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What changed in Four Seasons Education (Cayman) Inc.'s 20-F — 2023 vs 2024

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Paragraph-level year-over-year comparison of Four Seasons Education (Cayman) Inc.'s 2023 and 2024 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+631 added−547 removedSource: 20-F (2024-06-27) vs 20-F (2023-06-28)

Top changes in Four Seasons Education (Cayman) Inc.'s 2024 20-F

631 paragraphs added · 547 removed · 469 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

2 edited+0 added−0 removed0 unchanged
Biggest changeMAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 131 ITEM 8. FINANCIAL INFORMATION 132 ITEM 9. THE OFFER AND LISTING 133 ITEM 10. ADDITIONAL INFORMATION 134 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 147 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 147 PART II 149
Biggest changeMAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 135 ITEM 8. FINANCIAL INFORMATION 136 ITEM 9. THE OFFER AND LISTING 137 ITEM 10. ADDITIONAL INFORMATION 138 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 151 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 151 PART II 153
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS 7 ITEM 2 OFFER STATISTICS AND EXPECTED TIMETABLE 7 ITEM 3 KEY INFORMATION 7 ITEM 4. INFORMATION ON THE COMPANY 72 ITEM 4A. UNRESOLVED STAFF COMMENTS 105 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 106 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 122 ITEM 7.
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS 7 ITEM 2 OFFER STATISTICS AND EXPECTED TIMETABLE 7 ITEM 3 KEY INFORMATION 7 ITEM 4. INFORMATION ON THE COMPANY 71 ITEM 4A. UNRESOLVED STAFF COMMENTS 109 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 110 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 126 ITEM 7.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

211 edited+42 added−32 removed537 unchanged
Biggest changeAs of February 28, 2022 Other Four Seasons WFOE Subsidiaries VIEs Eliminations Consolidated (RMB in thousands) Cash and cash equivalents 179,086 19,466 8,441 55,436 — 262,429 Restricted cash — — — 10,273 — 10,273 Short-term investments — 45,289 44,255 — — 89,544 Long-term investments under fair value - current 156,459 — — — — 156,459 Amounts due from Four Seasons group companies (1) — 41,184 16,381 — (57,565 ) — Investments in subsidiaries and the VIEs (2) 110,569 2,300 39,700 — (152,569 ) — Long-term investments, net — 13,500 — 500 — 14,000 Other assets 907 4,521 4,714 59,686 — 69,828 Total assets 447,021 126,260 113,491 125,895 (210,134 ) 602,533 Accrued expenses and other current liabilities 1,080 2,400 360 64,449 — 68,289 Amounts due to Four Seasons group companies (1) — 7,925 15,888 33,752 (57,565 ) — Other liabilities — 2,767 766 28,217 — 31,750 Total liabilities 1,080 13,092 17,014 126,418 (57,565 ) 100,039 Total equity (deficit) 445,941 113,168 96,477 (523 ) (152,569 ) 502,494 27 As of February 28, 2023 Other Four Seasons WFOE Subsidiaries VIEs Eliminations Consolidated (RMB in thousands) Cash and cash equivalents 65,987 28,138 41,670 39,901 — 175,696 Restricted cash — — — 1,362 — 1,362 Short-term investments — 24,332 — — — 24,332 Short-term investments under fair value 156,639 — — — — 156,639 Long-term investments under fair value - current 135,201 — — — — 135,201 Amounts due from Four Seasons Group Companies (1) 3 39,701 42,700 — (82,404 ) — Investments in subsidiaries and consolidated VIEs (2) 122,352 300 41,700 — (164,352 ) — Long-term investments, net — 27,000 — 500 — 27,500 Other assets 14,553 4,229 1,333 60,195 — 80,310 Total assets 494,735 123,700 127,403 101,958 (246,756 ) 601,040 Accrued expenses and other current liabilities 2,314 377 842 56,009 — 59,542 Amounts due to Four Seasons group companies (1) 34,689 11,985 5,877 29,853 (82,404 ) — Other liabilities — 3,566 442 25,600 — 29,608 Total liabilities 37,003 15,928 7,161 111,462 (82,404 ) 89,150 Total equity (deficit) 457,732 107,772 120,242 (9,504 ) (164,352 ) 511,890 (1) The eliminations are mainly related to the unpaid balance of service fees between our WFOE and the VIEs, as well as other interest-free advances from/to the VIEs.
Biggest changeThe following tables present the summary balance sheet data for the VIEs and other entities as of the dates presented. 26 Table of Contents As of February 28, 2023 Other Four Seasons WFOE Subsidiaries VIEs Eliminations Consolidated (RMB in thousands) Current assets Cash and cash equivalents 65,987 28,138 41,670 39,901 — 175,696 Short-term investments — 24,332 — — — 24,332 Short-term investments under fair value 156,639 — — — — 156,639 Long-term investments under fair value - current 135,201 — — — — 135,201 Amounts due from Four Seasons Group Companies (1) 3 39,701 42,700 — (82,404 ) — Other current assets 970 2,978 891 14,481 — 19,320 Total current assets 358,800 95,149 85,261 54,382 (82,404 ) 511,188 Non-current assets Restricted cash — — — 1,362 — 1,362 Investments in subsidiaries and consolidated VIEs (2) 122,352 300 41,700 — (164,352 ) — Long-term investments, net — 27,000 — 500 — 27,500 Other non-current assets 13,583 1,251 442 45,714 — 60,990 Total non-current assets 135,935 28,551 42,142 47,576 (164,352 ) 89,852 Total assets 494,735 123,700 127,403 101,958 (246,756 ) 601,040 Accrued expenses and other current liabilities 2,314 377 842 56,009 — 59,542 Amounts due to Four Seasons group companies (1) 34,689 11,985 5,877 29,853 (82,404 ) — Other liabilities — 3,566 442 25,600 — 29,608 Total liabilities 37,003 15,928 7,161 111,462 (82,404 ) 89,150 Total equity (deficit) 457,732 107,772 120,242 (9,504 ) (164,352 ) 511,890 27 Table of Contents As of February 29, 2024 Other Four Seasons WFOE Subsidiaries VIEs Eliminations Consolidated (RMB in thousands) Current assets Cash and cash equivalents 73,528 26,778 22,778 57,114 — 180,198 Short-term investments — 18,929 — — — 18,929 Short-term investments under fair value 82,791 — — — — 82,791 Long-term investments under fair value - current 14,122 — — — — 14,122 Amounts due from Four Seasons Group Companies (1) 4 36,927 40,035 — (76,966 ) — Other current assets 1,334 2,283 6,896 16,026 — 26,539 Total current assets 171,779 84,917 69,709 73,140 (76,966 ) 322,579 Non - current assets Restricted cash 121,472 — — 576 — 122,048 Investments in subsidiaries and consolidated VIEs (2) 124,990 300 70,700 25,000 (220,990 ) — Long-term investments, net — 36,000 — — — 36,000 Long-term investment under fair value 94,817 — — — — 94,817 Other non-current assets — 463 80,130 18,123 — 98,716 Total non-current assets 341,279 36,763 150,830 43,699 (220,990 ) 351,581 Total assets 513,058 121,680 220,539 116,839 (297,956 ) 674,160 Accrued expenses and other current liabilities 1,446 360 5,015 59,219 — 66,040 Amounts due to Four Seasons group companies (1) 35,322 11,556 3,876 26,212 (76,966 ) — Long-term borrowings — — 40,000 — — 40,000 Other liabilities 1,287 2,798 838 37,053 — 41,976 Total liabilities 38,055 14,714 49,729 122,484 (76,966 ) 148,016 Total equity (deficit) 475,003 106,966 170,810 (5,645 ) (220,990 ) 526,144 (1) The eliminations are mainly related to the unpaid balance of service fees between our WFOE and the VIEs, as well as other interest-free advances from/to the VIEs.
If the PCAOB is unable to conduct such inspections for two consecutive years beginning in 2021, the SEC will prohibit the trading of our ADSs. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.
If the PCAOB is unable to conduct such inspections for two consecutive years beginning in 2021, the SEC will prohibit the trading of our ADSs. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.
Risk Factors — Risks Related to Doing Business in the PRC — The PCAOB may be unable to inspect or fully investigate our auditors as required under the Holding Foreign Companies Accountable Act, or the HFCA Act.
Risk Factors — Risks Related to Doing Business in the PRC — The PCAOB may be unable to inspect or fully investigate our auditors as required under the Holding Foreign Companies Accountable Act, or the HFCA Act.
If the PCAOB is unable to conduct such inspections for two consecutive years beginning in 2021, the SEC will prohibit the trading of our ADSs. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.
If the PCAOB is unable to conduct such inspections for two consecutive years beginning in 2021, the SEC will prohibit the trading of our ADSs. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.
We are a holding company and rely principally on dividends paid by our subsidiaries in the PRC. Current PRC regulations permit our subsidiaries in the PRC to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations.
We are a holding company and rely principally on dividends paid by our subsidiaries in the PRC. Current PRC regulations permit our subsidiaries in the PRC to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations.
Under the applicable requirements of PRC law, our PRC subsidiaries may only distribute dividends after they have made allowances to fund certain statutory reserves. These reserves are not distributable as cash dividends.
Under the applicable requirements of PRC law, our PRC subsidiaries may only distribute dividends after they have made allowances to fund certain statutory reserves. These reserves are not distributable as cash dividends.
In addition, at the end of each fiscal year, each of our learning centers that are private schools in the PRC is required to allocate a certain amount to its development fund for the construction or maintenance of the school properties or purchase or upgrade of school facilities.
In addition, at the end of each fiscal year, each of our learning centers that are private schools in the PRC is required to allocate a certain amount to its development fund for the construction or maintenance of the school properties or purchase or upgrade of school facilities.
Furthermore, if our subsidiaries or the VIEs in the PRC incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us.
Furthermore, if our subsidiaries or the VIEs in the PRC incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us.
In addition, to the extent cash or assets in our business is in the PRC or Hong Kong or a PRC or Hong Kong entity, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in, or the imposition of restrictions and limitations on, the ability of our holding company, our PRC subsidiaries, or the VIEs by the PRC government to transfer cash or assets.
In addition, to the extent cash or assets in our business is in the PRC or Hong Kong or a PRC or Hong Kong entity, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in, or the imposition of restrictions and limitations on, the ability of our holding company, our PRC subsidiaries, or the VIEs by the PRC government to transfer cash or assets.
Cash may be transferred within our organization in the following manners: Under PRC laws, Four Seasons may, through its intermediary holding companies, provide funding to our PRC subsidiaries only through capital contributions or loans, and to the VIEs only through loans, subject to satisfaction of applicable government registration and approval requirements.
Cash may be transferred within our organization in the following manners: Under PRC laws, Four Seasons may, through its intermediary holding companies, provide funding to our PRC subsidiaries only through capital contributions or loans, and to the VIEs only through loans, subject to satisfaction of applicable government registration and approval requirements.
Any such restrictions or requirements may materially affect such entities’ ability to make dividends or make payments, in service fees or otherwise, to us, which may materially and adversely affect our business, financial condition and results of operations. For more details, see “Item 3. Key Information — D.
Any such restrictions or requirements may materially affect such entities’ ability to make dividends or make payments, in service fees or otherwise, to us, which may materially and adversely affect our business, financial condition and results of operations. For more details, see “Item 3. Key Information — D.
In addition, to the extent cash or assets in our business is in the PRC or Hong Kong or a PRC or Hong Kong entity, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in, or the imposition of restrictions and limitations on, the ability of our holding company, our PRC subsidiaries, or the VIEs by the PRC government to transfer cash or assets.
In addition, to the extent cash or assets in our business is in the PRC or Hong Kong or a PRC or Hong Kong entity, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in, or the imposition of restrictions and limitations on, the ability of our holding company, our PRC subsidiaries, or the VIEs by the PRC government to transfer cash or assets.
Moreover, we may fail to maintain, renew or update any of our existing licenses, permits, approvals, registrations or filings in a timely manner and on commercially reasonable terms, or at all, which could materially and adversely affect our business, results of operations and financial condition.
Moreover, we may fail to maintain, renew or update any of our existing licenses, permits, approvals, registrations or filings in a timely manner and on commercially reasonable terms, or at all, which could materially and adversely affect our business, results of operations and financial condition.
Besides, we may develop new business lines or make changes to the operations of certain of the current business of our PRC subsidiaries or the VIEs, which may require us to obtain additional licenses, approvals, permits, registrations and filings.
Besides, we may develop new business lines or make changes to the operations of certain of the current business of our PRC subsidiaries or the VIEs, which may require us to obtain additional licenses, approvals, permits, registrations and filings.
However, there can be no assurance that we are, or will be, able to successfully obtain such licenses, approvals, permits, registrations and filings in a timely manner, or at all.
However, there can be no assurance that we are, or will be, able to successfully obtain such licenses, approvals, permits, registrations and filings in a timely manner, or at all.
Government authorities may also from time to time issue new laws, rules and regulations or enhance enforcement of existing laws, rules and regulations, which could also require us to obtain new and additional licenses, permits, approvals, registrations or filings.
Government authorities may also from time to time issue new laws, rules and regulations or enhance enforcement of existing laws, rules and regulations, which could also require us to obtain new and additional licenses, permits, approvals, registrations or filings.
Risks Related to Doing Business in the PRC Changes in PRC economy, or economic and political conditions or government policies in China, could have a material adverse effect on our business, financial conditions and results of operations. Substantially all of our business operations are conducted in China.
Risks Related to Doing Business in the PRC Changes in PRC economy, or economic and political conditions or government policies in China, could have a material adverse effect on our business, financial conditions and results of operations. Substantially all of our business operations are conducted in China.
The PRC government has also opened a probe into several U.S.-listed technology companies focusing on anti-monopoly, financial technology regulation and more recently, with the passage of the PRC Data Security Law, how companies collect, store, process and transfer personal data.
The PRC government has also opened a probe into several U.S.-listed technology companies focusing on anti-monopoly, financial technology regulation and more recently, with the passage of the PRC Data Security Law, how companies collect, store, process and transfer personal data.
Currently these laws (other than the Law of the PRC on Safeguarding National Security in Hong Kong) are expected to apply to China domestic businesses, rather than businesses in Hong Kong which operate under a different set of laws from China.
Currently these laws (other than the Law of the PRC on Safeguarding National Security in Hong Kong) are expected to apply to China domestic businesses, rather than businesses in Hong Kong which operate under a different set of laws from China.
For example, the PRC government may pressure the government of Hong Kong to enact similar laws and regulations to those in the PRC, which may seek to exert control over offerings conducted overseas by Hong Kong companies.
For example, the PRC government may pressure the government of Hong Kong to enact similar laws and regulations to those in the PRC, which may seek to exert control over offerings conducted overseas by Hong Kong companies.
The Overseas Listing Trial Measures regulates both direct and indirect overseas offering and listing of PRC domestic companies’ securities by adopting a filing-based regulatory regime.
The Overseas Listing Trial Measures regulates both direct and indirect overseas offering and listing of PRC domestic companies’ securities by adopting a filing-based regulatory regime.
Pursuant to the Overseas Listing Trial Measures, the principle of “substance over form” shall be followed when determining whether an offering and listing shall be deemed as an indirect overseas offering and listing by a PRC domestic company and if the issuer meets both the following criteria, the overseas securities offering and listing conducted by such issuer shall be deemed as indirect overseas offering by PRC domestic companies: (i) 50% or more of any of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in the PRC or its main place(s) of business are located in the PRC, or the majority of senior management staff in charge of its business operations and management are PRC citizens or have their habitual residence located in the PRC.
Pursuant to the Overseas Listing Trial Measures, the principle of “substance over form” shall be followed when determining whether an offering and listing shall be deemed as an indirect overseas offering and listing by a PRC domestic company and if the issuer meets both the following criteria, the overseas securities offering and listing conducted by such issuer shall be deemed as indirect overseas offering by PRC domestic companies: (i) 50% or more of any of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in the PRC or its main place(s) of business are located in the PRC, or the majority of senior management staff in charge of its business operations and management are PRC citizens or have their habitual residence located in the PRC.
Where an issuer submits an application for initial public offering to competent overseas regulators, such issuer must file with the CSRC within three business days after such application is submitted.
Where an issuer submits an application for initial public offering to competent overseas regulators, such issuer must file with the CSRC within three business days after such application is submitted.
The Overseas Listing Trial Measures also requires subsequent reports to be submitted to the CSRC on material events, such as change of control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings and listings.
The Overseas Listing Trial Measures also requires subsequent reports to be submitted to the CSRC on material events, such as change of control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings and listings.
On the same day, the CSRC also published the Notice on the Administrative Arrangements for the Filing of Overseas Securities Offering and Listing by the Domestic Enterprises, or the Notice on Overseas Listing Measures.
On the same day, the CSRC also published the Notice on the Administrative Arrangements for the Filing of Overseas Securities Offering and Listing by the Domestic Enterprises, or the Notice on Overseas Listing Measures.
According to the Notice on Overseas Listing Measures, issuers that have already been listed in an overseas market by March 31, 2023, the date on which the Overseas Listing Measures will become effective, such as our company, are not required to make any immediate filing.
According to the Notice on Overseas Listing Measures, issuers that have already been listed in an overseas market by March 31, 2023, the date on which the Overseas Listing Measures will become effective, such as our company, are not required to make any immediate filing.
However, such issuers will be required to comply with the filing requirements under Overseas Listing Measures if and when they pursue any future securities offerings and listings outside of mainland China, including but not limited to follow-on offerings, secondary listings and going private transactions.
However, such issuers will be required to comply with the filing requirements under Overseas Listing Measures if and when they pursue any future securities offerings and listings outside of mainland China, including but not limited to follow-on offerings, secondary listings and going private transactions.
It remains uncertain how PRC government authorities will regulate overseas listing in general and whether we are required to complete filing or obtain any specific regulatory approvals from the CSRC, CAC or any other PRC government authorities for our overseas offerings.
It remains uncertain how PRC government authorities will regulate overseas listing in general and whether we are required to complete filing or obtain any specific regulatory approvals from the CSRC, CAC or any other PRC government authorities for our overseas offerings.
If the CSRC, CAC or other government authorities later promulgate new rules or explanations requiring that we obtain their approvals for our future overseas offerings, we may be unable to obtain such approvals in a timely manner, or at all, and such approvals may be rescinded even if obtained.
If the CSRC, CAC or other government authorities later promulgate new rules or explanations requiring that we obtain their approvals for our future overseas offerings, we may be unable to obtain such approvals in a timely manner, or at all, and such approvals may be rescinded even if obtained.
Any such circumstance could significantly limit or completely hinder our ability to continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. In addition, implementation of industry-wide regulations directly targeting our operations could cause the value of our securities to significantly decline.
Any such circumstance could significantly limit or completely hinder our ability to continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. In addition, implementation of industry-wide regulations directly targeting our operations could cause the value of our securities to significantly decline.
If we are unable to protect the personal information and other data we collect, store and use from unauthorized access, use, disclosure, disruption, modification, or destruction, such problems or security breaches could cause a loss, give rise to our liabilities to the owners or subject of the information, or subject us to fines and other penalties.
If we are unable to protect the personal information and other data we collect, store and use from unauthorized access, use, disclosure, disruption, modification, or destruction, such problems or security breaches could cause a loss, give rise to our liabilities to the owners or subject of the information, or subject us to fines and other penalties.
In accordance with the Draft Data Security Regulations, data processors shall apply for a cybersecurity review for certain activities, including, among other things, (i) the listing abroad of data processors that process the personal information of more than one million individuals and (ii) any data processing activity that affects or may affect national security.
In accordance with the Draft Data Security Regulations, data processors shall apply for a cybersecurity review for certain activities, including, among other things, (i) the listing abroad of data processors that process the personal information of more than one million individuals and (ii) any data processing activity that affects or may affect national security.
As a result, restrictions on currency exchange may limit our ability to use revenue generated in Renminbi to fund any business activities we may have outside the PRC in the future or to make dividend payments to our shareholders and ADS holders in U.S. dollars.
As a result, restrictions on currency exchange may limit our ability to use revenue generated in Renminbi to fund any business activities we may have outside the PRC in the future or to make dividend payments to our shareholders and ADS holders in U.S. dollars.
Under current PRC laws and regulations, Renminbi is freely convertible for current account items, such as trade and service-related foreign exchange transactions and dividend distributions. However, Renminbi is not freely convertible for direct investment or loans or investments in securities outside the PRC, unless such use is approved by SAFE.
Under current PRC laws and regulations, Renminbi is freely convertible for current account items, such as trade and service-related foreign exchange transactions and dividend distributions. However, Renminbi is not freely convertible for direct investment or loans or investments in securities outside the PRC, unless such use is approved by SAFE.
To the extent we need to convert and use any Renminbi-denominated revenue generated by the VIEs not paid to our PRC subsidiaries and revenue generated by our PRC subsidiaries not declared and paid as dividends, the limitations discussed above will restrict the convertibility of, and our ability to directly receive and use such revenue.
To the extent we need to convert and use any Renminbi-denominated revenue generated by the VIEs not paid to our PRC subsidiaries and revenue generated by our PRC subsidiaries not declared and paid as dividends, the limitations discussed above will restrict the convertibility of, and our ability to directly receive and use such revenue.
Furthermore, if our subsidiaries or the VIEs in the PRC incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us.
Furthermore, if our subsidiaries or the VIEs in the PRC incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us.
In addition, to the extent cash or assets in our business is in the PRC or Hong Kong or a PRC or Hong Kong entity, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in, or the imposition of restrictions and limitations on, the ability of our holding company, our PRC subsidiaries, or the VIEs by the PRC government to transfer cash or assets.
In addition, to the extent cash or assets in our business is in the PRC or Hong Kong or a PRC or Hong Kong entity, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in, or the imposition of restrictions and limitations on, the ability of our holding company, our PRC subsidiaries, or the VIEs by the PRC government to transfer cash or assets.
Cash may be transferred within our organization in the following manners: Under PRC laws, Four Seasons may, through its intermediary holding companies, provide funding to our PRC subsidiaries only through capital contributions or loans, and to the VIEs only through loans, subject to satisfaction of applicable government registration and approval requirements.
Cash may be transferred within our organization in the following manners: Under PRC laws, Four Seasons may, through its intermediary holding companies, provide funding to our PRC subsidiaries only through capital contributions or loans, and to the VIEs only through loans, subject to satisfaction of applicable government registration and approval requirements.
On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures and five supporting guidelines, which came into effect on March 31, 2023.
On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures and five supporting guidelines, which came into effect on March 31, 2023.
If we fail to obtain required approval or complete other review or filing procedures, under the Overseas Listing Measures or otherwise, for any future securities offerings and listings outside of mainland China, including but not limited to follow-on offerings, secondary listings and going private transactions, we may face sanctions by the CSRC or other PRC regulatory authorities, including administrative penalties, such as order to rectify, warnings, fines or other actions that may materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs.
