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51Talk Online Education Group

51Talk Online Education GroupCOE決算レポート

NYSE

51Talk Online Education Group is a leading online English education service provider headquartered in China, primarily catering to K-12 students and adult learners across the domestic market. It offers live one-on-one and small-group tutoring sessions taught by certified native English-speaking instructors, with tailored courses covering conversational English, exam preparation and academic English to meet diverse learning demands.

What changed in 51Talk Online Education Group's 20-F — 2022 vs 2023

Top changes in 51Talk Online Education Group's 2023 20-F

702 paragraphs added · 510 removed · 436 edited across 6 sections

Item 2. Properties

Properties — owned and leased real estate

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ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE 4 ITEM 3. KEY INFORMATION 4 ITEM 4. INFORMATION ON THE COMPANY 38 ITEM 4.A. UNRESOLVED STAFF COMMENTS 62 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 62 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 73 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 83 ITEM 8. FINANCIAL INFORMATION 84 ITEM 9.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE 4 ITEM 3. KEY INFORMATION 4 ITEM 4. INFORMATION ON THE COMPANY 52 ITEM 4.A. UNRESOLVED STAFF COMMENTS 81 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 81 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 95 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 106 ITEM 8. FINANCIAL INFORMATION 107 ITEM 9.
THE OFFER AND LISTING 84 ITEM 10. ADDITIONAL INFORMATION 85 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 101 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 102 PART II . ​ 103
THE OFFER AND LISTING 107 ITEM 10. ADDITIONAL INFORMATION 108 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 125 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 126 PART II . ​ 128

