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What changed in New Oriental Education & Technology Group Inc.'s 20-F — 2022 vs 2023

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Paragraph-level year-over-year comparison of New Oriental Education & Technology Group Inc.'s 2022 and 2023 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+818 added−702 removedSource: 20-F (2023-09-25) vs 20-F (2022-09-29)

Top changes in New Oriental Education & Technology Group Inc.'s 2023 20-F

818 paragraphs added · 702 removed · 577 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

249 edited+131 added−65 removed508 unchanged
Biggest changeFor the Years Ended May 31, (in thousands of US$ except share and per share data) 2018 2019 2020 2021 2022 Selected Consolidated Statement of Operations Data: Net revenues: Educational programs and services 2,165,152 2,785,254 3,230,378 3,936,969 2,709,549 Books and other services 282,278 311,237 348,304 339,570 395,697 Total net revenues 2,447,430 3,096,491 3,578,682 4,276,539 3,105,246 Operating cost and expenses: (1) Cost of revenues (1,065,740 ) (1,376,269 ) (1,588,899 ) (2,036,875 ) (1,754,291 ) Selling and marketing (324,249 ) (384,287 ) (445,259 ) (600,778 ) (466,895 ) General and administrative (794,482 ) (1,028,783 ) (1,145,521 ) (1,489,826 ) (1,866,573 ) Impairment loss on intangible assets and goodwill — (5,245 ) — (31,794 ) — 8 Table of Contents For the Years Ended May 31, (in thousands of US$ except share and per share data) 2018 2019 2020 2021 2022 Selected Consolidated Statement of Operations Data: Total operating cost and expenses (2,184,471 ) (2,794,584 ) (3,179,679 ) (4,159,273 ) (4,087,759 ) Gain on disposal of a subsidiary — 3,627 — — — Operating income/(loss) 262,959 305,534 399,003 117,266 (982,513 ) Other income, net: Interest income 84,838 97,530 116,117 141,511 123,542 Interest expense — (1,615 ) (4,627 ) (6,747 ) (4,050 ) Realized gain from long-term investments 7,366 26,379 407 3,535 22,004 Impairment loss from long-term investments (980 ) (5,919 ) (31,750 ) (40,207 ) (129,350 ) Loss from fair value change of long-term investments — (104,636 ) (18,451 ) (3,824 ) (14,933 ) Loss on deconsolidation of subsidiaries — — — — (79,609 ) Miscellaneous income/(loss), net 2,841 (1,424 ) 27,137 103,443 32,411 Provision for income taxes: Current (72,785 ) (103,031 ) (142,992 ) (127,313 ) (44,378 ) Deferred 13,377 17,317 8,630 43,725 (91,934 ) Provision for income taxes (59,408 ) (85,714 ) (134,362 ) (83,588 ) (136,312 ) (Loss)/Gain from equity method investments (379 ) (2,289 ) 1,385 (1,368 ) (51,466 ) Net income/(loss) 297,237 227,846 354,859 230,021 (1,220,276 ) Less: Net income/(loss) attributable to noncontrolling interests 1,107 (10,219 ) (58,474 ) (104,393 ) (32,555 ) Net income/(loss) attributable to New Oriental Education & Technology Group Inc.’s shareholders 296,130 238,065 413,333 334,414 (1,187,721 ) Net income/(loss) per common share attributable to shareholders of New Oriental Education & Technology Group Inc.