If we fail to obtain required approval or complete other review or filing procedures, under the Overseas Listing Measures or otherwise, for any future securities offerings and listings outside of mainland China, including but not limited to follow-on offerings, secondary listings and going private transactions, we may face sanctions by the CSRC or other PRC regulatory authorities, including administrative penalties, such as order to rectify, warnings, fines or other actions that may materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs.
If the PCAOB is unable to conduct such inspections for two consecutive years beginning in 2021, the SEC will prohibit the trading of our ADSs. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.
If the PCAOB is unable to conduct such inspections for two consecutive years beginning in 2021, the SEC will prohibit the trading of our ADSs. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.
The HFCA Act states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection for the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
The HFCA Act states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection for the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
Senate passed the Accelerating Holding Foreign Companies Accountable Act, or the AHFCA Act, which was signed into law on December 29, 2022, amending the HFCA Act and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.
Senate passed the Accelerating Holding Foreign Companies Accountable Act, or the AHFCA Act, which was signed into law on December 29, 2022, amending the HFCA Act and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.
On December 2, 2021, the SEC adopted final amendments implementing the disclosure and submission requirements under the HFCA Act, pursuant to which the SEC will identify a “Commission-Identified Issuer” if an issuer has filed an annual report containing an audit report issued by a registered public accounting firm that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction.
On December 2, 2021, the SEC adopted final amendments implementing the disclosure and submission requirements under the HFCA Act, pursuant to which the SEC will identify a “Commission-Identified Issuer” if an issuer has filed an annual report containing an audit report issued by a registered public accounting firm that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction.
On August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol (the “Protocol”) with the CSRC and the Ministry of Finance (“MOF”) of the People's Republic of China, governing inspections and investigations of audit firms based in mainland China and Hong Kong. The Protocol remains unpublished and is subject to further explanation and implementation.
On August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol (the “Protocol”) with the CSRC and the Ministry of Finance (“MOF”) of the People's Republic of China, governing inspections and investigations of audit firms based in mainland China and Hong Kong. The Protocol remains unpublished and is subject to further explanation and implementation.
Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and the unfettered ability to transfer information to the SEC.
Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and the unfettered ability to transfer information to the SEC.
On December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous PCAOB Determination Report to the contrary.
On December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous PCAOB Determination Report to the contrary.
However, whether the PCAOB will continue to conduct inspections and investigations completely to its satisfaction of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditor’s, control, including positions taken by authorities of the PRC.
However, whether the PCAOB will continue to conduct inspections and investigations completely to its satisfaction of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditor’s, control, including positions taken by authorities of the PRC.
The PCAOB is expected to continue to demand complete access to inspections and investigations against accounting firms headquartered in mainland China and Hong Kong in the future and states that it has already made plans to resume regular inspections in early 2023 and beyond.
The PCAOB is expected to continue to demand complete access to inspections and investigations against accounting firms headquartered in mainland China and Hong Kong in the future and states that it has already made plans to resume regular inspections in early 2023 and beyond.
The PCAOB is required under the HFCA Act to make its determination on an annual basis with regards to its ability to inspect and investigate completely accounting firms based in the mainland China and Hong Kong.
The PCAOB is required under the HFCA Act to make its determination on an annual basis with regards to its ability to inspect and investigate completely accounting firms based in the mainland China and Hong Kong.
Should the PCAOB again encounter impediments to inspections and investigations in mainland China or Hong Kong as a result of positions taken by any authority in either jurisdiction, the PCAOB will make determinations under the HFCA Act as and when appropriate.
Should the PCAOB again encounter impediments to inspections and investigations in mainland China or Hong Kong as a result of positions taken by any authority in either jurisdiction, the PCAOB will make determinations under the HFCA Act as and when appropriate.
MarcumAisa, whose audit report is included in this annual report on Form 20-F, is headquartered in New York, New York, and is subject to inspection by the PCAOB on a regular basis.
MarcumAisa, whose audit report is included in this annual report on Form 20-F, is headquartered in New York, New York, and is subject to inspection by the PCAOB on a regular basis.
If our shares and ADSs are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States.
If our shares and ADSs are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States.
Such a prohibition would substantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our ADSs.
Such a prohibition would substantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our ADSs.
Because a separate determination must be made after the close of each taxable year as to whether we were a PFIC for that year, we cannot assure you that we will not be a PFIC for the current or any future taxable year.
Because a separate determination must be made after the close of each taxable year as to whether we were a PFIC for that year, we cannot assure you that we will or will not be a PFIC for the current or any future taxable year.
In addition, all of our current directors and officers, namely Peiqing Tian, Yi Zuo, Shaoqing Jiang, Zongwei Li and Bing Yuan, reside within mainland China and Hong Kong and all of their assets are located outside the United States.
In addition, all of our current directors and officers, namely Peiqing Tian, Yi Zuo, Shaoqing Jiang, Zongwei Li and Bing Yuan, reside within mainland China and Hong Kong and all of their assets are located outside the United States.
As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise.
As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise.
There is uncertainty as to whether the courts of Hong Kong would (i) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or (ii) entertain original actions brought in Hong Kong against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.
There is uncertainty as to whether the courts of Hong Kong would (i) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or (ii) entertain original actions brought in Hong Kong against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.
A judgment of a court in the United States predicated upon U.S. federal or state securities laws may be enforced in Hong Kong at common law by bringing an action in a Hong Kong court on that judgment for the amount due thereunder, and then seeking summary judgment on the strength of the foreign judgment, provided that the foreign judgment, among other things, is (i) for a debt or a definite sum of money (not being taxes or similar charges to a foreign government taxing authority or a fine or other penalty) and (ii) final and conclusive on the merits of the claim, but not otherwise.
A judgment of a court in the United States predicated upon U.S. federal or state securities laws may be enforced in Hong Kong at common law by bringing an action in a Hong Kong court on that judgment for the amount due thereunder, and then seeking summary judgment on the strength of the foreign judgment, provided that the foreign judgment, among other things, is (i) for a debt or a definite sum of money (not being taxes or similar charges to a foreign government taxing authority or a fine or other penalty) and (ii) final and conclusive on the merits of the claim, but not otherwise.
Such a judgment may not, in any event, be so enforced in Hong Kong if (a) it was obtained by fraud; (b) the proceedings in which the judgment was obtained were opposed to natural justice; (c) its enforcement or recognition would be contrary to the public policy of Hong Kong; (d) the court of the United States was not jurisdictionally competent; or (e) the judgment was in conflict with a prior Hong Kong judgment.
Such a judgment may not, in any event, be so enforced in Hong Kong if (a) it was obtained by fraud; (b) the proceedings in which the judgment was obtained were opposed to natural justice; (c) its enforcement or recognition would be contrary to the public policy of Hong Kong; (d) the court of the United States was not jurisdictionally competent; or (e) the judgment was in conflict with a prior Hong Kong judgment.
Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States.
Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States.
Our brand and reputation could be adversely affected under many circumstances, including the following: • our learners and customers are not satisfied with our programs and related services; • we fail to properly manage accidents or other events that injure our learners and customers; 35 • our faculty or staff behave or are perceived to behave inappropriately or illegally; • our faculty or staff fail to appropriately supervise learners and customers under their care; • we fail to conduct proper background checks on our faculty or staff; • we lose a license, permit or other authorization to operate a learning center or study camp; • we do not maintain consistent learning service and product quality; • our facilities do not meet the standards expected by learners and customers; and • learning center or study camp operators with lower quality abuse our brand name or those with brand names similar to ours by conducting fraudulent activities and creating confusion among learners and customers.
Our brand and reputation could be adversely affected under many circumstances, including the following: • our learners and customers are not satisfied with our programs and related services; • we fail to properly manage accidents or other events that injure our learners and customers; • our faculty or staff behave or are perceived to behave inappropriately or illegally; • our faculty or staff fail to appropriately supervise learners and customers under their care; • we fail to conduct proper background checks on our faculty or staff; • we lose a license, permit or other authorization to operate a learning center or study camp; • we do not maintain consistent learning service and product quality; • our facilities do not meet the standards expected by learners and customers; and • learning center or study camp operators with lower quality abuse our brand name or those with brand names similar to ours by conducting fraudulent activities and creating confusion among learners and customers.
Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: • the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC; • 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 stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and • the selective disclosure rules by issuers of material nonpublic information under Regulation FD.
Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: • the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC; • 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 stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and • the selective disclosure rules by issuers of material nonpublic information under Regulation.
Since the Cyber Data Security Draft are still a draft for comments, the Cyber Data Security Draft (especially its operative provisions) and its anticipated adoption or effective date are subject to further changes with substantial uncertainty. 12 On February 17, 2023, the CSRC released the Overseas Listing Trial Measures and five supporting guidelines, which became effect on March 31, 2023.
Since the Cyber Data Security Draft are still a draft for comments, the Cyber Data Security Draft (especially its operative provisions) and its anticipated adoption or effective date are subject to further changes with substantial uncertainty. On February 17, 2023, the CSRC released the Overseas Listing Trial Measures and five supporting guidelines, which became effect on March 31, 2023.
Given the substantial uncertainties surrounding the latest CSRC filing requirements and the CAC cybersecurity review requirements, and such regulations are subject to change, we cannot assure you that our holding company, PRC subsidiaries or the VIEs will be able to complete the filings and fully comply with the relevant new rules on a timely basis, if the CSRC, CAC or other government authorities later promulgate new rules or explanations requiring that we obtain their approvals for our future overseas offerings. 13 In addition, implementation of industry-wide regulations directly targeting our operations could cause the value of our securities to significantly decline.
Given the substantial uncertainties surrounding the latest CSRC filing requirements and the CAC cybersecurity review requirements, and such regulations are subject to change, we cannot assure you that our holding company, PRC subsidiaries or the VIEs will be able to complete the filings and fully comply with the relevant new rules on a timely basis, if the CSRC, CAC or other government authorities later promulgate new rules or explanations requiring that we obtain their approvals for our future overseas offerings. 13 Table of Contents In addition, implementation of industry-wide regulations directly targeting our operations could cause the value of our securities to significantly decline.
Our teachers may, against our policies, use third-party copyrighted materials without proper authorization in our classes. We may incur liability for unauthorized duplication or distribution of materials posted on our websites or used in our classes. 39 We have limited insurance coverage with respect to our business and operations.
Our teachers may, against our policies, use third-party copyrighted materials without proper authorization in our classes. We may incur liability for unauthorized duplication or distribution of materials posted on our websites or used in our classes. We have limited insurance coverage with respect to our business and operations.
In the event of accidents or injuries or other harm to learners and customers or other people on our premises, including those caused by or otherwise arising from the actions or negligence of our employees or contractors on our premises, our facilities may be perceived to be unsafe, which may result in decreased learners enrollment.
In the event of accidents or injuries or other harm to learners and customers or other people on our premises, including those caused by or otherwise arising from the actions or negligence of our employees or contractors on our premises, our facilities may be perceived to be unsafe, which may result in decreased learners' enrollment.
In addition, if the legal structure and the contractual arrangements were found to violate any existing or future PRC laws and regulations, we may be subject to fines or other legal or administrative sanctions. 43 If the imposition of government actions causes us to lose our right to direct the activities of the VIEs or our right to receive substantially all the economic benefits and residual returns from the VIEs and we are not able to restructure our ownership structure and operations in a satisfactory manner, we would no longer be able to consolidate the financial results of the VIEs.
In addition, if the legal structure and the contractual arrangements were found to violate any existing or future PRC laws and regulations, we may be subject to fines or other legal or administrative sanctions. 43 Table of Contents If the imposition of government actions causes us to lose our right to direct the activities of the VIEs or our right to receive substantially all the economic benefits and residual returns from the VIEs and we are not able to restructure our ownership structure and operations in a satisfactory manner, we would no longer be able to consolidate the financial results of the VIEs.
We may be required to make further adjustments to our business practices to comply with the personal information protection laws and regulations. 52 • On August 1, 2022, the Standing Committee further amended the Anti-Monopoly Law, which, among others, (i) emphasized that business operators with a dominant market position shall not engage in any conduct of abusing a dominant market position by utilizing data and algorithm, technology, and platform rules, (ii) increased the fines on business operators for illegal concentration to “no more than ten percent of the preceding year’s sales revenue of the business operators if the concentration of business operators has or may have an effect of excluding or limiting competition; or a fine of up to RMB5 million if the concentration of business operators does not have an effect of excluding or limiting competition,” and (iii) increased the fines on business operators that reaching monopoly agreements to “no less than one percent but no more than ten percent of the preceding year’s sales revenue of the business operators, or a fine of up to RMB5 million if no sales revenue in the preceding year; and if such monopoly agreements have not been implemented, a fine of up to RMB3 million.” Many of the data-related legislations are relatively new and certain concepts thereunder remain subject to interpretation by the regulators.
We may be required to make further adjustments to our business practices to comply with the personal information protection laws and regulations. 51 Table of Contents • On August 1, 2022, the Standing Committee further amended the Anti-Monopoly Law, which, among others, (i) emphasized that business operators with a dominant market position shall not engage in any conduct of abusing a dominant market position by utilizing data and algorithm, technology, and platform rules, (ii) increased the fines on business operators for illegal concentration to “no more than ten percent of the preceding year’s sales revenue of the business operators if the concentration of business operators has or may have an effect of excluding or limiting competition; or a fine of up to RMB5 million if the concentration of business operators does not have an effect of excluding or limiting competition,” and (iii) increased the fines on business operators that reaching monopoly agreements to “no less than one percent but no more than ten percent of the preceding year’s sales revenue of the business operators, or a fine of up to RMB5 million if no sales revenue in the preceding year; and if such monopoly agreements have not been implemented, a fine of up to RMB3 million.” Many of the data-related legislations are relatively new and certain concepts thereunder remain subject to interpretation by the regulators.
Risk Factors — Risks Related to Doing Business in the PRC — Uncertainties with respect to the PRC legal system could have a material adverse effect on us.” 11 On June 30, 2020, the Standing Committee of the National People’s Congress of the PRC, or the SCNPC promulgated the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region, or the Law of PRC on Safeguarding National Security in Hong Kong, the interpretation of which involves a degree of uncertainty.
Risk Factors — Risks Related to Doing Business in the PRC — Uncertainties with respect to the PRC legal system could have a material adverse effect on us.” 11 Table of Contents On June 30, 2020, the Standing Committee of the National People’s Congress of the PRC, or the SCNPC promulgated the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region, or the Law of PRC on Safeguarding National Security in Hong Kong, the interpretation of which involves a degree of uncertainty.
However, we do not believe that such actions would result in the liquidation or dissolution of our company, our wholly-owned subsidiaries in the PRC or VIEs and their learning centers or subsidiaries. 42 Substantial uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure and business operations.
However, we do not believe that such actions would result in the liquidation or dissolution of our company, our wholly-owned subsidiaries in the PRC or VIEs and their learning centers or subsidiaries. 42 Table of Contents Substantial uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure and business operations.
In addition to market and industry factors, the price and trading volume for our ADSs may be highly volatile due to a number of factors, including the following: • regulatory developments affecting us or our industry; • actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; • changes in the market condition, market potential and competition in our industry; • announcements by us or our competitors of new education services, expansions, investments, acquisitions, strategic partnerships or joint ventures; • fluctuations in global and Chinese economies; • changes in financial estimates by securities analysts; 64 • adverse publicity about us; • additions or departures of our key personnel and senior management; • release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; • potential litigation or regulatory investigations; and • proceedings instituted recently by the SEC against five PRC-based accounting firms, including our independent registered public accounting firm.
In addition to market and industry factors, the price and trading volume for our ADSs may be highly volatile due to a number of factors, including the following: • regulatory developments affecting us or our industry; • actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; • changes in the market condition, market potential and competition in our industry; • announcements by us or our competitors of new education services, expansions, investments, acquisitions, strategic partnerships or joint ventures; • fluctuations in global and Chinese economies; • changes in financial estimates by securities analysts; • adverse publicity about us; • additions or departures of our key personnel and senior management; 63 Table of Contents • release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; • potential litigation or regulatory investigations; and • proceedings instituted recently by the SEC against five PRC-based accounting firms, including our independent registered public accounting firm.
The agreement will remain effective unless terminated upon the full exercise of call option or unilaterally terminated by Shanghai Fuxi with a notice 30 days in advance. 8 Equity Pledge Agreement Pursuant to the equity pledge agreement, the shareholders of the VIEs unconditionally and irrevocably pledged all of its equity interests in the VIEs to Shanghai Fuxi, to respectively guarantee the performance of the VIEs of their obligations under the relevant contractual agreements.
The agreement will remain effective unless terminated upon the full exercise of call option or unilaterally terminated by Shanghai Fuxi with a notice 30 days in advance. 8 Table of Contents Equity Pledge Agreement Pursuant to the equity pledge agreement, the shareholders of the VIEs unconditionally and irrevocably pledged all of its equity interests in the VIEs to Shanghai Fuxi, to respectively guarantee the performance of the VIEs of their obligations under the relevant contractual agreements.
They further undertakes not to make any assertions in connection with the equity interests of the VIEs held by the applicable shareholder, and confirm that the shareholder can perform the relevant transaction documents described above and further amend or terminate such transaction documents without the authorization or consent from such spouse.
They further undertake not to make any assertions in connection with the equity interests of the VIEs held by the applicable shareholder, and confirm that the shareholder can perform the relevant transaction documents described above and further amend or terminate such transaction documents without the authorization or consent from such spouse.
If we are unable to maintain effective control over the VIEs, we would not be able to continue to consolidate their financial results in our consolidated financial statements. In the 2021, 2022 and 2023 fiscal years, substantially all of our revenue was derived from the operations of the VIEs.
If we are unable to maintain effective control over the VIEs, we would not be able to continue to consolidate their financial results in our consolidated financial statements. In the 2022, 2023 and 2024 fiscal years, substantially all of our revenue was derived from the operations of the VIEs.
Our current auditor, Marcum Asia CPAs LLP (formerly Marcum Bernstein & Pinchuk LLP), or MarcumAsia, the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United States), or the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
Our current auditor, Marcum Asia CPAs LLP, or MarcumAsia, the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United States), or the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
We may not succeed in executing our growth strategies due to a number of factors, including, without limitation, the following: • we may fail to promote our current business in existing markets or identify, or market our current business in new markets with sufficient growth potential; 33 • we may fail to obtain the requisite licenses and permits necessary to operate our business at our desired locations from local authorities or face risks in opening without the requisite licenses and permits; • we may not be able to further expand our existing content library or learning technology and content solutions; • we may not be able to retain core talents that are critical to our business; • we may fail to maintain our competitive advantages in the market; • we may not be able to expand the scale of our current business in a cost-effective and timely manner; • we may not be able to replicate our successful growth model in Shanghai in other geographic markets; and • we may not be able to successfully identify new business opportunities, if any, or successfully cooperate with our local business partners or integrate acquired businesses with our current service offerings and achieve anticipated synergies.
We may not succeed in executing our growth strategies due to a number of factors, including, without limitation, the following: • we may fail to promote our current business in existing markets or identify, or market our current business in new markets with sufficient growth potential; • we may fail to obtain the material requisite licenses and permits necessary to our principial business operation at our desired locations from local authorities or face risks in opening without the requisite licenses and permits; • we may not be able to further expand our existing content library or learning technology and content solutions; • we may not be able to retain core talents that are critical to our business; • we may fail to maintain our competitive advantages in the market; • we may not be able to expand the scale of our current business in a cost-effective and timely manner; • we may not be able to replicate our successful growth model in Shanghai in other geographic markets; and • we may not be able to successfully identify new business opportunities, if any, or successfully cooperate with our local business partners or integrate acquired businesses with our current service offerings and achieve anticipated synergies.
In the opinion of Fangda Partners, our PRC counsel: • the ownership structure of Shanghai Fuxi and the VIEs do not violate applicable PRC laws and regulations currently in effect; and 7 • the contractual arrangements between Shanghai Fuxi, the VIEs and their respective shareholders governed by PRC law currently are valid and binding.
In the opinion of Fangda Partners, our PRC counsel: • the ownership structure of Shanghai Fuxi and the VIEs do not violate applicable PRC laws and regulations currently in effect; and 7 Table of Contents • the contractual arrangements between Shanghai Fuxi, the VIEs and their respective shareholders governed by PRC law currently are valid and binding.
Our PRC counsel, Fangda Partners, has consulted the relevant government authorities, which acknowledged that, under the currently effective PRC laws and regulations, a company already listed in a foreign stock exchange before promulgation of the latest Cybersecurity Review Measures is not required to go through a cybersecurity review by the CAC to conduct a securities offering or maintain its listing status on the foreign stock exchange on which its securities have been listed.
Our PRC counsel, Fangda Partners, has consulted the relevant government authorities, which 12 Table of Contents acknowledged that, under the currently effective PRC laws and regulations, a company already listed in a foreign stock exchange before promulgation of the latest Cybersecurity Review Measures is not required to go through a cybersecurity review by the CAC to conduct a securities offering or maintain its listing status on the foreign stock exchange on which its securities have been listed.
If there is any material change of the principal business of the listed company after the overseas offering and listing so that the listed company is no longer required to file with the CSRC, it shall file a specific report and a legal opinion issued by a domestic law firm to the CSRC within three business days after the occurrence hereof. 59 Given the substantial uncertainties surrounding the latest CSRC filing requirements at this stage, we cannot assure you that we will be able to complete the filings and fully comply with the relevant new rules on a timely basis, if at all.
If there is any material change of the principal business of the listed company after the overseas offering and listing so that the listed company is no longer required to file with the CSRC, it shall file a specific report and a legal opinion issued by a domestic law firm to the CSRC within three business days after the occurrence hereof. 58 Table of Contents Given the substantial uncertainties surrounding the latest CSRC filing requirements at this stage, we cannot assure you that we will be able to complete the filings and fully comply with the relevant new rules on a timely basis, if at all.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

148 edited+90 added−30 removed247 unchanged
Biggest changeIn addition, the Double Alleviating Opinions also provide a series of restrictions in connection with the operation of Academic AST Institutions, especially that: (i) a filing and inspection system and administration rules shall be adopted in connection with the training content provided and tutoring materials used by Academic AST Institutions and providing foreign training courses is prohibited; (ii) Academic AST Institutions shall not provide tutoring service during public holidays, weekends and school breaks; (iii) Academic AST Institutions shall not solicit teachers who works in the schools by making high salary commitment and staffs engaging in academic AST service must obtain teacher qualification certificates, and copies of such qualifications must be prominently displayed on Academic AST Institutions’ premises and website; (iv) Academic AST Institutions shall not disclose the parents’ and students’ personal information; (v) Academic AST Institutions shall adopt tuition standard based on market demands, costs and other factors and disclose such tuition standards for the public’s supervision; (vi) Academic AST Institutions shall adopt the form of service contract for after-school tutoring services provided to primary and secondary school students as formulated by governmental authorities; (vii) online after-school tutoring service shall not be provided after 21:00 each day with each lesson’s length of no more than thirty minutes and each lesson break’s length of no less than ten minutes; and (viii) the employment of foreign teachers shall be in compliance with relevant rules and regulations and employment of foreign teachers outside the PRC is prohibited.