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely our current auditor, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year.
If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely our current auditor, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year.
We accept payments using a variety of methods, including bank transfers and payment through third-party online payment platforms such as Airwallex, stripe, Paypal, Atome, Payermax, Checkout, Ipay88. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs and lower our profit margins.
We accept payments using a variety of methods, including bank transfers and payment through third-party online payment platforms such as Airwallex, Stripe, Paypal, Atome, Payermax, Checkout and Ipay88. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs and lower our profit margins.
BHD, provides local sales, customer service and other ancillary services for our online courses in Malaysia. The Ministry of Education of Malaysia has notified us that the ministry has no clear requirements or guidance on whether private companies offering online education need to obtain the relevant licenses for local educational institutions.
BHD, provides local sales, customer service and other ancillary services for our online courses in Malaysia. The Ministry of Education of Malaysia has notified us that the ministry has no clear requirements or guidance on whether private companies offering online education need to obtain relevant licenses for local educational institutions.
A series of circulars promulgated by relevant government authorities require mainland China residents to register with qualified banks in connection with their direct establishment or indirect control of an offshore entity, for the purpose of international investment and financing, with such mainland China residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, which is referred to in SAFE Circular 37 as a “special purpose vehicle.” In the event that a mainland China resident holding interests in a special purpose vehicle fails to complete the required SAFE registration, the mainland China subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its mainland China subsidiaries.
A series of circulars promulgated by government authorities require mainland China residents to register with qualified banks in connection with their direct establishment or indirect control of an offshore entity, for the purpose of international investment and financing, with such mainland China residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, which is referred to in SAFE Circular 37 as a “special purpose vehicle.” In the event that a mainland China resident holding interests in a special purpose vehicle fails to complete the required SAFE registration, the mainland China subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its mainland China subsidiaries.
The market price and trading volume for our ADSs may be volatile and subject to wide fluctuations in response to factors including, but not limited to, the following: ● the financial projections that we may choose to provide to the public, any changes in those projections or our failure for any reason to meet those projections; ● variations in our net revenues, net loss/income and cash flow; ● changes in the economic performance or market valuation of other education companies; ● announcements of new investments, acquisitions by us or our competitors, strategic partnerships, joint ventures or capital commitments; ● announcements of new services and expansions by us or our competitors; ● detrimental negative publicity about us, our competitors or our industry; ● changes in financial estimates by securities analysts; ● additions or departures of key personnel; 32 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 other actions; ● substantial sales or perception of sales of our ADSs in the public market; ● fluctuations in market prices for our products; ● any share repurchase program; ● outbreaks of health epidemics, natural disasters, and other extraordinary events; and ● general economic, regulatory or political conditions in the international markets in which we operate and mainland China.
The market price and trading volume for our ADSs may be volatile and subject to wide fluctuations in response to factors including, but not limited to, the following: ● the financial projections that we may choose to provide to the public, any changes in those projections or our failure for any reason to meet those projections; ● variations in our net revenues, net loss/income and cash flow; ● changes in the economic performance or market valuation of other education companies; ● announcements of new investments, acquisitions by us or our competitors, strategic partnerships, joint ventures or capital commitments; ● announcements of new services and expansions by us or our competitors; ● detrimental negative publicity about us, our competitors or our industry; ● changes in financial estimates by securities analysts; ● additions or departures of key personnel; ● 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 other actions; ● substantial sales or perception of sales of our ADSs in the public market; ● fluctuations in market prices for our products; ​ 46 Table of Contents ● any share repurchase program; ● outbreaks of health epidemics, natural disasters, and other extraordinary events; and ● general economic, regulatory or political conditions in the international markets in which we operate and mainland China.
We incurred net loss from continuing operations for 2021 and 2022 we cannot assure you that we will be able to generate net profits or positive cash flow from operating activities in the future, especially as we divested the China Mainland Business and transitioned into new international markets, the financial prospects of which are largely uncertain.
We incurred net loss from continuing operations for 2021, 2022 and 2023 we cannot assure you that we will be able to generate net profits or positive cash flow from operating activities in the future, especially as we divested the China Mainland Business and transitioned into new international markets, the financial prospects of which are largely uncertain.
Our former auditor was PricewaterhouseCoopers Zhong Tian LLP, an independent registered public accounting firm that issued the audit report for fiscal years 2020 and 2021 included elsewhere in this annual report. Our former auditor is located in mainland China, a jurisdiction where the PCAOB was historically unable to conduct inspections and investigations completely before 2022.
Our former auditor was PricewaterhouseCoopers Zhong Tian LLP, an independent registered public accounting firm that issued the audit report for fiscal years 2021 included elsewhere in this annual report. Our former auditor is located in mainland China, a jurisdiction where the PCAOB was historically unable to conduct inspections and investigations completely before 2022.
Furthermore, the Archives Rules also provides that securities companies and securities service providers shall also fulfill the applicable legal procedures when providing overseas regulatory institutions and other relevant institutions and individuals with documents or materials containing any state secrets or government authorities work secrets or other documents or materials that, if divulged, will jeopardize national security or public interest.
Furthermore, the Archives Rules also provides that securities companies and securities service providers shall also fulfill the applicable legal procedures when providing overseas regulatory institutions and other institutions and individuals with documents or materials containing any state secrets or government authorities work secrets or other documents or materials that, if divulged, will jeopardize national security or public interest.
If the authorities take the view that this outsourcing arrangement constitutes labor dispatch and thus violates relevant labor laws, we may be ordered to terminate this outsource arrangement and may even be fined. If we are subject to penalties or incur significant liabilities in connection with labor disputes or investigation, our business and profitability may be adversely affected.
If the authorities take the view that this outsourcing arrangement constitutes labor dispatch and thus violates the labor laws, we may be ordered to terminate this outsource arrangement and may even be fined. If we are subject to penalties or incur significant liabilities in connection with labor disputes or investigation, our business and profitability may be adversely affected.
Some students may decide to register for our online or mobile platform and attend our courses from mainland China, which may be deemed by relevant government authorities in mainland China as circumventing the restrictions on after-school tutoring taught by foreign tutors to K-12 students in mainland China.
Some students may decide to register for our online or mobile platform and attend our courses from mainland China, which may be deemed by government authorities in mainland China as circumventing the restrictions on after-school tutoring taught by foreign tutors to K-12 students in mainland China.
There remains uncertainty as to whether these contractual provisions are consistent and enforceable under the Consumer Protection Act or other relevant laws and regulations of Malaysia. Additionally, Malaysian authorities and courts may deem our contractual provisions unfair under the Consumer Protection Act, resulting in voiding our contracts with Malaysian customers.
There remains uncertainty as to whether these contractual provisions are consistent and enforceable under the Consumer Protection Act or other laws and regulations of Malaysia. Additionally, Malaysian authorities and courts may deem our contractual provisions unfair under the Consumer Protection Act, resulting in voiding our contracts with Malaysian customers.
We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we publish our results on a quarterly basis as press releases, distributed pursuant to the rules and regulations of the NYSE.
We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we publish our results on a quarterly basis as press releases, distributed pursuant to the rules and regulations of the NYSE American.
If students from mainland China register for or use our platform for English courses, we and our operations may be deemed by relevant government authorities in mainland China to circumvent the restrictions on after-school tutoring taught by foreign tutors to K-12 students in mainland China.
If students from mainland China register for or use our platform for English courses, we and our operations may be deemed by the government authorities in mainland China to circumvent the restrictions on after-school tutoring taught by foreign tutors to K-12 students in mainland China.
Any failure of this vendor to provide these services may negatively impact our relationships with tutors in the countries and regions where we operate our business, damage our reputation and cause us to lose tutors while making it difficult to find replacement tutors. 15 Table of Contents Some students may decide not to continue taking our courses for a number of reasons, including a perceived lack of improvement in their English proficiency or general dissatisfaction with our programs, which may adversely affect our business, financial condition, results of operations and reputation.
Any failure of this vendor to provide these services may negatively impact our relationships with tutors in the countries and regions where we operate our business, damage our reputation and cause us to lose tutors while making it difficult to find replacement tutors. ​ 24 Table of Contents Some students may decide not to continue taking our courses for a number of reasons, including a perceived lack of improvement in their English proficiency or general dissatisfaction with our programs, which may adversely affect our business, financial condition, results of operations and reputation.
We might not be able to continue to efficiently monitor and analyze relevant data important for us to provide a personalized learning experience for our students, or to continue to drive our teaching training, curriculum development and other operational aspects of our platform.
We might not be able to continue to efficiently monitor and analyze data important for us to provide a personalized learning experience for our students, or to continue to drive our teaching training, curriculum development and other operational aspects of our platform.
Non-compliance with the relevant regulations of Hong Kong may lead to a loss in business as a result of reputational damage or loss of trust from customers as we may be not seen as trustworthy or reliable and may struggle to attract and retain customers.
Non-compliance with the regulations of Hong Kong may lead to a loss in business as a result of reputational damage or loss of trust from customers as we may be not seen as trustworthy or reliable and may struggle to attract and retain customers.
Any adverse determinations by a revenue authority in relation to our tax obligations may have an adverse effect on our business, financial condition and results of operations, and may adversely impact our operations in the relevant country or region and our reputation.
Any adverse determinations by a revenue authority in relation to our tax obligations may have an adverse effect on our business, financial condition and results of operations, and may adversely impact our operations in the country or region and our reputation.
Even if we identify an appropriate acquisition or investment target, we may not be able to negotiate the terms of the acquisition or investment successfully, finance the proposed transaction or integrate the relevant businesses into our existing business and operations.
Even if we identify an appropriate acquisition or investment target, we may not be able to negotiate the terms of the acquisition or investment successfully, finance the proposed transaction or integrate the businesses into our existing business and operations.
If the relevant Malaysian regulatory agency is to determine that a license is required for our local operations, there is no assurance that we will be able to obtain such licenses under the laws of Malaysia.
If a Malaysian regulatory agency is to determine that a license is required for our local operations, there is no assurance that we will be able to obtain such licenses under the laws of Malaysia.
Any perception by the public that online transactions or the privacy of user information are becoming increasingly unsafe or vulnerable to attacks could inhibit the growth of online education services generally, which may negatively impact our business prospects. 17 Table of Contents We face risks related to outbreaks of health epidemics, natural disasters, and other extraordinary events, which could significantly disrupt our operations and adversely affect our business, financial condition or results of operations.
Any perception by the public that online transactions or the privacy of user information are becoming increasingly unsafe or vulnerable to attacks could inhibit the growth of online education services generally, which may negatively impact our business prospects. ​ 26 Table of Contents We face risks related to outbreaks of health epidemics, natural disasters, and other extraordinary events, which could significantly disrupt our operations and adversely affect our business, financial condition or results of operations.
However, we need to continue to observe the legislative trends of the Ministry of Education to determine whether we need to obtain relevant licenses, depending on the status of our employees, business activities and online education model in Malaysia.
However, we need to continue to observe the legislative trends of the Ministry of Education to determine whether we need to obtain the licenses, depending on the status of our employees, business activities and online education model in Malaysia.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of mainland China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. 35 Table of Contents The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to vote your Class A ordinary shares.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of mainland China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. ​ 49 Table of Contents The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to vote your Class A ordinary shares.
In addition, if internet access fees or other charges to internet users increase, our visitor traffic may decrease, which in turn may harm our revenues. 13 Table of Contents The PCAOB had historically been unable to inspect our former auditor in relation to its audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our former auditor in the past has deprived our investors with the benefits of such inspections.
In addition, if internet access fees or other charges to internet users increase, our visitor traffic may decrease, which in turn may harm our revenues. ​ 22 Table of Contents The PCAOB had historically been unable to inspect our former auditor in relation to its audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our former auditor in the past has deprived our investors with the benefits of such inspections.
For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F for the fiscal year ended December 31, 2022. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.
For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F for the fiscal year ended December 31, 2023. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.
Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. 14 Table of Contents Higher labor costs, inflation and implementation of stricter labor laws in the countries and regions where we operate our business may adversely affect our business, financial conditions and results of operations.
Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. ​ 23 Table of Contents Higher labor costs, inflation and implementation of stricter labor laws in the countries and regions where we operate our business may adversely affect our business, financial conditions and results of operations.
We may not succeed in executing these growth strategies due to a number of factors, including the following: ● we may fail to develop or implement our new business models and service offerings; ● we may fail to further promote our platforms; ● we may not be able to engage, train and retain a sufficient number of qualified tutors and other key personnel; ● we may not be able to continue to improve our personalized learning experience of our students or to develop new courses that meet the changing demands for English learners; ● our business may face additional regulatory challenges; ● we may fail to grow our international business; ● we may fail to maintain the technology necessary to deliver a smooth learning experience to our students; and ● we may not be able to identify suitable targets for acquisitions and partnership.
We may not succeed in executing these growth strategies due to a number of factors, including the following: ● we may fail to develop or implement our new business models and service offerings; ● we may fail to further promote our platforms; ● we may not be able to engage, train and retain a sufficient number of qualified tutors and other key personnel; ● we may not be able to continue to improve our personalized learning experience of our students or to develop new courses that meet the changing demands for English learners; ● our business may face additional regulatory challenges; ​ 19 Table of Contents ● we may fail to grow our international business; ● we may fail to maintain the technology necessary to deliver a smooth learning experience to our students; and ● we may not be able to identify suitable targets for acquisitions and partnership.
Sales of these registered shares in the public market, or the perception that such sales could occur, could cause the price of our ADSs to decline. 34 Table of Contents You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.
Sales of these registered shares in the public market, or the perception that such sales could occur, could cause the price of our ADSs to decline. ​ 48 Table of Contents You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.
We may encounter disputes from time to time over rights and obligations concerning intellectual property, and we may not prevail in those disputes. 16 Table of Contents Any claims against us, with or without merit, could be time consuming and costly to defend or litigate, divert our management’s attention and resources or result in the loss of goodwill associated with our brand.
We may encounter disputes from time to time over rights and obligations concerning intellectual property, and we may not prevail in those disputes. ​ 25 Table of Contents Any claims against us, with or without merit, could be time consuming and costly to defend or litigate, divert our management’s attention and resources or result in the loss of goodwill associated with our brand.
For example, rising trade and political tensions, including those arising from the conflict in Ukraine and sanctions on Russia, could reduce levels of trades, investments, technological exchanges and other economic activities between China and other countries, which would have an adverse effect on global economic conditions, the stability of global financial markets, and international trade policies.
For example, rising trade and political tensions, including those arising from the conflict in Ukraine and sanctions on Russia and the conflict in the Gaza Strip, could reduce levels of trades, investments, technological exchanges and other economic activities between China and other countries, which would have an adverse effect on global economic conditions, the stability of global financial markets, and international trade policies.
No assurances can be given with regard to our PFIC status for the taxable year ended December 31, 2022, or the current or any future taxable year because the determination of whether we will be or become a PFIC is a factual determination made annually that will depend, in part, upon the characterization and composition of our income, assets and liabilities.
No assurances can be given with regard to our PFIC status for the taxable year ended December 31, 2023, or the current or any future taxable year because the determination of whether we will be or become a PFIC is a factual determination made annually that will depend, in part, upon the characterization and composition of our income, assets and liabilities.
Any failure to comply with regulations in those places could subject us to legal and reputational risks. 18 Table of Contents Our brand image, business and results of operations may be adversely impacted by students and independently contracted tutors’ misconduct and misuse of our platform. Our platforms allow independently contracted tutors and students to engage in real-time communication.
Any failure to comply with regulations in those places could subject us to legal and reputational risks. ​ 27 Table of Contents Our brand image, business and results of operations may be adversely impacted by students and independently contracted tutors’ misconduct and misuse of our platform. Our platforms allow independently contracted tutors and students to engage in real-time communication.
Our industry generally experiences seasonality, reflecting a combination of traditional education industry patterns and new patterns associated with the online platform in particular. Seasonal fluctuations affected our business when we focused on lessons for K-12 students and focus on lessons for students from the international markets, and may continue to affect our business as we shift to new business models.
Our industry generally experiences seasonality, reflecting a combination of traditional education industry patterns and new patterns associated with the online platform in particular. Seasonal fluctuations affected our business when we focused on lessons for Chinese K-12 students and lessons for students from the international markets, and may continue to affect our business as we shift to new business models.
For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective. (3) The PRC Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise, or FIE, to its immediate holding company outside of China.
For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective. (3) The PRC Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign-invested enterprise to its immediate holding company outside of China.
As a result, we may be forced to scale back our operations and even unable to operate in Hong Kong and our business operations and prospects may be adversely and materially affected. 29 Table of Contents Information regarding our course offerings to customers are regulated by a series of laws and regulations, including consumer protection laws in Hong Kong.
As a result, we may be forced to scale back our operations and even unable to operate in Hong Kong and our business operations and prospects may be adversely and materially affected. ​ 43 Table of Contents Information regarding our course offerings to customers are regulated by a series of laws and regulations, including consumer protection laws in Hong Kong.
If the relevant government authorities in mainland China take actions against us, our business and operations could be materially and adversely affected.
If the government authorities in mainland China take actions against us, our business and operations could be materially and adversely affected.
We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business. Accordingly, for the years ended December 31, 2020, 2021 and 2022, no dividends or distributions were paid or made to U.S. investors.
We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business. Accordingly, for the years ended December 31, 2021, 2022 and 2023, no dividends or distributions were paid or made to U.S. investors.
Our business broadcasts online content and we are required to comply with various broadcasting and online content regulations, including licensing requirements, under applicable laws. Non-compliance with such regulations and applicable licensing requirements may result in, among others, the revocation of our licenses and the takedown and/or blocking of our content in the relevant jurisdictions.
Our business broadcasts online content and we are required to comply with various broadcasting and online content regulations, including licensing requirements, under applicable laws. Non-compliance with such regulations and applicable licensing requirements may result in, among others, the revocation of our licenses and the takedown and/or blocking of our content in these jurisdictions.
The conversion of one currency into another currency is based on rates set by relevant authorities in each of the countries and regions where we operate and is affected by, among other things, changes in each country or region’s political and economic conditions and its foreign exchange policies.
The conversion of one currency into another currency is based on rates set by responsible authorities in each of the countries and regions where we operate and is affected by, among other things, changes in each country or region’s political and economic conditions and its foreign exchange policies.
In addition, we may not at all times be fully aware or informed of the identities of all our shareholders or beneficial owners that are required to make such registrations, and we may not be able to compel them to comply with all relevant foreign exchange regulations.
In addition, we may not at all times be fully aware or informed of the identities of all our shareholders or beneficial owners that are required to make such registrations, and we may not be able to compel them to comply with all applicable foreign exchange regulations.
Our business operations and financial condition may be materially and adversely affected if our Malaysian customers decides to file lawsuits against us on the validity and enforceability of such contractual provisions or if the relevant Malaysia authority decides that these contractual provisions are unenforceable.