Biggest changeFor the Years Ended May 31, (in thousands of US$ except share and per share data) 2019 2020 2021 2022 2023 Selected Consolidated Statement of Operations Data: Net revenues: Net service revenues 3,043,263 3,529,650 4,230,638 3,050,022 2,544,729 Net product revenues 53,228 49,032 45,901 55,224 453,031 Total net revenues 3,096,491 3,578,682 4,276,539 3,105,246 2,997,760 Operating cost and expenses: (1) Cost of revenues (1,376,269 ) (1,588,899 ) (2,036,875 ) (1,754,291 ) (1,409,438 ) Selling and marketing (384,287 ) (445,259 ) (600,778 ) (466,895 ) (444,693 ) General and administrative (1,028,783 ) (1,145,521 ) (1,489,826 ) (1,866,573 ) (953,583 ) Impairment loss on intangible assets and goodwill (5,245 ) — (31,794 ) — — Selected Consolidated Statement of Operations Data: Total operating cost and expenses (2,794,584 ) (3,179,679 ) (4,159,273 ) (4,087,759 ) (2,807,714 ) Gain on disposal of a subsidiary 3,627 — — — — Operating income/(loss) 305,534 399,003 117,266 (982,513 ) 190,046 Other income/(expense): Interest income 97,530 116,117 141,511 123,542 114,453 Interest expense (1,615 ) (4,627 ) (6,747 ) (4,050 ) (707 ) Realized gain from long-term investments 26,379 407 3,535 22,004 767 Impairment loss from long-term investments (5,919 ) (31,750 ) (40,207 ) (129,350 ) (8,056 ) Loss from fair value change of long-term investments (104,636 ) (18,451 ) (3,824 ) (14,933 ) (860 ) Loss on deconsolidation of subsidiaries — — — (79,609 ) — Miscellaneous (loss)/income, net (1,424 ) 27,137 103,443 32,411 12,888 Provision for income taxes: Current (103,031 ) (142,992 ) (127,313 ) (44,378 ) (97,594 ) Deferred 17,317 8,630 43,725 (91,934 ) 31,528 Provision for income taxes (85,714 ) (134,362 ) (83,588 ) (136,312 ) (66,066 ) (Loss)/Gain from equity method investments (2,289 ) 1,385 (1,368 ) (51,466 ) (7,102 ) Net income/(loss) 227,846 354,859 230,021 (1,220,276 ) 235,363 Less: Net (loss)/income attributable to non-controlling interests (10,219 ) (58,474 ) (104,393 ) (32,555 ) 58,022 12 Table of Contents For the Years Ended May 31, (in thousands of US$ except share and per share data) 2019 2020 2021 2022 2023 Net income/(loss) attributable to New Oriental Education & Technology Group Inc.’s shareholders 238,065 413,333 334,414 (1,187,721 ) 177,341 -Basic 0.15 0.26 0.20 (0.70 ) 0.11 -Diluted 0.15 0.26 0.20 (0.70 ) 0.10 Weighted average shares used in calculating basic net income/(loss) per common share (3) 1,582,938,900 1,584,295,760 1,645,463,440 1,696,419,232 1,678,264,547 Weighted average shares used in calculating diluted net income/(loss) per common share (3) 1,590,393,450 1,595,368,900 1,651,982,384 1,696,419,232 1,685,631,987 (1) Share-based compensation expenses are included in our operating cost and expenses as follows: (2) Each ADS represents ten common shares.
Therefore, there are substantial uncertainties as to how PRC governmental authorities will regulate overseas listing in general and whether we are required to complete filing or obtain any specific regulatory approvals from the CSRC, CAC or any other PRC governmental authorities for our future offshore offerings.
Therefore, there are substantial uncertainties as to how PRC governmental authorities will regulate overseas listing in general in the future and whether we are required to complete filing or obtain any specific regulatory approvals from the CSRC, CAC or any other PRC governmental authorities for our future offshore offerings.
In the event that the provision of digital academic educational resources through our intelligent learning systems and devices is deemed as after-school tutoring activities, the academic educational resources provided by our intelligent learning systems and devices to K-9 students shall comply with all regulations related to academic after-school tutoring, including, among others, the Alleviating Burden Opinion.
In the event that the provision of digital academic educational resources through our intelligent learning systems and devices is deemed as after-school tutoring activities, the academic educational resources provided by our intelligent learning systems and devices to K-9 students shall comply with all regulations related to academic after-school tutoring, including, among others, the Alleviating Burden Opinion.
Our PRC operating entities of the intelligent learning systems and devices may then be deemed as Academic AST Institutions, and these entities will be prohibited from being controlled by us as the Alleviating Burden Opinion prohibits foreign ownership in Academic AST Institutions, including through contractual arrangements.
Our PRC operating entities of the intelligent learning systems and devices may then be deemed as Academic AST Institutions, and these entities will be prohibited from being controlled by us as the Alleviating Burden Opinion prohibits foreign ownership in Academic AST Institutions, including through contractual arrangements.