Biggest changeIn addition, The Double Alleviating Opinions further provides that no approvals will be granted to AST Institutions providing academic subjects tutoring service to pre-school children (i.e. children from three to six years old) and ordinary senior high school students, that any online and offline tutoring service provided to pre-school children is strictly prohibited and that the administration in connection with Academic AST Institution targeting ordinary senior high school students shall be carried out by reference to the requirements and restrictions under the Double Alleviating Opinions. 78 Table of Contents In addition, the Double Alleviating Opinions also provide a series of restrictions in connection with the operation of Academic AST Institutions, especially that: (i) a filing and inspection system and administration rules shall be adopted in connection with the training content provided and tutoring materials used by Academic AST Institutions and providing foreign training courses is prohibited; (ii) Academic AST Institutions shall not provide tutoring service during public holidays, weekends and school breaks; (iii) Academic AST Institutions shall not solicit teachers who works in the schools by making high salary commitment and staffs engaging in academic AST service must obtain teacher qualification certificates, and copies of such qualifications must be prominently displayed on Academic AST Institutions’ premises and website; (iv) Academic AST Institutions shall not disclose the parents’ and students’ personal information; (v) Academic AST Institutions shall adopt tuition standard based on market demands, costs and other factors and disclose such tuition standards for the public’s supervision; (vi) Academic AST Institutions shall adopt the form of service contract for after-school tutoring services provided to primary and secondary school students as formulated by governmental authorities; (vii) online after-school tutoring service shall not be provided after 21:00 each day with each lesson’s length of no more than thirty minutes and each lesson break’s length of no less than ten minutes; and (viii) the employment of foreign teachers shall be in compliance with relevant rules and regulations and employment of foreign teachers outside the PRC is prohibited.
On September 10, 2021, the General office of MOE, together with five other governmental authorities promulgated the Notice on the Conversion of Filing Mechanism to Approval Mechanism regarding Existing Online Academic AST Institutions, which reiterates that an approval mechanism will be adopted with regard to the existing online Academic AST Institutions which previously filed with competent authorities and requires all existing online Academic AST Institutions shall convert themselves into non-profit institutions by registration with local counterparts of the MCA by the end of 2021. • Regulations related to non-academic after-school tutoring institutions 80 On March 3, 2022, the MOE jointly with SAMR and NDRC promulgated the Notice on Regulating Non-Academic After-school Training Institutions, which provide that, among others, (i) non-academic after-school tutoring institutions shall have the corresponding qualifications and their staffs shall have the corresponding proofs for their profession; (ii) non-academic after-school tutoring institutions shall ensure that training contents and training methods are suitable for the age, mental and physical characteristics and cognitive level of students; (iii) the training contents, training hours, charging items, charging standards and other information of non-academic after school tutoring institutions shall be made public and subject to public supervision; (iv) non-academic after-school tutoring institutions shall use the form of service contract for after-school training activities provided to primary and secondary school students, strictly performing contractual obligations and regulating its charging behaviors; (v) non-academic after school tutoring institutions’ unfair competition by fictitious original prices, false discounts, false publicity, monopolistic behaviors and any form of price fraud are prohibited; (vi) the pre-collection of fees by non-academic after-school tutoring institutions shall be deposited to the special account for fee collection and tuition fees shall not be collected in a lump sum, or in disguised form of recharging or measured cards for more than 60 classes or for a course length of more than three months; and (vii) non-academic after-school tutoring institutions shall comply with requirements relating to premise, facilities and fire safety.
On September 10, 2021, the General office of MOE, together with five other governmental authorities promulgated the Notice on the Conversion of Filing Mechanism to Approval Mechanism regarding Existing Online Academic AST Institutions, which reiterates that an approval mechanism will be adopted with regard to the existing online Academic AST Institutions which previously filed with competent authorities and requires all existing online Academic AST Institutions shall convert themselves into non-profit institutions by registration with local counterparts of the MCA by the end of 2021. • Regulations related to non-academic AST institutions On March 3, 2022, the MOE jointly with SAMR and NDRC promulgated the Notice on Regulating Non-Academic After-school Training Institutions, which provide that, among others, (i) non-academic AST institutions shall have the corresponding qualifications and their staffs shall have the corresponding proofs for their profession; (ii) non-academic AST institutions shall ensure that training contents and training methods are suitable for the age, mental and physical characteristics and cognitive level of students; (iii) the training contents, training hours, charging items, charging standards and other information of non-academic after school tutoring institutions shall be made public and subject to public supervision; (iv) non-academic AST institutions shall use the form of service contract for after-school training activities provided to primary and secondary school students, strictly performing contractual obligations and regulating its charging behaviors; (v) non-academic after school tutoring institutions’ unfair competition by fictitious original prices, false discounts, false publicity, monopolistic behaviors and any form of price fraud are prohibited; (vi) the pre-collection of fees by non-academic AST institutions shall be deposited to the special account for fee collection and tuition fees shall not be collected in a lump sum, or in disguised form of recharging or measured cards for more than 60 classes or for a course length of more than three months; and (vii) non-academic AST institutions shall comply with requirements relating to premise, facilities and fire safety.
Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, which became effective on December 8, 2006 and applies to income derived in any year of assessment commencing on or after April 1, 2007 in Hong Kong and in any year commencing on or after January 1, 2007 in China, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10% if the Hong Kong enterprise is deemed the beneficial owner of any dividend paid by a PRC subsidiary by PRC tax 96 authorities and holds at least 25% of the equity interests in that particular PRC enterprise at all times within the 12-month period immediately before distribution of the dividends.
Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, which became effective on December 8, 2006 and applies to income derived in any year of assessment commencing on or after April 1, 2007 in Hong Kong and in any year commencing on or after January 1, 2007 in China, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10% if the Hong Kong enterprise is deemed the beneficial owner of any dividend paid by a PRC subsidiary by PRC tax authorities and holds at least 25% of the equity interests in that particular PRC enterprise at all times within the 12-month period immediately before distribution of the dividends.
However, there are still significant uncertainties relating to the interpretation and implementation of the Audio-Visual Program Provisions, in particular, the scope of “internet audio-visual programs.” 84 On March 16, 2018, the SAPPRFT promulgated the Notice on Further Regulating the Transmission Order of Internet Audio-Visual Program Services, providing that the classic literary works, radio, film and television programs, internet original audio-visual programs shall not be re-edited, re-dubbed, re-subtitled or partly captured and consolidated as a new program without authorizations and providers of internet audio-visual program services shall strictly manage and supervise such re-edited programs uploaded by the internet users and shall not provide any transmission channel for those internet audio-visual programs which have political orientation issues, copyright issues or content issues.
However, there are still significant uncertainties relating to the interpretation and implementation of the Audio-Visual Program Provisions, in particular, the scope of “internet audio-visual programs.” On March 16, 2018, the SAPPRFT promulgated the Notice on Further Regulating the Transmission Order of Internet Audio-Visual Program Services, providing that the classic literary works, radio, film and television programs, internet original audio-visual programs shall not be re-edited, re-dubbed, re-subtitled or partly captured and consolidated as a new program without authorizations and providers of internet audio-visual program services shall strictly manage and supervise such re-edited programs uploaded by the internet users and shall not provide any transmission channel for those internet audio-visual programs which have political orientation issues, copyright issues or content issues.
Regulations on Stock Incentive Plans 95 Pursuant to the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of an Overseas Publicly Listed Company, or SAFE Circular 7, issued by SAFE in February 2012, employees, directors, supervisors and other senior management participating in any stock incentive plan of an overseas publicly listed company who are PRC citizens or who are non-PRC citizens residing in China for a continuous period of not less than one year, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be a PRC subsidiary of such overseas listed company or another qualified institution selected by the PRC subsidiary, and complete certain other procedures.
Regulations on Stock Incentive Plans Pursuant to the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of an Overseas Publicly Listed Company, or SAFE Circular 7, issued by SAFE in February 2012, employees, directors, supervisors and other senior management participating in any stock incentive plan of an overseas publicly listed company who are PRC citizens or who are non-PRC citizens residing in China for a continuous period of not less than one year, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be a PRC subsidiary of such overseas listed company or another qualified institution selected by the PRC subsidiary, and complete certain other procedures.
On the same day, the Shanghai Municipal Education Commission, together with three other government authorities promulgated the Guidelines for Basic Service Requirements of After-school Training Institutions in Shanghai, effective from April 15, 2022, which details the basic service requirements for after-school tutoring institutions in Shanghai, including, among other things, the requirements on the sponsors, premises, facilities, internal management, practitioners, training content and plans, fee management etc. and provides that institutions providing online tutoring should follow the PRC Cybersecurity Law and the Data Security Law, obtain the ICP License or complete the ICP filing and complete the grade-based cybersecurity protection system filing at or above Grade III.
On the same day, the Shanghai Municipal Education Commission, together with three other government authorities promulgated the Guidelines for Basic Service Requirements of After-school Training Institutions in Shanghai, effective from April 15, 2022, which details the basic service requirements for AST institutions in Shanghai, including, among other things, the requirements on the sponsors, premises, facilities, internal management, practitioners, training content and plans, fee management etc. and provides that institutions providing online tutoring should follow the PRC Cybersecurity Law and the Data Security Law, obtain the ICP License or complete the ICP filing and complete the grade-based cybersecurity protection system filing at or above Grade III.
Pursuant to the 2021 Negative List, operation of training institution is outside the scope of the 2021Negative List, which indicates that this is open to foreign investment, while a preschool, a regular senior secondary school, or a higher education institution shall only be operated by Chinese-foreign contractual joint ventures, under the control of the Chinese party (the principal or the chief executive shall be a Chinese citizen, and the council, board of directors, or joint management committee shall consist of members from the Chinese party accounting for no less than one half of the total number of members).
Pursuant to the 2021 Negative List, operation of training institution is outside the scope of the 2021 Negative List, which indicates that this is open to foreign investment, while a preschool, a regular senior secondary school, or a higher education institution shall only be operated by Chinese-foreign contractual joint ventures, under the control of the Chinese party (the principal or the chief executive shall be a Chinese citizen, and the council, board of directors, or joint management committee shall consist of members from the Chinese party accounting for no less than one half of the total number of members).
Where a PRC domestic company, after completing the relevant procedures, provides to securities companies, securities service providers or other entities with any documents and materials that contain state secrets or working secrets of government agencies, or any other documents and materials that would be detrimental to national security or public interest if leaked, a non-disclosure agreement must be signed between the provider and receiver of such information according to the relevant PRC laws and regulations, which must specify, among others, the obligations and liabilities on confidentiality held by such securities companies and securities 100 service providers.
Where a PRC domestic company, after completing the relevant procedures, provides to securities companies, securities service providers or other entities with any documents and materials that contain state secrets or working secrets of government agencies, or any other documents and materials that would be detrimental to national security or public interest if leaked, a non-disclosure agreement must be signed between the provider and receiver of such information according to the relevant PRC laws and regulations, which must specify, among others, the obligations and liabilities on confidentiality held by such securities companies and securities service providers.
Shareholder Voting Rights Proxy Agreement and Irrevocable Power of Attorney The shareholders of the VIEs have each executed a shareholder voting rights proxy agreement appointing Shanghai Fuxi, or any person designated by Shanghai Fuxi, as their proxy to act for all matters pertaining to such 103 shareholding and to exercise all of their rights as shareholders, including but not limited to attending shareholders’ meetings and designating and appointing directors, supervisors, the chief executive officer and other senior management members, and selling, transferring, pledging or disposing the equity interests of the VIEs.
Shareholder Voting Rights Proxy Agreement and Irrevocable Power of Attorney The shareholders of the VIEs have each executed a shareholder voting rights proxy agreement appointing Shanghai Fuxi, or any person designated by Shanghai Fuxi, as their proxy to act for all matters pertaining to such shareholding and to exercise all of their rights as shareholders, including but not limited to attending shareholders’ meetings and designating and appointing directors, supervisors, the chief executive officer and other senior management members, and selling, transferring, pledging or disposing the equity interests of the VIEs.
Regulations Relating to Online Transmission of Audio-Visual Programs 83 The Measures for the Administration of Publication of Audio-Visual Programs through Internet or Other Information Network, or the Audio-Visual Measures, promulgated by the State Administration of Press, Publication, Radio, Film and Television, or the SAPPRFT (currently known as the State Administration of Radio and Television), on July 6, 2004 and came into effect on October 11, 2004, apply to the activities relating to the opening, broadcasting, integration, transmission or download of audio-visual programs using internet or other information network.
Regulations Relating to Online Transmission of Audio-Visual Programs The Measures for the Administration of Publication of Audio-Visual Programs through Internet or Other Information Network, or the Audio-Visual Measures, promulgated by the State Administration of Press, Publication, Radio, Film and Television, or the SAPPRFT (currently known as the State Administration of Radio and Television), on July 6, 2004 and came into effect on October 11, 2004, apply to the activities relating to the opening, broadcasting, integration, transmission or download of audio-visual programs using internet or other information network.
We believe the principal competitive factors in our business include the following: • reputation and brand; • learning- centric technology and content capabilities; 74 • overall learner and customer experience; • type and quality of products and services offered; • ability to effectively tailor service and product offerings to specific needs of learners; and • ability to attract, train and retain high quality faculty members.
We believe the principal competitive factors in our business include the following: • reputation and brand; • learning-centric technology and content capabilities; • overall learner and customer experience; • type and quality of products and services offered; • ability to effectively tailor service and product offerings to specific needs of learners; and • ability to attract, train and retain high quality faculty members.
Failure to complete the SAFE registrations may subject to fines and legal sanctions and may also limit the ability to contribute additional capital into wholly foreign-owned subsidiary in China and limit such subsidiary’s ability to distribute dividends. In addition, the State Administration of Taxation has issued certain circulars concerning employee share options or restricted shares.
Failure to complete the SAFE registrations may be subject to fines and legal sanctions and may also limit the ability to contribute additional capital into wholly foreign-owned subsidiary in China and limit such subsidiary’s ability to distribute dividends. In addition, the State Administration of Taxation has issued certain circulars concerning employee share options or restricted shares.
Circular 19 came into force and replaced both the Circular of the State Administration of Foreign 94 Exchange on Issues Relating to the Improvement of Business Operations with Respect to the Administration of Foreign Exchange Capital Payment and Settlement of Foreign-invested Enterprises, or Circular 142 and the Circular of the State Administration of Foreign Exchange on Issues concerning the Pilot Reform of the Administrative Approach Regarding the Settlement of the Foreign Exchange Capitals of Foreign-invested Enterprises in Certain Areas, or Circular 36 on June 1, 2015.
Circular 19 came into force and replaced both the Circular of the State Administration of Foreign Exchange on Issues Relating to the Improvement of Business Operations with Respect to the Administration of Foreign Exchange Capital Payment and Settlement of Foreign-invested Enterprises, or Circular 142 and the Circular of the State Administration of Foreign Exchange on Issues concerning the Pilot Reform of the Administrative Approach Regarding the Settlement of the Foreign Exchange Capitals of Foreign-invested Enterprises in Certain Areas, or Circular 36 on June 1, 2015.
For a detailed description of adjusted net income (loss), please see “Item 5. Operating and Financial Review and Prospects — Non-GAAP Measures.” Our Offerings We are committed to maximizing a learner’s potential by providing access to an engaging learning experience empowered by our technology and content capabilities.
For a detailed description of adjusted net income (loss), please see “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Non-GAAP Measures.” Our Offerings We are committed to maximizing a learner’s potential by providing access to an engaging learning experience empowered by our technology and content capabilities.
The CIIOs shall take the responsibility to protect the CII’s security by performing certain prescribed obligations, including conducting network security test and risk assessment, reporting the assessment results to relevant regulatory authorities. 91 On August 20, 2021, the SCPNC adopted the Personal Information Protection Law, which became effective on November 1, 2021.
The CIIOs shall take the responsibility to protect the CII’s security by performing certain prescribed obligations, including conducting network security test and risk assessment, reporting the assessment results to relevant regulatory authorities. On August 20, 2021, the SCPNC adopted the Personal Information Protection Law, which became effective on November 1, 2021.
Research and academic study travel safety protection mechanisms shall be established and perfected. Travel agencies and places for research and 85 academic study travel shall, in accordance with the characteristics of young students, combine education with tourism in terms of content designing, furnishing of tourist guides, safety facilities and protection.
Research and academic study travel safety protection mechanisms shall be established and perfected. Travel agencies and places for research and academic study travel shall, in accordance with the characteristics of young students, combine education with tourism in terms of content designing, furnishing of tourist guides, safety facilities and protection.
In addition, the tax circular mentioned above specifies that certain PRC-invested overseas enterprises controlled by a Chinese enterprise or a Chinese enterprise group in the PRC will be classified as PRC resident enterprises if the following are located or resided in the PRC: (i) senior management personnel and departments that are responsible for daily production, operation and management; (ii) financial and personnel decision making bodies; (iii) key properties, accounting books, the company seal, and minutes of board meetings and shareholders’ meetings; and (iv) half or more of the senior management or directors who have the voting rights.
In addition, the tax circular mentioned above specifies that certain PRC-invested overseas enterprises controlled by a Chinese enterprise or a Chinese enterprise group in the PRC will be classified as PRC resident enterprises if the following are located or resided in the PRC: (i) senior management personnel and departments that are responsible for daily production, operation and management; (ii) financial and personnel decision making bodies; (iii) key properties, accounting books, the company seal, and minutes of board meetings and shareholders meetings; and (iv) half or more of the senior management or directors who have the voting rights.
Further, in June 2014, Four Seasons Education Cayman established a wholly-owned subsidiary in Hong Kong, namely Four Seasons Education (Hong Kong) Limited, or Four Seasons Education HK. Shanghai Fuxi Information Technology Service Co., Ltd., or Shanghai Fuxi, was then incorporated in December 2014 as a wholly-owned subsidiary of Four Seasons Education HK. B.
Further, in June 2014, Four Seasons Education Cayman established a wholly-owned subsidiary in Hong Kong, namely Four Seasons Education (Hong Kong) Limited, or Four Seasons Education HK. Shanghai Fuxi Information Technology Service Co., Ltd., or Shanghai Fuxi, was then incorporated in December 2014 as a wholly-owned subsidiary of Four Seasons Education HK.
According to applicable PRC regulations on foreign-invested enterprises, including but not limited to the Interim Measures for the Administration of the Establishment and Alteration of Archival Filing of Foreign Funded Enterprises, effective on October 8, 2016 and revised on July 30, 2017 and June 29, 2018, capital contributions from a foreign holding company to its PRC subsidiaries, which are considered foreign-invested enterprises, may only be made when approval or filing by the Ministry of Commerce or its local branch has been obtained.
According to applicable PRC regulations on FIEs, including but not limited to the Interim Measures for the Administration of the Establishment and Alteration of Archival Filing of Foreign Funded Enterprises, effective on October 8, 2016 and revised on July 30, 2017 and June 29, 2018, capital contributions from a foreign holding company to its PRC subsidiaries, which are considered FIEs, may only be made when approval or filing by the Ministry of Commerce or its local branch has been obtained.
Regulation on Sino-foreign Cooperation in Operating Schools and its Implementing Rules 76 Sino-foreign cooperation in operating schools in China is governed by the Regulation on Sino-foreign Cooperative Education (2019 Revision) promulgated by the State Council and the Implementing Rules for Sino-foreign Cooperative Education (2004) issued by the Ministry of Education.
Regulation on Sino-foreign Cooperation in Operating Schools and its Implementing Rules Sino-foreign cooperation in operating schools in China is governed by the Regulation on Sino-foreign Cooperative Education (2019 Revision) promulgated by the State Council and the Implementing Rules for Sino-foreign Cooperative Education (2004) issued by the Ministry of Education.
Any violation of these laws and regulations may subject the entity collecting personal information to warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of filings, closedown of websites or even criminal liabilities. 89 Pursuant to the Notice of the Supreme People’s Court, the Supreme People’s Procuratorate and the Ministry of Public Security on Legally Punishing Criminal Activities Infringing upon the Personal Information of Citizens, issued in 2013, and the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues regarding Legal Application in Criminal Cases Infringing upon the Personal Information of Citizens, which was issued on May 8, 2017 and took effect on June 1, 2017, the following activities may constitute the crime of infringing upon a citizen’s personal information: (i) providing a citizen’s personal information to specified persons or releasing a citizen’s personal information online or through other methods in violation of relevant national provisions; (ii) providing legitimately collected information relating to a citizen to others without such citizen’s consent (unless the information is processed, not traceable to a specific person and not recoverable); (iii) collecting a citizen’s personal information in violation of applicable rules and regulations when performing a duty or providing services; or (iv) collecting a citizen’s personal information by purchasing, accepting or exchanging such information in violation of applicable rules and regulations.
Any violation of these laws and regulations may subject the entity collecting personal information to warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of filings, closedown of websites or even criminal liabilities. 92 Table of Contents Pursuant to the Notice of the Supreme People’s Court, the Supreme People’s Procuratorate and the Ministry of Public Security on Legally Punishing Criminal Activities Infringing upon the Personal Information of Citizens, issued in 2013, and the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues regarding Legal Application in Criminal Cases Infringing upon the Personal Information of Citizens, which was issued on May 8, 2017 and took effect on June 1, 2017, the following activities may constitute the crime of infringing upon a citizen’s personal information: (i) providing a citizen’s personal information to specified persons or releasing a citizen’s personal information online or through other methods in violation of relevant national provisions; (ii) providing legitimately collected information relating to a citizen to others without such citizen’s consent (unless the information is processed, not traceable to a specific person and not recoverable); (iii) collecting a citizen’s personal information in violation of applicable rules and regulations when performing a duty or providing services; or (iv) collecting a citizen’s personal information by purchasing, accepting or exchanging such information in violation of applicable rules and regulations.
Specifically, the determination of an indirect offering and listing will be conducted on a “substance over form” basis, and an offering and listing shall be considered as an indirect overseas offering and listing by a domestic company if the issuer meets the following conditions: (i) the operating income, gross profit, total assets, or net assets of the domestic enterprise in the most recent fiscal year was more than 50% of the relevant line item in the issuer’s audited consolidated financial statement for that year; and (ii) senior management personnel responsible for business operations and management are mostly PRC citizens or are ordinarily resident in the PRC, and the main place of business is in the PRC or carried out in the PRC.