Our business operations and financial condition may be materially and adversely affected if our Malaysian customers decides to file lawsuits against us on the validity and enforceability of such contractual provisions or if a Malaysia authority decides that these contractual provisions are unenforceable.
Our labor costs will increase if we engage our independently contracted tutors in the countries and regions where we operate our business as full-time employees or if courts or relevant authorities in the countries and regions where we operate our business determine that our independently contracted tutors are deemed employees instead of independent contractors.
Our labor costs will increase if we engage our independently contracted tutors in the countries and regions where we operate our business as full-time employees or if courts or other authorities in the countries and regions where we operate our business determine that our independently contracted tutors are deemed employees instead of independent contractors.
However, there is no assurance that relevant governmental authorities in mainland China would fully apprehend the impact of the divestiture of our international business and our on-going operations and may consider that we are still subject to the Alleviating Burden Opinion.
However, there is no assurance that governmental authorities in mainland China would fully apprehend the impact of the divestiture of our China Mainland Business and our on-going operations and may consider that we are still subject to the Alleviating Burden Opinion.
For mainland China and United States federal income tax considerations of an investment in our ADSs, see “Item 10. Additional Information—E. Taxation.” 5 Table of Contents Under the current laws of the Cayman Islands, we are not subject to tax on income or capital gains. Upon payments of dividends to our shareholders, no Cayman Islands withholding tax will be imposed.
For mainland China and United States federal income tax considerations of an investment in our ADSs, see “Item 10. Additional Information—E. Taxation.” Under the current laws of the Cayman Islands, we are not subject to tax on income or capital gains. Upon payments of dividends to our shareholders, no Cayman Islands withholding tax will be imposed.
Controls and Procedures.” However, we cannot assure you that we will be able to continuously implement these measures to effectively remediate our material weaknesses, or that we will not identify additional material weaknesses or significant deficiencies in the future.
Controls and Procedures.” However, we cannot assure you that we will be able to continually implement these measures to effectively remediate our material weaknesses, or that we will not identify additional material weaknesses or significant deficiencies in the future.
We maintain personal accident insurance for all employees after six months of employment in mainland China, maintain commercial medical insurance for our management and employees in mainland China and Malaysia and provide government-mandated medical insurance to all of our employees in the Philippines and mainland China, with supplementary medical insurance to certain of our employees in the Philippines and China.
We maintain personal accident insurance for all employees after six months of employment in mainland China, maintain commercial medical insurance for our management and employees in mainland China and Malaysia, provide government-mandated medical insurance to all of our employees in the Philippines, mainland China and Thailand, and provide supplementary medical insurance to certain of our employees in the Philippines and China.
The depositary may refuse to deliver, transfer or register transfers of our ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.
The depositary may refuse to deliver, transfer or register transfers of our ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason. ​ 51 Table of Contents
Going forward, our subsidiaries intend to retain most, if not all, of their available funds and any future earnings. 51Talk Online Education Group has not declared or paid any cash dividends, nor does it have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future.
Going forward, our subsidiaries intend to retain most, if not all, of their available funds and any future earnings. ​ 12 Table of Contents 51Talk Online Education Group has not declared or paid any cash dividends, nor does it have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future.
In addition, we may not be able to locate desirable alternative sites for our facilities as our business continues to grow and failure in relocating our affected operations could adversely affect our business and operations. The wide variety of payment methods that we accept subjects us to third-party payment processing-related risks.
In addition, we may not be able to locate desirable alternative sites for our facilities as our business continues to grow and failure in relocating our affected operations could adversely affect our business and operations. ​ 29 Table of Contents The wide variety of payment methods that we accept subjects us to third-party payment processing-related risks.
However, if any dispute arises between our officers and us, we may have to incur substantial costs and expenses in order to enforce such agreements in mainland China or we may be unable to enforce them at all. 20 Table of Contents Fluctuations in foreign currency exchange rates may materially and adversely affect our results of operations.
However, if any dispute arises between our officers and us, we may have to incur substantial costs and expenses in order to enforce such agreements in mainland China or we may be unable to enforce them at all. Fluctuations in foreign currency exchange rates may materially and adversely affect our results of operations.
As a result, we may struggle to attract and retain users, which may materially and adversely affect our business operations and financial condition. 30 Table of Contents If the relevant Malaysian regulatory agency is to determine that a license is required for our local operations, our business, financial condition and results of operations could be adversely affected.
As a result, we may struggle to attract and retain users, which may materially and adversely affect our business operations and financial condition. ​ 44 Table of Contents If relevant Malaysian regulatory agency is to determine that a license is required for our local operations, our business, financial condition and results of operations could be adversely affected.
The statutory limit for the total amount of foreign debts of a foreign-invested company is the difference between the amount of total investment as approved by or filed with, as the case may be, the MOFCOM or its local counterpart and the amount of registered capital of such foreign-invested company. See “Item 4. Information on the Company—B.
The statutory limit for the total amount of foreign debts of a foreign-invested company is the difference between the amount of total investment as approved by or filed with, as the case may be, the Ministry of Commerce or its local counterpart and the amount of registered capital of such foreign-invested company. See “Item 4. Information on the Company—B.
We provide our course offerings to our students in Hong Kong and are subject to laws, rules and regulations governing the accessibility and content of our course offerings, such as the Education Ordinance and anti-discrimination laws. Non-compliance with the relevant laws and regulations regarding our operations in Hong Kong may materially and adversely affect our reputation, business operations and prospectus.
We provide our course offerings to our students in Hong Kong and are subject to laws, rules and regulations governing the accessibility and content of our course offerings, such as the Education Ordinance and anti-discrimination laws. Non-compliance with the laws and regulations regarding our operations in Hong Kong may materially and adversely affect our reputation, business operations and prospects.
The Alleviating Burden Opinion and its subsequently adopted implementation measures prohibited our historically offered online tutoring services taught mainly by independently contracted foreign tutors to K-12 students in mainland China. In response to the regulatory developments in the private education sector in mainland China since mid-2021, we have divested our China Mainland Business and are completely focused on international markets.
The Alleviating Burden Opinion and its subsequently adopted implementation measures prohibited our historically offered online tutoring services taught mainly by independently contracted foreign tutors to K-12 students in mainland China. ​ 38 Table of Contents In response to the regulatory developments in the private education sector in mainland China since mid-2021, we have divested our China Mainland Business and are completely focused on international markets.
If we are unsuccessful in addressing any of the risks related to new courses, our reputation and business may be materially and adversely affected. 11 Table of Contents Our business generates and processes a large amount of data, and we are required to comply with applicable laws relating to privacy and cybersecurity.
If we are unsuccessful in addressing any of the risks related to new courses, our reputation and business may be materially and adversely affected. Our business generates and processes a large amount of data, and we are required to comply with applicable laws relating to privacy and cybersecurity.
After the divestiture of our China Mainland Business, we started to offer English courses to students in countries and regions outside of mainland China. If students 25 Table of Contents from mainland China wish to access our course offerings, they may register for our online or mobile platform and attend our courses from mainland China.
After the divestiture of our China Mainland Business, we started to offer English courses to students in countries and regions outside of mainland China. If students from mainland China wish to access our course offerings, they may register for our online or mobile platform and attend our courses from mainland China.
Our operations and investments in Asia are subject to various risks related to the economic, political and social conditions of the countries and regions that we operate in, including risks related to the following: ● inconsistent and evolving regulations, licensing and legal requirements may increase our operational risks and cost of operations among the countries and regions in Asia in which we operate; ● currencies may be devalued or may depreciate or currency restrictions or other restraints on transfer of funds may be imposed; ● the effects of inflation within Asia generally and/or within any specific country in which we operate may increase our cost of operations; ● governments or regulators may impose new or more burdensome regulations, taxes or tariffs; ● political changes may lead to changes in the business, legal and regulatory environments in which we operate; ● economic downturns, political instability, civil disturbances, war, military conflict, religious or ethnic strife, terrorism and general security concerns may negatively affect our operations; ● enactment or any increase in the enforcement of regulations, including, but not limited to, those related to personal data protection and localization and cybersecurity, and especially on the cross-border acquisition and use of personal data by our company, may incur compliance costs; ● health epidemics, pandemics or disease outbreaks (including the COVID-19 outbreak) may affect our operations and demand for our offerings; and 23 Table of Contents ● natural disasters like volcanic eruptions, floods, typhoons and earthquakes may impact our operations severely.
Our operations and investments in Asia are subject to various risks related to the economic, political and social conditions of the countries and regions that we operate in, including risks related to the following: ● inconsistent and evolving regulations, licensing and legal requirements may increase our operational risks and cost of operations among the countries and regions in Asia in which we operate; ● currencies may be devalued or may depreciate or currency restrictions or other restraints on transfer of funds may be imposed; ● the effects of inflation within Asia generally and/or within any specific country in which we operate may increase our cost of operations; ● governments or regulators may impose new or more burdensome regulations, taxes or tariffs; ● political changes may lead to changes in the business, legal and regulatory environments in which we operate; ● economic downturns, political instability, civil disturbances, war, military conflict, religious or ethnic strife, terrorism and general security concerns may negatively affect our operations; ● enactment or any increase in the enforcement of regulations, including, but not limited to, those related to personal data protection and localization and cybersecurity, and especially on the cross-border acquisition and use of personal data by our company, may incur compliance costs; ● health epidemics, pandemics or disease outbreaks may affect our operations and demand for our offerings; and ● natural disasters like volcanic eruptions, floods, typhoons and earthquakes may impact our operations severely. ​ 33 Table of Contents For example, volatile political situations in certain Asian countries and regions could impact our business.
Our capital contributions to our mainland China subsidiary HelloWorld Online, Foreign-Invested Enterprises, or FIEs that we believe do not fall within the scope of special administration measures for foreign investment admission, must be filed with the MOFCOM or its local counterpart. See “Item 4. Information on the Company—B.
Our capital contributions to our mainland China subsidiary HelloWorld Online, foreign-invested enterprises that we believe do not fall within the scope of special administration measures for foreign investment admission, must be filed with the Ministry of Commerce or its local counterpart. See “Item 4. Information on the Company—B.
Our tax exposure and obligations exist in each of the countries and regions in which we presently operate and may arise in other countries or regions in the future in the event that we commence operations in such new countries or regions, either organically or through acquisitions.
Our tax exposure and obligations exist in each of the countries and regions in which we presently operate and provide course offerings and may arise in other countries or regions in the future in the event that we commence operations in such new countries or regions, either organically or through acquisitions.
Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting as of December 31, 2022.
Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting as of December 31, 2023.
A non-United States corporation, such as our company, will be classified as a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income (the “asset test”).
A non-United States corporation, such as our company, will be classified as a passive foreign investment company, or a PFIC, for U.S. federal income tax purposes for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income, or the asset test.
ITEM 3. KEY INFORMATION Permissions for Our Operations and Securities Issuances to Offshore Investors 51Talk Online Education Group is not an operating company, but rather a Cayman Islands holding company. We conduct part of our operations through our subsidiaries in mainland China. Our operations in mainland China are governed by laws and regulations of mainland China.
Permissions for Our Operations and Securities Issuances to Offshore Investors 51Talk Online Education Group is not an operating company, but rather a Cayman Islands holding company. We conduct part of our operations through our subsidiaries in mainland China. Our operations in mainland China are governed by laws and regulations of mainland China.
Currency fluctuations in the currencies of the countries and regions where we operate could create economic instability that may increase our expenses and harm our business operations. Currency fluctuations in the exchange rates among the various currencies that we use could create economic instability that may increase our expenses and harm our business operations.
Currency fluctuations in the currencies of the countries and regions where we operate could create economic instability that may increase our expenses and harm our business operations. ​ 30 Table of Contents Currency fluctuations in the exchange rates among the various currencies that we use could create economic instability that may increase our expenses and harm our business operations.
The hypothetical book pre-tax earnings amount, not considering timing differences, is assumed to equal taxable income in China. (2) Certain of our subsidiaries and the variable interest entities enjoy tax holiday of two-year EIT exemption and subsequently three-year 12.5% preferential tax rate in China. However, such rate may not be available in a future period when distributions are paid.
The hypothetical book pre-tax earnings amount, not considering timing differences, is assumed to equal taxable income in China. (2) Certain of our subsidiaries enjoy tax holiday of two-year enterprise income tax exemption and subsequently three-year 12.5% preferential tax rate in China. However, such rate may not be available in a future period when distributions are paid.
If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds from our equity offerings and to capitalize or otherwise fund our 27 Table of Contents mainland China operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds from our equity offerings and to capitalize or otherwise fund our mainland China operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
Failure to refine our existing marketing and branding approaches or to introduce new marketing and branding approaches in a cost-effective manner may reduce our market share, cause our revenues to decline and negatively impact our profitability. 9 Table of Contents We have incurred, and in the future may continue to incur, net losses.
Failure to refine our existing marketing and branding approaches or to introduce new marketing and branding approaches in a cost-effective manner may reduce our market share, cause our revenues to decline and negatively impact our profitability. We have incurred, and in the future may continue to incur, net losses.
You are urged to consult your tax advisor concerning the United States federal income tax consequences of holding and disposing of ADSs if we are or become classified as a PFIC. For more information, see “Item 10. Additional Information—E. Taxation—United States Federal Income Taxation—Passive Foreign Investment Company Considerations.” and “Item 10. Additional Information—E.
You are urged to consult your tax advisor concerning the U.S. federal income tax consequences of holding and disposing of ADSs if we are or become classified as a PFIC. For more information, see “Item 10. Additional Information—E. Taxation—United States Federal Income Taxation—Passive Foreign Investment Company Considerations” and “Item 10. Additional Information—E.
As a result of grants and potential future grants under the 2013 Plan, the 2014 Plan and the 2016 Plan, we have incurred and will continue to incur share-based compensation expenses. We have recognized share-based compensation expense in the amount of US$0.7 million in 2022.
As a result of grants under the 2013 Plan, the 2014 Plan and the 2016 Plan and potential future grants under the 2014 Plan and the 2016 Plan, we have incurred and will continue to incur share-based compensation expenses. We have recognized share-based compensation expense in the amount of US$0.9 million in 2023.
However, in auditing our consolidated financial statements for the fiscal years ended December 31, 2021, our management and our independent registered public accounting firm identified two material weaknesses in our internal control over financial reporting in accordance with the standards established by the Public Company Accounting Oversight Board of the United States (PCAOB).
However, in auditing our consolidated financial statements for the fiscal year ended December 31, 2023, our management and our independent registered public accounting firm identified two material weaknesses in our internal control over financial reporting in accordance with the standards established by the Public Company Accounting Oversight Board of the United States, or the PCAOB.
Ting Shu, who directly or indirectly hold shares in our Cayman Islands holding company and who are known to us as being mainland China residents have completed the initial foreign exchange registrations, amended their registrations to reflect our corporate restructuring in November 2014.
Mr. Jack Jiajia Huang and Ms. Ting Shu, who directly or indirectly hold shares in our Cayman Islands holding company and who are known to us as being mainland China residents have completed the initial foreign exchange registrations, amended their registrations to reflect our corporate restructuring in November 2014.
Our business depends on the performance and reliability of the internet infrastructure in the countries and regions where we operate our business. In many parts of the countries and regions where we operate our business, in particular, certain Asian countries, the internet infrastructure is relatively underdeveloped, and internet connections are generally slower and less stable than in more developed countries.
In many parts of the countries and regions where we operate our business, in particular, certain Asian countries, the internet infrastructure is relatively underdeveloped, and internet connections are generally slower and less stable than in more developed countries.
This could in turn limit our access to capital markets, harm our 22 Table of Contents results of operations, and lead to a decline in the trading price of our ADSs.
This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of our ADSs.
A lower withholding income tax rate of 5% is applied if the FIE’s immediate holding company is registered in Hong Kong SAR or other jurisdictions that have a tax treaty arrangement with mainland China, subject to a qualification review at the time of the distribution.
A lower withholding income tax rate of 5% is applied if the immediate holding company of the foreign-invested enterprise is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with mainland China, subject to a qualification review at the time of the distribution.
We incurred nil million, US$3.4 million and US$13.3 million in sales and marketing expenses for international business in 2020, 2021, and 2022, respectively. We have ceased branding and marketing services in mainland China since the release of the Alleviating Burden Opinion, and we are conducting branding and marketing activities in our international markets.
We incurred US$3.4 million, US$13.3 million and US$23.6 million in sales and marketing expenses for international business in 2021, 2022, and 2023, respectively. We have ceased branding and marketing services in mainland China since the release of the Alleviating Burden Opinion, and we are conducting branding and marketing activities in our international markets.
In the event that this pandemic cannot be effectively and timely contained, our ability to consistently offer online lessons and related services in the future may be significantly disrupted, which in turn may harm the growth rate and retention of our students, as well as our financial performance generally.
In the event that a health epidemic cannot be effectively and timely contained, our ability to consistently offer online lessons and related services in the future may be significantly disrupted, which in turn may harm the growth rate and retention of our students, as well as our financial performance generally.
There can be no assurance that we will not be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year, which could subject United States holders of our ADSs or ordinary shares to significant adverse United States federal income tax consequences.
There can be no assurance that we will not be a passive foreign investment company for U.S. federal income tax purposes for any taxable year, which could subject U.S. Holders of our ADSs or ordinary shares to significant adverse U.S. federal income tax consequences.
Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Rules.” If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding our ADSs, the market price for our ADSs and trading volume could decline.
Taxation—United States Federal Income Taxation—Passive Foreign Investment Company Rules.” ​ 47 Table of Contents If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding our ADSs, the market price for our ADSs and trading volume could decline.
Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in the jurisdictions where we operate could materially and adversely affect our business and impede our ability to continue our operations.
Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in mainland China could materially and adversely affect our business and impede our ability to continue our operations.
We face competition in various areas of English education in which we offer or plan to offer services, from existing online and offline education companies in the global markets. In the future, we may also face competition from new entrants into the English education market.
The global English education market is fragmented, rapidly evolving and highly competitive. We face competition in various areas of English education in which we offer or plan to offer services, from existing online and offline education companies in the global markets. In the future, we may also face competition from new entrants into the English education market.
Failure to renew our current leases or locate desirable alternatives for our facilities could materially and adversely affect our business. We lease properties for our offices in mainland China, the Philippines, Malaysia and Hong Kong.
Failure to renew our current leases or locate desirable alternatives for our facilities could materially and adversely affect our business. We lease properties for our offices in mainland China, the Philippines, Malaysia, Hong Kong, Thailand and other countries and regions where we operate.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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The intention of the ADS ratio change was to prepare the Company for a contemplated transfer of the listing of our ADSs from the New York Stock Exchange to a listing venue that more fits the Company’s size and stage.
The intention of the ADS ratio change was to prepare our company for a contemplated transfer of the listing of our ADSs from the New York Stock Exchange to a listing venue that more fits our company’s size and stage.
Pursuant to the Foreign Investment Law of the PRC, “foreign investors” means natural person, enterprise, or other organization of a foreign country, “foreign-invested enterprises” (FIEs) means any enterprise established under PRC law that is wholly or partially invested by foreign investors and “foreign investment” means any foreign investor’s direct or indirect investment in Mainland China, including: (i) establishing FIEs in Mainland China either individually or jointly with other investors; (ii) obtaining stock shares, stock equity, property shares, other similar interests in Chinese domestic enterprises; (iii) investing in new projects in Mainland China either individually or jointly with other investors; and (iv) making investment through other means provided by laws, administrative regulations, or State Council provisions.
