |
Total | |
Europe
/ Middle East / Africa | |
$ | 12,792,087 | | |
$ | 3,473,507 | | |
$ | 16,265,594 | | |
$ | 602 | | |
$ | 8,476,791 | | |
$ | 8,477,393 | |
Asia
/ Pacific | |
| 24,799,301 | | |
| 4,112,755 | | |
| 28,912,056 | | |
| — | | |
| 2,120,102 | | |
| 2,120,102 | |
North
America / South America | |
| 21,831,530 | | |
| — | | |
| 21,831,530 | | |
| 501,750 | | |
| — | | |
| 501,750 | |
Non-current assets | |
$ | 59,422,918 | | |
$ | 7,586,262 | | |
$ | 67,009,180 | | |
$ | 502,352 | | |
$ | 10,596,893 | | |
$ | 11,099,245 | |
A
summary of revenue by geographic location appears below:
| |
Education | | |
Campus | | |
Total | | |
Education | | |
Campus | | |
Total | |
| |
For
the Years Ended December 31, | |
| |
2022 | | |
2021 | |
| |
Education | | |
Campus | | |
Total | | |
Education | | |
Campus | | |
Total | |
Europe
/ Middle East / Africa | |
$ | 3,857,193 | | |
$ | 2,403,570 | | |
$ | 6,260,763 | | |
$ | 1,948,567 | | |
$ | 1,554,828 | | |
$ | 3,503,395 | |
Asia
/ Pacific | |
| 2,073,866 | | |
| 2,234,551 | | |
| 4,308,417 | | |
| 1,795,863 | | |
| 1,547,382 | | |
| 3,343,245 | |
North
America / South America | |
| 7,624,436 | | |
| - | | |
| 7,624,436 | | |
| 1,448,164 | | |
| — | | |
| 1,448,164 | |
Revenue | |
$ | 13,555,495 | | |
$ | 4,638,121 | | |
$ | 18,193,616 | | |
$ | 5,192,594 | | |
$ | 3,102,210 | | |
$ | 8,294,804 | |
NOTE
32 — EVENTS AFTER THE REPORTING PERIOD
Convertible
Debt Obligations
Subsequent
to June 30, 2023 and prior to the issuance of these financial statements, convertible debt obligations consisting of $11.03 million of
principal and accrued interest were converted into 22.2 million shares of Genius Group Ltd pursuant to conversion offers extended by
the Company.
On
July 26, 2023, Genius Group Ltd. (the “Company”) executed and delivered a bridge note with an accredited investor in the
face amount of $3.2 million, which has a $200,000 original issue discount. Pursuant to the bridge note, $1,000,000 shall be delivered
to a bank account identified by the Company upon closing and the Company shall keep $2,000,000 of the Loan Proceeds on deposit in a blocked
account subject to an account control agreement with the investor. The proceeds held in the blocked account may be released at the investor’s
discretion on each of August 24, 2023 and September 24, 2023. The maturity date of the bridge note is the earlier of November 24, 2023
and the date of entry into definitive documentation or funding of a Subsequent Financing. Simultaneously with the execution of the bride
note, the Company’s entered into an amendment agreement with investor with respect to the original note with the accredited investor
issued on August 26, 2022, and due February 26, 2025 (“Note”) was reverted to its original terms prior to the amendments
previously announced on March 28, 2023, with certain modifications permitting the Company to consummate its previously announced spin
off and future financings pursuant to a registration statement to be filed in conjunction therewith. The investor and the Company agree
to that the investor may accelerate monthly installment payments under the Note with respect to current and future monthly installments
in accordance with Section 8(e) of the Note, provided that Holder agrees that it will no longer accelerate any Installment Amount pursuant
to Section 8(e) of the Note as amended by this Amendment following the earlier to occur of (A) the date that the Company consummates
a public offering of its Ordinary Shares, or units comprised of Ordinary Shares and warrants to purchase its Ordinary Shares, which results
in aggregate Net Proceeds to the Company equal to at least 130% of the sum of (x) the entire outstanding Conversion Amount of the Notes
and (y) the entire outstanding principal balance of the Bridge Loan (such sum of (x) and (y), the “Aggregate Debt”) measured
as of the Trading Day prior to the consummation of such public offering and (B) such time that the Aggregate Debt is less than $4,000,000
(all capitalized terms used and not defined herein are used as defined in the Note).
Entrepreneur
Resorts Ltd Proposed Spinoff
Subsequent
to June 30, 2023, and prior to the issuance of these financial statements, shareholders had passed the resolution to authorize
the spinoff of its subsidiary ERL and adoption of a new company constitution. ERL is a public listed company on the Seychelles
MERJ Stock Exchange, with 95%
of outstanding shares owned by Genius Group. This spinoff transaction was closed on October 2, 2023.