Specifically, the determination of an indirect offering and listing will be conducted on a “substance over form” basis, and an offering and listing shall be considered as an indirect overseas offering and listing by a domestic company if the issuer meets the following conditions: (i) the 103 Table of Contents operating income, gross profit, total assets, or net assets of the domestic enterprise in the most recent fiscal year was more than 50% of the relevant line item in the issuer’s audited consolidated financial statement for that year; and (ii) senior management personnel responsible for business operations and management are mostly PRC citizens or are ordinarily resident in the PRC, and the main place of business is in the PRC or carried out in the PRC.
The AST Classification Guide requires provincial counterparts of the MOE to establish classification guidance system and expert identification system with regard to the scope of academic subject and non-academic subjects and proposes to adopt tutoring objectives, tutoring content, tutoring methods and tutoring evaluation methods as the factors in identification. • Regulations related to the registration and conversion of existing Academic AST Institutions On August 24, 2021, the General Office of the MCA issued the Notice on Further Strengthening the Registration Administration of After-School Tutoring Institutions, which requires local counterparts of the MCA to promote the registration and administration of Academic AST Institutions in accordance with the Double Alleviating Opinions and the local counterparts of the MCA shall no longer grant approvals to any new AST Institutions providing service to pre-school children, and primary school and secondary school students.
The AST Classification Guide requires provincial counterparts of the MOE to establish classification guidance system and expert identification system with regard to the scope of academic subject and non-academic subjects and proposes to adopt tutoring objectives, tutoring content, tutoring methods and tutoring evaluation methods as the factors in identification. • Regulations related to the registration and conversion of existing Academic AST Institutions On August 24, 2021, the General Office of the MCA issued the Notice on Further Strengthening the Registration Administration of After-School Tutoring Institutions, which requires local counterparts of the MCA to promote the registration and administration of Academic AST Institutions in accordance 79 Table of Contents with the Double Alleviating Opinions and the local counterparts of the MCA shall no longer grant approvals to any new AST Institutions providing service to pre-school children, and primary school and secondary school students.
Driven by real-world needs and pain points faced by these schools, we have created, developed and launched a broad array of learning technology and content solutions customized for various close-loop learning scenarios encompassing teaching, learning and content development. 113 well-known K-12 schools and institutions have invited us to deliver our proprietary courses to their students since our inception.
Driven by real-world needs and pain points faced by these schools, we have created, developed and launched a broad array of learning technology and content solutions customized for various close-loop learning scenarios encompassing teaching, learning and content development. 125 well-known K-12 schools and institutions have invited us to deliver our proprietary courses to their students since our inception.
However, there exist substantial uncertainties with respect to the interpretation and implementation in practice with respect to the Circular 28, Circular 16 and other laws and regulations related to foreign currency exchange.
However, there exist substantial uncertainties with respect to the interpretation and implementation in practice with respect to Circular [2019] 28, Circular 16 and other laws and regulations related to foreign currency exchange.
We rely on dividends and other distributions paid to us by our WFOE, Shanghai Fuxi, which in turn depends on the service fees paid to Shanghai 102 Fuxi by the VIEs.
We rely on dividends and other distributions paid to us by our WFOE, Shanghai Fuxi, which in turn depends on the service fees paid to Shanghai Fuxi by the VIEs.
In addition, travel agencies must enter into contracts with customers for travel services; and before a tour starts, a customer may assign his personal rights and obligations in a packaged-tour contract to any third person, whom the travel agency cannot refuse without cause, as long as any fee increase will be borne by the customer and the relevant third person.
In addition, travel agencies must enter into contracts with customers for travel services; and before a tour starts, a customer may assign his personal rights and obligations in a tourism contract to any third person, whom the travel agency cannot refuse without cause, as long as any fee increase will be borne by the customer and the relevant third person.
They further undertakes not to make any assertions in connection with the equity interests of the VIEs held by the applicable shareholder, and confirm that the shareholder can perform the relevant transaction documents described above and further amend or terminate such transaction documents without the authorization or consent from such spouse.
They further undertake not to make any assertions in connection with the equity interests of the VIEs held by the applicable shareholder, and confirm that the shareholder can perform the relevant transaction documents described above and further amend or terminate such transaction documents without the authorization or consent from such spouse.
If we are unable to maintain effective control over the VIEs, we would not be able to continue to consolidate their financial results in our consolidated financial statements. In the 2021,2022 and 2023 fiscal years, substantially all of our revenue was derived from the operations of the VIEs.
If we are unable to maintain effective control over the VIEs, we would not be able to continue to consolidate their financial results in our consolidated financial statements. In the 2022, 2023 and 2024 fiscal years, substantially all of our revenue was derived from the operations of the VIEs.
On September 12, 2022, the CAC network office issued a draft Regulations of the PRC Cyber Security Law (Draft for Comments) to modify the legal liability of the parties. 90 Pursuant to the Provisions on Online Protection of Children’s Personal Information issued by the CAC on August 22, 2019, effective from October 1, 2019, network operators, who collect, store, use, transfer and disclose personal information of children under the age of 14, or the Children, via the internet shall establish special rules and user agreements, designate specific personnel to take charge of the protection of Children’s personal information, inform the Children’s guardians in a noticeable and clear manner, and obtain the consent of the Children’s guardians.
On September 12, 2022, the CAC network office issued a draft Regulations of the PRC Cyber Security Law (Draft for Comments) to modify the legal liability of the parties. 93 Table of Contents Pursuant to the Provisions on Online Protection of Children’s Personal Information issued by the CAC on August 22, 2019, effective from October 1, 2019, network operators, who collect, store, use, transfer and disclose personal information of children under the age of 14, or the Children, via the internet shall establish special rules and user agreements, designate specific personnel to take charge of the protection of Children’s personal information, inform the Children’s guardians in a noticeable and clear manner, and obtain the consent of the Children’s guardians.
Travel agencies are prohibited from (i) leasing, lending or illegally transferring travel agency operation licenses or otherwise disseminating untrue or inaccurate information when soliciting customers and organizing tours, (ii) conducting any false publicity to mislead customers, (iii) arranging visits to or participation in any project or activity in violation of PRC laws and regulations or social morality, (iv) organizing tours at unreasonably low price to induce or cheat tourists, or obtaining unlawful profits such as kickbacks, and (v) changing or ceasing scheduled itineraries without reasons and forcing the tourists to participate in other activities against the will of tourists.
Besides, Travel agencies are prohibited from (i) leasing, lending, or illegally transferring travel agency operation licenses, (ii) disseminating untrue or inaccurate information when soliciting customers and organizing tours or conducting any false publicity to mislead customers, (iii) arranging visits to or participation in any project or activity in violation of PRC laws and regulations or social morality, (iv) organizing tours at unreasonably low prices to induce or cheat tourists, or obtaining unlawful profits such as kickbacks, and (v) changing or ceasing scheduled itineraries without reasons and forcing the tourists to participate in other activities against the will of the tourists.
However, Circular 19 continues to prohibit foreign-invested enterprises from, among other things, using Renminbi fund converted from its foreign exchange capitals for expenditure beyond its business scope and providing entrusted loans or repaying loans between non-financial enterprises.
However, Circular 19 continues to prohibit FIEs from, among other things, using Renminbi fund converted from its foreign exchange capitals for expenditure beyond its business scope and providing entrusted loans or repaying loans between non-financial enterprises.
Pursuant to Circular on Further Clarifying Policies on Reinsurance, Real Estate Leasing and Non-diploma Education in Comprehensively Promoting the Pilot Collection of Value-added Tax in Lieu of Business Tax which came into effect on May 1, 2016, general taxpayers providing non-diploma education services may opt to adopt the simplified method for calculation of tax payable at a rate of 3%.
Pursuant to Circular on Further Clarifying Policies on Reinsurance, Real Estate Leasing and Non-diploma Education 102 Table of Contents in Comprehensively Promoting the Pilot Collection of Value-added Tax in Lieu of Business Tax which came into effect on May 1, 2016, general taxpayers providing non-diploma education services may opt to adopt the simplified method for calculation of tax payable at a rate of 3%.
Further, on March 31, 2009, SAPPRFT promulgated the Notice on Strengthening the Administration of the Content of Internet Audio-Visual Programs, which reiterates the pre-approval requirements for the audio-visual programs transmitted via the internet, including through mobile networks, where applicable, and prohibits certain types of internet audio-visual programs containing violence, pornography, gambling, terrorism, superstition or other similarly prohibited elements.
Further, on March 31, 2009, SAPPRFT promulgated the Notice on Strengthening the Administration of the Content 85 Table of Contents of Internet Audio-Visual Programs, which reiterates the pre-approval requirements for the audio-visual programs transmitted via the internet, including through mobile networks, where applicable, and prohibits certain types of internet audio-visual programs containing violence, pornography, gambling, terrorism, superstition or other similarly prohibited elements.
Contractual Arrangements with the VIEs, Their Shareholder and Us PRC laws and regulations place certain restrictions on direct foreign investment ownership of China-based companies, and also places separate restrictions on foreign investment in the private education businesses.
Contractual Arrangements with the VIEs, Their Shareholders and Us PRC laws and regulations place certain restrictions on direct foreign investment ownership of China-based companies, and also places separate restrictions on foreign investment in the private education businesses.
Moreover, the service provider of education app shall establish data protection mechanism with regard to collection, storage, transmission, and use of personal information and education apps operated by online Academic AST Institutions which store personal information of more than one million people shall pass the impact assessment, certification, or compliance audit on personal information protection.
Moreover, the service provider of 82 Table of Contents education app shall establish data protection mechanism with regard to collection, storage, transmission, and use of personal information and education apps operated by online Academic AST Institutions which store personal information of more than one million people shall pass the impact assessment, certification, or compliance audit on personal information protection.
Regulations on Publishing and Distribution of Publications The Administrative Regulations on Publication, promulgated by the State Council and most recently amended on November 29, 2020, apply to publication activities, i.e., the publishing, printing, copying, importation or distribution of publications, including books, newspapers, periodicals, audio and video products and electronic publications, each of which requires approval from the relevant publication administrative authorities.
Regulations on Publishing and Distribution of Publications The Administrative Regulations on Publication, promulgated by the State Council in December 2001 and most recently amended on November 29, 2020, apply to publication activities, i.e., the publishing, printing, copying, importation or distribution of publications, including books, newspapers, periodicals, audio and video products and electronic publications, each of which requires approval from the relevant publication administrative authorities.
Under the Foreign Exchange Administration Rules, foreign-invested enterprises in China may, without the approval of SAFE, make a payment from their foreign exchange accounts at designated foreign exchange banks for paying dividends with certain evidencing documents (such as board resolutions, tax certificates), or for trade and services-related foreign exchange transactions by providing commercial documents evidencing such transactions.
Under the Foreign Exchange Administration Rules, FIEs in China may, without the approval of SAFE, make a payment from their foreign exchange accounts at designated foreign exchange banks for paying dividends with certain evidencing documents (such as board resolutions, tax certificates), or for trade and services-related foreign exchange transactions by providing commercial documents evidencing such transactions.
Based on our consultation with relevant governmental authorities, we ceased offering the K9 Academic AST Services in mainland China at the end of 2021, and believe that the remaining products and services we currently offer do not constitute “tutoring service related to academic subjects of compulsory education stage” and thus not subject to the above restrictions.
Based on our consultation with relevant governmental authorities, we ceased offering the K-9 Academic AST Services in mainland China at the end of 2021, and believe that the remaining products and services we currently offer do not constitute “tutoring service related to academic subjects of compulsory education stage” and thus not subject to the above restrictions.
Business Overview — Our Learning Centers.” On August 1, 2020, we acquired land use right of a parcel for approximately 9,499 square meters, and leasehold right of a property for approximately 5,655.6 square meters, in Tongling, Anhui, as capital contribution of certain shareholders with a consideration of RMB3.2 million and RMB8.5 million, respectively.
Business Overview — Our Learning Centers and Study Camps.” On August 1, 2020, we acquired land use right of a parcel for approximately 9,499 square meters, and land use right of a property for approximately 5,655.6 square meters, in Tongling, Anhui, as capital contribution of certain shareholders with a consideration of RMB3.2 million and RMB8.5 million, respectively.
On March 30, 2015, SAFE promulgated the Circular of the SAFE on Reforming the Management Approach regarding the Settlement of Foreign Capital of Foreign-invested Enterprise, or Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises nationwide.
On March 30, 2015, SAFE promulgated the Circular of the SAFE on Reforming the Management Approach regarding the Settlement of Foreign Capital of Foreign-invested Enterprise, or Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitals of FIEs nationwide.
Foreign invested enterprises are not allowed to carry out such business. On April 13, 2005, the State Council promulgated the Certain Decisions on the Entry of the Non-state-owned Capital into the Cultural Industry. On July 6, 2005, five PRC governmental authorities, including the SAPPRFT, jointly adopted the Several Opinions on Canvassing Foreign Investment into the Cultural Sector.
FIES are not allowed to carry out such business. On April 13, 2005, the State Council promulgated the Certain Decisions on the Entry of the Non-state-owned Capital into the Cultural Industry. On July 6, 2005, five PRC governmental authorities, including the SAPPRFT, jointly adopted the Several Opinions on Canvassing Foreign Investment into the Cultural Sector.
As part of its efforts to fully comply with the Opinion and applicable rules, regulations and measures, we ceased offering the K9 Academic AST Services in mainland China at the end of 2021. We will continue to seek guidance from and work constructively with the government authorities in connection with other compliance efforts.
As part of its efforts to fully comply with the Opinion and applicable rules, regulations and measures, we ceased offering the K-9 Academic AST Services in mainland China at the end of 2021. We will continue to seek guidance from and work constructively with the government authorities in connection with other compliance efforts.
For those who have the conditions for a license, the education department will guide them to do so; for those who do not meet the conditions for a license, the education department, in conjunction with market supervision, civil affairs, human resources and social security departments, will order them to stop operating schools and dispose of them properly.
For those who have the conditions for a license, the education department will guide them to do so; for those who do not meet the conditions for a license, the education department, in conjunction with 83 Table of Contents market supervision, civil affairs, human resources and social security departments, will order them to stop operating schools and dispose of them properly.
PBOC Circular 9 also provides that during the one-year period starting from January 11, 2017, or the Transitional Period, foreign-invested enterprises may choose one method to carry out cross-border financing in foreign currency either according to PBOC Circular 9 or according to the Interim Provisions on the Management of Foreign Debts.
PBOC Circular 9 also provides that during the one-year period starting from January 11, 2017, or the Transitional Period, FIEs may choose one method to carry out cross-border financing in foreign currency either according to PBOC Circular 9 or according to the Interim Provisions on the Management of Foreign Debts.
Pursuant to the Food Safety Law of the PRC, hotels failing to obtain the food business license (or formerly the food service license) may be subject to: (i) confiscation of illegal gains, food illegally produced for sale, and tools, facilities and raw materials used for illegal production; or (ii) fines between RMB50,000 and RMB100,000 if the value of food illegally produced is less than RMB10,000, or fines equal to 10 to 20 times of the value of food if such value is equal to or more than RMB10,000.
Pursuant to the abovementioned Law and Measures, hotels failing to obtain the food business license (or formerly the food service license) may be subject to: (i) confiscation of illegal gains, food illegally produced for sale, and tools, facilities and raw materials used for illegal production; or (ii) fines between RMB50,000 and RMB100,000 if the value of food illegally produced is less than RMB10,000, or fines equal to 10 to 20 times of the value of food if such value is equal to or more than RMB10,000.
Under SAFE Circular 37, an SPV refers to an offshore entity established or controlled, directly or indirectly, by PRC residents or entities for the purpose of seeking offshore financing or making offshore investment, using legitimate domestic or offshore assets or interests, while “round trip investment” refers to the direct investment in China by PRC residents or entities through SPVs, namely, establishing foreign-invested enterprises to obtain the ownership, control rights and management rights.
Under SAFE Circular 37, an SPV refers to an offshore entity established or controlled, directly or indirectly, by PRC residents or entities for the purpose of seeking offshore financing or making offshore investment, using legitimate domestic or offshore assets or interests, while “round trip investment” refers to the direct investment in China by PRC residents or entities through SPVs, namely, establishing FIEs to obtain the ownership, control rights and management rights.
SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or Circular 16, effective in June 2016, which reiterates some of the rules set forth in Circular 19, but compared to Circular 19, Circular 16 provides that discretionary foreign exchange settlement applies to foreign exchange capital, foreign debt offering proceeds and remitted foreign listing proceeds, and the corresponding Renminbi capital converted from foreign exchange are not restricted from extending loans to related parties or repaying the intercompany loans (including advances by third parties).
SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or Circular 16, effective in June 2016 and last amended on December 4, 2023, which reiterates some of the rules set forth in Circular 19, but compared to Circular 19, Circular 16 provides that discretionary foreign exchange settlement applies to foreign exchange capital, foreign debt offering proceeds and remitted foreign listing proceeds, and the corresponding Renminbi capital converted from foreign exchange are not restricted from extending loans to related parties or repaying the intercompany loans (including advances by third parties).
Despite that rules and regulations have been promulgated in connection with the scope of academic subjects in compulsory education stage, it remains unclear, and subject to relevant governmental authorities’ discretion, as to whether the products and services we offer fall into the scope of academic subjects of compulsory education stage.
Despite that rules and regulations have been promulgated in connection with the scope of academic subjects in compulsory 106 Table of Contents education stage, it remains unclear, and subject to relevant governmental authorities’ discretion, as to whether the products and services we offer fall into the scope of academic subjects of compulsory education stage.
On December 19, 2016, the National Tourism Administration issued the Standards of Research and Academic Study Travel, according the standard, the undertaker of the research and academic study travel should be a qualified travel agency.
On December 19, 2016, the National Tourism Administration issued the Standards of Research and Academic Study Travel. According to the standards, the undertaker of the research and academic study travel should be a qualified travel agency.
On February 8, 2022, the MOE issued the Key Points of Workstreams of the Year 2022 on its public website, indicating that the requirements for academic subjects tutoring for students on grade ten to twelve shall strictly refer to the requirements implemented to academic subjects tutoring for students in compulsory education.
On February 8, 2022, the Chinese Ministry of Education, or the MOE issued the Key Points of Workstreams of the Year 2022 on its public website, indicating that the requirements for academic subjects tutoring for students on grade ten to twelve shall strictly refer to the requirements implemented to academic subjects tutoring for students in compulsory education.
Payments for transactions that take place within China shall be made in Renminbi. Foreign currency revenue received by PRC companies may be repatriated into China or retained outside of China in accordance with requirements and terms specified by SAFE.
Payments for transactions that take place within China shall be made in Renminbi. Foreign currency revenue received by PRC 98 Table of Contents companies may be repatriated into China or retained outside of China in accordance with requirements and terms specified by SAFE.
According to the Overseas Listing Trial Measures, an overseas listed company shall file with the CSRC within three business days after the completion of its subsequent securities offering on the same market, and an overseas listed company shall file with the CSRC within three business days after its application of its offering and listing on a different market.
According to the Overseas Listing Trial Measures, an overseas listed company shall file with the CSRC within three business days after the completion of its subsequent securities offering on the same market, and an overseas listed company shall file with the CSRC within three business days after its application of its offering and listing on 104 Table of Contents a different market.
Further, the Notice of the State Administration of Foreign Exchange on Further Facilitating Cross-border Trade and Investment, promulgated by SAFE on October 23, 2019, or Circular 28, effective from January 2020, establishes a pilot program that a non-financial enterprise in pilot regions may register foreign debts up to two times of its net assets with local branch of SAFE, and it then may borrow several tranches of 93 foreign debts within the registered amount, without registration of each foreign debt.
Further, the Notice of the State Administration of Foreign Exchange on Further Facilitating Cross-border Trade and Investment, promulgated by SAFE on October 23, 2019, or Circular [2019] 28, effective from January 2020 and last amended on December 4, 2023, establishes a pilot program that a non-financial enterprise in pilot regions may register foreign debts up to two times of its net assets with local branch of SAFE, and it then may borrow several tranches of foreign debts within the registered amount, without registration of each foreign debt.
Under the provisions, these foreign-invested enterprises must submit registration applications to the local branches of SAFE within 15 days following execution of foreign loan agreements, and the registration should be completed within 20 business days from the date of receipt of the application.
Under the provisions, these FIEs must submit registration applications to the local branches of SAFE within 15 days following execution of foreign loan agreements, and the registration should be completed within 20 business days from the date of receipt of the application.
The capital contribution of the foreign-invested enterprises falling in the scope of “restricted foreign investment industries” and “prohibited foreign investment industries” shall obtain approval from the Ministry of Commerce or its local branch, while the capital contribution of the foreign-invested enterprises falling outside such scopes may file with the Ministry of Commerce or its local branch.
The capital contribution of the FIEs falling in the scope of “restricted foreign investment industries” and “prohibited foreign investment industries” shall obtain approval from the Ministry of Commerce or its local branch, while the capital contribution of FIEs falling outside such scopes may file with the Ministry of Commerce or its local branch.
The Decisions on Maintaining Internet Security which was enacted by the Standing Committee of the PRC National People’s Congress, or the SCNPC in December 2000 and amended in August 2009, may subject violators to criminal punishment in China for any effort to: (i) gain improper entry into a computer or system of strategic importance; (ii) disseminate politically disruptive information; (iii) leak state secrets; (iv) spread false commercial information; or (v) infringe intellectual property rights.
The Decisions on Maintaining Internet Security which was enacted by the SCNPC in December 2000 and amended in August 2009, may subject violators to criminal punishment in China for any effort to: (i) gain improper entry into a computer or system of strategic importance; (ii) disseminate politically disruptive information; (iii) leak state secrets; (iv) spread false commercial information; or (v) infringe intellectual property rights.
However, most local authorities may delay accepting or approving applications of for-profit schools before the local implementing regulations being promulgated.
However, most local authorities may delay accepting or approving applications of for-profit schools before the local implementing regulations are promulgated.
After the end of such one-year period, the method of foreign-invested enterprises to carry out cross-border financing in foreign currency will be determined by People’s Bank of China and SAFE.
After the end of such one-year period, the method of FIEs to carry out cross-border financing in foreign currency will be determined by People’s Bank of China and SAFE.
Circular 19 allows foreign-invested enterprises established in China whose main business is investment to use their foreign exchange capitals to make equity investment and removes certain other restrictions under Circular 142.
Circular 19 allows FIEs established in China whose main business is investment to use their foreign exchange capitals to make equity investment and removes certain other restrictions under Circular 142.
Foreign invested enterprises have only been subject to the net assets limit in calculating the maximum amount of foreign debt they may hold from the date of promulgation of PBOC Circular 9.