Pursuant to the Foreign Investment Law of the PRC, “foreign investors” means natural person, enterprise, or other organization of a foreign country, “foreign-invested enterprises” means any enterprise established under PRC law that is wholly or partially invested by foreign investors and “foreign investment” means any foreign investor’s direct or indirect investment in Mainland China, including: (i) establishing foreign-invested enterprises in Mainland China either individually or jointly with other investors; (ii) obtaining stock shares, stock equity, property shares, other similar interests in Chinese domestic enterprises; (iii) investing in new projects in Mainland China either individually or jointly with other investors; and (iv) making investment through other means provided by laws, administrative regulations, or State Council provisions.
Under the exclusive option agreements by and among Philippines Co II, each of the shareholders of Philippines Co II and 51Talk, in consideration of the payment of US$1.0 by 51Talk, each of the shareholders irrevocably granted 51Talk a binding and exclusive right to purchase or designate one or more persons to purchase, equity interests in Philippines Co II then held by each shareholder at once or at multiple times at any time in part or in whole at 51Talk’s sole and absolute discretion to the extent permitted by Philippine laws and at the price of US$1.0.
Under the exclusive option agreements by and among Philippines Co II, each of the signing shareholders of Philippines Co II and 51Talk, in consideration of the payment of US$1.0 by 51Talk, each of the signing shareholders irrevocably granted 51Talk a binding and exclusive right to purchase or designate one or more persons to purchase, equity interests in Philippines Co II then held by each shareholder at once or at multiple times at any time in part or in whole at 51Talk’s sole and absolute discretion to the extent permitted by Philippine laws and at the price of US$1.0.
Without 51Talk’s prior written consent, Philippines Co II’s shareholders shall not sell, transfer, mortgage, or otherwise dispose in any manner any material assets of Philippines Co II or legal or beneficial interest in the material business or revenues of Philippines Co II in an amount exceeding US$100,000, or allow the encumbrance thereon of any security interests; or cause Philippines Co II to execute any contract with a price exceeding US$100,000, except the contracts in the ordinary course of business.
Without 51Talk’s prior written consent, Philippines Co II’s signing shareholders shall not sell, transfer, mortgage, or otherwise dispose in any manner any material assets of Philippines Co II or legal or beneficial interest in the material business or revenues of Philippines Co II in an amount exceeding US$100,000, or allow the encumbrance thereon of any security interests; or cause Philippines Co II to execute any contract with a price exceeding US$100,000, except the contracts in the ordinary course of business.
On the other hand, the law prohibits labor-only contracting, which is where the person supplying workers to an employer does not have substantial capital or investment, and the workers recruited and placed by such contractor/subcontractor are performing activities which are directly related to the principal business of such employer, or when the contractor or subcontractor does not exercise the right to control over the performance of the work of the employee.
On the other hand, the law prohibits labor-only contracting, which is where the person supplying workers to an employer does not have substantial capital or investment, and the workers recruited and placed by such contractor/subcontractor are performing activities which are directly related to the principal business of such employer, or when the contractor or subcontractor does not exercise the right to control over the performance of the work of the workers.
Failure to complete the SAFE registrations may lead to fines and legal sanctions and may also limit a company’s ability to contribute additional capital into its wholly foreign-owned subsidiary in mainland China. In addition, the State Administration for Taxation, or the SAT, has issued certain circulars concerning employee share options or restricted shares.
Failure to complete the SAFE registrations may lead to fines and legal sanctions and may also limit a company’s ability to contribute additional capital into its wholly foreign-owned subsidiary in mainland China. In addition, the State Administration for Taxation has issued certain circulars concerning employee share options or restricted shares.
Moreover, all mainland China enterprises are generally required to implement a standard working time system of eight hours a day and forty hours a week, and if the implementation of such standard working time system is not appropriate due to the nature of the job or the characteristics of business operation, the enterprise may implement a flexible working time system or comprehensive working time system after obtaining approvals from the relevant authorities.
Moreover, all mainland China enterprises are generally required to implement a standard working time system of eight hours a day and forty hours a week, and if the implementation of such standard working time system is not appropriate due to the nature of the job or the characteristics of business operation, the enterprise may implement a flexible working time system or comprehensive working time system after obtaining approvals from the authorities.
The shareholders of Philippines Co II waive their rights of first refusal in regard to the transfer of equity interest by any other shareholder of Philippines Co II to 51Talk (if any), give consents to the execution by each other shareholder of Philippines Co II with 51Talk and Philippines Co II the exclusive option agreements, the equity interest pledge agreements and the powers of attorney, and accept not to take any actions in conflict with such documents executed by other shareholders.
The signing shareholders of Philippines Co II waive their rights of first refusal in regard to the transfer of equity interest by any other shareholder of Philippines Co II to 51Talk (if any), give consents to the execution by each other shareholder of Philippines Co II with 51Talk and Philippines Co II the exclusive option agreements, the equity interest pledge agreements and the powers of attorney, and accept not to take any actions in conflict with such documents executed by other shareholders.
We then broadly release such new versions on our platform after we have incorporated the relevant feedback. We regularly release updates to our course materials. We will continue to launch new courses in the future to meet the varied interests and English learning needs of our young students and to realize greater cross-selling opportunities.
We then broadly release such new versions on our platform after we have incorporated the feedback. We regularly release updates to our course materials. We will continue to launch new courses in the future to meet the varied interests and English learning needs of our young students and to realize greater cross-selling opportunities.
Our key business offering under our international business is one-on-one English lessons taught by English tutors to students in countries and regions outside of mainland China. We started our international business in the second half of 2021 and currently provide English course offerings in Hong Kong, Malaysia, and certain other countries and regions.
Our key business offering under our international business is one-on-one English lessons taught by English tutors to students in countries and regions outside of mainland China. We started our international business in the second half of 2021 and currently provide English course offerings in Hong Kong, Malaysia, Thailand and certain other countries and regions.
In addition, to the extent that our platforms or services enable our users to transmit online content to each other or access third party online content, we would be an internet intermediary under the Protection from Online Falsehoods and Manipulation Act 2019 of Singapore, or POFMA.
In addition, to the extent that our platforms or services enable our users to transmit online content to each other or access third party online content, we would be an internet intermediary under the Protection from Online Falsehoods and Manipulation Act 2019 of Singapore.
We entered into contractual arrangements with these individual shareholders which provide us an exclusive option to purchase all of the individual shareholders’ equity interests in Philippines Co II and the power to exercise their shareholder rights.
We entered into contractual arrangements with some of these individual shareholders which provide us an exclusive option to purchase all of these individual shareholders’ equity interests in Philippines Co II and the power to exercise their shareholder rights.
These agreements shall remain in effect until all equity interests in Philippines Co II held by the shareholders have been transferred or assigned to 51Talk and/or any other person designed by 51Talk in accordance with this agreement.
These agreements shall remain in effect until all equity interests in Philippines Co II held by the signing shareholders have been transferred or assigned to 51Talk and/or any other person designed by 51Talk in accordance with this agreement.
The number of years an entity is entitled to the incentives is determined by the location of the entity and the type of business or activity it is engaged in. Philippine Economic Zone Authority (“PEZA”) PEZA is an attached agency to the Department of Trade and Industry.
The number of years an entity is entitled to the incentives is determined by the location of the entity and the type of business or activity it is engaged in. Philippine Economic Zone Authority The Philippine Economic Zone Authority, or the PEZA, is an attached agency to the Department of Trade and Industry.
If the employees fail to pay or the mainland China subsidiaries fail to withhold their income taxes according to relevant laws and regulations, the mainland China subsidiaries may face sanctions imposed by the tax authorities or other mainland China government authorities. 58 Table of Contents Regulations Relating to Employment and Social Insurance The PRC Labor Law effective as of January 1, 1995 (as latest amended on December 29, 2018), and the PRC Labor Contract Law effective as of January 1, 2008 (as amended on December 28, 2012), set forth a series of provisions governing the labor relationship between employees and employers.
If the employees fail to pay or the mainland China subsidiaries fail to withhold their income taxes according to relevant laws and regulations, the mainland China subsidiaries may face sanctions imposed by the tax authorities or other mainland China government authorities. ​ 74 Table of Contents Regulations Relating to Employment and Social Insurance The PRC Labor Law effective as of January 1, 1995 (as latest amended on December 29, 2018), and the PRC Labor Contract Law effective as of January 1, 2008 (as amended on December 28, 2012), set forth a series of provisions governing the labor relationship between employees and employers.
SAFE Circular 37 further provides that option or share-based incentive tool holders of a non-listed SPV can exercise the options or share incentive tools to become a shareholder of such non-listed SPV, subject to registration with SAFE or its local branch. 57 Table of Contents Mainland China residents or entities who have contributed legitimate domestic or offshore interests or assets to SPVs but have yet to obtain SAFE registration before the implementation of the SAFE Circular 37 shall register their ownership interests or control in such SPVs with SAFE or its local branch.
SAFE Circular 37 further provides that option or share-based incentive tool holders of a non-listed SPV can exercise the options or share incentive tools to become a shareholder of such non-listed SPV, subject to registration with SAFE or its local branch. 73 Table of Contents Mainland China residents or entities who have contributed legitimate domestic or offshore interests or assets to SPVs but have yet to obtain SAFE registration before the implementation of the SAFE Circular 37 shall register their ownership interests or control in such SPVs with SAFE or its local branch.
The shareholders of Philippines Co II agree to promptly donate any profits, interests, dividends, or proceeds of liquidation to 51Talk or any other person designated by 51Talk to the extent permitted under the applicable Philippine laws.
The signing shareholders of Philippines Co II agree to promptly donate any profits, interests, dividends, or proceeds of liquidation to 51Talk or any other person designated by 51Talk to the extent permitted under the applicable Philippine laws.
Companies may also need to obtain licenses or approvals from the Education Bureau or other relevant authorities before offering their services. Companies that violate the regulations may be subject to fines and other penalties.
Companies may also need to obtain licenses or approvals from the Education Bureau or other authorities before offering their services. Companies that violate the regulations may be subject to fines and other penalties.
The amended Copyright Law has improved the relevant provisions on the protection of internet copyright, especially by substantially increasing the upper limit of legal damages for infringement and clarifying the principle of punitive damages.
The amended Copyright Law has improved the provisions on the protection of internet copyright, especially by substantially increasing the upper limit of legal damages for infringement and clarifying the principle of punitive damages.
For example, the Education Bureau may impose fines on companies that are found to be operating without the necessary licenses or approvals, or that are in violation of the curriculum or assessment requirements set out in the Education Ordinance. 52 Table of Contents Regulations on Data Privacy and Cybersecurity The Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong), or the PDPO, regulates the collection, storage, use, and disclosure of personal data in Hong Kong.
For example, the Education Bureau may impose fines on companies that are found to be operating without the necessary licenses or approvals, or that are in violation of the curriculum or assessment requirements set out in the Education Ordinance. ​ 67 Table of Contents Regulations on Data Privacy and Cybersecurity The Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong), or the PDPO, regulates the collection, storage, use, and disclosure of personal data in Hong Kong.
It created new offenses relating to advertising, including (i) false trade descriptions relating to services, (ii) misleading omissions, and (iii) certain aggressive or unfair commercial practices. 53 Table of Contents Malaysia Regulations Regulations on Education The Education Act sets out the regulations surrounding education in Malaysia, including requirements for licensing and accreditation of educational institutions.
It created new offenses relating to advertising, including (i) false trade descriptions relating to services, (ii) misleading omissions, and (iii) certain aggressive or unfair commercial practices. ​ 68 Table of Contents Malaysia Regulations Regulations on Education The Education Act sets out the regulations surrounding education in Malaysia, including requirements for licensing and accreditation of educational institutions.
Regulations on Foreign Exchange Foreign Currency Exchange Pursuant to the Foreign Currency Administration Rules, as amended, and various regulations issued by SAFE on August 5, 2008, and other relevant PRC government authorities, RMB is freely convertible to the extent of current account items, such as trade related receipts and payments, interest and dividends.
Regulations on Foreign Exchange Foreign Currency Exchange Pursuant to the Foreign Currency Administration Rules, as amended, and various regulations issued by the State Administration of Foreign Exchange, or the SAFE, on August 5, 2008, and other relevant PRC government authorities, RMB is freely convertible to the extent of current account items, such as trade related receipts and payments, interest and dividends.
This M&A Rule purports to require, among other things, offshore SPVs, formed for listing purposes through acquisition of mainland China domestic companies and controlled by mainland China companies or individuals, to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange.
This M&A Rules purports to require, among other things, offshore SPVs, formed for listing purposes through acquisition of mainland China domestic companies and controlled by mainland China companies or individuals, to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange.
According to the amended Copyright Law effective as of June 1, 2020, the definition of works has been revised that the expression of “cinematographic works and works created by methods similar to cinematographic production” has been amended to “audio-visual works,” which means that the scope of copyright protection has been further expanded.
According to the amended Copyright Law effective as of June 1, 2021, the definition of works has been revised that the expression of “cinematographic works and works created by methods similar to cinematographic production” has been amended to “audio-visual works,” which means that the scope of copyright protection has been further expanded.
In addition, employers in mainland China are obliged to pay contributions to the social insurance plan and the housing fund plan for their employees, and such contribution amount payable shall be calculated based on the employee actual salary in accordance with the relevant regulations.
In addition, employers in mainland China are obliged to pay contributions to the social insurance plan and the housing fund plan for their employees, and such contribution amount payable shall be calculated based on the employee actual salary in accordance with the applicable regulations.
We also cross reference students’ English proficiency, learning progression, age group, profession, gender and platform engagement against certain traits of our teacher base to provide each student an individualized shortlist of most suitable tutors. 41 Table of Contents Lessons are typically 25 minutes long. Tutors and students interact using real-time audio and visual streaming technology.
We also cross reference students’ English proficiency, learning progression, age group, profession, gender and platform engagement against certain traits of our teacher base to provide each student an individualized shortlist of most suitable tutors. Lessons are typically 25 minutes long. Tutors and students interact using real-time audio and visual streaming technology.
The large pool of tutors not only allows us to accommodate and address students’ individual English proficiency level and learning behaviors and needs, but also ensures that we are able to afford students’ scheduling flexibility. We develop and tailor our proprietary curriculum specifically to our interactive lesson format and our goal of building an interactive and immersive English learning environment.
The large pool of tutors not only allows us to accommodate and address students’ individual English proficiency level and learning behaviors and needs, but also ensures that we are able to afford students’ scheduling flexibility. ​ 54 Table of Contents We develop and tailor our proprietary curriculum specifically to our interactive lesson format and our goal of building an interactive and immersive English learning environment.
We maintain personal accident insurance for all employees after six months of employment in mainland China, maintain commercial medical insurance for our management and employees in mainland China and Malaysia and provide government-mandated medical insurance to all of our employees in the Philippines and mainland China, with supplementary medical insurance to certain of our employees in the Philippines and mainland China.
We maintain personal accident insurance for all employees after six months of employment in mainland China, maintain commercial medical insurance for our management and employees in mainland China and Malaysia, provide government-mandated medical insurance to all of our employees in the Philippines, mainland China and Thailand, and provide supplementary medical insurance to certain of our employees in the Philippines and mainland China.
For example, FICA empowers the Minister for Home Affairs to issue FICA directions to various entities such as social media services, relevant electronic services, internet access services, as well as persons who own or run websites, blogs or social media pages, to help the authorities investigate and counter hostile communications activity that is of foreign origin.
For example, this act empowers the Minister for Home Affairs to issue the directions to various entities such as social media services, relevant electronic services, internet access services, as well as persons who own or run websites, blogs or social media pages, to help the authorities investigate and counter hostile communications activity that is of foreign origin.
This shared economy approach has allowed us to quickly build a large pool of tutors in a cost-effective manner. 39 Table of Contents Prior to the second half of 2021, we focused primarily on offering one-on-one lessons to K-12 students in mainland China, connecting them with our pool of foreign tutors.
This shared economy approach has allowed us to quickly build a large pool of tutors in a cost-effective manner. Prior to the second half of 2021, we focused primarily on offering one-on-one lessons to K-12 students in mainland China, connecting them with our pool of foreign tutors.
Risk Factor—Risk Related to Our Business and Industry—We face significant competition, and if we fail to compete effectively, we may lose our market share or fail to gain additional market share, which would adversely impact our business and financial conditions and operating results.” Seasonality Seasonal fluctuations have affected, and may affect our business in the future.
Risk Factors—Risks Related to Our Business and Industry—We face significant competition, and if we fail to compete effectively, we may lose our market share or fail to gain additional market share, which would adversely impact our business and financial conditions and operating results.” Seasonality Seasonal fluctuations have affected, and may affect our business in the future.
Effective Practice Students are required to preview course materials through the AI-empowered knowledge preview. Pre-lesson learning is particularly important, as such process allows students to engage in more productive interactions with tutors or other students during live lessons. Our AI-empowered knowledge preview aims to develop students’ English speaking, listening, reading and writing skills.
Effective Practice Students are required to preview course materials through the AI-empowered knowledge preview. Pre-lesson learning is particularly important, as such process allows students to engage in more productive interactions with tutors or other students during live lessons. ​ 56 Table of Contents Our AI-empowered knowledge preview aims to develop students’ English speaking, listening, reading and writing skills.
The DPA expressly requires that before a personal information controller or processor can collate, process, and then use or share personal data, the personal information controller or processor must have a lawful criterion or basis for processing, such as consent (which is defined as any freely given, specific, informed indication of will, whereby the data subject agrees to the collection and processing of his or her personal data).
The Data Privacy Act of 2012 expressly requires that before a personal information controller or processor can collate, process, and then use or share personal data, the personal information controller or processor must have a lawful criterion or basis for processing, such as consent (which is defined as any freely given, specific, informed indication of will, whereby the data subject agrees to the collection and processing of his or her personal data).
As an internet content provider, we are obliged to use our best efforts to ensure that prohibited material (which refers to material that is objectionable on the grounds of public interest, public morality, public security, national harmony, offends good taste or decency, or is otherwise prohibited by applicable Singapore laws) is not broadcast via the internet to users in Singapore, and we are also required to deny access to any prohibited material if directed to do so by the IMDA.
As an internet content provider, we are obliged to use our best efforts to ensure that prohibited material (which refers to material that is objectionable on the grounds of public interest, public morality, public security, national harmony, offends good taste or decency, or is otherwise prohibited by applicable Singapore laws) is not broadcast via the internet to users in Singapore, and we are also required to deny access to any prohibited material if directed to do so by the Infocomm Media Development Authority.
The efforts to undertake internet domain name services as well as the operation, maintenance, supervision and administration thereof and other relevant activities within the territory of mainland Chinashall thereafter be made in compliance with Administrative Measures for Internet Domain Names.
The efforts to undertake internet domain name services as well as the operation, maintenance, supervision and administration thereof and other relevant activities within the territory of mainland China shall thereafter be made in compliance with Administrative Measures for Internet Domain Names.
We entered into contractual arrangements with these individual shareholders which provide us with an exclusive option to purchase all of the individual shareholders’ equity interests in Philippines Co III and the power to exercise their respective shareholder rights.
We entered into contractual arrangements with one of these individual shareholders which provide us with an exclusive option to purchase all of the individual shareholder’s equity interests in Philippines Co III and the power to exercise their respective shareholder rights.
The shareholders of Philippines Co II and Philippines Co II do not have any right to terminate the exclusive option agreements in any event unless otherwise required by the applicable laws. 51Talk, Philippines Co III and the individual shareholders of Philippines Co III entered into exclusive option agreements on February 1, 2016.
The signing shareholders of Philippines Co II and Philippines Co II do not have any right to terminate the exclusive option agreements in any event unless otherwise required by the applicable laws. 51Talk, Philippines Co III and the signing shareholder of Philippines Co III entered into exclusive option agreements on February 1, 2016.
On December 27, 2021, the Ministry of Commerce, or the MOFCOM and the National Development and Reform Commission, or the NDRC, jointly promulgated the Special Administrative Measures for Access of Foreign Investment (Negative List) (2021 Version), or the 2021 Negative List, which became effective on January 1, 2022.
On December 27, 2021, the Ministry of Commerce and the National Development and Reform Commission jointly promulgated the Special Administrative Measures for Access of Foreign Investment (Negative List) (2021 version), which became effective on January 1, 2022.