Loan
Agreement with CEO
On
October 16, 2023, the Company entered into a loan agreement with its CEO, Roger James Hamilton, to provide it with up to $4 million as
an interest free loan, to be converted into equity in the Company as ordinary shares and upon the same terms at the next qualified financing
round. Roger Hamilton has loaned the Company $2.1 million under this agreement. He has agreed to have $1 million converted into
the securities offered under this prospectus upon the same terms as set forth here. The balance of $900,000 will be repaid in cash at
a date no sooner than July 1, 2024.
Founder
Equity Compensation Plan with CEO
On
October 16, 2023, the Company’s BOD approved a CEO equity Compensation Plan (the “Plan”). The Plan is devised to that
the CEO has the opportunity to earn his way back to a 20% shareholding in the Company, on the basis of achieving a market capitalization
for the Company of at least $1 Billion within ten years. The grants are over the period of 10 years, starting from December 31, 2023
and ending on December 31, 2033, 10 tranches of restricted share are awarded to the CEO based on the terms of this Plan. The restricted
shares for each of the 10 tranches will be vested in the month after each of the market capitalization goals in the table below are achieved,
based on the average market capitalization over a 20-day trading period, together with achieving an additional one operational goal from
any row of the revenue goals column or adjusted EBITDA goals column located within the Plan document.
Additional funding sources
Senior
executives and shareholders in Genius Group, which include founders of a number of the companies acquired by Genius Group in 2022 and
2023, together with other senior executives of the Company, are providing additional funding amounting to approximately $2 million in
the form of both interest free loans and earnings converted to equity.
The
Company also made internally an announcement to its leaders and direct managers with regards to a Q4 2023 equity payment plan in which
all leaders are receiving a percentage of their monthly salary in shares from October to December. The Company has faced significant
cash flow challenges recently due to a combination of the Company’s current financiers withholding expected funds and due to a
delay in receiving regulatory approvals for its next funding round, which is now expected sometime in November 2023.
Employees
with a gross salary of certain higher ranges will receive 60% of their salary as cash compensation and the remaining 40% in Company shares.
Employees with certain middle ranges will receive 80% of their salary as cash compensation and the remaining 20% in Company shares. Employees
with a gross salary with certain lower ranges will continue to receive 100% of their salary in cash. This is a temporary measure through
to the end of December 2023 only.
Upstream/Merj
Exchange
Starting
from October 30, 2023, U.S. individuals will no longer have the authorization to engage in securities trading activities (including buying,
selling, or depositing) on the Upstream/MERJ Exchange. All U.S. shareholders will be promptly removed from Upstream and their holdings
will be transferred back to the ERL book entry system. Investors will still need to follow the process to claim their ERL shares, but
these shares will be exclusively held with ERL through the registrar. Shareholders won’t be able to view their positions on Upstream,
as they will no longer be maintained in Upstream accounts. Trading these securities won’t be possible after a 6-month period, and
shareholders will remain as such until ERL lists on another market or until the SEC accepts the Upstream/MERJ position of 15A-6.
Resignation
of Chief Financial Officer and Transition Plan for Genius Group Ltd
On November
2, 2023, the Company’s Chief Financial Officer (“CFO”), Erez Simha, provided notices that he will resign from his position
at Genius Group Ltd effective December 1, 2023 to pursue other business interests. Mr. Simha’s resignation is not because of any
disagreement with the Company on any matter relating to the Company’s operations, policies or practices, including accounting principles
and practices.
Jeremy Harris
will become the Company’s Interim CFO until a new permanent CFO is appointed. Jeremy Harris previously served as Genius Group’s
CFO from 2020 until 2022 and has over 25 years’ experience as an accountant and business advisor.
Jeremy is
currently a Director and the CFO of ERL and he is stepping down from his position as ERL CFO
for the duration of his tenure at the Company.
23,571,429 Series 1 Units, each consisting of One Ordinary Share
and
One Series 2024-A Warrant to Purchase One Ordinary Share and One Series 2024-C Warrant to Purchase One Ordinary Share
and
0 Series 2 Units, each consisting of One Pre-Funded Series 2024-B Warrant to Purchase
One
Ordinary Share and One Series 2024-A Warrant
to
Purchase One Ordinary Share and One Series 2024-C Warrant to Purchase One Ordinary Share
and
Placement
Agent Warrants to Purchase Up to 1,035,714 Ordinary Shares
and
1,035,714
Ordinary Shares Underlying the Placement Agent Warrants
Genius
Group Limited
PROSPECTUS
H.C. Wainwright &
Co.
January 11,
2024
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