FIEs have only been subject to the net assets limit in calculating the maximum amount of foreign debt they may hold from the date of promulgation of PBOC Circular 9.
On November 30, 2022, the MOE and relevant authorities published Opinions on Regulation of Non-Academic After-School Tutoring for Primary and Secondary School Students, which provide that, among others, (1) local governments shall identify corresponding competent authorities for different tutoring categories and set forth basic standards; (2) non-academic tutoring institutions shall comply with requirements relating to premise, facilities, fire safety, environment protection and food safety; (3) practitioners shall have corresponding capability or certificates for different tutoring categories, and tutoring institutions shall not solicit or recruit primary and secondary school teachers; (4) non-academic online tutoring institutions shall obtain certificates issued by provincial government authorities; (5) class times shall not conflict with the teaching time of the local primary and secondary schools, and offline after-school trainings shall end no later than 8:30 p.m. and online live trainings shall end no later than 9:00 p.m.; (6) tuition fees collected by a tutoring institution shall not be collected in a lump sum for more than 60 course sessions, or for a course length of more than three months, or for more than 5,000 RMB, and tutoring institutions shall open a special bank account for the tuition fees and file the account information and other required information with government authorities.
On November 30, 2022, the MOE and relevant authorities published Opinions on Regulation of Non-Academic After-School Tutoring for Primary and Secondary School Students, which provide that, among others, (i) local governments shall identify corresponding competent authorities for different tutoring categories and set forth basic standards; (ii) non-academic tutoring institutions shall comply with requirements relating to premise, facilities, fire safety, environment protection and food safety; (iii) practitioners shall have corresponding capability or certificates for different tutoring categories, and 80 Table of Contents tutoring institutions shall not solicit or recruit primary and secondary school teachers; (iv) non-academic online tutoring institutions shall obtain certificates issued by provincial government authorities; (v) class times shall not conflict with the teaching time of the local primary and secondary schools, and offline after-school trainings shall end no later than 8:30 p.m. and online live trainings shall end no later than 9:00 p.m.; (vi) tuition fees collected by a tutoring institution shall not be collected in a lump sum for more than 60 course sessions, or for a course length of more than three months, or for more than 5,000 RMB, and tutoring institutions shall open a special bank account for the tuition fees and file the account information and other required information with government authorities.
Please see “—Risks Relating to Doing Business in China—Uncertainties with respect to the PRC legal system could have a material adverse effect on us.” However, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations, and there can be no assurance that the PRC government will take a view that is not contrary to or otherwise different from the opinion of our PRC counsel.
Risk Factors —Risks Related to Doing Business in the PRC — Uncertainties with respect to the PRC legal system could have a material adverse effect on us.” However, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations, and there can be no assurance that the PRC government will take a view that is not contrary to or otherwise different from the opinion of our PRC counsel.
Before a public gathering place is put into use or opens for business, the owner or using entity shall apply for fire safety inspection, give an undertaking that the said place complies with fire protection technical standards and management provisions, submit the required materials, and be responsible for its undertaking and the veracity of materials.
Regulations on Fire Safety According to the Fire Prevention Law, before a public gathering place is put into use or opens for business, the owner or using entity shall apply for fire safety inspection, give an undertaking that the said place complies with fire protection technical standards and management provisions, submit the required materials, and be responsible for its undertaking and the veracity of materials.
Private Education Law and Its Implementation Rules The Law for Promoting Private Education (2018 Revision), or the PRC Private Education Law, promulgated by the Standing Committee of the PRC National People’s Congress on December 28, 2002 and last amended on December 29, 2018 and the Implementation Rules for the Private Education Law (2021) which was newly revised on April 7, 2021 and became effective on September 1, 2021, provide rules for social organizations or individuals to establish schools or other educational organizations using non-government funds in China.
Private Education Law and Its Implementation Rules The Law for Promoting Private Education (2018 Revision), or the PRC Private Education Law, promulgated by the SCNPC on December 28, 2002 and last amended on December 29, 2018 and the Implementation Rules for the Private Education Law (2021) which was newly revised on April 7, 2021 and became effective on September 1, 2021, provide rules for social organizations or individuals to establish schools or other educational organizations using non-government funds in China.
(4) 26 companies that operate in the fields including educational tourism and planning, non-academic tutoring, faculty training, investment management, and management consulting. (5) Nine companies that operate in the fields including educational technology, tourism, educational management, study trip development, culture development, corporate management, and publications.
(4) 14 companies that operate in the fields including educational tourism and planning, non-academic tutoring, faculty training, investment management, and management consulting. (5) Seven companies that operate in the fields including educational technology, tourism, educational management, study trip development, culture development, corporate management, and publications.
For example, the difficulties of education contents provided by extracurricular training institutions shall not exceed the difficulties of contents in textbooks used in corresponding compulsory education classes, the extracurricular education targeting students in primary schools shall not include contents to be taught in middle schools, and the extracurricular education targeting students in middle schools shall not include contents to be taught in high schools. 78 On July 24, 2021, the General Office of the CPC Central Committee and the General Office of the State Council issued the Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education, or the Double Alleviating Opinions, which provides high-level polices related to requirements and restrictions on After-School Institutions, or the AST Institutions, especially that: (i) no new approvals shall be granted to AST Institutions providing tutoring service related to academic subjects in compulsory education stage, or Academic AST Institutions; (ii) existing Academic AST Institutions are required to convert themselves into non-profit institutions; (iii) an approval mechanism will be adopted with regard to the existing online Academic AST Institutions which previously filed with competent authorities; (iv) Academic AST Institutions are prohibited from raising funds through publicly listing or other capitalization operations; (v) listed companies are prohibited from investing in Academic AST institution or purchase Academic AST Institutions’ assets by means of issuance of shares or by cash; (vi) foreign investors are prohibited from investing in Academic AST Institutions through mergers and acquisitions, entrustment, franchise and variable interest entities; (vii) for non-academic tutoring, local authorities shall identify corresponding competent authorities for different tutoring categories, set forth standards and approve relevant non-academic tutoring institutions.
On July 24, 2021, the General Office of the CPC Central Committee and the General Office of the State Council issued the Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education, or the Double Alleviating Opinions, which provides high-level polices related to requirements and restrictions on After-School Institutions, or the AST Institutions, especially that: (i) no new approvals shall be granted to AST Institutions providing tutoring service related to academic subjects in compulsory education stage, or Academic AST Institutions; (ii) existing Academic AST Institutions are required to convert themselves into non-profit institutions; (iii) an approval mechanism will be adopted with regard to the existing online Academic AST Institutions which previously filed with competent authorities; (iv) Academic AST Institutions are prohibited from raising funds through publicly listing or other capitalization operations; (v) listed companies are prohibited from investing in Academic AST institution or purchase Academic AST Institutions’ assets by means of issuance of shares or by cash; (vi) foreign investors are prohibited from investing in Academic AST Institutions through mergers and acquisitions, entrustment, franchise and variable interest entities; (vii) for non-academic tutoring, local authorities shall identify corresponding competent authorities for different tutoring categories, set forth standards and approve relevant non-academic tutoring institutions.
Pursuant to these regulations, failure to pass the required fire control assessment shall be subject to: (i) orders to suspend the construction of projects, use of such projects or operation of relevant business; and (ii) a fine between RMB30,000 and RMB300,000.
Pursuant to the aforementioned law and notice, failure to pass the required fire control assessment shall be subject to: (i) orders to suspend the construction of projects, use of such projects or operation of relevant business; and (ii) a fine between RMB30,000 and RMB300,000.
Under the PRC Education Law, no organization or individual may establish or operate a school or any other educational institution for profit-making purposes. On December 27, 2015, the Standing Committee of the PRC National People’s Congress, published the Decision on Amendment of the Education Law, which became effective on June 1, 2016.
Under the PRC Education Law, no organization or individual may establish or operate a school or any other educational institution for profit-making purposes. On December 27, 2015, the SCNPC published the Decision on Amendment of the Education Law, which became effective on June 1, 2016.
A duly approved private school will be granted a private school operating permit and shall be registered with the Ministry of Civil Affairs or its local counterparts as a private non-enterprise institution. 77 The Decision of the Standing Committee of the National People’s Congress on Amending the Private Education Law was promulgated on November 7, 2016 and became effective on September 1, 2017.
A duly approved private school will be granted a private school operating permit and shall be registered with the Ministry of Civil Affairs or its local counterparts as a private non-enterprise institution. The Decision of the SCNPC on Amending the Private Education Law was promulgated on November 7, 2016 and became effective on September 1, 2017.
However, although the Transitional Period ended on January 10, 2018, as of the date of this annual report, neither PBOC nor SAFE has issued any new regulations regarding the appropriate means of calculating the maximum amount of foreign debt for foreign-invested enterprises.
However, although the Transitional Period ended on January 10, 2018, as of the date of this annual report, neither PBOC nor SAFE has issued any new regulations regarding the appropriate means of calculating the 97 Table of Contents maximum amount of foreign debt for FIEs.
In the 2023 fiscal year, Shanghai Fuxi received service fees of RMB1.3 million (US$0.2 million) from the VIEs and did not distribute any dividends. Notwithstanding our business decisions to continue to invest and expand our PRC operations and launching new programs, our WFOE may receive service fees from the VIEs or make distributions to us in the future.
In the 2024 fiscal year, Shanghai Fuxi received service fees of RMB3.6 million (US$0.5 million) from the VIEs and did not distribute any dividends. Notwithstanding our business decisions to continue to invest and expand our PRC operations and launching new programs, our WFOE may receive service fees from the VIEs or make distributions to us in the future.
Those who choose to be registered as non-profit private schools shall amend their article of association before December 31, 2019, and those who choose to be registered as for-profit private schools shall make finance clearance, clarify the title of their properties, pay the tax related and re-make registration before (i) December 31, 2020 for private colleges or universities; or (ii) December 31, 2020 for other private schools. 82 On April 2, 2022, the Shanghai Municipal Education Commission, together with five other government authorities promulgated the Implementation Measures for the Establishment and Management of After-school Training Institutions in Shanghai, or the Shanghai Implementation Measures, effective from April 15, 2022, which raise certain requirements on establishment and management of after-school tutoring institutions in Shanghai, including, among other things, (i) after-school tutoring institutions providing online or offline academic subject tutoring for students in compulsory education and high schools, and the tutoring in culture and art, sports, technology, and non-academic cultural knowledge for students in compulsory education and preschool-age children are required to obtain the relevant private school operating permit; (ii) academic and non-academic cultural knowledge after-school tutoring institutions shall be approved by the education administration authorities at the district level; after-school tutoring institutions that provide tutoring services in culture and art, sports, science and technology and other tutoring activities shall be approved by the education administration authorities together with the tourism, sports, science and technology and other administrative authorities at the district level; (iii) after school tutoring institutions shall use the form of service contract for after-school training activities provided to primary and secondary school students, implement the training fee management policy formulated by the government, and cooperate with professional institutions such as commercial banks to open a special account for pre-collection of fees; and (iv) after-school training institutions established before the Shanghai Implementation Measures, intending to continue to provide tutoring in culture and art, sports, science and technology, and non-academic cultural knowledge for compulsory education and preschool-age children, shall, before December 31, 2023 or before changing the relevant registration items, follow the relevant laws, regulations, policies and the procedures to obtain the private school operating permit.
On April 2, 2022, the Shanghai Municipal Education Commission, together with five other government authorities promulgated the Implementation Measures for the Establishment and Management of After-school Training Institutions in Shanghai, or the Shanghai Implementation Measures, effective from April 15, 2022, which raise certain requirements on establishment and management of AST institutions in Shanghai, including, among other things, (i) after-school tutoring institutions providing online or offline academic subject tutoring for students in compulsory education and high schools, and the tutoring in culture and art, sports, technology, and non-academic cultural knowledge for students in compulsory education and preschool-age children are required to obtain the relevant private school operating permit; (ii) academic and non-academic cultural knowledge after-school tutoring institutions shall be approved by the education administration authorities at the district level; after-school tutoring institutions that provide tutoring services in culture and art, sports, science and technology and other tutoring activities shall be approved by the education administration authorities together with the tourism, sports, science and technology and other administrative authorities at the district level; (iii) AST institutions shall use the form of service contract for after-school training activities provided to primary and secondary school students, implement the training fee management policy formulated by the government, and cooperate with professional institutions such as commercial banks to open a special account for pre-collection of fees; and (iv) after-school training institutions established before the Shanghai Implementation Measures, intending to continue to provide tutoring in culture and art, sports, science and technology, and non-academic cultural knowledge for compulsory education and preschool-age children, shall, before December 31, 2023 or before changing the relevant registration items, follow the relevant laws, regulations, policies and the procedures to obtain the private school operating permit.
In addition, “internet cultural products” is defined in the Internet Culture Provisions as cultural products produced, broadcast and disseminated via the internet, which mainly include internet cultural products specially produced for the internet, such as online music entertainment, online games, online shows and plays (programs), online performances, online works of art and online cartoons, and internet cultural products produced from cultural products such as music entertainment, games, shows and plays (programs), performances, works of art, and cartoons through certain techniques and duplicating those to internet for dissemination.
In addition, “internet cultural products” is defined in the Internet Culture Provisions as cultural products produced, broadcast and disseminated via the internet, which mainly include internet cultural products specially produced for the internet, such as online music entertainment, online games, online shows and plays (programs), online performances, online works of art and online cartoons, and internet cultural products produced from cultural products such as music entertainment, games, shows and plays (programs), performances, works of art, and cartoons through certain techniques and duplicating those to internet for dissemination. 86 Table of Contents The Internet Culture Provisions further classifies internet cultural activities into commercial internet cultural activities and non-commercial internet cultural activities.
We also lease all of our learning centers, which occupy an aggregate of approximately 1,485 square meters as of the date of this annual report. The majority of lease agreements for our learning centers have durations of one to two years. For most of our learning centers, we pay annual rental charges.
We also lease all of our learning centers, which occupy an aggregate of approximately 5,274 square meters as of the date of this annual report. The majority of lease agreements for our learning centers have durations of one to nearly four years. For most of our learning centers, we pay annual rental charges.
The Standing Committee of the National People’s Congress, or the SCNPC, enacted the Food Safety Law of the PRC in February 2009, which was most recently amended in April 2021, according to which any hotel that provides food must obtain a license.
The SCNPC enacted the Food Safety Law of the PRC in February 2009, which was most recently amended in April 2021, according to which any hotel that provides food must obtain a license.
On February 13, 2015, SAFE further promulgated the Circular on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Circular 13, which took effect on June 1, 2015.
On February 13, 2015, SAFE further promulgated the Circular on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Circular 13, which took effect on June 1, 2015 and was partially repealed on December 30, 2019.
We have crafted a wide variety of learning products and services to address learners and customers’ evolving needs in well-rounded development. We also offer learning technology and content solutions to educational institutions. We are currently offering, and evaluating, a broad range of learning programs that are aligned with our mission, core competencies, and learner demand.
We have crafted a wide variety of both learning and tourism products and services to address learners and customers’ evolving needs in well-rounded development. We are currently offering, and evaluating, a broad range of learning programs that are aligned with our mission, core competencies, and learner demand.
Domain Names Management of domain names was prescribed by Measures for the Administration of Internet Domain Names of China which was promulgated by the PRC Ministry of Industry and Information Technology in 2002 and amended in 2004. It was superseded by Measures for the Administration of Internet Domain Names of China published in 2017.
Domain Names Management of domain names was prescribed by Measures for the Administration of Internet Domain Names of China which was promulgated by the MIIT in 2002 and amended in 2004. It was superseded by Measures for the Administration of Internet Domain Names published in 2017.
After completing the domain name registration, the registrant becomes the holder of the domain name registered by him/it. See “Item 4. Information on the Company — B. Business Overview — Intellectual Property” for more details on the current situation of our domain names.
The principle of “first come, first serve” is followed for the domain name registration service. After completing the domain name registration, the registrant becomes the holder of the domain name registered by him/it. See “Item 4. Information on the Company — B. Business Overview — Intellectual Property” for more details on the current situation of our domain names.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

73 edited+23 added−14 removed64 unchanged
Biggest changeFor the Years Ended February 28 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Summary Consolidated Statements of Operations: Revenue --Revenue from third parties 277,806 99.1 249,274 99.6 26,556 3,831 77.6 --Revenue from related parties 2,476 0.9 949 0.4 7,660 1,105 22.4 Total Revenue 280,282 100.0 250,223 100.0 34,216 4,936 100.0 Cost of revenue (168,832 ) (60.2 ) (149,615 ) (59.8 ) (19,922 ) (2,874 ) (58.2 ) Gross profit 111,450 39.8 100,608 40.2 14,294 2,062 41.8 Operating expenses — General and administrative expenses (116,972 ) (41.7 ) (85,298 ) (34.1 ) (45,291 ) (6,533 ) (132.4 ) Sales and marketing expenses (30,953 ) (11.0 ) (22,045 ) (8.8 ) (4,668 ) (673 ) (13.6 ) Lease termination loss — — (7,046 ) (2.9 ) — — — Impairment loss on intangible assets and goodwill — — (44,562 ) (17.8 ) — — — Impairment loss on other long-lived assets — — (7,871 ) (3.1 ) — — — Operating income (loss) (36,475 ) (12.9 ) (66,214 ) (26.5 ) (35,665 ) (5,144 ) (104.2 ) Subsidy income 11,898 4.2 2,298 0.9 1,412 204 4.1 Gain from disposal of liabilities and a subsidiary — — 4,048 1.7 — — — Interest income, net 3,403 1.2 3,230 1.3 2,284 329 6.7 Other income (expenses), net 1,900 0.7 (3,501 ) (1.4 ) (526 ) (76 ) (1.6 ) Loss before income taxes and loss from equity method investments (19,274 ) (6.8 ) (60,139 ) (24.0 ) (32,495 ) (4,687 ) (95.0 ) Income tax expense (4,760 ) (1.7 ) (21,843 ) (8.7 ) (993 ) (143 ) (2.9 ) Loss from equity method investments (3,852 ) (1.4 ) (36,750 ) (14.7 ) — — — Net loss (27,886 ) (9.9 ) (118,732 ) (47.4 ) (33,488 ) (4,830 ) (97.9 ) Year Ended February 28, 2023 Compared to Year Ended February 28, 2022 Revenue Our total revenue was RMB34.2 million (US$4.9 million) for the 2023 fiscal year and RMB250.2 million in the 2022 fiscal year, primarily due to the decrease of RMB217.1 million in revenue generated from learning services, resulting from the cessation of our K9 Academic AST Services in mainland China by the end of 2021, 113 partially offset by the increase of RMB1.7 million in revenue generated from study camp as we rollout our study camp in Hubei province.
Biggest changeFor the Years Ended February 28, February 28, February 29, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentages) Summary Consolidated Statements of Operations: Revenue --Revenue from third parties 249,274 99.6 26,556 77.6 123,076 17,099 98.1 --Revenue from related parties 949 0.4 7,660 22.4 2,369 329 1.9 Total Revenue 250,223 100.0 34,216 100.0 125,445 17,428 100.0 Cost of revenue (149,615 ) (59.8 ) (19,922 ) (58.2 ) (79,951 ) (11,108 ) (63.7 ) Gross profit 100,608 40.2 14,294 41.8 45,494 6,320 36.3 Operating expenses General and administrative expenses (85,298 ) (34.1 ) (45,291 ) (132.4 ) (44,337 ) (6,160 ) (35.4 ) Sales and marketing expenses (22,045 ) (8.8 ) (4,668 ) (13.6 ) (6,753 ) (938 ) (5.4 ) Lease termination loss (7,046 ) (2.9 ) — — — — — Impairment loss on intangible assets and goodwill (44,562 ) (17.8 ) — — — — — Impairment loss on other long-lived assets (7,871 ) (3.1 ) — — (3,674 ) (510 ) (2.9 ) Operating (loss) income (66,214 ) (26.5 ) (35,665 ) (104.2 ) (9,270 ) (1,288 ) (7.4 ) Subsidy income 2,298 0.9 1,412 4.1 728 101 0.6 Gain from disposal of liabilities and a subsidiary 4,048 1.7 — — — — — Interest income, net 3,230 1.3 2,284 6.7 7,235 1,005 5.8 Realized gain in investments 1,749 0.7 1,867 5.5 3,207 446 2.6 Unrealized holding (loss) gain in investments (2,855 ) (1.1 ) (3,794 ) (11.2 ) 3,910 543 3.1 Other (expenses) income, net (2,395 ) (1.0 ) 1,401 4.1 (1,434 ) (199 ) (1.2 ) Impairment loss on long-term investments — — — — (500 ) (69 ) (0.5 ) (Loss) Income before income taxes and loss from equity method investments (60,139 ) (24.0 ) (32,495 ) (95.0 ) 3,876 539 3.0 Income tax expense (21,843 ) (8.7 ) (993 ) (2.9 ) (1,101 ) (153 ) (0.9 ) Loss from equity method investments (36,750 ) (14.7 ) — — — — — Net (loss) income (118,732 ) (47.4 ) (33,488 ) (97.9 ) 2,775 386 2.1 117 Table of Contents Year Ended February 29, 2024 Compared to Year Ended February 28, 2023 Revenue Our total revenue increased by 266.6% to RMB125.4 million (US$17.4 million) for the 2024 fiscal year from RMB34.2 million in the 2023 fiscal year, mainly driven by the rapid growth in the tourism services due to the tourism business development through business acquisition in the 2024 fiscal year, and rapid growth in the learning services business primarily due to the business recovery from the COVID-19 impact as the PRC government had removed the restrictive measures in China since December 2022, and also our business expansion effort for the learning services.
Learning technology and content solutions. The success of our learning technology and content solutions primarily depends on our abilities to continue to provide quality services to our existing customers leveraging our technology and content developing capabilities, in particular, to tailor our learning technology products and services to the needs of customers and to further develop our accumulated immense content library.
The success of our learning technology and content solutions primarily depends on our abilities to continue to provide quality services to our existing customers leveraging our technology and content developing capabilities, in particular, to tailor our learning technology products and services to the needs of customers and to further develop our accumulated immense content library.
Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity.
Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity.
In August 2015, the State Administration of Taxation promulgated the Administrative Measures for Non-Resident Taxpayers to Enjoy Treatment under Tax Treaties, or SAT Circular 60, which became effective on November 1, 2015. SAT Circular 60 provides that non-resident enterprises are not 110 required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax.
In August 2015, the State Administration of Taxation promulgated the Administrative Measures for Non-Resident Taxpayers to Enjoy Treatment under Tax Treaties, or SAT Circular 60, which became effective on November 1, 2015. SAT Circular 60 provides that non-resident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax.