On June 18, 2019, the CNNIC issued the Measures on Resolution of Disputes over National Top-level Domain Names, pursuant to which the domain name disputes shall be accepted and solved by a domain name dispute resolution body as recognized by the CNNIC. 55 Table of Contents Regulations on After-School Tutoring On July 24, 2021, the General Office of State Council and the General Office of Central Committee of the Communist Party of China jointly promulgated the Alleviating Burden Opinion, which provides that, among other things, (i) local government authorities shall no longer approve new after-school tutoring institutions providing tutoring services on academic subjects for students in compulsory education, or the Academic AST Institutions, and the existing after-school tutoring institutions providing tutoring services on academic subjects shall be registered as non-profit; (ii) online Academic AST Institutions that have filed with the local education administration authorities providing tutoring services on academic subjects shall be subject to review and re-approval procedures by competent government authorities, and any failure to obtain such approval will result in the cancellation of its previous filing and ICP license; (iii) Academic AST Institutions are prohibited from raising funds by listing on stock markets or conducting any capitalization activities and listed companies are prohibited from investing in Academic AST Institutions through capital markets fund raising activities, or acquiring assets of Academic AST Institutions by paying cash or issuing securities; and (iv) foreign capital is prohibited from controlling or participating in any Academic AST Institutions through mergers and acquisitions, entrusted operation, joining franchise or variable interest entities.
Pursuant to these measures, the domain name disputes shall be accepted and solved by a domain name dispute resolution body as recognized by the center. ​ 70 Table of Contents Regulations on After-School Tutoring On July 24, 2021, the General Office of State Council and the General Office of Central Committee of the Communist Party of China jointly promulgated the Alleviating Burden Opinion, which provides that, among other things, (i) local government authorities shall no longer approve new after-school tutoring institutions providing tutoring services on academic subjects for students in compulsory education, or the Academic AST Institutions, and the existing after-school tutoring institutions providing tutoring services on academic subjects shall be registered as non-profit; (ii) online Academic AST Institutions that have filed with the local education administration authorities providing tutoring services on academic subjects shall be subject to review and re-approval procedures by competent government authorities, and any failure to obtain such approval will result in the cancellation of its previous filing and ICP license; (iii) Academic AST Institutions are prohibited from raising funds by listing on stock markets or conducting any capitalization activities and listed companies are prohibited from investing in Academic AST Institutions through capital markets fund raising activities, or acquiring assets of Academic AST Institutions by paying cash or issuing securities; and (iv) foreign capital is prohibited from controlling or participating in any Academic AST Institutions through mergers and acquisitions, entrusted operation, joining franchise or variable interest entities.
POFMA empowers any Singapore government minister to direct the POFMA Office to issue certain directions to internet intermediaries whose internet intermediary service had been used to communicate a false statement of fact in Singapore, if the minister is of the opinion that it would be in the public interest to do so.
This act empowers any Singapore government minister to direct the responsible office to issue certain directions to internet intermediaries whose internet intermediary service had been used to communicate a false statement of fact in Singapore, if the minister is of the opinion that it would be in the public interest to do so.
On September 11, 2020, the Bayanihan to Recover As One Act (the “Bayanihan 2”) was passed which, among others, exempted all mergers and acquisitions with transaction values below PHP50 billion from compulsory notification under the PCA if entered into within a period of two years from the effectivity of Bayanihan 2 (i.e., until September 15, 2022).
On September 11, 2020, the Bayanihan to Recover as One Act was passed which, among others, exempted all mergers and acquisitions with transaction values below PHP50 billion from compulsory notification under the Philippine Competition Act if entered into within a period of two years from the effectivity of Bayanihan 2 (i.e., until September 15, 2022).
Organizations have mandatory obligations to assess data breaches they suffer, and to notify the Personal Data Protection Commission (“PDPC”), which administers and enforces the PDPA, and where applicable, the relevant individuals where the data breach is (or is likely to be) of a significant scale or resulting in (or is likely to result in) significant harm to individuals.
Organizations have mandatory obligations to assess data breaches they suffer, and to notify the Personal Data Protection Commission, which administers and enforces the Personal Data Protection Act 2012, and where applicable, the relevant individuals where the data breach is (or is likely to be) of a significant scale or resulting in (or is likely to result in) significant harm to individuals.
Regulations on Online Content and Broadcasting The Broadcasting Act 1994 “(“BA”) of Singapore prohibits the provision of certain broadcasting services, including internet content, in or from Singapore without a license issued by the Infocomm Media Development Authority (“IMDA”). The IMDA is the regulator of the information, communications and media sectors in Singapore.
Regulations on Online Content and Broadcasting The Broadcasting Act 1994 of Singapore prohibits the provision of certain broadcasting services, including internet content, in or from Singapore without a license issued by the Infocomm Media Development Authority. The Infocomm Media Development Authority is the regulator of the information, communications and media sectors in Singapore.
Students who took free or paid short-duration trial lessons, but who did not book any paid lesson, are not counted as “active students with general lesson consumption.” Fees We offer the following payment plans for our students: Prepaid credit Packages . We offer prepaid credit packages of 55 lesson credits to 200 lesson credits to international students.
Students who took free or paid short-duration trial lessons, but who did not book any paid lesson, are not counted as “active students with general lesson consumption.” Fees We offer the following payment plans for our students: Prepaid credit Packages . We offer a variety of prepaid credit packages to international students.
In compliance with, and in order to take advantage of the above rules, as of December 31, 2022, we have registered 5 software copyrights in mainland China. Patents The NPC Standing Committee adopted the Patent Law of the People’s Republic of China in 1984 and amended it in 1992, 2000, 2008 and 2020, respectively.
In compliance with, and in order to take advantage of the above rules, as of December 31, 2023, we registered five software copyrights in mainland China. Patents The NPC Standing Committee adopted the Patent Law of the People’s Republic of China in 1984 and amended it in 1992, 2000, 2008 and 2020, respectively.
Regulations Relating to Foreign Investment On March 15, 2019, the National People’s Congress adopted the Foreign Investment Law of the PRC, which became effective on January 1, 2020.
Regul ations Relating to Foreign Investment On March 15, 2019, the National People’s Congress adopted the Foreign Investment Law of the PRC, which became effective on January 1, 2020.
We currently offer three flagship courses, namely Classic English Junior and Classic English . We complement our flagship offerings with AI-empowered knowledge preview and AI-empowered reading lessons. 43 Table of Contents Classic English Junior and Classic English Classic English Junior is taught by foreign tutors and taken by K-12 students in countries and regions outside of mainland China.
We currently offer two flagship courses, namely Classic English Junior and Classic English . We complement our flagship offerings with AI-empowered knowledge preview and AI-empowered reading lessons. Classic English Junior and Classic English Classic English Junior is taught by foreign tutors and taken by K-12 students in countries and regions outside of mainland China.
An internet content provider includes a corporation which provides any program for business purposes on the internet. If the content provided via the computer online services includes content relating to political or religious content in Singapore, the provider of such content would have to register itself with the IMDA.
An internet content provider includes a corporation which provides any program for business purposes on the internet. If the content provided via the computer online services includes content relating to political or religious content in Singapore, the provider of such content would have to register itself with the Infocomm Media Development Authority.
Our Air Class platform integrates high quality video and audio streaming features to create an interactive learning experience for our students. Each aspect of our holistic learning solution is available through our Air Class platform.
Our Air Class platform integrates high quality video and audio streaming features to create an interactive learning experience for our students. Each aspect of our holistic learning solution is available through our Air Class platform. The Air Class platform is available online and through our mobile app.
Moreover, the Alleviating Burden Opinion specifies a series of operating requirements that after-school tutoring institutions must meet, including, among other things, (i) after-school tutoring institutions shall not provide tutoring services on academic subjects during national holidays, weekends and school breaks; (ii) for online tutoring, each session shall be no more than thirty minutes and the training shall end no later than 9:00 p.m.; (iii) no advertisements for after-school tutoring shall be published or broadcasted in the network platforms and billboards displayed in the mainstream media, new media, public place and residential areas; (iv) the provision of international education courses is strictly prohibited; (v) fees charged for academic subjects tutoring in compulsory education shall be included into government-guided price management, and excessive high fees and excessive profit-seeking behaviors will be suppressed; (vi) government authorities will implement risk management and control for the pre-collection of fees by after-school tutoring institutions with requirements such as setting up third-party custodians and risk reserves, and strengthen supervision over loans regarding tutoring services; (vii) online tutoring for preschool-age children is prohibited, and offline academic subjects (including foreign language) tutoring services for preschool-age children is also strictly prohibited; (viii) no more approval of new after-school tutoring institutions providing tutoring services on academic subjects for pre-school-age children and students on grade ten to twelve will be granted; and (ix) administration and supervision over academic subjects tutoring institutions for students on grade ten to twelve shall be implemented by reference to the relevant provisions of the Alleviating Burden Opinion.
Moreover, the Alleviating Burden Opinion specifies a series of operating requirements that after-school tutoring institutions must meet, including, among other things, (i) after-school tutoring institutions shall not provide tutoring services on academic subjects during national holidays, weekends and school breaks; (ii) for online tutoring, each session shall be no more than thirty minutes and the training shall end no later than 9:00 p.m.; (iii) no advertisements for after-school tutoring shall be published or broadcasted in the network platforms and billboards displayed in the mainstream media, new media, public place and residential areas; (iv) the provision of international education courses is strictly prohibited; (v) fees charged for academic subjects tutoring in compulsory education shall be included into government-guided price management, and excessive high fees and excessive profit-seeking behaviors will be suppressed; (vi) government authorities will implement risk management and control for the pre-collection of fees by after-school tutoring institutions with requirements such as setting up third-party custodians and risk reserves, and strengthen supervision over loans regarding tutoring services; (vii) online tutoring for preschool-age children is prohibited, and offline academic subjects (including foreign language) tutoring services for preschool-age children is also strictly prohibited; (viii) no more approval of new after-school tutoring institutions providing tutoring services on academic subjects for pre-school-age children and students on grade ten to twelve will be granted; and (ix) administration and supervision over academic subjects tutoring institutions for students on grade ten to twelve shall be implemented by reference to the provisions of the Alleviating Burden Opinion. ​ 71 Table of Contents On March 14, 2023, the Ministry of Education together with four other government authorities issued the Interim Measures on Financial Management of After-School Tutoring Institutions to regulate the financial management of after-school tutoring institutions which provide after-school tutoring services for pre-school children aged 3 to 6 and students in compulsory education and high schools.
Regulations Relating to Overseas Listing and M&A Rule The Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rule, were jointly adopted by six PRC regulatory authorities, including China Securities Regulatory Commission, or CSRC, on August 8, 2006, and became effective as of September 8, 2006, and were later amended on June 22, 2009.
Regulations Relating to Overseas Listing and M&A Rules The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rules, were jointly adopted by six PRC regulatory authorities, including China Securities Regulatory Commission, or CSRC, on August 8, 2006, and became effective as of September 8, 2006, and were later amended on June 22, 2009.
BHD was incorporated as a wholly owned subsidiary of our Company to operate the international business in Malaysia. 38 Table of Contents In June 2022, we entered into a definitive share purchase agreement, dated June 24, 2022 (the “Share Purchase Agreement”), with Dasheng Holding (HK) Limited (“Dasheng”), an entity controlled by Mr.
BHD was incorporated as a wholly owned subsidiary of our company to operate the international business in Malaysia. ​ 52 Table of Contents In June 2022, we entered into a definitive share purchase agreement, dated June 24, 2022, with Dasheng Holding (HK) Limited, or Dasheng, an entity controlled by Mr.
The directions include (a) directions to an OCS provider to disable access by Singapore users to the egregious content on the service, (b) directions to an OCS provider to stop the delivery or communication of content to Singapore users, and (c) direction to an Internet access service provider to block access by Singapore users to the non-compliant OCS if the OCS provider fails to comply with IMDA’s directions.
The directions include (a) directions to an OCS provider to disable access by Singapore users to the egregious content on the service, (b) directions to an OCS provider to stop the delivery or communication of content to Singapore users, and (c) direction to an internet access service provider to block access by Singapore users to the non-compliant OCS if the OCS provider fails to comply with the directions of the Infocomm Media Development Authority.
In order to facilitate international capital raising of our company, we incorporated China Online Education Group, or 51Talk, to become our offshore holding company under the laws of the Cayman Islands in November 2012. In October 2014, 51 Talk English International Limited (the “COE HK Co”) was incorporated with limited liability in Hong Kong. China Online Innovations Inc.
In order to facilitate international capital raising of our company, we incorporated China Online Education Group, or 51Talk, to become our offshore holding company under the laws of the Cayman Islands in November 2012. In October 2014, 51 Talk English International Limited, or COE HK Co, was incorporated with limited liability in Hong Kong.
Our tutors deliver lessons based on their individual availability, at appropriate locations of their choice, and are paid according to the number of lessons they teach. Tutors who deliver paid lessons are generally engaged by us as independent contractors. As of December 31, 2022, we had approximately 2.7 thousand foreign tutors qualified to deliver lessons on our platform.
Our tutors deliver lessons based on their individual availability, at appropriate locations of their choice, and are paid according to the number of lessons they teach. Tutors who deliver paid lessons are generally engaged by us as independent contractors. As of December 31, 2023, we had approximately 4.1 thousand foreign tutors qualified to deliver lessons on our platform.
Under such 2021 Negative List, pre-school education, senior high school education in grades 10 to 12, and higher education are in a restricted industry, meaning foreign educational organizations with relevant qualifications and experience and Chinese educational organizations are only allowed to operate pre-school education, senior high schools and higher education in cooperative ways by the form of a cooperative joint venture in the PRC.
Under these measures, pre-school education, senior high school education in grades 10 to 12, and higher education are in a restricted industry, meaning foreign educational organizations with relevant qualifications and experience and Chinese educational organizations are only allowed to operate pre-school education, senior high schools and higher education in cooperative ways by the form of a cooperative joint venture in the PRC.
To address the problem of copyright infringement related to the content posted or transmitted over the Internet, the National Copyright Administration and the MIIT jointly promulgated the Measures for Administrative Protection of Copyright Related to Internet on April 29, 2005, which became effective on May 30, 2005.
To address the problem of copyright infringement related to the content posted or transmitted over the internet, the National Copyright Administration and the Ministry of Industry and Information Technology jointly promulgated the Measures for Administrative Protection of Copyright Related to Internet on April 29, 2005, which became effective on May 30, 2005.
The DPA applies to any natural or juridical person involved in the personal information processing such as the personal information controllers and processors who, although not found or established in the Philippines, use equipment that are located in the Philippines, or those who maintain an office, branch or agency in the Philippines, subject to certain exceptions.
The Data Privacy Act of 2012 applies to any natural or juridical person involved in the personal information processing such as the personal information controllers and processors who, although not found or established in the Philippines, use equipment that are located in the Philippines, or those who maintain an office, branch or agency in the Philippines, subject to certain exceptions.
Such entity must also register with the NPC and appoint a data protection officer. 48 Table of Contents The DPA and its implementing rules require personal information controllers and processors to have a data protection officer or compliance officer who shall be accountable for ensuring compliance with applicable laws and regulations for the protection of data privacy and security.
Such entity must also register with the NPC and appoint a data protection officer. The Data Privacy Act of 2012 and its implementing rules require personal information controllers and processors to have a data protection officer or compliance officer who shall be accountable for ensuring compliance with applicable laws and regulations for the protection of data privacy and security.
We leverage the familiarity of our professionals in Beijing with the learning patterns of Chinese students to produce customized and high-quality course material for our students. Process Our Classic English Junior and Classic English course materials and content for substantially all of our popular specialty courses are developed in-house.
We leverage the familiarity of our professionals in Beijing with the learning patterns of Chinese students to produce customized and high-quality course material for our students outside mainland China. ​ 58 Table of Contents Process Our Classic English Junior and Classic English course materials and content for substantially all of our popular specialty courses are developed in-house.
In addition, we engage in various branding activities to promote brand awareness among prospective students. Branding We are focused on promoting our 51Talk brand and to increase the overall effectiveness of our sales and marketing efforts.
In addition, we engage in various branding activities to promote brand awareness among prospective students. Branding We are focused on promoting our 51Talk brand and to increase the overall effectiveness of our sales and marketing efforts. Our 51Talk brand represents our K-12 one-on-one program.
Internet content providers are in general mandated to be automatically class licensed without any need to make specific applications to the IMDA, and are required to comply with the conditions of the class license and the Internet Code of Practice.
Internet content providers are in general mandated to be automatically class licensed without any need to make specific applications to the Infocomm Media Development Authority, and are required to comply with the conditions of the class license and the Internet Code of Practice.
Regulations on Anti-discrimination Hong Kong has various anti-discrimination laws, including the Sex Discrimination Ordinance, the Disability Discrimination Ordinance, and the Race Discrimination Ordinance, to prohibit discrimination against a person on the grounds of sex, marital status, pregnancy, disability, family status, and race.
Regulations on Anti-discrimination Hong Kong has various anti-discrimination laws, including the Sex Discrimination Ordinance (Chapter 480 of the Laws of Hong Kong), the Disability Discrimination Ordinance (Chapter 487 of the Laws of Hong Kong), the Family Status Discrimination Ordinance (Chapter 527 of the Laws of Hong Kong) and the Race Discrimination Ordinance (Chapter 602 of the Laws of Hong Kong), to prohibit discrimination against a person on the grounds of sex, marital status, pregnancy, disability, family status, and race.
The New Filing Rules consist of six sets of rules, including the Trial Measure for Administration of the Overseas Securities Offerings and Listings by Domestic Enterprises, or the Trial measures and five guidelines.
The New Filing Rules consist of six sets of rules, including the Trial Measure for Administration of the Overseas Securities Offerings and Listings by Domestic Enterprises.
Course Content Development Team We have dedicated course content development teams based in Beijing and Manila, employing a total of eight professionals as of December 31, 2022. Our content development team members focus exclusively on developing, updating and improving our curriculum and course materials.
Course Content Development Team We have dedicated course content development teams mainly based in Beijing, employing a total of seven professionals as of December 31, 2024. Our content development team members focus exclusively on developing, updating and improving our curriculum and course materials.
Bayanihan 2’s suspension power to review transaction motu proprio by the Philippine Competition Commission (“PCC”), including transactions that do not meet the thresholds for compulsory notification, expired on September 15, 2021. Thus, the PCC is now once again able to review transactions motu proprio.
The suspension power under the Bayanihan to Recover as One Act to review transaction motu proprio by the Philippine Competition Commission, including transactions that do not meet the thresholds for compulsory notification, expired on September 15, 2021. Thus, the PCC is now once again able to review transactions motu proprio.
The effective date of the Amendment Ordinance will be confirmed shortly. Five key areas of changes are introduced under the new regulatory framework, including, among others, a technology-neutral communication right for copyright owners to communicate their works to the public via any mode of electronic transmission and criminal sanctions against infringers making unauthorized communication of copyright works to the public.
Five key areas of changes are introduced under the new regulatory framework, including, among others, a technology-neutral communication right for copyright owners to communicate their works to the public via any mode of electronic transmission and criminal sanctions against infringers making unauthorized communication of copyright works to the public.
Our 51Talk mobile app, which serves as an integral part of our students’ overall learning experience, allows students to book and manage lessons, access pre-lesson preparation and review materials, and take lessons at locations of their choice. Approximately 99.4% of our active students utilized our mobile app in the three months ended December 31, 2022.
Our 51Talk mobile app, which serves as an integral part of our students’ overall learning experience, allows students to book and manage lessons, access pre-lesson preparation and review materials, and take lessons at locations of their choice. Approximately 99.4% of our active students utilized our mobile app in 2023.
Regulations on Data Privacy The Republic Act No. 10173 (the “Data Privacy Act of 2012” or the “DPA”), its implementing rules and regulations, and the issuances of the National Privacy Commission (the “NPC”) govern the processing of all types of personal information.
Regulations on Data Privacy The Republic Act No. 10173, or the Data Privacy Act of 2012, its implementing rules and regulations, and the issuances of the National Privacy Commission govern the processing of all types of personal information.
Under the BA, no person may provide any ‘licensable broadcasting services’ (including computer on-line services) “in or from Singapore” without a broadcasting license granted by the IMDA. The BA sets out an automatic class licensing scheme for computer online services provided by internet content providers.
Under the Broadcasting Act 1994, no person may provide any ‘licensable broadcasting services’ (including computer on-line services) “in or from Singapore” without a broadcasting license granted by the Infocomm Media Development Authority. The Broadcasting Act 1994 sets out an automatic class licensing scheme for computer online services provided by internet content providers.
Companies should be prepared to comply with such directions under FICA from a technical/operational perspective in relation to content carried on their online platforms.
Companies should be prepared to comply with such directions under Foreign Interference (Countermeasures) Act from a technical/operational perspective in relation to content carried on their online platforms.
We incurred net loss from international business of nil, US$4.2 million and US$12.8 million in 2020, 2021 and 2022, respectively. 40 Table of Contents The following table sets forth our key operating data of international business for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, 2020 2021 2022 Summary of Operating Data Gross billings (1) (in US$ millions) — 3.5 28.7 Active students with general lesson consumption (2) (in thousands) — 3.8 26.4 Paying students (3) (in thousands) — 4.0 25.3 Average spending per paying student (in US$ thousands) — 1.0 1.1 Notes: (1) “Gross billings” for a specific period refer to the total amount of cash received and receivable from third party payment platforms for the sale of course packages and services in such period, net of the total amount of refunds in such period.