We believe that our available cash and cash equivalents will be sufficient to meet our working capital requirements and capital expenditures in the ordinary course of business for the next twelve months. 116 However, we may require additional cash resources due to changing business conditions or other future developments, including any investments or acquisitions we may decide to selectively pursue.
We believe that our available cash and cash equivalents will be sufficient to meet our working capital requirements and capital expenditures in the ordinary course of business for the next twelve months. However, we may require additional cash resources due to changing business conditions or other future developments, including any investments or acquisitions we may decide to selectively pursue.
Deferred tax assets are reduced by a valuation allowance when, based upon the weight of 111 available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets are reduced by a valuation allowance when, based upon the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Sales and Marketing Expenses Our sales and marketing expenses decreased by 78.8% from RMB22.0 million in the 2022 fiscal year to RMB4.7 million (US$0.7 million) in the 2023 fiscal year, primarily because we made our last funding commitments accrual to ECNU in the 2022 fiscal year.
Sales and Marketing Expenses Our sales and marketing expenses decreased by 78.8% from RMB22.0 million in the 2022 fiscal year to RMB4.7 million in the 2023 fiscal year, primarily because we made our last funding commitments accrual to ECNU in the 2022 fiscal year.
No provision for Hong Kong profits tax has been made in our consolidated financial statements as Four Seasons Education HK has no assessable income for the 2021, 2022 and 2023 fiscal years.
No provision for Hong Kong profits tax has been made in our consolidated financial statements as Four Seasons Education HK has no assessable income for the 2022, 2023 and 2024 fiscal years.
Gross Profit As a result of the foregoing, our gross profit was RMB100.6 million and RMB14.3 million (US$2.1 million) for the 2022 and 2023 fiscal year, respectively. Our gross margin was 40.2% and 41.8% for the 2022 and 2023 fiscal year, respectively.
Gross Profit As a result of the foregoing, our gross profit was RMB100.6 million and RMB14.3 million for the 2022 and 2023 fiscal year, respectively. Our gross margin was 40.2% and 41.8% for the 2022 and 2023 fiscal year, respectively.
We believe the following accounting estimates involve the most significant judgments used in the preparation of our financial statements. Income Taxes We are required to make estimates and apply our judgements in determining the provision for income tax expenses for financial reporting purpose based on tax laws.
We believe the following accounting estimates involve the most significant judgments used in the preparation of our financial statements. 115 Table of Contents Income Taxes We are required to make estimates and apply our judgements in determining the provision for income tax expenses for financial reporting purpose based on tax laws.
Cost of Revenue Our total cost of revenue decreased by 86.7% from RMB149.6 million in the 2022 fiscal year to RMB19.9 million (US$2.9 million) for the fiscal year 2023, primarily attributable to the decrease of RMB71.0 million in staff costs, and RMB38.0 million in rental, utilities and maintenance costs for the learning centers, resulting from the closure of our learning centers and the decrease of number of teachers due to ceased K9 Academic AST by the end of 2021.
Cost of Revenue Our total cost of revenue decreased by 86.7% from RMB149.6 million in the 2022 fiscal year to RMB19.9 million for the fiscal year 2023, primarily attributable to the decrease of RMB71.0 million in staff costs, and RMB38.0 million in rental, utilities and maintenance costs for the learning centers, resulting from the closure of our learning centers and the decrease of number of teachers due to ceased K-9 Academic AST by the end of 2021.
The PRC Enterprise Income Tax Law and its implementing rules provide that dividends paid by a PRC entity to a non-resident enterprise for income tax purposes is subject to PRC withholding tax at a rate of 10%, subject to reduction by an applicable tax treaty with China.
The PRC Enterprise Income Tax Law and its implementing rules provide that dividends paid by a PRC entity to a non-resident enterprise for income tax purposes is subject to PRC withholding tax at a rate of 10%, 114 Table of Contents subject to reduction by an applicable tax treaty with China.
Cash and cash equivalents consist of cash on hand, cash in bank, time deposits with original maturities of three months or less when purchased and floating rate financial instruments which are unrestricted as to withdrawal or use. Our cash and cash equivalents are primarily denominated in Renminbi.
Cash and cash equivalents consist of cash on hand, cash in bank, time deposits with original maturities of three months or less when purchased and floating rate financial instruments 120 Table of Contents which are unrestricted as to withdrawal or use. Our cash and cash equivalents are primarily denominated in Renminbi.
We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us. Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of February 28, 2023.
We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us. Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of February 29, 2024.
The results of operations of our learning services and study camp and learning trip business depend on our abilities to retain existing participants and attract new ones by maintaining the consistency and quality of our services, successfully executing our pricing strategies, enhancing our 106 operational efficiency, and to meet the evolving needs of our l customers through introduction of new offerings and excellent experience.
The results of operations of our trip-related services and study camp business depend on our abilities to retain existing participants and attract new ones by maintaining the consistency and quality of our services, successfully executing our pricing strategies, enhancing our operational efficiency, and to meet the evolving needs of our customers through introduction of new offerings and excellent experience.
We expect this funding commitment and our collaboration with ECNU to positively impact our branding efforts and aid in our expansion to cities outside of Shanghai. Consequently, our sales and marketing expenses primarily consisted of a RMB20 million, RMB10 million and nil funding commitment accrual to ECNU in the years ended February 28, 2021, 2022 and 2023, respectively.
We expect this funding commitment and our collaboration with ECNU to positively impact our branding efforts and aid in our expansion to cities outside of Shanghai. Consequently, our sales and marketing expenses primarily consisted of a RMB10 million, nil and nil funding commitment accrual to ECNU in the years ended February 28, 2022, 2023 and February 29, 2024, respectively.
Loss Before Income Taxes and Loss from Equity Method Investments As a result of the foregoing, our loss before income taxes and loss from equity method investments was RMB32.5 million (US$4.7 million) in the 2023 fiscal year, compared to the RMB60.1 million in the 2022 fiscal year.
Loss Before Income Taxes and Loss from Equity Method Investments As a result of the foregoing, our loss before income taxes and loss from equity method investments was RMB32.5 million in the 2023 fiscal year, compared to the RMB60.1 million in the 2022 fiscal year.
Net cash provided by investing activities amounted to RMB4.3 million in the 2022 fiscal year. This was primarily attributable to proceeds from maturity of investments under fair value of RMB128.1 million, partially offset by the purchase of short-term investments of RMB89.5 million and the payments to long-term investments of RMB14.0 million.
Net cash provided by investing activities amounted to RMB4.3 million in the 2022 fiscal year. This was primarily attributable to proceeds from maturity of investments under fair value of RMB128.1 million, partially offset by the purchase of short-term investments of RMB89.5 million, the payments to long-term investments of RMB14.0 million and purchases of property and equipment of RMB9.9 million.
E. Critical Accounting Estimates For our critical accounting estimates, see “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Critical Accounting Estimates.” 121
Critical Accounting Estimates For our critical accounting estimates, see “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Critical Accounting Estimates.”
General and Administrative Expenses Our general and administrative expenses decreased by 46.9% from RMB85.3 million in the 2022 fiscal year to RMB45.3 million (US$6.5 million) for the 2023 fiscal year, primarily due to the decrease in staff costs of our administrative personnel, resulting from the closure of our learning centers due to ceased K9 Academic AST by the end of 2021.
General and Administrative Expenses Our general and administrative expenses decreased by 46.9% from RMB85.3 million in the 2022 fiscal year to RMB45.3 million for the 2023 fiscal year, primarily due to the decrease in staff costs of our administrative personnel, resulting from the closure of our learning centers due to ceased K-9 Academic AST by the end of 2021.
Such cessation has had a significantly negative impact on our financial performance for the fiscal year ended February 28, 2022 and 2023 since revenues from offering K9 Academic AST Services accounted for a substantial majority of our total revenues prior to our cessation of such business.
Such cessation has had a significantly negative impact on our financial performance for the fiscal year ended February 28, 2022, 2023 and February 29, 2024 since revenues from offering K-9 Academic AST Services accounted for a substantial majority of our total revenues prior to our cessation of such business.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the fiscal year ended February 28, 2023 that are reasonably likely to have a material adverse effect on our net revenue, income, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial conditions.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the fiscal year ended February 29, 2024 that are reasonably likely to have a material adverse effect on our net revenue, income, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial conditions. 125 Table of Contents E.
In compliance with the Alleviating Burden Opinion Regarding Compulsory Education and applicable rules, regulations and measures, we ceased offering K9 Academic AST Services in mainland China by the end of December 2021. Our revenues generated from K9 Academic AST Services was RMB251.4 million, RMB208.3 million and nil for the years ended February 28, 2021, 2022 and 2023, respectively.
In compliance with the Alleviating Burden Opinion Regarding Compulsory Education and applicable rules, regulations and measures, we ceased offering K-9 Academic AST Services in mainland China by the end of December 2021. Our revenues generated from K-9 Academic AST Services was RMB208.3 million, nil and nil for the years ended February 28, 2022, 2023 and February 29, 2024, respectively.
We have shifted, and will continue to, shift our focus towards non-academic educational products and services, and explore other business opportunities by leveraging our educational resources accumulated over our operating history. Our revenue was RMB280.3 million in the 2021 fiscal year, RMB250.2 million in the 2022 fiscal year and RMB34.2 million (US$4.9 million) in the 2023 fiscal year, respectively.
We have shifted, and will continue to, shift our focus towards non-academic educational products and services, and explore other business opportunities by leveraging our educational resources accumulated over our operating history. Our revenue was RMB250.2 million in the 2022 fiscal year, RMB34.2 million in the 2023 fiscal year and RMB125.4 million (US$17.4 million) in the 2024 fiscal year, respectively.
It reflected the net loss of RMB118.7 million, primarily adjusted by: (i) deferred revenue of RMB66.1 million, (ii) changes in operating lease liabilities of RMB59.8 million, (ii) other receivables, deposits and other assets of RMB11.9 million, (iv) gain from disposal of liabilities and a subsidiary of RMB4.0 million, and (v) accrued expenses and other current liabilities f RMB3.1 million; partially offset by: (i) loss from goodwill impairment of RMB42.3 million, (ii) noncash lease expenses of RMB39.5 million, (iii) loss from equity method investments, net of taxes of RMB36.8 million, (iv) deferred income taxes of RMB14.4 million, (v) share-based compensation of RMB9.0 million, (vi) depreciation of property and equipment of RMB8.5 million, (vii) loss from property and equipment impairment of RMB7.9 million, (viii) provision for credit losses of RMB6.9 million, (ix) income tax payable of RMB4.6 million, and (x) loss from intangible assets impairment of RMB2.3 million.
It reflected the net loss of RMB118.7 million, primarily adjusted by: (i) deferred revenue of RMB66.1 million, (ii) changes in operating lease liabilities of RMB59.8 million, (ii) other receivables, deposits and other assets of RMB11.9 million, (iv) gain from disposal of liabilities and a subsidiary of RMB4.0 million, and (v) accrued expenses and other current liabilities of RMB3.1 million; partially offset by: (i) loss from goodwill impairment of RMB42.3 million, (ii) noncash lease expenses of RMB39.5 million, (iii) loss from equity method investments, net of taxes of RMB36.8 million, (iv) deferred income taxes of RMB14.4 million, (v) share-based compensation of RMB9.0 million, (vi) depreciation of property and equipment of RMB8.5 million, (vii) loss from property and equipment impairment of RMB7.9 million, (viii) provision for credit losses of RMB6.9 million, (ix) income tax payable of RMB4.6 million, and (x) loss from intangible assets impairment of RMB2.3 million. 122 Table of Contents Investing Activities Net cash provided by investing activities amounted to RMB71.5 million (US$9.9 million) in the 2024 fiscal year.
We operate and generate all of our revenue in the PRC. The VIEs in the PRC contributed 100%, 100% and 97.6% of our consolidated revenue for the years ended February 28, 2021, 2022 and 2023, respectively. 120 Our assets are located in the Cayman Islands, the PRC and Hong Kong.
We operate and generate all of our revenue in the PRC. The VIEs in the PRC contributed 100%, 97.6% and 99.3% of our consolidated revenue for the years ended February 28, 2022, 2023 and February 29, 2024, respectively. Our assets are located in the Cayman Islands, the PRC and Hong Kong.
It reflected the net loss of RMB33.5 million (US$4.8 million), primarily adjusted by:(i) increase in amounts due from related parties of RMB8.2 million (US$1.2 million), (ii) decrease in accrued expenses and other current liabilities of RMB7.6 million (US$1.1 million), and (iii) decrease in operating lease liabilities of RMB2.1 million (US$0.3 million); partially offset by (i) decrease in other receivables, deposits and other assets of RMB3.9 million (US$0.6 million), (ii) share-based compensation of RMB3.2 million (US$0.5 million), (iii) decrease in other non-current assets of RMB3.0 million (US$0.4 million), (iv) depreciation of property and equipment of RMB2.8 million (US$0.4 million), (v) noncash lease expenses of RMB3.0 million (US$0.4 million) and (vi) increase in income tax payable of RMB2.4 million (US$0.4 million). 117 Net cash used in operating activities amounted to RMB91.3 million in the 2022 fiscal year.
It reflected the net loss of RMB33.5 million, primarily adjusted by:(i) increase in amounts due from related parties of RMB8.2 million , (ii) decrease in accrued expenses and other current liabilities of RMB7.6 million , and (iii) decrease in operating lease liabilities of RMB2.1 million; partially offset by (i) decrease in other receivables, deposits and other assets of RMB3.9 million, (ii) share-based compensation of RMB3.2 million, (iii) decrease in other non-current assets of RMB3.0 million, (iv) depreciation of property and equipment of RMB2.8 million, (v) noncash lease expenses of RMB3.0 million, (vi) increase in income tax payable of RMB2.4 million.
The table below sets forth the respective asset contributions of (i) our company and our subsidiaries and (ii) the VIEs in the PRC for the periods indicated as a percentage of total assets: Assets As of February 28 2021 2022 2023 Our Company and our subsidiaries Four Seasons Education Cayman 43.4 % 55.8 % 62.0 % Four Seasons Education HK and other subsidiaries 6.0 % 9.6 % 7.1 % Shanghai Fuxi 11.3 % 13.7 % 13.9 % Our variable interest entities 39.3 % 20.9 % 17.0 % Total assets 100.0 % 100.0 % 100.0 % * The percentages given exclude inter-company transactions among Four Season Education (Cayman) Inc., its subsidiaries and its variable interest entities.
The table below sets forth the respective asset contributions of (i) our company and our subsidiaries and (ii) the VIEs in the PRC for the periods indicated as a percentage of total assets: Assets For the Years Ended February 28, February 28, February 29, 2022 2023 2024 Our Company and our subsidiaries Four Seasons Education Cayman 55.8 % 62.0 % 57.6 % Four Seasons Education HK and other subsidiaries 9.6 % 7.1 % 16.3 % Shanghai Fuxi 13.7 % 13.9 % 12.5 % Our variable interest entities 20.9 % 17.0 % 13.6 % Total assets 100.0 % 100.0 % 100.0 % * The percentages given exclude inter-company transactions among Four Season Education (Cayman) Inc., its subsidiaries and its variable interest entities.
This was primarily attributable to purchases of short-term investments under fair value of RMB175.8 million (US$25.4 million), purchases of long-term investments under fair value of RMB145.9 million (US$21.0 million), purchase of short-term investments of RMB29.3 million (US$4.2 million), payments to long-term investments of RMB13.5 million (US$ 1.9 million), and purchases of property and equipment of RMB8.7 million (US$1.2 million), offset by the proceeds from maturity of investments of RMB276.6 million (US$39.9 million).
This was primarily attributable to purchases of short-term investments under fair value of RMB175.8 million , purchases of long-term investments under fair value of RMB145.9 million, purchase of short-term investments of RMB29.3 million , payments to long-term investments of RMB13.5 million, and purchases of property and equipment of RMB8.7 million, offset by the proceeds from maturity of investments of RMB276.6 million.
As a result, our ability to pay dividends depends upon dividends paid by our subsidiaries, which in turn depends on the service fees paid to Shanghai Fuxi by the VIEs. In the 2023 fiscal year, Shanghai Fuxi received service fees of RMB1.3 million (US$0.2 million) from the VIEs and did not distribute any dividends.
As a result, our ability to pay dividends depends upon dividends paid by our subsidiaries, which in turn depends on the service fees paid to Shanghai Fuxi by the VIEs. In the 2024 fiscal year, Shanghai Fuxi received service fees of RMB3.6 million (US$0.5 million) from the VIEs and did not distribute any dividends.
The number of our full-time teachers was 359, 150, and 76 as of February 28, 2021, February 28, 2022 and February 28, 2023, respectively, mainly due to our cessation of K9 Academic AST Services offering in mainland China by the end of 2021.
The number of our full-time teachers was 150, 76, and 83 as of February 28, 2022, February 28, 2023 and February 29, 2024, respectively, mainly due to our cessation of K-9 Academic AST Services offering in mainland China by the end of 2021.
The table below sets forth a breakdown of our operating expenses for the periods indicated: For the Years Ended February 28 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentage) General and administrative expenses 116,972 79.1 85,298 51.1 45,291 6,533 90.7 Sales and marketing expenses 30,953 20.9 22,045 13.2 4,668 673 9.3 Lease termination loss — — 7,046 4.2 — — — Impairment loss on intangible assets and goodwill — — 44,562 26.8 — — — Impairment loss on other long-lived assets — — 7,871 4.7 — — — Total 147,925 100.0 166,822 100.0 49,959 7,206 100.0 General and Administrative Expenses Our general and administrative expenses primarily consist of (i) staff costs and employee benefits for our executive, finance, legal, information technology, human resources and other administrative personnel, (ii) office rent, utility and other expenses, (iii) cost of third-party professional services, and (iv) share-based compensation expenses for our administrative personnel.
The table below sets forth a breakdown of our operating expenses for the periods indicated: For the Years Ended February 28, February 28, February 29, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentage) General and administrative expenses 85,298 51.1 45,291 90.7 44,337 6,160 81.0 Sales and marketing expenses 22,045 13.2 4,668 9.3 6,753 938 12.3 Lease termination loss 7,046 4.2 — — — — — Impairment loss on intangible assets and goodwill 44,562 26.8 — — — — — Impairment loss on other long-lived assets 7,871 4.7 — — 3,674 510 6.7 Total 166,822 100.0 49,959 100.0 54,764 7,608 100.0 113 Table of Contents General and Administrative Expenses Our general and administrative expenses primarily consist of (i) staff costs and employee benefits for our executive, finance, legal, information technology, human resources and other administrative personnel, (ii) office rent, utility and other expenses, (iii) cost of third-party professional services, and (iv) share-based compensation expenses for our administrative personnel.
As of February 28, 2023 we had two learning centers in two cities in China. We always keep a keen prospective for the evolving and developing industry. In addition to the course offerings that target improving learners and customers’ academic performance, we also began to expand our offerings by introducing study camp and learning trip in the recent years.
We always keep a keen prospective for the evolving and developing industry. In addition to the course offerings that target improving learners and customers’ academic performance, we also began to expand our offerings by introducing study camp and learning trip in the recent years.
This was primarily attributable to repurchase of ordinary shares of RMB27.8 million and partially offset by the contribution from non-controlling interests of RMB3.6 million. Net cash provided in financing activities amounted to RMB0.2 million in the 2021 fiscal year. This was primarily attributable to proceeds from related parties loans of RMB0.1 million.
This was primarily attributable to repayment on related parties loans of RMB0.6 million. Net cash used by financing activities amounted to RMB25.6 million in the 2022 fiscal year. This was primarily attributable to repurchase of ordinary shares of RMB27.8 million and partially offset by the contribution from non-controlling interests of RMB3.6 million.
Nevertheless, we expect that our total costs and expenses will increase in line with the development and growth of our new business lines, which is likely to be partially offset by our increasing economies of scale and improved operating efficiency.
Nevertheless, we expect that our total costs and expenses will increase in line with the development and growth of our new business lines, which is likely to be partially offset by our increasing economies of scale and improved operating efficiency. Economy and travel industry trends Our tourism business is driven by the demand for travel services in China.
The amounts restricted include paid-in capital and the statutory reserves of the VIEs without considering the effect of elimination upon consolidation during the relevant period. As of February 28, 2023, total restricted net assets were RMB111.5 million (US$16.1 million).
The amounts restricted include paid-in capital and the statutory reserves of the VIEs without considering the effect of elimination upon consolidation during the relevant period. As of February 29, 2024, total restricted net assets were RMB138.5 million (US$19.2 million).
We recorded net loss of RMB27.9 million in the 2021 fiscal year, RMB118.7 million in the 2022 fiscal year and RMB33.5 million (US$4.8 million) in the 2023 fiscal year.
We recorded net loss of RMB118.7 million in the 2022 fiscal year, RMB33.5 million in the 2023 fiscal year and net income of RMB2.8 million (US$0.4 million) in the 2024 fiscal year.
Even though we currently do not require any such dividends, loans or advances from our entities for working capital and other funding purposes, we may in the future require additional cash resources from them due to changes in business conditions, to fund future acquisitions and development, or merely to declare and pay dividends or distributions to our shareholders.
Furthermore, if our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. 124 Table of Contents Even though we currently do not require any such dividends, loans or advances from our entities for working capital and other funding purposes, we may in the future require additional cash resources from them due to changes in business conditions, to fund future acquisitions and development, or merely to declare and pay dividends or distributions to our shareholders.
The table below sets forth a breakdown of our cost of revenue for the periods indicated: For the Years Ended February 28 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentage) Staff costs 92,712 54.9 85,134 56.9 14,089 2,032 70.7 Study camp and learning trip related expense 93 0.1 1,335 0.9 2,250 325 11.3 Rental, utilities and maintenance costs 49,920 29.6 38,473 25.7 481 69 2.4 Depreciation of leasehold improvement of learning centers 11,244 6.7 6,706 4.5 1,409 203 7.1 Other expenses 14,863 8.7 17,967 12.0 1,693 245 8.5 Total 168,832 100.0 149,615 100.0 19,922 2,874 100.0 Operating Expenses Our operating expenses primarily consist of general and administrative expenses and sales and marketing expenses.
The table below sets forth a breakdown of our cost of revenue for the periods indicated: For the Years Ended February 28, February 28, February 29, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentage) Tourism service related expense 1,335 0.9 2,250 11.3 45,786 6,361 57.3 Staff costs 85,134 56.9 14,089 70.7 23,853 3,314 29.8 Rental, utilities and maintenance costs 38,473 25.7 481 2.4 457 63 0.6 Depreciation of leasehold improvement of learning centers 6,706 4.5 1,409 7.1 2,167 301 2.7 Other expenses 17,967 12.0 1,693 8.5 7,688 1,069 9.6 Total 149,615 100.0 19,922 100.0 79,951 11,108 100.0 Operating Expenses Our operating expenses primarily consist of general and administrative expenses and sales and marketing expenses.