The following table sets forth our key operating data of international business for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, 2021 2022 2023 Summary of Operating Data Gross billings (1) (in US$ millions) 3.5 28.7 39.9 Active students with general lesson consumption (2) (in thousands) 3.8 26.4 51.9 Paying students (3) (in thousands) 4.0 25.3 37.4 Average spending per paying student (in US$ thousands) 1.0 1.1 1.1 Notes: (1) “Gross billings” for a specific period refer to the total amount of cash received and receivable from third party payment platforms for the sale of course packages and services in such period, net of the total amount of refunds in such period.
In December 2022, we changed the ratio of our American depositary shares (“ADSs”) to Class A ordinary shares (the “ADS Ratio”) from one ADS representing fifteen Class A ordinary shares to one ADS representing sixty Class A ordinary shares.
In December 2022, we changed the ratio of our American depositary shares, or ADSs, to Class A ordinary shares from one ADS representing fifteen Class A ordinary shares to one ADS representing sixty Class A ordinary shares.
Pre-Bayanihan 2 thresholds are PHP6 billion for the Size of Party Test and PHP2.4 billion for the Size of Transaction Test, which will be applicable to transactions entered after September 15, 2022 (subject to annual adjustment based on the Gross Domestic Product of the Philippines).
The thresholds before the enactment of the Bayanihan to Recover as One Act are PHP6 billion for the size of party test and PHP2.4 billion for the size of transaction test, which will be applicable to transactions entered after September 15, 2022 (subject to annual adjustment based on the gross domestic product of the Philippines).
As of December 31, 2022, we had a total of 110 (including 4 full-time employees and 106 outsourced personnel) account managers. Our account manager team plays a critical role in increasing the course package upgrades and renewals among our students.
As of December 31, 2023, we had a total of 198 account managers (including 34 full-time employees and 164 outsourced personnel). Our account manager team plays a critical role in increasing the course package upgrades and renewals among our students.
Furthermore, the Archives Rules establish a cross-border regulatory cooperation mechanism as prescribed in the PRC Securities Law and strengthen cross-border regulatory cooperation as prescribed in the New Filing Rules, which shifts the overall direction of cross-border supervision of international offering and listing from a “dominated by domestic regulators or depend on the conclusions of inspections by domestic regulators” approach to a “cross-border regulatory cooperation” mechanism. 59 Table of Contents The Archives Rules provide that, among other things, (i) in relation to the international offering and listing activities of domestic enterprises, the domestic enterprises are required to strictly comply with the relevant requirements on confidentiality and archives management, establish a sound confidentiality and archives system, and take necessary measures to implement their confidentiality and archives management responsibilities; (ii) during the course of an international offering and listing, if a domestic enterprise needs to publicly disclose or provide to securities companies, accounting firms or other securities service providers and international regulators, any materials that contain relevant state secrets, work secrets of government agencies or that have a sensitive impact (i.e., be detrimental to national security or the public interest if divulged), the domestic enterprise should complete the relevant approval/filing and other regulatory procedures; and (iii) working papers produced in mainland China by securities companies and securities service institutions, which provide domestic enterprises with securities services during their international issuance and listing, should be stored in mainland China, and the transmission of all such working papers to recipients outside of mainland China is required to be approved by competent authorities of mainland China.
The Archives Rules provide that, among other things, (i) in relation to the international offering and listing activities of domestic enterprises, the domestic enterprises are required to strictly comply with the requirements on confidentiality and archives management, establish a sound confidentiality and archives system, and take necessary measures to implement their confidentiality and archives management responsibilities; (ii) during the course of an international offering and listing, if a domestic enterprise needs to publicly disclose or provide to securities companies, accounting firms or other securities service providers and international regulators, any materials that contain relevant state secrets, work secrets of government agencies or that have a sensitive impact (i.e., be detrimental to national security or the public interest if divulged), the domestic enterprise should complete the approval/filing and other regulatory procedures; and (iii) working papers produced in mainland China by securities companies and securities service institutions, which provide domestic enterprises with securities services during their international issuance and listing, should be stored in mainland China, and the transmission of all such working papers to recipients outside of mainland China is required to be approved by competent authorities of mainland China. ​ 76 Table of Contents C.
Seasonal fluctuations affected our business when we focused on lessons for K-12 students in countries and regions, and has continued to affect our business as we shifted to new countries and regions.
Seasonal fluctuations affected our business when we focused on lessons for K-12 students in mainland China, and may continue to affect our business as we shifted to new countries and regions.
Regulations on Cybersecurity BSP Circular No. 808, Series of 2013 provides for the guidelines on technology risk management applicable to all BSP-supervised institutions and requires BSP supervised institutions to establish a robust technology risk management system covering the following components: (1) technology governance, (2) risk identification and assessment, (3) technology control implementation, and (4) risk measurement and monitoring.
Regulations on Cybersecurity BSP Circular No. 808, Series of 2013 provides for the guidelines on technology risk management applicable to all BSP-supervised institutions and requires BSP supervised institutions to establish a robust technology risk management system covering the following components: (1) technology governance, (2) risk identification and assessment, (3) technology control implementation, and (4) risk measurement and monitoring. ​ 63 Table of Contents Regulations on Competition Law The Philippine Competition Act is the primary competition policy of the Philippines.
Pursuant to the Measures for the Security Review of Foreign Investment, which was promulgated by the NDRC and the MOFCOM on December 19, 2020, and became effective on January 18, 2021, the office of the working mechanism for the security review of foreign investments is set up under the NDRC, which is led by the NDRC and the MOFCOM to undertake the routine work of the security review of foreign investments. 56 Table of Contents The Foreign Investment Law of the PRC is considered to grant national treatment to FIEs, except that FIEs are subject to certain restrictions or prohibitions if they propose to operate in certain industries prescribed on the 2021 Negative List.
Pursuant to the Measures for the Security Review of Foreign Investment, which was promulgated by the National Development and Reform Commission and the Ministry of Commerce on December 19, 2020, and became effective on January 18, 2021, the office of the working mechanism for the security review of foreign investments is set up under the National Development and Reform Commission, which is led by the National Development and Reform Commission and the Ministry of Commerce to undertake the routine work of the security review of foreign investments. ​ 72 Table of Contents The Foreign Investment Law of the PRC is considered to grant national treatment to foreign-invested enterprises, except that foreign-invested enterprises are subject to certain restrictions or prohibitions if they propose to operate in certain industries prescribed on the Special Administrative Measures for Access of Foreign Investment (Negative List) (2021 version).
Risk Factor—Risks Related to Our Business and Industry—Our results of operations have been and may continue to be subject to seasonal fluctuations.” Insurance We do not maintain any liability insurance or property insurance policies covering students, equipment and facilities for injuries, death or losses due to fire, earthquake, flood or any other disaster.
Risk Factors—Risks Related to Our Business and Industry—Our results of operations have been and may continue to be subject to seasonal fluctuations.” ​ 62 Table of Contents Insurance We do not maintain any liability insurance or property insurance policies covering students, equipment and facilities for injuries, death or losses due to fire, earthquake, flood or any other disaster, except for the liability insurance and property insurance policies for certain office in mainland China.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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The increase was primarily due to an increase in the number of technology and course development-related personnel in the international business. Other income/(expenses) We had other expenses from continuing operations of US$0.5 million in 2022, compared with other income of US$0.2 million in 2021. The decrease was mainly due to the changes of foreign exchange gain and loss.
The increase was primarily due to an increase in the number of technology and course development-related personnel in the international business. Other income/(expenses) We had other income from continuing operations of US$0.2 million in 2021, compared with other expenses of US$0.5 million in 2022. The decrease was mainly due to the changes of foreign exchange gain and loss.
Change in Segment Reporting Upon divestiture of the China Mainland Business on June 30, 2022, the chief operating decision maker (“CODM”) no longer reviews the China Mainland Business, as a result, we reevaluated our segments and now have classified the China Mainland Business as discontinued operations.
Change in Segment Reporting Upon the divestiture of the China Mainland Business on June 30, 2022, the chief operating decision maker no longer reviews the China Mainland Business, as a result, we reevaluated our segments and now have classified the China Mainland Business as discontinued operations.
Jiajia Jack Huang, through Dasheng, acquired all of the Company’s online English tutoring businesses in mainland China, including all associated liabilities and assets, for US$1. On June 30, 2022, we completed the divestiture of the China Mainland Business.
Jiajia Jack Huang, through Dasheng, acquired all of our company’s online English tutoring businesses in mainland China, including all associated liabilities and assets, for US$1. On June 30, 2022, we completed the divestiture of the China Mainland Business.
PRC Our subsidiary and the former consolidated VIEs in mainland China are companies incorporated under PRC law and, as such, are subject to mainland China enterprise income tax on their taxable income in accordance with the relevant PRC income tax laws.
PRC Our subsidiary and the former consolidated VIEs in mainland China are companies incorporated under PRC law and, as such, are subject to mainland China enterprise income tax on their taxable income in accordance with the PRC income tax laws.
The consolidated balance sheets as of December 31, 2021 and 2022, consolidated financial statements of operations and consolidated financial statements of cash flows for the years ended December 31, 2020, 2021 and 2022 have been adjusted to reflect this change.
The consolidated balance sheets as of December 31, 2022, consolidated financial statements of operations and consolidated financial statements of cash flows for the years ended December 31, 2021 and 2022 have been adjusted to reflect this change.
Pursuant to the EIT Law, which became effective on January 1, 2008, and was amended on February 24, 2017, and December 29, 2018, a uniform 25% enterprise income tax rate is generally applicable to both foreign-invested enterprises and domestic enterprises, except where a special preferential rate applies.
Pursuant to the PRC Enterprise Income Tax Law, which became effective on January 1, 2008, and was amended on February 24, 2017, and December 29, 2018, a uniform 25% enterprise income tax rate is generally applicable to both foreign-invested enterprises and domestic enterprises, except where a special preferential rate applies.
The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. We are subject to VAT at a rate of 6%, 9% and 13% on the goods/products we provide, less any deductible VAT we have already paid or borne.
The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. We are subject to value-added tax at a rate of 6%, 9% and 13% on the goods/products we provide, less any deductible value-added tax we have already paid or borne.
We mainly offer prepaid credit packages with minimum monthly consumption for our students to purchase. For prepaid credit packages, fees for lessons that have expired are automatically recognized as revenues. We had advances from students from international business of nil, US$2.9 million and US$15.2 million as of December 31, 2020, 2021 and 2022, respectively.
We mainly offer prepaid credit packages with minimum monthly consumption for our students to purchase. For prepaid credit packages, fees for lessons that have expired are automatically recognized as revenues. We had advances from students from international business of US$2.9 million, US$15.2 million and US$27.2 million as of December 31, 2021, 2022 and 2023, respectively.
Investing Activities Net cash used in investing activities from continuing operations amounted to US$7.6 million in 2022, which was primarily attributable to the repayment of investment to discontinued operations and partially offset by withdrawal of time deposits.
Net cash used in investing activities from international business operations amounted to US$7.6 million in 2022, which was primarily attributable to the repayment of investment to discontinued operations and partially offset by withdrawal of time deposits.
As of December 31, 2022, we had only one reportable segment, namely the international business segment. Selected Income Statement Items Net Revenues In 2020, 2021 and 2022, we generated net revenues from continuing operations of nil, US$0.8 million and US$15.0 million, respectively. We generally collect fees in advance, which we initially record as advances from students.
As of December 31, 2022 and 2023, we had only one reportable segment, namely the international business segment. Selected Income Statement Items Net Revenues In 2021, 2022 and 2023, we generated net revenues from continuing operations of US$0.8 million, US$15.0 million and US$27.1 million, respectively. We generally collect fees in advance, which we initially record as advances from students.
The increase was mainly due to the increases in sales and marketing expenses, general and administrative expenses, and product development expenses. Sales and Marketing Expenses Our sales and marketing expenses from continuing operations increased by 287.1% from US$3.4 million in 2021 to US$13.3 million in 2022.
The increase was mainly due to the increases in sales and marketing expenses, general and administrative expenses, and product development expenses. ​ 87 Table of Contents Sales and Marketing Expenses Our sales and marketing expenses from continuing operations increased by 287.1% from US$3.4 million in 2021 to US$13.3 million in 2022.
We made provisions for Hong Kong profits tax for the year ended December 31, 2020 and 2021 as COE HK Co I reported taxable profit during such period. For the year ended December 31,2022, there was no taxable profit for COE HK Co I.
We made provisions for Hong Kong profits tax for the year ended December 31, 2021 as COE HK Co I and COE HK Co II reported taxable profit during such period. For the years ended December 31, 2022 and 2023, there was no taxable profit for COE HK Co II.
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 period from January 1, 2022 to December 31, 2022 that are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions. 71 Table of Contents E.
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 period since January 1, 2024 that are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions. ​ 93 Table of Contents E.
We have designed our infrastructure based on our insights into the local environment to ensure an optimal streaming experience for our tutors and our students. We work with leading network providers in the Philippines and have employed an exclusive network infrastructure to support our online performance by increasing stability and reliability since April 2017.
We have designed our infrastructure based on our insights into the local environment to ensure an optimal streaming experience for our tutors and our students. We work with leading network providers in the Philippines and have employed an exclusive network infrastructure to support our online performance by increasing stability and reliability since April 2017. See “Item 3. Key Information—D.
We recorded cost of revenues from continuing operations of nil, US$0.1 million and US$3.2 million in 2020, 2021 and 2022, respectively. 63 Table of Contents Operating Expenses Our operating expenses from continuing operations consist of sales and marketing expenses and general and administrative expenses, and to a lesser extent, product development expenses and goodwill and intangibles impairment.
We recorded cost of revenues from continuing operations of US$0.1 million, US$3.2 million and US$6.3 million in 2021, 2022 and 2023, respectively. ​ 82 Table of Contents Operating Expenses Our operating expenses from continuing operations consist of sales and marketing expenses and general and administrative expenses, and to a lesser extent, product development expenses and goodwill and intangibles impairment.
Our net losses from continuing operations was US$4.2 million and US$12.8 million in 2021 and 2022, respectively.
Our net losses from continuing operations in 2021 and 2022 was US$4.2 million and US$12.8 million, respectively and our net losses in 2023 was US$15.0 million.
Specifically, net income of US$21.2 million, US$22.9 million in 2020 and 2021, respectively and net loss of US$29.7 million in 2022, have been excluded from our financial results from international business and have been separately reclassified to the divested China Mainland Business. ​ 65 Table of Contents Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amounts and as percentages of our net revenues.
Specifically, net income of US$22.9 million in 2021 and net loss of US$29.7 million in 2022, have been excluded from our financial results from international business and have been separately reclassified to the divested China Mainland Business. ​ Results of Operations The following table sets forth a summary of our consolidated results of operations for the years indicated, both in absolute amounts and as percentages of our net revenues.
After the divestiture, the Company focuses on providing online English tutoring lessons taught by foreign tutors to K-12 and post-secondary students in countries and regions outside of mainland China, meanwhile, China Online Education (HK) limited and its subsidiaries and variable interest entities ceased to be our subsidiaries and variable interest entities. 62 Table of Contents Effective January 1, 2022, we elected to change our reporting currency from RMB to USD.
After the divestiture, our company focuses on providing online English tutoring lessons taught by foreign tutors to K-12 and post-secondary students in countries and regions outside of mainland China, meanwhile, China Online Education (HK) limited and its subsidiaries ceased to be our subsidiaries and the variable interest entities in mainland China were divested along with such divestiture or subsequently dissolved. ​ 81 Table of Contents Effective January 1, 2022, we elected to change our reporting currency from RMB to USD.
The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
Lte., is subject to 17% Singapore Corporate Income Tax on its taxable income generated from operations in Singapore for the year 2022. In year 2022, the company is in a loss position, hence no taxable profit was reported during such period. Malaysia Our subsidiary in Malaysia, 51Talk Training Sdn. Bhd was incorporated in April 2022.
Ltd., is subject to 17% Singapore corporate income tax on its taxable income generated from operations in Singapore for the year 2023. In 2023, HelloWorld Online Education Pte. Ltd. is in a loss position, hence no taxable profit was reported during such period. Malaysia Our subsidiary in Malaysia, 51TALK TRAINING SDN. BHD was incorporated in April 2022.
The operating cash outflows from continuing operations were nil and US$5.0 million for the years ended December 31, 2020 and 2021, respectively, and the operating cash inflows from continuing operations were US$1.9 million for the years ended December 31, 2022.
The operating cash outflows from continuing operations were US$5.0 million for the year ended December 31, 2021, and the operating cash inflows from continuing operations were US$1.9 million and US$0.6 million for the years ended December 31, 2022 and 2023, respectively.
The following table sets forth our contractual obligations as of December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than 1–3 More than ​ ​ Total ​ 1 year ​ years ​ 3 years ​ ​ in US$ thousands Operating lease obligations (1) 761 435 326 — Purchase commitments (2) 25 ​ 25 — — Capital commitments (3) ​ — ​ — ​ — ​ — Notes: (1) Represents our non-cancelable leases for our offices and learning centers, which include all future cash outflows under ASC Topic 842, Leases and the operating leases that have not commenced or with lease terms of 12 months or less as of December 31, 2022.
The following table sets forth our contractual obligations as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than 1–3 More than ​ ​ Total ​ 1 year ​ years ​ 3 years ​ ​ in US$ thousands Operating lease obligations (1) 688 644 44 — Purchase commitments (2) 614 ​ 612 2 — Notes: (1) Represents our non-cancelable leases for our offices and learning centers, which include all future cash outflows under ASC Topic 842, Leases and the operating leases that have not commenced or with lease terms of 12 months or less as of December 31, 2023.
Net cash provided by investing activities from continuing operations amounted to US$5.6 million in 2021, which was primarily attributable to in the withdrawal of time deposits and partially offset by placement of time deposits. Net cash used in investing activities from continuing operations amounted to nil in 2020.
Net cash provided by investing activities from international business operations amounted to US$5.6 million in 2021, which was primarily attributable to in the withdrawal of time deposits and partially offset by placement of time deposits. Financing Activities Net cash used in financing activities from international business operations in 2023 and 2022 amounted to nil.
The following table sets forth, for the periods indicated, our operating expenses, in absolute amounts and as percentages of total net revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2020 ​ ​ ​ 2021 ​ ​ ​ 2022 ​ ​ ​ US$ % US$ % US$ % ​ ​ (in thousands, except for percentages) Operating expenses: ​ Sales and marketing — — ​ 3,430 435.3 % 13,279 88.2 % General and administrative — — ​ 1,685 213.8 % 8,068 53.6 % Product development — — ​ 135 17.1 % 2,865 19.0 % Total operating expenses — — ​ 5,250 666.2 % 24,212 160.8 % ​ Our sales and marketing expenses primarily consist of online and mobile marketing expenses, branding expenses, free trial lesson-related expenses.
The following table sets forth, for the years indicated, our operating expenses, in absolute amounts and as percentages of total net revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2021 ​ ​ ​ 2022 ​ ​ ​ 2023 ​ ​ ​ US$ % US$ % US$ % ​ ​ (in thousands, except for percentages) Operating expenses: ​ Sales and marketing 3,430 ​ 435.3 % 13,279 ​ 88.2 % 23,637 87.2 % General and administrative 1,685 ​ 213.8 % 8,068 ​ 53.6 % 7,727 28.5 % Product development 135 ​ 17.1 % 2,865 ​ 19.0 % 3,088 11.4 % Total operating expenses 5,250 666.2 % 24,212 ​ 160.8 % 34,452 127.1 % ​ Our sales and marketing expenses primarily consist of online and mobile marketing expenses, branding expenses, free trial lesson-related expenses.
See “Risk Factors—Risks Related to Our Business and Industry—Unexpected network interruptions, security breaches or computer virus attacks and system failures could have a material adverse effect on our business, financial condition and results of operations.” 70 Table of Contents All of our servers and routers, including backup servers, are currently hosted by third-party service providers in Singapore.
Risk Factors—Risks Related to Our Business and Industry—Unexpected network interruptions, security breaches or computer virus attacks and system failures could have a material adverse effect on our business, financial condition and results of operations.” All of our servers and routers, including backup servers, are currently hosted by third-party service providers in Singapore. We back up our databases daily.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ US$ % US$ % US$ % ​ ​ (in thousands, except for percentages) Net revenues — — ​ 788 100.0 ​ 15,048 100.0 Cost of revenues — — (130) 16.5 (3,194) 21.2 Gross profit — — 658 83.5 11,854 78.8 Operating expenses and other income: ​ ​ ​ ​ ​ ​ Sales and marketing expenses — — (3,430) 435.3 (13,279) 88.2 Product development expenses — — (135) 17.1 (2,865) 19.0 General and administrative expenses — — (1,685) 213.8 (8,068) 53.6 Loss from operations — — (4,592) 582.7 (12,358) 82.1 Interest income — — 282 35.8 27 0.2 Other income/(expenses), net — — 219 27.8 (453) 3.0 Loss before income tax — — (4,091) 519.1 (12,784) 85.0 Income tax expenses — — (100) 12.7 (60) 0.4 Net loss from continuing operations, net of income tax ​ — ​ — ​ (4,191) ​ 531.8 ​ (12,844) ​ 85.4 Net income/(loss) from discontinued operations, net of income tax ​ 21,241 ​ — ​ 22,929 ​ — ​ (29,712) ​ — Net (loss)/income, all attributable to the Company’s ordinary shareholders 21,241 — ​ 18,738 — ​ (42,556) — ​ The Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 Net Revenues Our net revenues from continuing operations increased by 1,809.6% from US$0.8 million in 2021 to US$15.0 million in 2022.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ US$ % US$ % US$ % ​ ​ (in thousands, except for percentages) Net revenues 788 ​ 100.0 ​ 15,048 ​ 100.0 ​ 27,111 100.0 Cost of revenues (130) ​ 16.5 ​ (3,194) ​ 21.2 ​ (6,322) 23.3 Gross profit 658 ​ 83.5 ​ 11,854 ​ 78.8 ​ 20,789 76.7 Operating expenses and other income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales and marketing expenses (3,430) ​ 435.3 ​ (13,279) ​ 88.2 ​ (23,637) 87.2 Product development expenses (135) ​ 17.1 ​ (2,865) ​ 19.0 ​ (3,088) 11.4 General and administrative expenses (1,685) ​ 213.8 ​ (8,068) ​ 53.6 ​ (7,727) 28.5 Loss from operations (4,592) ​ 582.7 ​ (12,358) ​ 82.1 ​ (13,663) 50.4 Interest income 282 ​ 35.8 ​ 27 ​ 0.2 ​ 165 0.6 Other income/(expenses), net 219 ​ 27.8 ​ (453) ​ 3.0 ​ (1,416) 5.2 Loss before income tax (4,091) ​ 519.1 ​ (12,784) ​ 85.0 ​ (14,914) 55.0 Income tax expenses (100) ​ 12.7 ​ (60) ​ 0.4 ​ (118) 0.4 Net loss from continuing operations, net of income tax ​ (4,191) ​ 531.8 ​ (12,844) ​ 85.4 ​ (15,032) ​ 55.4 Net income/(loss) from discontinued operations, net of income tax ​ 22,929 ​ — ​ (29,712) ​ — ​ — ​ — Net income/(loss), all attributable to the Company’s ordinary shareholders 18,738 ​ — ​ (42,556) ​ — ​ (15,032) — ​ ​ 85 Table of Contents The Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Net Revenues Our net revenues from our international business operations increased by 80.2% from US$15.0 million in 2022 to US$27.1 million in 2023.