We recorded deferred tax assets of RMB0.9 million and RMB0.6 million (US$ 0.1 million), net of valuation allowance of RMB27.4 million and RMB30.8 million (US$4.4 million), as of February 28, 2022 and 2023, respectively.
We recorded deferred tax assets of RMB0.6 million and nil net of valuation allowance of RMB30.5 million and RMB35.2 million (US$4.9 million), as of February 28, 2023 and February 29, 2024, respectively.
Net cash used in investing activities amounted to RMB68.0 million in the 2021 fiscal year.
Net cash used in investing activities amounted to RMB96.7 million in the 2023 fiscal year.
Adjusted net income (loss) represents net income (loss) before the impact of (i) share-based compensation expenses; (ii) fair value change of investments, excluding foreign currency translation adjustment and (iii) impairment loss on intangible assets and goodwill (net of tax effect) and (vi) impairment loss on long-lived assets.
Adjusted net income (loss) represents net income (loss) before the impact of (i) share-based compensation expenses; (ii) unrealized holding gain (loss) in investments; (iii) impairment loss on intangible assets and goodwill (net of tax effect); and (iv) impairment loss on long-lived assets.
We are hosting a series of study camps, learning trips and interest-oriented classes, and have continued to integrate technology with learning, promote industry innovation, and lead industry development form our inception.
We have since realigned our business focus towards tourism services, learning services as well as learning technology and content solutions to capture evolving customer needs. We are hosting a series of study camps, learning trips and interest-oriented classes, and have continued to integrate technology with learning, promote industry innovation, and lead industry development form our inception.
The evaluation of asset impairment requires us to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require judgment and actual results may differ from assumed and estimated amounts. We recognized nil, RMB7.9 million and nil impairment loss of property and equipment during the years ended February 28, 2021, 2022, and 2023, respectively.
The evaluation of asset impairment requires us to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require judgment and actual results may differ from assumed and estimated amounts.
Loss Before Income Taxes and Loss from Equity Method Investments As a result of the foregoing, our loss before income taxes and loss from equity method investments was RMB60.1 million in the 2022 fiscal year, compared to the RMB19.3 million in the 2021 fiscal year.
Income (Loss) Before Income Taxes and Loss from Equity Method Investments As a result of the foregoing, our income before income taxes and loss from equity method investments was RMB3.9 million (US$0.5 million) in the 2024 fiscal year, compared to the loss of RMB32.5 million in the 2023 fiscal year.
Net Loss As a result of the foregoing, we recorded net loss of RMB27.9 million and RMB118.7 million in the 2021 and 2022 fiscal year, respectively. Non-GAAP Measures We use adjusted net income (loss), a non-GAAP financial measure, in the evaluation of our operating results and in our financial and operational decision-making.
Non-GAAP Measures We use adjusted net income (loss), a non-GAAP financial measure, in the evaluation of our operating results and in our financial and operational decision-making.
For the Years Ended February 28 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentage) Learning services 268,334 95.7 235,627 94.2 18,516 2,672 54.1 Learning technology and content solutions 11,734 4.2 13,537 5.4 12,328 1,778 36.0 Study camp and learning trip 268 0.1 1,843 0.7 3,502 505 10.2 Less: sales tax 54 0.0 784 0.3 130 19 0.3 Total 280,282 100.0 250,223 100.0 34,216 4,936 100.0 Cost of Revenue Our cost of revenue primarily consists of (i) Staff costs, which primarily consist of teaching salaries and other benefits for the teachers and related service providing staff, (ii) study camp and learning trip related expense, which primarily consist of study tour travel expense, accommodation expense and transportation expenditures, (iii) rental, utilities and maintenance costs for the learning centers, (iv) education expenses, which primarily consist of expenses related to educational activities, including teaching material expenses, student activity expenses and platform and service charges for online course, and (v) amortization of leasehold improvement of learning centers .
For the Years Ended February 28, February 28, February 29, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentage) Learning services 235,627 94.2 18,516 54.1 65,842 9,148 52.5 Tourism services 1,843 0.7 3,502 10.2 51,880 7,208 41.4 Learning Technology and content solutions 13,537 5.4 12,328 36.0 7,978 1,108 6.4 Less: sales tax 784 0.3 130 0.3 255 36 0.3 Total 250,223 100.0 34,216 100.0 125,445 17,428 100.0 112 Table of Contents Cost of Revenue Our cost of revenue primarily consists of (i) tourism services related expense, which primarily consist of tour travel expense, accommodation expense and transportation expenditures, (ii) Staff costs, which primarily consist of teaching salaries and other benefits for the teachers and related service providing staff, (iii) rental, utilities and maintenance costs for the learning centers, and (iv)amortization of leasehold improvement of learning centers.
As of February 28, 2023, 30.9% of our total assets were located in the PRC, 62.0% of our total assets were located in the Cayman Islands and 7.1% of our total assets were located in Hong Kong.
As of February 29, 2024, 41.7% of our total assets were located in the PRC, 57.6% of our total assets were located in the Cayman Islands and 0.7% of our total assets were located in Hong Kong.
We recognized nil, RMB2.3 million and nil impairment loss on intangible assets during the years ended February 28, 2021, 2022, and 2023, respectively.
We recognized RMB7.9 million, nil and RMB3.7 million (US$0.5 million) impairment loss of property and equipment during the years ended February 28, 2022, 2023, and February 29, 2024, respectively. We recognized RMB2.3 million, nil and nil impairment loss on intangible assets during the years ended February 28, 2022, 2023, and February 29, 2024, respectively.
Historically, we have financed our operations through cash generated from operating activities and net proceeds we received from our initial public offering. We intend to finance our future working capital requirements and capital expenditures from cash generated from operating activities and from the funds raised from financing activities, including the net proceeds we received from our initial public offering.
We intend to finance our future working capital requirements and capital expenditures from cash generated from operating activities and from the funds raised from financing activities, including the net proceeds we received from our initial public offering and fixed assets loan supported by the uncommitted credit facility with China Merchants Bank.
Our adjusted net loss, which exclude share-based compensation expenses, fair value change of investments, impairment loss on intangible assets and goodwill (net of tax effect) and impairment loss on long-lived assets (net of tax effect), was RMB2.5 million in the 2021 fiscal year, adjusted net loss of RMB58.4 million in the 2022 fiscal year, adjusted net loss of RMB32.2 million (US$4.7 million) in the 2023 fiscal year.
We recorded adjusted net loss, which exclude share-based compensation expenses, unrealized holding gain (loss) in investments, impairment loss on intangible assets and goodwill (net of tax effect) and impairment loss on long-lived assets (net of tax effect), was RMB54.4 million in the 2022 fiscal year, adjusted net loss of RMB26.5 million in the 2023 fiscal year, and adjusted net income of RMB5.7 million (US$0.8 million) in the 2024 fiscal year.
As of February 28, 2021, 2022 and 2023, we had RMB378.4 million, RMB262.4 million and RMB175.7 million (US$25.3 million), respectively, in cash and cash equivalents.
As of February 28, 2023 and February 29, 2024, we had RMB175.7 million and RMB180.2 million (US$25.0 million), respectively, in cash and cash equivalents.
The following table sets forth a summary of our cash flows for the periods indicated: For the Years Ended February 28 2021 2022 2023 RMB RMB RMB US$ (in thousands) Net cash provided by (used in) operating activities 31,124 (91,321 ) (25,493 ) (3,678 ) Net cash (used in) provided by investing activities (68,004 ) 4,297 (96,702 ) (13,948 ) Net cash provided by (used in) financing activities 198 (25,555 ) (838 ) (121 ) Effect of foreign exchange rate changes (16,460 ) (3,932 ) 27,389 3,950 Net decrease in cash, cash equivalents and restricted cash (53,142 ) (116,511 ) (95,644 ) (13,797 ) Cash, cash equivalents and restricted cash at beginning of the year 442,355 389,213 272,702 39,337 Cash, cash equivalents and restricted cash at end of the year 389,213 272,702 177,058 25,540 Operating Activities Net cash used in operating activities amounted to RMB25.5 million (US$3.7 million) in the 2023 fiscal year.
The following table sets forth a summary of our cash flows for the periods indicated: For the Years Ended February 28, February 28, February 29, 2022 2023 2024 RMB RMB RMB US$ (in thousands) Net cash (used in) provided by operating activities (91,321 ) (25,493 ) 16,556 2,300 Net cash provided by (used in) investing activities 4,297 (96,702 ) 71,481 9,931 Net cash (used in) provided by financing activities (25,555 ) (838 ) 41,268 5,734 Effect of foreign exchange rate changes (3,932 ) 27,389 (4,117 ) (572 ) Net (decrease) increase in cash and cash equivalents and restricted cash (116,511 ) (95,644 ) 125,188 17,393 Cash and cash equivalents and restricted cash at beginning of the year 389,213 272,702 177,058 24,599 Cash and cash equivalents and restricted cash at end of the year 272,702 177,058 302,246 41,992 121 Table of Contents Operating Activities Net cash provided by operating activities amounted to RMB16.6 million (US$2.3 million) in the 2024 fiscal year.
Year Ended February 28, 2022 Compared to Year Ended February 28, 2021 Revenue Our total revenue decreased from RMB280.3 million in the 2021 fiscal year to RMB250.2 million for the 2022 fiscal year, primarily due to the decrease of RMB32.7 million in revenue generated from learning services, resulting from ceased K9 Academic AST by the end of 2021, partially offset by the increase of RMB1.6 million in revenue generated from study camp and learning trip as we rollout study camp programs in addition to learning trips, and also the increase of RMB 1.8 million in learning technology and content solutions.
Year Ended February 28, 2023 Compared to Year Ended February 28, 2022 Revenue Our total revenue was RMB34.2 million for the 2023 fiscal year and RMB250.2 million in the 2022 fiscal year, primarily due to the decrease of RMB217.1 million in revenue generated from learning services, resulting from the cessation of our K-9 Academic AST Services in mainland China by the end of 2021, partially offset by the increase of RMB1.7 million in revenue generated from study camp as we rollout our study camp in Hubei province.
We believe that adjusted net income (loss) helps us identify underlying trends in our business that could otherwise be distorted by the effect of certain expenses that we include in net income (loss). 115 Adjusted net income (loss) should not be considered in isolation or construed as an alternative to net income (loss) or any other measure of performance or as an indicator of our operating performance.
We believe that adjusted net income (loss) helps us identify underlying trends in our business that could otherwise be distorted by the effect of certain expenses that we include in net income (loss).
Financing Activities Net cash used by financing activities amounted to RMB0.8 million (US$0.1 million) in the 2023 fiscal year. This was primarily attributable to repayment on related parties loans of RMB0.6 million (US$0.1 million). Net cash used by financing activities amounted to RMB25.6 million in the 2022 fiscal year.
Financing Activities Net cash provided by financing activities amounted to RMB41.3 million (US$5.7 million) in the 2024 fiscal year. This was primarily attributable to proceeds from bank loan of RMB40.0 million (US$5.6 million) and proceeds from related parties loans of RMB1.6 million (US$0.2 million). Net cash used by financing activities amounted to RMB0.8 million in the 2023 fiscal year.
We expect our total cost of revenue to decrease as a result of the cessation of our K9 Academic AST Services offering, partially offset by the increase in line with the development of our new business lines as we open more study camps and 108 organize more learning trips and expand the size of our existing faculty.
Our total cost of revenue decreased compared to that of the fiscal year ended February 28, 2022 due to cessation of our K-9 Academic AST Services offering, partially offset by the increase in line with the development of our new business lines as we organize more tourism groups and expand the size of our existing faculty.
The table below sets forth a reconciliation of our net loss to adjusted net income (loss) for the periods indicated: For the Years Ended February 28 2021 2022 2023 RMB RMB RMB US$ (in thousands) Net loss (27,886 ) (118,732 ) (33,488 ) (4,830 ) Add: share-based compensation expenses (net of tax effect of nil) 27,513 9,002 3,168 457 Add: fair value change of investments, excluding foreign currency translation adjustment (net of tax effect of nil) (2,148 ) (1,106 ) (1,927 ) (278 ) Add: impairment loss on intangible assets and goodwill (net of tax effect of nil) — 44,562 — — Add: impairment loss on long-lived assets (net of tax effect of nil) — 7,871 — — Adjusted net loss (non-GAAP) (2,521 ) (58,403 ) (32,247 ) (4,651 ) B.
The table below sets forth a reconciliation of our net loss to adjusted net income (loss) for the periods indicated: For the Years Ended February 28, February 28, February 29, 2022 2023 2024 RMB RMB RMB US$ (in thousands) Net (loss) income (118,732 ) (33,488 ) 2,775 386 Add: share-based compensation expenses (net of tax effect of nil) 9,002 3,168 3,122 434 Add: Unrealized holding loss (gain) in investments (net of tax effect of nil) 2,855 3,794 (3,910 ) (543 ) Add: impairment loss on intangible assets and goodwill (net of tax effect of nil) 44,562 — — — Add: impairment loss on long-lived assets (net of tax effect of nil) 7,871 — 3,674 510 Adjusted net (loss) income (non-GAAP) (54,442 ) (26,526 ) 5,661 787 B.
Net cash provided by operating activities amounted to RMB31.1 million in the 2021 fiscal year.
Net cash used in operating activities amounted to RMB25.5 million in the 2023 fiscal year.
Investors are encouraged to compare the historical non-GAAP financial measures with the most directly comparable GAAP measures. Adjusted net income (loss) presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data.
Adjusted net income (loss) presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.
We have realigned our business focus toward (i) learning services, mainly non-academic tutoring, (ii) learning technology and content solutions, mainly include course design and development services, digital learning system, student management platform and promotional assistance for educational institutions and K-12 schools, staff outsourcing services, etc., and (iii) study camp and learning trip, creating an immersive learning experience to meet emerging scenario-based, experiential and interactive learning and training needs from group and individual learners.
We have realigned our business focus toward (i) learning services, mainly non-academic tutoring, (ii) tourism services, offers customized tourism services to travel agencies, corporate customers, and individuals, including but not limited to services like chartered bus service, itinerary route schedule, sightseeing tour guidance, accommodation arrangement and (iii) learning technology and content solutions, mainly include course design and development services, digital learning system, student management platform and promotional assistance for educational institutions and K-12 schools, staff outsourcing services, etc..
Risk Factors — Risks Related to Our Business — The global COVID-19 outbreak has had a significant impact on our business, which may materially and adversely affect our operating results and financial condition.” 107 Key Components of Results of Operations Revenue In the fiscal years ended February 28, 2021, 2022 and 2023, we generated total net revenues of RMB280.3 million, RMB250.2 million and RMB34.2 million (US$4.9 million), respectively.
Key Components of Results of Operations Revenue In the fiscal years ended February 28, 2022, 2023 and February 29, 2024, we generated total net revenues of RMB250.2 million, RMB34.2 million and RMB125.4 million (US$17.4 million), respectively.
Net Loss As a result of the foregoing, we recorded net loss of RMB118.7 million and RMB33.5 million (US$4.8 million) in the 2022 and 2023 fiscal year, respectively.
Income tax expense Our income tax expense decreased by 95.5% from RMB21.8 million for the 2022 fiscal year to RMB1.0 million (US$0.1 million) in the 2023 fiscal year, mainly attributable by the deterioration in the financial performance since we ceased offering K-9 Academic AST by the end of 2021. 119 Table of Contents Net Loss As a result of the foregoing, we recorded net loss of RMB118.7 million and RMB33.5 million in the 2022 and 2023 fiscal year, respectively.
We seek to continue to maintain our competitive advantages in our existing businesses. Learning services and study camp and learning trip.
We seek to continue to maintain our competitive advantages in our existing businesses. Learning Services. The performance of learning services hinges on the relevance and quality of the course content, the expertise and reputation of our instructors, and the effectiveness of our marketing and student recruitment efforts.
Our long-term investment obligations represent obligations in connection with several investments as of February 28, 2023. As of February 28, 2023, the payment due within one year and thereafter for our long-term investment obligations amounted to RMB17.5 million (US$2.5 million).
As of February 29, 2024, the payment due within one year and thereafter for our long-term investment obligations amounted to RMB9.0 million (US$1.3 million). As of February 29, 2024, we had long-term borrowings amounted to RMB40 million (US$5.6 million) and are expected to be paid from July 25, 2026 to December 15, 2030.
Material Cash Requirements Our material cash requirements as of February 28, 2023 primarily include our working capital needs, capital expenditures, lease obligations, capital commitment, and long-term investment obligations. Our capital expenditures amounted to RMB10.4 million, RMB10.0 million and RMB8.7 million (US$1.2 million) in the 2021, 2022, 2023 fiscal year, respectively.
Our capital expenditures amounted to RMB10.0 million, RMB8.7 million and RMB56.6 million (US$7.9 million) in the 2022, 2023, 2024 fiscal year, respectively. Our capital expenditures were primarily related to construction and development of study camps and leasehold improvements.
This was primarily attributable to the purchase of investments under fair value of RMB175.8 million, the payments to long-term investment of RMB44.4 million, and the payments to short-term investments of RMB31.0 million, partially offset by proceeds from maturity of investments under fair value of RMB192.9 million.
This was primarily attributable to (i) proceeds from maturity of investments of RMB351.8 million (US$48.9 million) and (ii) collection of loans to related parties of RMB5.3 million (US$0.7 million), and offset by (i) purchases of short-term investments under fair value of RMB103.1 million (US$14.3 million), (ii) purchases of long-term investments under fair value of RMB93.3 million (US$13.0 million), (iii)purchase of property and equipment of RMB56.6 million (US$7.9 million) (iv) purchase of short-term investments of RMB18.9 million (US$2.6 million), (v) payments to long-term investments of RMB9.0 million (US$1.3 million), and (vi) loans to related parties of RMB4.8 million (US$0.7 million).
General and Administrative Expenses Our general and administrative expenses decreased by 27.1% from RMB117.0 million for the fiscal year of 2021 to RMB85.3 million for the fiscal year of 2022, primarily because a significant part of the share-based compensation for our administrative personnel was fully vested in the fiscal year 2021.
General and Administrative Expenses Our general and administrative expenses decreased by 2.1% from RMB45.3 million in the 2023 fiscal year to RMB44.3 million (US$6.2 million) for the 2024 fiscal year.
Sales and Marketing Expenses Our sales and marketing expenses decreased by 28.8% from RMB31.0 million for the 2021 fiscal year to RMB22.0 million for the 2022 fiscal year, primarily due to a decrease of RMB10 million in our funding commitment accrual to ECNU.
Sales and Marketing Expenses Our sales and marketing expenses increased by 44.7% from RMB4.7 million in the 2023 fiscal year to RMB6.8 million (US$0.9 million) in the 2024 fiscal year, primarily due to the increase in advertising activities for business development.
In compliance with regulatory policies promulgated in 2021, we ceased offering the K9 Academic AST Services in mainland China at the end of 2021. We have since realigned our business focus towards study camp and learning trip, learning services as well as learning technology and content solutions to capture evolving customer needs.
This expansion aligns with our broader vision of integrating education with travel, leveraging the increasing demand for immersive and interactive learning experiences. In compliance with regulatory policies promulgated in 2021, we ceased offering the K-9 Academic AST Services in mainland China at the end of 2021.
Payment Due by Period Less Than More than Total 1 Year 1-3 Years 3-5 years 5 years RMB US$ RMB RMB RMB RMB (in thousands) Lease Obligations 5,685 821 4,386 1,299 — — Long-term investment obligations 17,500 2,524 17,500 — — — Capital commitments 5,826 840 5,826 — — — Total 29,011 4,185 27,712 1,299 — — 119 The capital commitments were solely related to contracts signed with vendors for camps construction by us and are expected to be paid in one year.
These commitments were solely related to contracts signed with vendors for study camps construction in Wuyuan, Jiangxi by the Group and are expected to be paid in one year. Our long-term investment obligations represent obligations in connection with several investments as of February 29, 2024.
Recent Accounting Pronouncements Recently issued ASUs by the FASB have no material impact on the Group’s consolidated statements of operations and cash flows or financial position. 112 Results of Operations The table below sets forth a summary of our consolidated results of operations for the periods indicated.
Recent Accounting Pronouncements A list of recent accounting announcements that are relevant to us is included in note 2(ac) to our consolidated financial statements included elsewhere in this annual report. 116 Table of Contents Results of Operations The table below sets forth a summary of our consolidated results of operations for the periods indicated.
It reflected the net loss of RMB27.9 million, primarily adjusted by noncash lease expenses of RMB54.5 million, share-based compensation of RMB27.5 million, depreciation of property and equipment of RMB13.8 million and accrued expenses and other current liabilities of RMB11.9 million, partially offset by changes in operating lease liabilities of RMB57.9 million. 118 Investing Activities Net cash used in investing activities amounted to RMB96.7 million (US$13.9 million) in the 2023 fiscal year.
It reflected the net income of RMB2.8 million (US$0.4 million), primarily adjusted by: (i) increase in deferred revenue of RMB10.4 million (US$1.4 million), (ii) noncash lease expenses of RMB4.0 million (US$0.6 million) , (iii) depreciation of property and equipment of RMB3.7 million (US$0.5 million), (iv) loss from property and equipment impairment of RMB3.7 million (US$0.5million), (v) share-based compensation of RMB3.1 million (US$0.4 million), (vi) decrease in amount due from related parties of RMB2.9 million (US$0.4 million), (vii) increase in amount due to related parties of RMB1.1 million (US$0.2 million) and (viii) increase in income tax payable of RMB1.0 million (US$0.1 million); partially offset by (i) increase in other receivables, deposits and other assets of RMB7.1 million (US$1.0 million), (ii) fair value changes of investments of RMB3.9 million (US$0.5 million), (iii) decrease in operating lease liabilities of RMB3.2 million (US$0.4 million, (iv) loss from deregistration of subsidiaries of RMB2.2 million (US$0.3 million).
Removed
Impact of COVID-19 Our results of operations were impacted by the outbreak of COVID-19 and the resulting precautionary measures with respect to our business.
Added
Staying attuned to evolving customer demands and industry trends is crucial to ensuring the 110 Table of Contents sustained competitiveness of our non-academic tutoring programs. Continuously investing in recruiting and retaining top-tier instructors, enhancing our curriculum design, and improving the technological infrastructure supporting our tutoring services are critical to driving enrollment and retention in this business segment.
Removed
After the initial outbreak of COVID-19, from time to time, some instances of COVID-19 infections have emerged in various regions of China, including the infections caused by the Omicron variants in early 2022, and varying levels of temporary restrictions and other measures are reinstated to contain the infections, such as those in Shanghai from March 2022.
Added
Maintaining the trust and satisfaction of students and parents is paramount for the success of our non-academic tutoring offerings. Tourism services.