We made provisions for income tax expense in the Philippines Co III for the years ended December 31, 2019, December 31, 2020, and December 31, 2021, as Philippines Co I and Philippines Co III reported taxable profit during such periods.
We made provisions for income tax expense in Philippines Co III for the years ended December 31, 2021,2022 and 2023, as Philippines Co I and Philippines Co III reported taxable profit during such period.
Our consolidated financial statements for 2021 had been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations. We incurred net losses of nil, US$4.2 million and US$12.8 million from continuing operations for the year ended December 31, 2020, 2021 and 2022, respectively.
Our consolidated financial statements for 2023 had been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations. We incurred net losses of US$4.2 million, US$12.8 million and US$15.0 million from international business operations for the fiscal years ended December 31, 2021, 2022 and 2023, respectively.
The year over year increase was primarily due to the increase in our cash received as advances from students. The increase in advances from students was US$9.4 million and increase in accrued expenses and other current liabilities is US$6.8 million from 2021 to 2022. Net cash used in operating activities from continuing operations in 2021 was US$5.0 million.
The year over year increase was primarily due to the increase in our cash received as advances from students. The increase in advances from students was US$9.4 million and increase in accrued expenses and other current liabilities is US$6.8 million from 2021 to 2022.
In addition to the 25% corporate income tax, these two companies are also subject to 12% of Value Added Tax on all income generated within the Philippines.
In addition to the 25% (if the 20% rate will not apply) corporate income tax, these two companies are also subject to 12% of Value Added Tax on all income generated within the Philippines.
The functional currency of the mainland China entities in our Company is RMB. In the consolidated financial statements, the financial information of our Company and other entities located in mainland China, the Philippines, Malaysia and Singapore has been translated into USD.
The functional currency of the mainland China entities in our company is RMB. In the consolidated financial statements, the entities located in mainland China, the Philippines, Malaysia, Thailand and Japan have been translated into USD.
After the divesture, no impairment of contract cost assets of continuing business was recognized for the years ended December 31, 2022. F.
After the divesture, no impairment of contract cost assets of international business, i.e., continuing business, was recognized for the years ended December 31, 2022 and 2023.
Gross Profit As a result of the foregoing, our gross profit from continuing operations was US$0.7 million in 2021 and US$11.9 million in 2022. Our gross margin decreased from 83.5% in 2021 to 78.8% in 2022.
Gross Profit As a result of the foregoing, our gross profit from continuing operations was US$0.7 million in 2021 and US$11.9 million in 2022. Our gross margin decreased from 83.5% in 2021 to 78.8% in 2022. The decrease was mainly due to the increase in tutors-related cost to develop international business.
Our critical accounting policies and practices include the following: (i) Principles of Consolidation; (ii) Discontinued Operation; (iii) Revenue recognition; and (iv) Share-based compensation. See Note 2—Summary of Significant Accounting Policies to our consolidated financial statements for the disclosure of these accounting policies.
Our critical accounting policies and practices include the following: (i) principles of consolidation; (ii) discontinued operation; (iii) revenue recognition; and (iv) share-based compensation. See Note 2 “Significant Accounting Policies” to our consolidated financial statements for the disclosure of these accounting policies. We believe the following accounting estimate involve the most significant judgments used in the preparation of our financial statements.
We manage our lesson delivery system mainly using our proprietary technology, and to a lesser extent, commercially available technology. We have built a robust technology infrastructure to optimize the performance of our Air Class platform. The telecommunication infrastructure in the Philippines, Malaysia and certain other countries and regions where we conduct our business is less developed.
We have built a robust technology infrastructure to optimize the performance of our Air Class platform. The telecommunication infrastructure in the Philippines, Malaysia and certain other countries and regions where we conduct our business is less developed.
We assess our liquidity by our ability to generate cash from operating activities to fund our operations, attract investors and borrow funds on favorable economic terms. Operating Activities Net cash provided by operating activities from continuing operations in 2022 was US$1.9 million. In 2021, net cash used in operating activities from continuing operations was US$5.0 million.
We assess our liquidity by our ability to generate cash from operating activities to fund our operations, attract investors and borrow funds on favorable economic terms. ​ 90 Table of Contents Operating Activities Net cash provided by operating activities from our international business operations in 2022 and 2023 was US$1.9 million and US$0.6 million, respectively.
We have also developed our proprietary CRM software to organize and manage every aspect of our students’ engagement with our platform. Our CRM software manages student information from leads generation through every step of our sales efforts, as well as tracks student feedback and performance on our platform throughout their entire learning experience.
Our CRM software manages student information from leads generation through every step of our sales efforts, as well as tracks student feedback and performance on our platform throughout their entire learning experience.
Our gross billings of international business increased from US$3.5 million in 2021 to US$28.7 million in 2022. We define gross billings for a specific period as the total amount of cash received and receivable from third party payment platforms for the sale of course packages and services in such period, net of the total amount of refunds in such period.
We define gross billings for a specific period as the total amount of cash received and receivable from third party payment platforms for the sale of course packages and services in such period, net of the total amount of refunds in such period.
The functional currency of our Company and our subsidiaries incorporated in the Cayman Islands and Hong Kong is United States dollars (“US$’”), the functional currency of the Philippines entities is Peso (‘‘PHP’’), the functional currency of the Singapore entities is Singapore dollars (‘‘SGD’’) and the functional currency of the Malaysia entities is Ringgit (‘‘MYR’’).
The functional currency of our company and our subsidiaries incorporated in the Cayman Islands, Hong Kong and Singapore is United States dollars, the functional currency of the Philippines entities is Peso, the functional currency of the Thailand entity is Thai Baht, the functional currency of Japan is Yen and the functional currency of the Malaysia entities is Ringgit.
Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated using the average of exchange rates during their respective reporting period. Our net revenues of international business increased from US$0.8 million in 2021 to US$15.0 million in 2022.
Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated using the average of exchange rates during their respective reporting period.
Proprietary CRM and ERP systems We developed our proprietary ERP system to manage and integrate our key administrative and operational functions, especially those related to our tutors. Each step of our tutors’ interaction with our platform, from initial engagement, to interviews, orientation, teacher training, evaluation and promotion, is systematically managed and processed by our ERP system.
Each step of our tutors’ interaction with our platform, from initial engagement, to interviews, orientation, teacher training, evaluation and promotion, is systematically managed and processed by our ERP system. We have also developed our proprietary CRM software to organize and manage every aspect of our students’ engagement with our platform.
Accumulated deficits were US$331.2 million as of December 31, 2022. The net current assets of continuing operations were US$26.7 million and US$6.1 million as of December 31, 2021 and 2022, respectively.
Accumulated deficits were US$346.4 million as of December 31, 2023. The net current assets of continuing operations were US$6.1 million and negative US$9.3 million as of December 31, 2022 and 2023, respectively.
Commencing from the year of assessment 2018/2019, the first HK$2 million of profits earned by our subsidiaries incorporated in Hong Kong will be taxed at half the current tax rate (i.e., 8.25%) while the remaining profits will continue to be taxed at the existing 16.5% tax rate.
The income tax rate is 20% on taxable profits. ​ 83 Table of Contents Hong Kong Commencing from the year of assessment 2018/2019, the first HK$2 million of profits earned by our subsidiaries incorporated in Hong Kong (being our former wholly owned subsidiary COE HK Co I and our wholly owned subsidiary COE HK Co II and HelloWorld Online HK) have been taxed at half the current tax rate of 16.5% (i.e., 8.25)% while the remaining profits continue to be taxed at the existing 16.5% tax rate.
As of December 31, 2022, we had US$23.1 million in cash, cash equivalents, time deposits. Cash equivalents consist of cash held in accounts managed by certain third party online payment channels in connection with the collection of fees online.
We received aggregate gross proceeds from the follow-on public offering of approximately US$6.2 million. As of December 31, 2023, we had US$23.4 million in cash, cash equivalents, and time deposits. Cash equivalents consist of cash held in accounts managed by certain third party online payment channels in connection with the collection of fees online.
In June 2020, we completed a registered follow-on public offering, where we issued and sold 81,785 ADSs (including 6,785 ADSs sold from the exercise of over-allotment option) at a public offering price of US$76.00 per ADS. We received aggregate gross proceeds from the follow-on public offering of approximately US$6.2 million.
Our principal sources of liquidity have been proceeds from our initial public offering and the concurrent private placements and cash generated from operating activities. In June 2020, we completed a registered follow-on public offering, where we issued and sold 81,785 ADSs (including 6,785 ADSs sold from the exercise of over-allotment option) at a public offering price of US$76.00 per ADS.
We back up our databases daily. Our IT department regularly monitors the performance of our websites, mobile apps and technology infrastructure to enable us to respond quickly to potential problems. We have not experienced any major problems in our network infrastructure.
Our IT department regularly monitors the performance of our websites, mobile apps and technology infrastructure to enable us to respond quickly to potential problems.
Prior to the second half of 2021, we focused primarily on offering one-on-one lessons to K-12 students and post-secondary students in mainland China, connecting them with our pool of foreign tutors.
Recognizing the strong demand for improving English proficiency and the lack of effective and affordable solutions, our founders started with English education as the first step of our journey. Prior to the second half of 2021, we focused primarily on offering one-on-one lessons to K-12 students and post-secondary students in mainland China, connecting them with our pool of foreign tutors.
As such, it is entitled to a special (5%) tax on gross income earned for the next 10 years. Thereafter, it will be subjected to 25% corporate income tax like any other Philippine corporation.
Philippines Philippines Co II has been registered with the Philippine Economic Zone Authority, or PEZA, as an Ecozone IT Enterprise since December 19, 2014. As such, it is entitled to a special (5%) tax on gross income earned for the next 10 years. Thereafter, it will be subjected to 25% corporate income tax like any other Philippine corporation.
We are also subject to surcharges on VAT payments in accordance with PRC law. Discontinued Operations In June 2022, we entered into a definitive share purchase agreement with Dasheng Holding (HK) Limited, an entity controlled by Mr. Jiajia Jack Huang, our chairman of the board of directors and chief executive officer of the Company, pursuant to which Mr.
We are also subject to surcharges on value-added tax payments in accordance with PRC law. ​ 84 Table of Contents Discontinued Operations In June 2022, we entered into a definitive share purchase agreement with Dasheng Holding (HK) Limited, an entity controlled by Mr.
Our capital expenditures from continuing business were nil, US$0.1 million and US$4.0 thousand in the years ended December 31, 2020, 2021 and 2022, respectively. We intend to continue to utilize real estate leasing in order to allocate our capital resources cost-efficiently. We may make acquisitions of businesses and properties that complement our operations when suitable opportunities arise.
Our capital expenditures from our international business were US$0.1 million, US$0.01 million and US$0.3 million in the years ended December 31, 2021, 2022 and 2023, respectively. We intend to continue to utilize real estate leasing in order to allocate our capital resources cost-efficiently.
Material Cash Requirements Other than the ordinary cash requirements for our operations, our material cash requirements as of December 31, 2022, and any subsequent interim period primarily include our capital commitments, operating lease obligations and purchase commitments.
We may make acquisitions of businesses and properties that complement our operations when suitable opportunities arise. ​ 91 Table of Contents Material Cash Requirements Other than the ordinary cash requirements for our operations, our material cash requirements as of December 31, 2023, and any subsequent interim period primarily include our operating lease obligations and purchase commitments.
The decrease was mainly due to the increase in tutors-related cost to develop international business. 66 Table of Contents Operating Expenses Our operating expenses from continuing operations increased by 361.2% from US$5.3 million in 2021 to US$24.2 million in 2022.
Our gross margin decreased from 78.8% in 2022 to 76.7% in 2023. The decrease was mainly due to the increase in tutors-related cost to develop our international business. Operating Expenses Our operating expenses from our international business operations increased by 42.3% from US$24.2 million in 2022 to US$34.4 million in 2023.
We assess recoverability of contract cost assets periodically, or more frequently if events or circumstances indicate an impairment may exist.
The asset is amortized on the basis consistent with the pattern of the transfer of services to which the asset relates. We assess recoverability of contract cost assets periodically, or more frequently if events or circumstances indicate an impairment may exist.
See “Forward-Looking Information.” In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report on Form 20-F. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties. A.
See “Forward-Looking Information.” In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report on Form 20-F. All the operational risks associated with having operations in mainland China also apply to operations in Hong Kong.
If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand, we may seek to issue equity or equity linked securities or obtain debt financing. The issuance and sale of additional equity would result in further dilution to our shareholders.
We may also need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand, we may seek to issue equity or equity linked securities or obtain debt financing.
Net (loss)/income As a result of the foregoing, we earned net income, all attributable to the Company’s ordinary shareholders of US$18.7 million and net loss of all attributable to our Company’s ordinary shareholders US$42.6 million in 2021 and 2022, respectively. 67 Table of Contents The Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020 We launched our international business since the second half of 2021.
Net (loss)/income As a result of the foregoing, we earned net income, all attributable to our company’s ordinary shareholders of US$18.7 million and net loss of all attributable to our company’s ordinary shareholders US$42.6 million in 2021 and 2022, respectively. ​ 88 Table of Contents Impact of Foreign Currency Fluctuation See “Item 3. Key Information—D.
Incremental costs of obtaining a contract mainly include sales commissions to sales personnel and distribution agents, as well as certain cash incentives for customers who provide referrals service for us. The asset is amortized on the basis consistent with the pattern of the transfer of services to which the asset relates.
Impairment of Contract Cost Assets Nature of estimate: We capitalize incremental costs of obtaining contracts with customers as an asset if we expect to recover those costs. Incremental costs of obtaining a contract mainly include sales commissions to sales personnel and distribution agents, as well as certain cash incentives for customers who provide referrals service for us.
Financing Activities Net cash used in financing activities from continuing operations in 2022 amounted to nil. Net cash provided by financing activities from continuing operations in 2021 amounted to US$23.6 million, which was mainly due from funding provided by the China Mainland Business.
Net cash provided by financing activities from international business operations in 2021 amounted to US$23.6 million, which was mainly due to funding provided by the China Mainland Business. Capital Expenditures Our capital expenditures are incurred primarily in connection with leasehold improvements and investments in office furniture, computers and servers.
(2) Purchase commitments mainly include minimum commitments for capital expenditure contracts. (3) Capital commitments mainly include commitments for budget management system and the payments on leasehold improvements. We intend to fund our existing and future material cash requirements primarily with anticipated cash flows from operations, our existing cash balance and other financing alternatives.
(2) Purchase commitments mainly include minimum commitments for enterprise routine operations. We intend to fund our existing and future material cash requirements primarily with anticipated cash flows from operations, our existing cash balance and other financing alternatives. We will continue to make cash commitments, including capital expenditures, to support our business. C. Research and Development, Patents and Licenses, etc.
Jiajia Jack Huang, through Dasheng, acquired all of our online English tutoring businesses in mainland China, including all associated liabilities and assets for US$1. We refer to this transaction as the divestiture of the China Mainland Business throughout this annual report. At the end of June 2022, the divestiture of the China Mainland Business had been consummated.
We refer to this transaction as the divestiture of the China Mainland Business throughout this annual report. At the end of June 2022, the divestiture of the China Mainland Business had been consummated.
We will continue to make cash commitments, including capital expenditures, to support our business. C. Research and Development, Patents and Licenses, etc. Technology Network infrastructure Building a reliable, scalable and secure technology infrastructure is crucial to our ability to support our lessons and the various services that we provide to our students on our online platforms.
Technology Network infrastructure Building a reliable, scalable and secure technology infrastructure is crucial to our ability to support our lessons and the various services that we provide to our students on our online platforms. We manage our lesson delivery system mainly using our proprietary technology, and to a lesser extent, commercially available technology.
Operating Results Overview We are a global online education platform with core expertise in English education. Our mission is to make quality education accessible and affordable. Recognizing the strong demand for improving English proficiency and the lack of effective and affordable solutions, our founders started with English education as the first step of our journey.
We caution you that our businesses and financial performance are subject to substantial risks and uncertainties. A. Operating Results Overview We are a global online education platform with core expertise in English education. Our mission is to make quality education accessible and affordable.
As of December 31, 2022, we and our subsidiaries held cash, cash equivalents and time deposits in the amount of US$11.6 million, PHP68.0 million, MYR0.3 million, HKD12.0 million and RMB60 million in bank accounts in mainland China, the United States, the Philippines, Malaysia and Hong Kong; our consolidated entities in mainland China held cash, cash equivalents in the amount of US$2.2 million in mainland China, which included cash reserved to settle payables to our mainland China subsidiaries. 68 Table of Contents We believe our cash and cash equivalents on hand will be sufficient to meet our current and anticipated needs for general corporate purposes for at least the next 12 months.
As of December 31, 2023, we and our subsidiaries held cash, cash equivalents and time deposits in the amount of US$8.5 million, SGD3.5 million, MYR5.7 million, HKD15.0 million, RMB58.7 million and THB16.1 million in bank accounts in mainland China, the United States, Singapore, Malaysia, Hong Kong and Thailand, and our consolidated entities in mainland China held cash, cash equivalents in the amount of US$1.2 million in mainland China, which included cash reserved to settle payables to our mainland China subsidiaries.
We also hold five registered software copyrights and eight trademarks in a number of jurisdictions, as of December 31, 2022. D.
As of December 31, 2023, we held sixteen registered domain names relating to our business, five registered software copyrights and two trademarks in several jurisdictions. D.
We may, however, need additional cash resources in the future if we experience changes in business conditions or other developments. We may also need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions.
We believe our cash and cash equivalents on hand will be sufficient to meet our current and anticipated needs for general corporate purposes for at least the next 12 months. We may, however, need additional cash resources in the future if we experience changes in business conditions or other developments.
In addition, payments of dividends by our subsidiaries incorporated in Hong Kong to us are not subject to withholding tax in Hong Kong. Philippines Philippines Co II has been registered with the Philippine Economic Zone Authority, or PEZA, as an Ecozone IT Enterprise since December 19, 2014.
For the years ended December 31, 2021, 2022 and 2023, there was no taxable profit for HelloWorld Online HK. In addition, payments of dividends by our subsidiaries incorporated in Hong Kong to us are not subject to withholding tax in Hong Kong.
Removed
The taxable income generated by the company should be subjected to 24% standard Malaysia Corporate Income Tax.
Added
With respect to the legal risks associated with having operations in mainland China, the laws, regulations and the discretion of mainland China governmental authorities discussed in this annual report are expected to apply to mainland China entities and operations, rather than entities or operations in Hong Kong which operate under a different set of laws from mainland China.
Removed
Certain tax incentive/relief might be applicable if the company could meet the relevant criteria. 64 Table of Contents Hong Kong Our former wholly owned subsidiary in Hong Kong, COE HK Co I, and our wholly owned subsidiary, COE HK Co II, are subject to 16.5% Hong Kong profit tax on their taxable income generated from operations in Hong Kong for the years of assessment 2015/2016, 2016/2017 and 2017/2018.
Added
Our net revenues increased from US$0.8 million in 2021 to US$15.0 million in 2022, and further to US$27.1 million in 2023. Our gross billings increased from US$3.5 million in 2021 to US$28.7 million in 2022, and further to US$39.9 million in 2023.
Removed
The operating and financial results from international business are not material for the year ended December 31, 2021 and there are no comparative data for international business for the year ended December 31, 2020.
Added
The taxable income generated by the company should be subjected to 15% for the first MYR150 taxable income, 17% on the next MYR450, and 24% thereafter. Thailand Our subsidiary in Thailand, Helloworld Education Online (Thailand) Co., Ltd., was incorporated in 2023. The income is subject to Thailand tax laws.
Removed
Mostly of the Company’s operating results for the year ended December 31, 2021 are generated from the China Mainland Business, which have been reclassified as discontinued operations in the accompanying consolidated financial statements with the consummation of the divestiture of the China Mainland Business in 2022.
Added
Prior to the Ease of Paying Taxes Act (Republic Act No. 11976), which took effect on January 22, 2024, the VAT on services was based on gross receipts. The implementing rules and regulations and related issuances, however, have yet to be released.
Removed
For a detailed description of the comparison of our operating results, prior to the divestiture of the China Mainland Business, for the year ended December 31, 2021 to the year ended December 31, 2020, see “Item 5. Operating and Financial Review and Prospects—A.
Added
Jiajia Jack Huang, our chairman of the board of directors and chief executive officer of our company pursuant to which Mr. Jiajia Jack Huang, through Dasheng, acquired all of our online English tutoring businesses in mainland China, including all associated liabilities and assets for US$1.
Removed
Operating Results—Results of Operations—Year Ended December 31, 2021 Compared to Year Ended December 31, 2020” of our annual report on Form 20-F filed with the Securities and Exchange Commission on May 2, 2022. Inflation Inflationary factors such as increases in costs may adversely affect our results of operations.
Added
In addition, we were granted a right to purchase the China Mainland Business with an exercise price equal to US$0.001, which expires at the 5th anniversary of June 30, 2022.
Removed
We do not believe that inflation has had a material effect on our business, financial condition or results of operations to date. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher cost through price increases.
Added
It’s unlikely that the warrant will become exercisable because such exercise of warrant shall be subject to laws and regulations of competent government authorities, including the Opinions issued by the General Office of the CPC Central Committee and the General Office of the State Council.