Removed
As such, we had to switch our learning programs and after-school proprietary courses from offline to online, and cease the operation of certain workshops, study camp and learning trip in the affected areas.
Added
Our relationships with expanding pool of business partners serve as the foundation for us to provide a diverse selection of offerings from budget to premium products and services to satisfy the varied needs of our customers base. Learning technology and content solutions.
Removed
Despite that the situation in China has significantly improved since December 2022, and the World Health Organization (WHO) declared that COVID-19 was no longer a public health emergency of international concern on May 4, 2023, the COVID-19 outbreak may continue affect our business operations and its financial condition and operating results in the future, including but not limited to negative impact to our total revenues, fair value adjustments or impairment to our long-term investments and other long-lived assets.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest change(4) Consists of 2,219,820 ordinary shares held in the form of ADSs by Sutro Park Ltd., a British Virgin Islands company. Mr. Theodore Walker Cheng-De King is the sole shareholder of Sutro Park Ltd. Mr. King's business address is Unit 1502, 15th Floor, 99 Hennessy Road, Wanchai, Hong Kong.
Biggest changeTheodore Walker Cheng-De King is the sole shareholder of Sutro Park Ltd. Mr. King's business address is Unit 1502, 15th Floor, 99 Hennessy Road, Wanchai, Hong Kong. (5) Consists of 2,100,000 ordinary shares held by Banya Holding Limited, a British Virgin Islands company. Ms. Jun Guo is the sole shareholder of Banya Holding Limited. Ms.
Louis in 2006 and his bachelor’s degree in mechanical engineering from Shanghai Institute of Technology in 1993. Mr. Li is a nonpracticing certified member of China institute of Certified Public Accountants. His business address is 36/F, CITIC Plaza, 859 North Sichuan Road, Shanghai 200085, China. 122 Bing Yuan has served as our independent director since July 2020. Mr.
Louis in 2006 and his bachelor’s degree in mechanical engineering from Shanghai Institute of Technology in 1993. Mr. Li is a nonpracticing certified member of China institute of Certified Public Accountants. His business address is 36/F, CITIC Plaza, 859 North Sichuan Road, Shanghai 200085, China. Bing Yuan has served as our independent director since July 2020. Mr.
Each award under the 2017 Plan shall be evidenced by an award agreement between the award recipient and our company, which may be any written notice, agreement, terms and conditions, contract or other instrument or document evidencing such award. Eligibility .
Award Agreement s . Each award under the 2017 Plan shall be evidenced by an award agreement between the award recipient and our company, which may be any written notice, agreement, terms and conditions, contract or other instrument or document evidencing such award. Eligibility .
As of the date of this annual report, we have granted awards for 3,270,000 shares under the 2017 Plan. On March 27, 2017, we granted options to purchase a total of 1,110,000 ordinary shares to employees at a weighted average exercise price of US$1.63 per share.
As of the date of this annual report, we have granted awards for 3,370,000 shares under the 2017 Plan. On March 27, 2017, we granted options to purchase a total of 1,110,000 ordinary shares to employees at a weighted average exercise price of US$1.63 per share.
The audit committee is responsible for, among other things: • selecting our independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by our independent registered public accounting firm; • reviewing with our independent registered public accounting firm any audit problems or difficulties and management’s response and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K; • discussing the annual audited financial statements with management and our independent registered public accounting firm; • annually reviewing and reassessing the adequacy of our audit committee charter; • meeting separately and periodically with the management and our internal auditor and our independent registered public accounting firm; • reporting regularly to the full board of directors; and • such other matters that are specifically delegated to our audit committee by our board of directors from time to time. 127 Compensation Committee.
The audit committee is responsible for, among other things: • selecting our independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by our independent registered public accounting firm; • reviewing with our independent registered public accounting firm any audit problems or difficulties and management’s response and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K; • discussing the annual audited financial statements with management and our independent registered public accounting firm; • annually reviewing and reassessing the adequacy of our audit committee charter; • meeting separately and periodically with the management and our internal auditor and our independent registered public accounting firm; • reporting regularly to the full board of directors; and • such other matters that are specifically delegated to our audit committee by our board of directors from time to time. 131 Table of Contents Compensation Committee.
The functions and powers of our board of directors include, among others: • convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings; • declaring 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. 128 Terms of Directors and Executive Officers Each of our directors shall hold office until the expiration of his or her term, or until his or her office is otherwise vacated.
The functions and powers of our board of directors include, among others: • convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings; • declaring 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. 132 Table of Contents Terms of Directors and Executive Officers Each of our directors shall hold office until the expiration of his or her term, or until his or her office is otherwise vacated.
He also served as an independent director and chairman of the audit committee of Youku Tudou Inc., an Internet television company listed on the New York Stock Exchange from 2010 to 2016. Mr. Li received his MBA from Olin School of Business, Washington University in St.
He also served as an independent director and chairman of the audit committee of Youku Tudou Inc., an Internet television company listed on the New York Stock Exchange 126 Table of Contents from 2010 to 2016. Mr. Li received his MBA from Olin School of Business, Washington University in St.
Tian also includes 400,000 ordinary shares underlying options vested within 60 days after the date of May 31, 2023 held by Mr. Peiqing Tian. Four Season Education Holdings Limited, a British Virgin Islands company, is wholly-owned by Mr. Peiqing Tian. Mr. Peiqing Tian’s business address is Room 1301, Zi'an Building, 309 Yuyuan Road, Jing'an District, Shanghai 200040, PRC.
Tian also includes 475,000 ordinary shares underlying options vested within 60 days after the date of May 31, 2024 held by Mr. Peiqing Tian. Four Season Education Holdings Limited, a British Virgin Islands company, is wholly-owned by Mr. Peiqing Tian. Mr. Peiqing Tian’s business address is Room 1301, Zi'an Building, 309 Yuyuan Road, Jing'an District, Shanghai 200040, PRC.
Jun Guo’s business address is 14th Floor, Zi’an Building, No. 309 Yuyuan Road, Jing’an District, Shanghai 200040, China. 130 Our ADSs are traded on the New York Stock Exchange and brokers or other nominees may hold ADSs in “street name” for customers who are the beneficial owners of our ADSs.
Jun Guo’s business address is 14th Floor, Zi’an Building, No. 309 Yuyuan Road, Jing’an District, Shanghai 200040, China. 134 Table of Contents Our ADSs are traded on the New York Stock Exchange and brokers or other nominees may hold ADSs in “street name” for customers who are the beneficial owners of our ADSs.
Subject also to all the transfer restrictions under the applicable laws and regulations and the restrictions set forth in the applicable award agreement, all awards are non-transferable and will not be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance or charge. 126 C. Board Practice Our board of directors consists of five directors.
Subject also to all the transfer restrictions under the applicable laws and regulations and the restrictions set forth in the applicable award agreement, all awards are non-transferable and will not be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance or charge. 130 Table of Contents C. Board Practice Our board of directors consists of five directors.
We have entered into indemnification agreements with our directors and executive officers, pursuant to which we will agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being such a director or officer. 123 B.
We have entered into indemnification agreements with our directors and executive officers, pursuant to which we will agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being such a director or officer. 127 Table of Contents B.
The maximum number of ordinary shares which may be issued pursuant to our share incentive plans is 4,201,330. 2015 Share Incentive Plan In June 2015, our board of directors approved the 2015 Share Incentive Plan, or the 2015 Plan, to provide additional incentives to our senior management and key employees.
The maximum number of ordinary shares which may be issued pursuant to our share incentive plans is 4,875,000. 2015 Share Incentive Plan In June 2015, our board of directors approved the 2015 Share Incentive Plan, or the 2015 Plan, to provide additional incentives to our senior management and key employees.
Other than the depositary, we had no record shareholders in the United States as of February 28, 2023. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
Other than the depositary, we had no record shareholders in the United States as of February 29, 2024. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
For certain information as of February 28, 2023 concerning the outstanding awards we have granted to our directors and executive officers individually pursuant to our share incentive plan, see “Item 6. Directors, Senior Management and Employees — B.
For certain information as of February 29, 2024 concerning the outstanding awards we have granted to our directors and executive officers individually pursuant to our share incentive plan, see “Item 6. Directors, Senior Management and Employees — B.
Ordinary Shares Beneficially Owned Number** Percent** Directors and Executive Officers: Peiqing Tian (1) 9,584,901 44.4 Yi Zuo (2) 1,299,012 5.9 Shaoqing Jiang - - Zongwei Li * * Bing Yuan - - All directors and executive officers as a group 10,908,913 51.5 Principal Shareholders: Peiqing Tian (1) 9,584,901 44.4 Chengwei Capital HK Limited (3) 3,133,333 14.8 Theodore Walker Cheng-De King (4) 2,219,820 10.5 Jun Guo (5) 2,100,000 9.9 Yi Zuo (2) 1,299,012 5.9 * Beneficially owns less than 1% of our outstanding shares. ** In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days.
Ordinary Shares Beneficially Owned Number** Percent** Directors and Executive Officers: Peiqing Tian (1) 9,659,901 44.6 Yi Zuo (2) 1,374,012 6.2 Shaoqing Jiang - - Zongwei Li * * Bing Yuan - - All directors and executive officers as a group 11,039,913 52.2 Principal Shareholders: Peiqing Tian (1) 9,659,901 44.6 Chengwei Capital HK Limited (3) 3,133,333 14.8 Theodore Walker Cheng-De King (4) 2,638,000 12.5 Jun Guo (5) 2,100,000 9.9 Yi Zuo (2) 1,374,012 6.2 * Beneficially owns less than 1% of our outstanding shares. ** In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days.
Directors and Executive Officers Age Position/Title Peiqing Tian 61 Chairman Yi Zuo 48 Director and Chief Executive Officer Shaoqing Jiang 49 Director Zongwei Li 51 Independent Director Bing Yuan 55 Independent Director Peiqing Tian has served as our chairman since our inception and our chief executive officer from inception to November 2019. Mr.
Directors and Executive Officers Age Position/Title Peiqing Tian 62 Chairman Yi Zuo 49 Director and Chief Executive Officer Shaoqing Jiang 50 Director Zongwei Li 52 Independent Director Bing Yuan 56 Independent Director Peiqing Tian has served as our chairman since our inception and our chief executive officer from inception to November 2019. Mr.
Amendment, Suspension or Termination . Our board of directors has the authority to amend, suspend or terminate the plan. However, no such action may adversely affect in any material way any award that has been granted or awarded to the recipient. Any amendment, suspension or termination shall be made by our board of directors in writing. 124 Transfer Restrictions .
Amendment, Suspension or Termination . Our board of directors has the authority to amend, suspend or terminate the plan. However, no such action may adversely affect in any material way any award that has been granted or awarded to the recipient.
As of May 31, 2023, the number of our ordinary shares issued and outstanding was 21,188,955, excluding 2,913,028 ordinary shares repurchased by the Company, and Deutsche Bank Trust Company Americas, as the depositary of our ADS facility, was the only record holder of our common shares in the United States.
As of May 31, 2024, the number of our ordinary shares issued and outstanding was 21,163,416, excluding 2,938,567 ordinary shares repurchased by the Company, and Deutsche Bank Trust Company Americas, as the depositary of our ADS facility, was the only record holder of our common shares in the United States.
On June 1, 2023, we granted 100,000 share options to employees with a ten-year life and vest ratably at each grant date anniversary over a period of four years. The following paragraphs summarize the terms of the 2017 Plan. 125 Plan Administration .
On June 1, 2023, we granted 100,000 share options to employees with a ten-year life and vest ratably at each grant date anniversary over a period of four years. Options have a ten-year life and vest ratably at each grant date anniversary over a period of four years.
These shares, however, are not included in the computation of the percentage ownership of any other person. (1) Consists of 8,809,451 ordinary shares held by Four Season Education Holdings Limited and 375,450 ordinary shares held in the form of ADSs, and the shares beneficially held by Mr.
These shares, however, are not included in the computation of the percentage ownership of any other person. (1) Consists of 9,172,401 ordinary shares held by Four Season Education Holdings Limited and 12,500 ordinary shares held in the form of ADSs, and the shares beneficially held by Mr.
Employees The following table sets forth the numbers of our employees, categorized by function, as of February 28, 2023: Functions Number of Employees Teachers 76 Learning center student services 12 General and administration 61 Sales, marketing and business development 18 Total 167 We had a total of 286 and 716 employees as of February 28, 2022 and 2021, respectively.
Employees The following table sets forth the numbers of our employees, categorized by function, as of February 29, 2024: Functions Number of Employees Teachers 83 Learning center student services 17 General and administration 44 Sales, marketing and business development 46 Total 190 We had a total of 167 and 286 employees as of February 28, 2023 and 2022, respectively.
Compensation Compensation of Directors and Executive Officers For the year ended February 28, 2023, we paid an aggregate of RMB2.5 million (US$0.4 million) in cash and benefits to our executive officers, and we paid US$0.1 million in compensation to our independent directors.
Compensation Compensation of Directors and Executive Officers For the year ended February 29, 2024, we paid an aggregate of RMB5.2 million (US$0.7 million) in cash and benefits to our executive officers, and we paid US$0.1 million in compensation to our independent directors.
Yi Zuo is the sole shareholder of Harvest Consulting Holding Limited. Ms. Yi Zuo’s business address is Room 1301, Zi'an Building, 309 Yuyuan Road, Jing'an District, Shanghai 200040, PRC. (3) Consists of 3,133,333 ordinary shares held in the form of ADSs held by Chengwei Capital HK Limited, a company incorporated in Hong Kong.
Yi Zuo’s business address is Room 1301, Zi'an Building, 309 Yuyuan Road, Jing'an District, Shanghai 200040, PRC. (3) Consists of 3,133,333 ordinary shares held in the form of ADSs held by Chengwei Capital HK Limited, a company incorporated in Hong Kong. Chengwei Capital HK Limited is wholly-owned by Chengwei Evergreen Capital, LP, whose general partner is Chengwei Evergreen Management, LLC.
The calculations in the table below are based on 21,188,955 ordinary shares outstanding as of May 31, 2023, excluding 2,913,028 ordinary shares repurchased by the Company. 129 Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
The calculations in the table below are based on 21,163,416 ordinary shares outstanding as of May 31, 2024, excluding 2,938,567 ordinary shares repurchased by the Company. 133 Table of Contents Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
(2) Consists of 272,222 ordinary shares held by Harvest Consulting Holding Limited, a British Virgin Islands company, and 35,000 ordinary shares held in the form of ADSs, and 991,790 ordinary shares underlying options vested within 60 days after the date of May 31, 2023 held by Ms. Yi Zuo. Ms.
(2) Consists of 307,222 ordinary shares held by Harvest Consulting Holding Limited, a British Virgin Islands company, and 1,066,790 ordinary shares underlying options vested within 60 days after the date of May 31, 2024 held by Ms. Yi Zuo. Ms. Yi Zuo is the sole shareholder of Harvest Consulting Holding Limited. Ms.
Chengwei Capital HK Limited is wholly-owned by Chengwei Evergreen Capital, LP, whose general partner is Chengwei Evergreen Management, LLC. Chengwei Evergreen Capital, LP is 99% economically owned by institutional LPs whose beneficial owners are not controlling persons and are not natural persons.
Chengwei Evergreen Capital, LP is 99% economically owned by institutional LPs whose beneficial owners are not controlling persons and are not natural persons. Chengwei Evergreen Management, LLC has 1% economic ownership of Chengwei Evergreen Capital, LP and EXL Holdings, LLC has 100% controlling voting power of Chengwei Evergreen Management, LLC.
Our board of directors or a committee appointed by our board of directors acts as the plan administrator. The board of directors or the committee may also delegate one or more members of our board of directors to grant or amend awards or take other administrative actions. Types of Awards .
The board of directors or the committee may also delegate one or more members of our board of directors to grant or amend awards or take other administrative actions. Types of Awards . The 2017 Plan authorizes the grant of options to purchase ordinary shares, the award of restricted shares and the award of restricted share units.
Chengwei Evergreen Management, LLC has 1% economic ownership of Chengwei Evergreen Capital, LP and EXL Holdings, LLC has 100% controlling voting power of Chengwei Evergreen Management, LLC. Eric Xun Li has 100% controlling voting power of EXL Holdings, LLC. The address of Chengwei Capital HK Limited is 26/F, Three Exchange Square, 8 Connaught Place, Central, Hong Kong.
Eric Xun Li has 100% controlling voting power of EXL Holdings, LLC. The address of Chengwei Capital HK Limited is 26/F, Three Exchange Square, 8 Connaught Place, Central, Hong Kong. (4) Consists of 2,638,000 ordinary shares held in the form of ADSs by Sutro Park Ltd., a British Virgin Islands company. Mr.
Removed
The 2017 Plan authorizes the grant of options to purchase ordinary shares, the award of restricted shares and the award of restricted share units. Award Agreement s .
Added
Any amendment, suspension or termination shall be made by our board of directors in writing. 128 Table of Contents Transfer Restrictions .
Removed
(5) Consists of 2,100,000 ordinary shares held by Banya Holding Limited, a British Virgin Islands company. Ms. Jun Guo is the sole shareholder of Banya Holding Limited. Ms.
Added
The modification resulted in an incremental compensation cost of RMB453, of which RMB400 was recognized as compensation expenses during the year ended February 29, 2024. The remaining RMB53 will be amortized over the remaining vesting period of the modified options.
Added
The following paragraphs summarize the terms of the 2017 Plan. 129 Table of Contents Plan Administration . Our board of directors or a committee appointed by our board of directors acts as the plan administrator.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

7 edited+4 added−0 removed5 unchanged
Biggest changeThe amounts of transactions that we entered into with others were approximately RMB3.8 million, nil and RMB0.1 million (US$ 0.02 million) for the 2021, 2022 and 2023 fiscal years, respectively. Services Provided to Related Parties We provide services to Shanghai Four Season Online School ("SHFSOS"), which is sponsored by Shanghai Jiaxin Travel Agency, an entity controlled by Mr.
Biggest changeFor the 2022, 2023 and 2024 fiscal years, we entered into transactions of an aggregate of approximately nil, RMB0.5 million, and RMB0.1 million (US$0.02 million), respectively, to purchase services from ESNU E&A Publishing. We also purchased IT service from Shanghai Four Season Online School (“SHFSOS”),an entity sponsored by Shanghai Jiaxin Travel Agency which is controlled by Mr.
Organizational Structure — Contractual Arrangements among The VIEs, Their Shareholders and Us.” Transactions with Other Related Parties Purchases of Services Provided by Related Parties We charged service fee for the copyright use of our self-developed book series and purchased printing service for the self-developed book series from East China Normal University Electronic and Audio-visual Publishing House ("ESNU Publishing") , a wholly-owned subsidiary of the non-controlling shareholder of us.
Organizational Structure — Contractual Arrangements among the VIEs, Their Shareholders and Us.” Transactions with Other Related Parties Purchases of Services Provided by Related Parties We charged service fee for the copyright use of our self-developed book series and purchased printing service for the self-developed book series from East China Normal University Electronic and Audio-visual Publishing House ("ESNU E&A Publishing"), a wholly-owned subsidiary of the non-controlling shareholder of us.
We disposed the deferred revenue related to K9 Academic AST services that we received in advance from the students for the unconsummated lessons to Jiaxin Travel’s sponsored not-for profit entities with a consideration at RMB7.5 million. After disposal, all the rights and obligations related to the contracts of unconsummated lessons were transferred to Jiaxin Travel.
We disposed the deferred revenue related to K-9 Academic AST services that we received in advance from the students for the unconsummated lessons to Jiaxin Travel’s sponsored not-for profit entities with a consideration at RMB7.5 million. After disposal, all the rights and obligations related to the contracts of unconsummated lessons were transferred to Jiaxin Travel.
Tian Peihua, brother of Mr. Tian Peiqing, Chairman of the Company. We entered into transactions of an aggregate of approximately nil, nil and RMB7.4 million (US$1.1 million) to provide course design and development services, digital learning system, student management platform and promotional assistance service to SHFSOS, in the 2021, 2022 and 2023 fiscal year, respectively.
We entered into transactions of an aggregate of approximately nil, RMB7.4 million and RMB0.9 million (US$0.1 million) to provide course design and development services, digital learning system, student management platform and promotional assistance service to SHFSOS, in the 2022, 2023 and 2024 fiscal year, respectively.
For the 2021, 2022 and 2023 fiscal years, we entered into transactions of an aggregate of approximately nil, nil, and RMB0.5 million (US$0.1 million), respectively, to purchase services from ESNU Publishing.
Tian Peiqing who is the chairman of the Group. For the 2022, 2023 and 2024 fiscal years, we entered into transactions of an aggregate of approximately nil, RMB 0.1 million and RMB0.3 million (US$0.04 million), respectively, to purchase services from SHFSOS.
The amounts of transactions that we entered into with others were approximately RMB2.5 million, RMB0.9 million and RMB0.3 million (US$ 0.04 million) for the 2021, 2022 and 2023 fiscal years, respectively. 131 Related Party leases We recognized lease expenses of RMB0.1 million, RMB0.1 million and RMB0.1million (US$0.01 million) in the 2021, 2022 and 2023 fiscal year, respectively.
The amounts of transactions 135 Table of Contents that we entered into with others were approximately RMB0.9 million, RMB0.3 million and RMB0.3 million (US$ 0.05 million) for the 2022, 2023 and 2024 fiscal years, respectively.
Gain from disposal of liabilities and a subsidiary Due to the change in regulations, we ceased offering K9 Academic AST services at the end of 2021.
We provided interest-free, unsecured and due on demand loan to other related parties of nil, nil and RMB1.0 million (US$ 0.1 million) in the 2022, 2023 and 2024 fiscal year, respectively. Gain from disposal of liabilities and a subsidiary Due to the change in regulations, we ceased offering K-9 Academic AST services at the end of 2021.
Added
Services Provided to Related Parties We provide services to Shanghai Four Season Online School ("SHFSOS"), which is sponsored by Shanghai Jiaxin Travel Agency ("Jiaxin Travel"), an entity controlled by Mr. Tian Peiqing, Chairman of the Company.
Added
We also entered into transactions of an aggregate of approximately nil, nil and RMB1.2 million (US$0.2 million) to provide tourism service to Jiaxin Travel, in the 2022, 2023 and 2024 fiscal year, respectively.
Added
Related Party leases We recognized lease expenses of RMB0.1 million, RMB0.1 million and RMB 4.1 million (US$0.6 million) in the 2022, 2023 and 2024 fiscal year, respectively.
Added
Loan to Related Party We provided interest-free, unsecured and due on demand loan to Shanghai Jing’an Dangdai Art Training School (“Dangdai”) of nil, RMB0.1 million and RMB3.8 million (US$ 0.5 million) in the 2022, 2023 and 2024 fiscal year, respectively.