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Item 6. [Reserved]

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

50 edited+6 added−6 removed67 unchanged
We may terminate an executive officer’s employment for cause at any time without advance notice or remuneration, if (i) the executive officer is convicted or pleads guilty to a felony or to an act of fraud, misappropriation or embezzlement, (ii) the executive officer has been negligent or acted dishonestly to our detriment, (iii) the executive officer has engaged in actions amounting to misconduct or failed to perform his/her duties thereunder and such failure continues after the executive officer is afforded a reasonable opportunity to cure such failure, (iv) the executive officer has died, or (v) the executive officer has a disability which shall mean a physical or mental impairment which, as reasonably determined by our board of directors, renders the executive officer unable to perform the essential functions of his/her employment with us, even with reasonable accommodation that does not impose an undue hardship on the Company, for more than 180 days in any 12-month period, unless a longer period is required by applicable law, in which case that longer period would apply.
We may terminate an executive officer’s employment for cause at any time without advance notice or remuneration, if (i) the executive officer is convicted or pleads guilty to a felony or to an act of fraud, misappropriation or embezzlement, (ii) the executive officer has been negligent or acted dishonestly to our detriment, (iii) the executive officer has engaged in actions amounting to misconduct or failed to perform his/her duties thereunder and such failure continues after the executive officer is afforded a reasonable opportunity to cure such failure, (iv) the executive officer has died, or (v) the executive officer has a disability which shall mean a physical or mental impairment which, as reasonably determined by our board of directors, renders the executive officer unable to perform the essential functions of his/her employment with us, even with reasonable accommodation that does not impose an undue hardship on our company, for more than 180 days in any 12-month period, unless a longer period is required by applicable law, in which case that longer period would apply.
Terms of Award . The term of each award is stated in the relevant award agreement. The specified term of any award will not include any period for which the grantee has elected to defer the receipt of the shares or cash issuable pursuant to the award. Transfer Restrictions .
The term of each award is stated in the relevant award agreement. The specified term of any award will not include any period for which the grantee has elected to defer the receipt of the shares or cash issuable pursuant to the award. Transfer Restrictions .
The audit committee is responsible for, among other things: ● selecting the independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by the independent registered public accounting firm; ● reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response; ● reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act; ● discussing the annual audited financial statements with management and the independent registered public accounting firm; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any special steps taken to monitor and control major financial risk exposures; ● annually reviewing and reassessing the adequacy of our audit committee charter; ● meeting separately and periodically with management and the independent registered public accounting firm; ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance; and ● reporting regularly to the board. 78 Table of Contents Compensation Committee .
The audit committee is responsible for, among other things: ● selecting the independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by the independent registered public accounting firm; ● reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response; ​ 100 Table of Contents ● reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act; ● discussing the annual audited financial statements with management and the independent registered public accounting firm; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any special steps taken to monitor and control major financial risk exposures; ● annually reviewing and reassessing the adequacy of our audit committee charter; ● meeting separately and periodically with management and the independent registered public accounting firm; ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance; and ● reporting regularly to the board.
The nominating and corporate governance committee is responsible for, among other things: ● recommending nominees to the board for election or re-election to the board, or for appointment to fill any vacancy on the board; ● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience, expertise, diversity and availability of service to us; ● selecting and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating and corporate governance committee itself; ● developing and reviewing the corporate governance principles adopted by the board and advising the board with respect to significant developments in the law and practice of corporate governance and our compliance with such laws and practices; and ● evaluating the performance and effectiveness of the board as a whole.
The nominating and corporate governance committee is responsible for, among other things: ● recommending nominees to the board for election or re-election to the board, or for appointment to fill any vacancy on the board; ● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience, expertise, diversity and availability of service to us; ​ 101 Table of Contents ● selecting and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating and corporate governance committee itself; ● developing and reviewing the corporate governance principles adopted by the board and advising the board with respect to significant developments in the law and practice of corporate governance and our compliance with such laws and practices; and ● evaluating the performance and effectiveness of the board as a whole.
Lin received an MBA degree from Stanford University and a bachelor’s degree in engineering from Dartmouth College. 73 Table of Contents Mr. Shengwen (Roy) Rong has served as our independent director since May 2021. Mr. Rong has over two decades of experience in the global financial industry.
Lin received an MBA degree from Stanford University and a bachelor’s degree in engineering from Dartmouth College. ​ 95 Table of Contents Mr. Shengwen (Roy) Rong has served as our independent director since May 2021. Mr. Rong has over two decades of experience in the global financial industry.
Directors and Executive Officers Age Position/Title Jack Jiajia Huang ​ 38 ​ Founder, Chairman, Chief Executive Officer Ting Shu ​ 37 ​ Co-Founder, Director Cindy Chun Tang ​ 48 ​ Chief Financial Officer Frank Lin ​ 59 ​ Director Shengwen (Roy) Rong ​ 55 ​ Independent Director Xiaoguang Wu ​ 48 ​ Independent Director ​ Mr.
Directors and Executive Officers Age Position/Title Jack Jiajia Huang ​ 39 ​ Founder, Chairman, Chief Executive Officer Ting Shu ​ 38 ​ Co-Founder, Director Cindy Chun Tang ​ 48 ​ Chief Financial Officer Frank Lin ​ 59 ​ Director Shengwen (Roy) Rong ​ 55 ​ Independent Director Xiaoguang Wu ​ 48 ​ Independent Director ​ Mr.
The board of directors or any entity appointed by the board to administrate the Pre-IPO Plans determines the provisions, terms, and conditions of each award including, but not limited to, the award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form of payment (cash, shares, or other consideration) upon settlement of the award and payment contingencies.
The board of directors or any entity appointed by the board to administrate the Pre-IPO Plans determines the provisions, terms, and conditions of each award including, but not limited to, the award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form of payment (cash, shares, or other consideration) upon settlement of the award and payment contingencies. ​ 97 Table of Contents Terms of Award .
For share incentive grants to our directors and executive officers, see “—Share Incentive Plan.” Our subsidiaries and consolidated affiliated entities are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, housing fund, unemployment and other statutory benefits.
For share incentive grants to our directors and executive officers, see “—Share Incentive Plan.” Our subsidiaries are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, housing fund, unemployment and other statutory benefits.
Lin currently serves on the board of directors of various DCM portfolio companies, including Tuniu Corporation, GigaCloud Technology Inc. and Quantasing Group Limited, which are Nasdaq-listed companies and Vipshop Holdings Limited, a NYSE-listed company and Kuaishou Technology, a Hong Kong Stock Exchange listed company. Mr.
Lin currently serves on the board of directors of various DCM portfolio companies, including Tuniu Corporation, GigaCloud Technology Inc. and Quantasing Group Limited, which are Nasdaq-listed companies, Vipshop Holdings Limited, an NYSE-listed company, and Kuaishou Technology and YSB Inc., which are Hong Kong Stock Exchange listed companies. Mr.
The settlors of the Trust are Mr. Huang and Ms. Shu. Mr. Huang, Ms. Shu and their family members are beneficiaries under the Trust. (2) The business address of Frank Lin is 2420 Sand Hill Road, Suite 200, Menlo Park, CA 94025, United States.
The settlors of the Trust are Mr. Huang and Ms. Shu. Mr. Huang, Ms. Shu and their family members are beneficiaries under the Trust. ​ 104 Table of Contents (2) The business address of Frank Lin is 2420 Sand Hill Road, Suite 200, Menlo Park, CA 94025, United States.
The 2016 Plan permits the awards of options, restricted shares and restricted share units. Plan Administration . Our board or a committee of one or more members of our board duly authorized for the purpose of the 2016 Plan can act as the plan administrator. 76 Table of Contents Award Agreement .
The 2016 Plan permits the awards of options, restricted shares and restricted share units. Plan Administration . Our board or a committee of one or more members of our board duly authorized for the purpose of the 2016 Plan can act as the plan administrator. Award Agreement .
A shareholder may have the right to seek damages in our name if a duty owed by our directors is breached. 79 Table of Contents Terms of Directors and Officers Our officers are elected by and serve at the discretion of the board.
A shareholder may have the right to seek damages in our name if a duty owed by our directors is breached. Terms of Directors and Officers Our officers are elected by and serve at the discretion of the board.
Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares as of February 28, 2023: ● each of our directors and executive officers; and ● each person known to us to own beneficially 5% or more of our ordinary shares.
Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares as of February 29, 2024: ● each of our directors and executive officers; and ● each person known to us to own beneficially 5% or more of our ordinary shares.
The grantee may designate one or more beneficiaries of the grantee’s award in the event of the grantee’s death on a beneficiary designation form provided by the administrator. 75 Table of Contents Time of Granting Awards .
The grantee may designate one or more beneficiaries of the grantee’s award in the event of the grantee’s death on a beneficiary designation form provided by the administrator. Time of Granting Awards .
As of February 28, 2023, to our knowledge, 57,681,212 Class B ordinary shares are held by DCM Hybrid RMB Fund, L.P., or Hybrid Fund, which is registered in the Cayman Islands.
As of February 29, 2024, to our knowledge, 57,681,212 Class B ordinary shares are held by DCM Hybrid RMB Fund, L.P., or Hybrid Fund, which is registered in the Cayman Islands.
Each of Dasheng Global and Dasheng Online is wholly beneficially owned by Dasheng International Holdings Limited (“Dasheng Holdings”), which is in turn, wholly owned by TB Family Trust (the “Trust”), for which TMF (Cayman) Ltd. acts as the trustee (the “Trustee”). S.B. Vanwall Ltd. is the sole director of Dasheng Holdings appointed by the Trustee.
Each of Dasheng Global and Dasheng Online is wholly beneficially owned by Dasheng International Holdings Limited, or Dasheng Holdings, which is in turn, wholly owned by TB Family Trust, or the Trust, for which TMF (Cayman) Ltd. acts as the trustee, or the Trustee. S.B. Vanwall Ltd. is the sole director of Dasheng Holdings appointed by the Trustee.
Awards may not be transferred in any manner by the recipient other than by will or the laws of descent and distribution, or pursuant to the other exceptions provided under the 2016 Plan, except as otherwise provided by the plan administrator. Termination . Unless terminated earlier, the 2016 Plan will terminate automatically in 2026.
Awards may not be transferred in any manner by the recipient other than by will or the laws of descent and distribution, or pursuant to the other exceptions provided under the 2016 Plan, except as otherwise provided by the plan administrator. Termination .
B. Compensation For the fiscal year ended December 31, 2022, we paid an aggregate of approximately US$627 thousand in cash to our executive officers and our non-executive directors.
B. Compensation For the fiscal year ended December 31, 2023, we paid an aggregate of approximately US$413.0 thousand in cash to our executive officers and our non-executive directors.
There were no outstanding options granted to our directors and executive officers under the 2013 Plan and 2014 Plan as of February 28, 2023.
There were no outstanding options granted to our directors and executive officers under the 2013 Plan and 2014 Plan as of February 29, 2024.
Nominating and Corporate Governance Committee . Our nominating and corporate governance committee consists of Jack Jiajia Huang, Shengwen (Roy) Rong and Xiaoguang Wu, and is chaired by Jack Jiajia Huang. We have determined that each of Shengwen (Roy) Rong and Xiaoguang Wu satisfies the “independence” requirements of Section 303A of the Corporate Governance Rules of the NYSE.
Nominating and Corporate Governance Committee . Our nominating and corporate governance committee consists of Jack Jiajia Huang, Shengwen (Roy) Rong and Xiaoguang Wu, and is chaired by Jack Jiajia Huang. We have determined that each of Shengwen (Roy) Rong and Xiaoguang Wu satisfies the “independence” requirements of Section 803 of the NYSE American Company Guide.
We believe that we maintain a good working relationship with our employees, and we have not experienced any significant labor disputes. 80 Table of Contents E.
We believe that we maintain a good working relationship with our employees, and we have not experienced any significant labor disputes. E.
Holders of our Class B ordinary shares may choose to convert their Class B ordinary shares into the same number of Class A ordinary shares at any time.
Holders of our Class B ordinary shares may choose to convert their Class B ordinary shares into the same number of Class A ordinary shares at any time. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstance.
These shares, however, are not included in the computation of the percentage ownership of any other person. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Beneficially Owned ​ ​ ​ ​ % of total ​ ​ Class A Class B Total ordinary ordinary shares on % of ​ ordinary ordinary shares on an as- an as converted aggregate ​ ​ Shares ​ Shares ​ converted basis basis ​ voting power † Directors and Executive Officers: ​ ​ ​ ​ ​ Jack Jiajia Huang (1) 26,194,680 45,925,744 72,120,424 21.2 38.2 Ting Shu (1) 26,194,680 45,925,744 72,120,424 21.2 38.2 Frank Lin (2) * — * * * Cindy Chun Tang * — * * * Shengwen (Roy) Rong * — * * * Xiaoguang Wu (3) * — * * * All directors and executive officers as a group 27,819,780 45,925,744 73,931,704 21.7 38.3 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal Shareholders: ​ ​ ​ ​ ​ DCM Funds (4) 10,607,110 57,681,212 68,288,322 20.1 46.2 Dasheng International Holdings Limited (1) 26,194,680 45,925,744 72,120,424 21.2 38.2 Sequoia Capital China Investment Funds (5) 40,033,395 — 40,033,395 11.8 3.1 Golien Ltd (6) 18,967,560 — 18,967,560 5.6 1.5 Notes: * Less than 1% of total ordinary shares on an as-converted basis. † For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
These shares, however, are not included in the computation of the percentage ownership of any other person. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Beneficially Owned ​ ​ ​ ​ % of total ​ ​ Class A Class B Total ordinary ordinary shares on % of ​ ordinary ordinary shares on an as- an as converted aggregate ​ ​ Shares ​ Shares ​ converted basis basis ​ voting power † Directors and Executive Officers: ​ ​ ​ ​ ​ Jack Jiajia Huang (1) 39,465,120 ​ 45,925,744 ​ 85,390,864 ​ 24.7 ​ 39.0 Ting Shu (1) 39,465,120 ​ 45,925,744 ​ 85,390,864 ​ 24.7 ​ 39.0 Frank Lin (2) * ​ — ​ * ​ * ​ * Cindy Chun Tang * ​ — ​ * ​ * ​ * Shengwen (Roy) Rong * ​ — ​ * ​ * ​ * Xiaoguang Wu (3) * ​ — ​ * ​ * ​ * All directors and executive officers as a group 42,560,593 ​ 45,925,744 ​ 88,486,337 ​ 25.6 ​ 39.2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Principal Shareholders: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DCM Funds (4) 10,607,110 ​ 57,681,212 ​ 68,288,322 ​ 19.8 ​ 46.0 Dasheng International Holdings Limited (1) 39,465,120 ​ 45,925,744 ​ 85,390,864 ​ 24.7 ​ 39.0 Sequoia Capital China Investment Funds (5) 40,033,395 ​ — ​ 40,033,395 ​ 11.6 ​ 3.1 Golien Ltd (6) 18,967,560 ​ — ​ 18,967,560 ​ 5.5 ​ 1.5 Notes: * Less than 1% of total ordinary shares on an as-converted basis. † For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
As of February 28, 2023, options to purchase an aggregate number of 10,249,670 Class A ordinary shares have been granted and are outstanding, and nil restricted share units have been granted and are outstanding. The terms of the Pre-IPO Plans are substantially similar. The following paragraphs summarize the terms of the Pre-IPO Plans. Types of Awards .
As of February 29, 2024, options to purchase an aggregate number of 9,476,175 Class A ordinary shares have been granted and are outstanding, and nil restricted share units have been granted and are outstanding. The terms of the Pre-IPO Plans are substantially similar. The following paragraphs summarize the terms of the Pre-IPO Plans. Types of Awards .
Our compensation committee consists of Frank Lin, Shengwen (Roy) Rong and Xiaoguang Wu, and is chaired by Frank Lin. We have determined that each of Shengwen (Roy) Rong and Xiaoguang Wu satisfies the “independence” requirements of Section 303A of the Corporate Governance Rules of the NYSE.
Compensation Committee . Our compensation committee consists of Frank Lin, Shengwen (Roy) Rong and Xiaoguang Wu, and is chaired by Frank Lin. We have determined that each of Shengwen (Roy) Rong and Xiaoguang Wu satisfies the “independence” requirements of Section 803 of the NYSE American Company Guide.
As of February 28, 2023, other current and former employees as a group held options to purchase 10,249,670 Class A ordinary shares under the 2013 Plan and the 2014 Plan, with exercise prices ranging from US$0.0167 to US$0.904 per Class A ordinary share. ​ 2016 Plan We adopted the 2016 share incentive plan, or the 2016 Plan, in May 2016.
As of February 29, 2024, other current and former employees as a group held options to purchase 9,476,175 Class A ordinary shares under the 2014 Plan, with exercise prices ranging from US$0.0167 to US$0.904 per Class A ordinary share. ​ ​ 98 Table of Contents 2016 Plan We adopted the 2016 share incentive plan, or the 2016 Plan, in May 2016.
On January 1, 2023, the maximum aggregate number of shares which may be issued pursuant to all awards under the 2016 Plan was increased to 37,848,315 Class A ordinary shares. As of February 28, 2023, 5,955,559 restricted share units have been granted and are outstanding. The following paragraphs summarize the terms of the 2016 Plan. Types of Awards .
On January 1, 2024, the maximum aggregate number of shares which may be issued pursuant to all awards under the 2016 Plan was increased to 42,997,818 Class A ordinary shares. As of February 29, 2024, 9,272,714 restricted share units have been granted and are outstanding. The following paragraphs summarize the terms of the 2016 Plan. Types of Awards .
Each executive officer has agreed to hold, at all times during and after the termination or expiry of his or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any of our confidential information, or the confidential or proprietary information disclosed to the executive officer by or obtained by the executive officer from us either directly or indirectly in writing, orally or otherwise, if specifically indicated to be confidential or reasonably expected to be confidential. 74 Table of Contents In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and for two years following the last date of employment.
An executive officer may terminate his or her employment at any time by giving a three-month prior written notice. ​ 96 Table of Contents Each executive officer has agreed to hold, at all times during and after the termination or expiry of his or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any of our confidential information, or the confidential or proprietary information disclosed to the executive officer by or obtained by the executive officer from us either directly or indirectly in writing, orally or otherwise, if specifically indicated to be confidential or reasonably expected to be confidential.
We may also terminate an executive officer’s employment by giving a three-month prior written notice. An executive officer may terminate his or her employment at any time by giving a three-month prior written notice.
We may also terminate an executive officer’s employment by giving a three-month prior written notice.
A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; or (ii) dies or is found by our company to be of unsound mind. D. Employees We have general administrative, content development and sales and marketing personnel in Hong Kong, Malaysia and mainland China.
A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; or (ii) dies or is found by our company to be of unsound mind. D.
Shengwen (Roy) Rong ​ * ​ ​ June 30,2021 Approximately two years from the date of grant. Xiaoguang Wu ​ * ​ ​ July 1, 2022 Approximately two years from the date of grant.
Ting Shu ​ * ​ ​ June 30, 2023 Approximately two years from the date of grant. Frank Lin ​ * ​ ​ July 1, 2022 Approximately two years from the date of grant. Shengwen (Roy) Rong ​ * ​ ​ June 30, 2023 Approximately two years from the date of grant.
For our full-time employees in countries, the employment contracts we have with them contain confidentiality and non-compete provisions. For our full-time employees in mainland China, we also enter into stand-alone confidentiality and non-compete agreements with them. In addition to salaries and benefits, we provide performance-based bonuses for our full-time employees and commission-based compensation for our sales and marketing force.
We enter into employment contracts with our full-time employees. For our full-time employees in countries and regions outside mainland China, the employment contracts we have with them contain confidentiality and non-compete provisions. For our full-time employees in mainland China, we also enter into stand-alone confidentiality and non-compete agreements with them.
As of February 28, 2023, we are authorized to grant options or share purchase rights to purchase up to an aggregate of 36,229,922 Class A ordinary shares under the Pre-IPO Plans.
As of February 29, 2024, we are authorized to grant options or share purchase rights to purchase up to an aggregate of 36,229,922 Class A ordinary shares under the Pre-IPO Plans. The 2013 Plan expired in September 2023 and additional grants may not be made thereunder.
The number of our employees changed significantly from 2021 to 2022, mainly attributable to the divestiture of the China Mainland Business, during which a significant number of our teaching staff and other staff ceased to be our employees.
As of December 31, 2023, we had 501 outsourced personnel mainly performing sales and marketing functions for us. The number of our employees changed significantly from 2021 to 2022, mainly attributable to the divestiture of the China Mainland Business, during which a significant number of our teaching staff and other staff ceased to be our employees.
Cindy Chun Tang ​ * ​ ​ June 30,2020 Approximately four years from the date of grant. ​ ​ ​ ​ ​ ​ March 31,2021 ​ Approximately two years from the date of grant. ​ ​ ​ ​ ​ ​ January 21,2022 ​ Approximately two years from the date of grant.
Xiaoguang Wu ​ ​ * ​ ​ July 1, 2022 ​ Approximately two years from the date of grant. Cindy Chun Tang ​ ​ * ​ ​ June 30, 2020 ​ Approximately four years from the date of grant.
In particular, our Philippines offices host our independently contracted teacher training team and free trial tutors. The rest of our sales and marketing staff are based in mainland China, Hong Kong and Malaysia. Our offices in the Philippines host our independently contracted teacher engaging and training team, free trial tutors, and part of our general and administrative personnel.
Employees We have general administrative, content development and sales and marketing personnel in Hong Kong, Malaysia, mainland China, Thailand and other countries and regions where we operate. In particular, our Philippines offices host our independently contracted teacher engaging and training team, free trial tutors, and part of our general and administrative personnel.
Class A ordinary shares are not convertible into Class B ordinary shares under any circumstance. 82 Table of Contents To our knowledge, we are not owned or controlled, directly or indirectly, by another corporation, by any government or by any other natural or legal persons, severally or jointly.
To our knowledge, we are not owned or controlled, directly or indirectly, by another corporation, by any government or by any other natural or legal persons, severally or jointly.
Shengwen (Roy) Rong on the audit committees of these public companies would not impair the ability of Mr. Shengwen (Roy) Rong to effectively serve on the audit committee of our board of directors. The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company.
Our board of directors has determined that the simultaneous service of Mr. Shengwen (Roy) Rong on the audit committees of these public companies would not impair the ability of Mr. Shengwen (Roy) Rong to effectively serve on the audit committee of our board of directors.
The calculations in the table below are based on 339,715,557 ordinary shares outstanding as of February 28, 2023, comprising of 236,108,577 Class A ordinary shares (excluding 4,533,315 Class A ordinary shares issued to our depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercising or vesting of awards granted under the issuer’s share incentive plan) and 103,606,980 Class B ordinary shares.
The calculations in the table below are based on 345,240,297 ordinary shares outstanding as of February 29, 2024, comprising of 241,633,317 Class A ordinary shares (excluding 4,408,575 Class A ordinary shares issued to our depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercising or vesting of awards granted under the issuer’s share incentive plan) and 103,606,980 Class B ordinary shares. ​ 103 Table of Contents Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
We have determined that each of Shengwen (Roy) Rong and Xiaoguang Wu satisfies the “independence” requirements of Section 303A of the Corporate Governance Rules of the NYSE and meet the independence standards under Rule 10A-3 under the Securities Exchange Act of 1934, as amended. We have determined that Shengwen (Roy) Rong qualifies as an “audit committee financial expert.” Mr.
Our audit committee consists of Shengwen (Roy) Rong and Xiaoguang Wu and is chaired by Shengwen (Roy) Rong. We have determined that each of Shengwen (Roy) Rong and Xiaoguang Wu satisfies the “independence” requirements of Section 803 of the NYSE American Company Guide and meet the independence standards under Rule 10A-3 under the Securities Exchange Act of 1934, as amended.
Shengwen (Roy) Rong currently also serves on the audit committees of Vision Deal HK Acquisition Corp, a HK-listed company, Tarena International, Inc., a Nasdaq-listed company, Qudian Inc., a NYSE-listed company, X Financial, a NYSE-listed company, and MOGU Inc., a NYSE-listed company. Our board of directors has determined that the simultaneous service of Mr.
Shengwen (Roy) Rong currently also serves on the audit committees of a number of companies including Vision Deal HK Acquisition Corp, a HK-listed company, TCTM Kids IT Education Inc. a Nasdaq-listed company, Cheche Group Inc., a Nasdaq-listed company, X Financial, a NYSE-listed company, Qudian Inc., a NYSE-listed company, and MOGU Inc., a NYSE-listed company.
In addition to our full-time employees, Beijing Helloworld Online Technology Co., Ltd. entered into services outsource agreements with independent third party suppliers in November 2021 and 2022, respectively, through which it outsourced part of its marketing and sales functions. As of December 31, 2022, we had 285 outsourced personnel mainly performing sales and marketing functions for us.
In addition to our full-time employees, some of our subsidiaries, such as Beijing Helloworld Online Technology Co., Ltd. and HelloWorld Online Education PTE. LTD, entered into services outsource agreements with independent third party suppliers in 2023, through which they have outsourced part of their marketing and sales functions.
A director may vote with respect to any contract, proposed contract, or arrangement in which he or she is materially interested.
Board Practices Board of Directors Our board of directors consists of five directors. A director is not required to hold any shares in our company to qualify to serve as a director. A director may vote with respect to any contract, proposed contract, or arrangement in which he or she is materially interested.
Independently contracted foreign tutors and Chinese tutors delivering paid lessons on our platform are generally not our full-time employees. We enter into service contracts with such independently contracted tutors, and pay service fees to them based on the number of lessons they teach and their teaching performance.
We enter into service contracts with such independently contracted tutors, and pay service fees to them based on the number of lessons they teach and their teaching performance. We had approximately 4.1 thousand independently contracted foreign tutors available to deliver lessons for our international business on our platform as of December 31, 2023.
He currently also serves as an independent director of Vision Deal HK Acquisition Corp. (SEHK: 7827), Tarena International, Inc. (NASDAQ: TEDU), Qudian Inc. (NYSE: QD), X Financial (NYSE: XYF) and MOGU Inc. (NYSE: MOGU). From February 2017 to September 2018, Mr. Rong served as the senior vice president and chief financial officer at Yixia Technology Co., Ltd.
He currently also serves as an independent director of a number of companies, including Vision Deal HK Acquisition Corp. (SEHK: 7827), TCTM Kids IT Education Inc. (NASDAQ: TCTM), Cheche Group Inc. (NASDAQ: CCG), X Financial (NYSE: XYF), Qudian Inc. (NYSE: QD) and MOGU Inc. (NYSE: MOGU). From February 2017 to September 2018, Mr.
The following table summarizes, as of February 28, 2023, the outstanding restricted share units granted to our directors and executive officers under the 2016 Plan. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Name Restricted Share Units Date of Grant Vesting Schedule Frank Lin ​ * ​ ​ July 1, 2022 Approximately two years from the date of grant.
Unless terminated earlier, the 2016 Plan will terminate automatically in 2026. ​ 99 Table of Contents The following table summarizes, as of February 29, 2024, the outstanding restricted share units granted to our directors and executive officers under the 2016 Plan. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Name Restricted Share Units Date of Grant Vesting Schedule Jack Jiajia Huang ​ * ​ ​ June 30, 2023 Approximately three years from the date of grant.
To our knowledge, as of February 28, 2023, 224,189,160 of our Class A ordinary shares are held by one record holder in the United States, which is the depositary of our ADS program, representing 95.0% of our total issued and outstanding Class A ordinary shares as of such date.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. ​ 105 Table of Contents To our knowledge, as of February 29, 2024, 229,713,900 of our Class A ordinary shares are held by one record holder in the United States, which is the depositary of our ADS program, representing 95.1% of our total issued and outstanding Class A ordinary shares as of such date.
Total ​ 1,522,920 ​ ​ ​ * The aggregate number of ordinary shares that will be vested from restricted share units is less than 1% of our total issued and outstanding ordinary shares.
Total ​ 3,845,160 ​ ​ ​ * The aggregate number of ordinary shares that will be vested from restricted share units is less than 1% of our total issued and outstanding ordinary shares. As of February 29, 2024, other current employees as a group held 5,427,554 restricted share units under the 2014 and the 2016 Plan. C.
Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one basis. 81 Table of Contents (1) Consists of (i) 30,390,321 Class B ordinary shares and 26,008,500 Class A ordinary shares in the form of ADSs held by Dasheng Global Limited, a company incorporated in the British Virgin Islands, (ii) 186,180 Class A ordinary shares in the form of ADS held by Jack Jiajia Huang, and (iii) 15,535,423 Class B ordinary shares held by Dasheng Online Limited, a company incorporated in the British Virgin Islands.
(1) Consists of (i) 30,390,321 Class B ordinary shares and 38,814,120 Class A ordinary shares in the form of ADSs held by Dasheng Global Limited, a company incorporated in the British Virgin Islands, (ii) 186,180 Class A ordinary shares in the form of ADS held by Jack Jiajia Huang, (iii) 274,980 Class A ordinary shares issuable to Jack Jiajia Huang upon exercise of options and vested from restricted share units within 60 days after February 29, 2024, (iv) 122,460 Class A ordinary shares in the form of ADSs held by Ting Shu, (v) 67,380 Class A ordinary shares issuable to Ting Shu upon the vesting of restricted share units within 60 days after February 22, 2024, and (vi) 15,535,423 Class B ordinary shares held by Dasheng Online Limited, a company incorporated in the British Virgin Islands.
We had a total of 2,479, 616 and 171 full-time employees as of December 31, 2020, 2021 and 2022, respectively. As of December 31, 2022, we had 72 full-time employees in mainland China, 66 full-time employees in the Philippines and five full-time employees in Hong Kong and 28 full-time employees in Malaysia.
We had a total of 616, 171 and 310 full-time employees as of December 31, 2021, 2022 and 2023, respectively. As of December 31, 2023, we had approximately 34 employees in research and development, 166 employees in sales and marketing, 54 employees in management and administration and 56 employees in free trial tutors and teaching support.
Removed
As of February 28, 2023, other current employees as a group held 4,432,639 restricted share units under the 2014 and the 2016 Plan. 77 Table of Contents C. Board Practices Board of Directors Our board of directors consists of five directors. A director is not required to hold any shares in our company to qualify to serve as a director.
Added
Rong served as the senior vice president and chief financial officer at Yixia Technology Co., Ltd.
Removed
Our audit committee consists of Shengwen (Roy) Rong and Xiaoguang Wu and is chaired by Shengwen (Roy) Rong.
Added
In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and for two years following the last date of employment.
Removed
The following table sets forth the number of our full-time employees, categorized by location, as of December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of full-time employees Location Mainland China Hong Kong the Philippines Malaysia Total Total 72 ​ 5 ​ 66 28 ​ 171 ​ We enter into employment contracts with our full-time employees.
Added
We have determined that Shengwen (Roy) Rong qualifies as an “audit committee financial expert.” Mr.
Removed
We had approximately 2.7 thousand independently contracted foreign tutors available to deliver lessons for our international business on our platform as of December 31, 2022.
Added
The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company.
Removed
Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
Added
In addition to salaries and benefits, we provide performance-based bonuses for our full-time employees and commission-based compensation for our sales and marketing force. ​ 102 Table of Contents Independently contracted foreign tutors and Chinese tutors delivering paid lessons on our platform are generally not our full-time employees.
Removed
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
Added
Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one basis.

Item 7. Management's Discussion & Analysis

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

5 edited+2 added−1 removed0 unchanged
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” B. Related Party Transactions Contractual Arrangements with Philippines Co II, Philippines Co III and their respective shareholders We have entered into a series of contractual arrangements with Philippines Co II, Philippines Co III and their respective shareholders.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” B. Related Party Transactions Contractual Arrangements with Philippines Co II, Philippines Co III and their respective shareholders We have entered into a series of contractual arrangements with Philippines Co II, Philippines Co III and some of their respective shareholders.
Compensation—Employment Agreements and Indemnification Agreements.” 83 Table of Contents Share Option Grants See “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plan.” C. Interests of Experts and Counsel Not applicable. ​
Directors, Senior Management and Employees—B. Compensation—Employment Agreements and Indemnification Agreements.” ​ 106 Table of Contents Share Option Grants See “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plan.” C. Interests of Experts and Counsel Not applicable. ​
For the year ended December 31, 2022, the fair value of agent service provided by the international business is estimated to be US$0.1 million, which are recognized as net revenues in the consolidated statement of comprehensive income/(loss) of our Company. Employment Agreements and Indemnification Agreements See “Item 6. Directors, Senior Management and Employees—B.
For the year ended December 31, 2023, the fair value of agent service provided by our company is estimated to be US$0.1 million, which are recognized as net revenues in the consolidated statement of comprehensive income/ (loss) of our company.
For a description of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure.” Transactions with Shareholders and Affiliates Share Purchase Agreement with Dasheng Holding (HK) Limited. On June 24, 2022, our Company entered into a definitive share purchase agreement, with Dasheng Holding (HK) Limited, an entity controlled by Mr.
For a description of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure.” Transactions with Shareholders and Affiliates Transactions with Dasheng Holding (HK) Limited, its subsidiaries and the consolidated VIEs. In 2022, Dasheng Holding (HK) Limited and its subsidiaries entered into an offshore service agreement with 51Talk English International Limited.
In 2022, Dasheng Holding (HK) Limited and its subsidiaries entered into an offshore service agreement with 51Talk English International Limited. Under the cooperation, the international business acted an agent to recommend the Philippine tutors of our Company to deliver the lessons to students of China Mainland Business.
Under the cooperation, 51Talk English International Limited provides agent services to Dasheng Holding (HK) Limited, its subsidiaries and the consolidated VIEs. In 2023, our company also entered into a series of service agreements, with Dasheng Holding (HK) Limited and its subsidiaries.
Removed
Jiajia Jack Huang, chairman of the board of directors (the “Board”) and chief executive officer of the Company, pursuant to which Mr. Jiajia Jack Huang, through Dasheng Holding (HK) Limited, will acquire all of our Company’s former China Mainland Business for US$1. The transaction was closed on June 30, 2022. Transactions with Dasheng Holding (HK) Limited and its subsidiaries.
Added
Under these service agreements, Dasheng Holding (HK) Limited and its subsidiaries provide technology service and product development labor service to our company.
Added
For the year ended December 31, 2023, the amount of product development labor service received from Dasheng Holding (HK) Limited and its subsidiaries is estimated to be US$0.9 million, and the amount of internet service received from Dasheng Holding (HK) Limited and its subsidiaries is estimated to be US$0.2 million. Employment Agreements and Indemnification Agreements See “Item 6.

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