If any of these penalties results in our inability to direct the activities of our consolidated affiliated entities that most significantly impact their economic performance, and/or our failure to receive the economic benefits from our consolidated affiliated entities, we may not be able to consolidate our consolidated affiliated entities in our consolidated financial statements in accordance with U.S. GAAP.
If any of these penalties results in our inability to direct the activities of the consolidated affiliated entities that most significantly impact their economic performance, and/or our failure to receive the economic benefits from the consolidated affiliated entities, we may not be able to consolidate the consolidated affiliated entities in our consolidated financial statements in accordance with U.S. GAAP.
In the event we are unable to enforce these contractual arrangements, we may not be able to have the power to direct the activities that most significantly affect the economic performance of the consolidated affiliated entities, and our ability to conduct our business may be negatively affected, and we may not be able to consolidate the financial results of our consolidated affiliated entities into our consolidated financial statements in accordance with U.S.
In the event we are unable to enforce these contractual arrangements, we may not be able to have the power to direct the activities that most significantly affect the economic performance of the consolidated affiliated entities, and our ability to conduct our business may be negatively affected, and we may not be able to consolidate the financial results of the consolidated affiliated entities into our consolidated financial statements in accordance with U.S.
Federal Income Taxation”) in our ADSs and/or common shares will generally be subject to reporting requirements and may incur significantly increased U.S. income tax on gain recognized on the sale or other disposition of the ADSs or common shares and on the receipt of distributions on the ADSs or common shares to the extent such gain or distribution is treated as an “excess distribution” under U.S. federal income tax rules.
Federal Income Taxation”) in our ADSs and/or common shares will generally be subject to reporting requirements and may incur significantly increased U.S. federal income tax on gain recognized on the sale or other disposition of the ADSs or common shares and on the receipt of distributions on the ADSs or common shares to the extent such gain or distribution is treated as an “excess distribution” under U.S. federal income tax rules.
In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment. The discontinuation of any preferential tax treatments currently available to us could materially and adversely affect our results of operations.
In addition, our currency exchange losses may be magnified by PRC exchange regulations that restrict our ability to convert Renminbi into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment. The discontinuation of any preferential tax treatments currently available to us could materially and adversely affect our results of operations.
For the years ended May 31, 2018, 2019, 2020 and 2021, the number of shares used in calculating basic and diluted net income per common share have been retrospectively adjusted to reflect the ADS ratio change from one ADS representing one common share to one ADS representing ten common shares, which became effective on April 8, 2022.
For the years ended May 31, 2019, 2020 and 2021, the number of shares used in calculating basic and diluted net income per common share have been retrospectively adjusted to reflect the ADS ratio change from one ADS representing one common share to one ADS representing ten common shares, which became effective on April 8, 2022.
A transfer pricing adjustment could, among other things, result in a reduction, for PRC tax purposes, of expense deductions recorded by the consolidated affiliated entities, which could in turn increase their tax liabilities. In addition, the PRC tax authorities may impose late payment fees and other penalties to our consolidated affiliated entities for under-paid taxes.
A transfer pricing adjustment could, among other things, result in a reduction, for PRC tax purposes, of expense deductions recorded by the consolidated affiliated entities, which could in turn increase their tax liabilities. In addition, the PRC tax authorities may impose late payment fees and other penalties to the consolidated affiliated entities for under-paid taxes.
Historically, our test preparation courses tend to have the highest revenue in our first fiscal quarter, which runs from June 1 to August 31 of each year, primarily because a significant number of students enroll in our courses during summer vacation to prepare for admissions and assessment tests.
Our test preparation courses tend to have the highest revenue in our first fiscal quarter, which runs from June 1 to August 31 of each year, primarily because a significant number of students enroll in our courses during summer vacation to prepare for admissions and assessment tests.
(3) For the years ended May 31, 2018, 2019 and 2020, the number of shares used in calculating basic and diluted net income per common share have been retrospectively adjusted to reflect the 1-for-10 share split that became effective on March 10, 2021.
(3) For the years ended May 31, 2019 and 2020, the number of shares used in calculating basic and diluted net income per common share have been retrospectively adjusted to reflect the 1-for-10 share split that became effective on March 10, 2021.
We face significant competition in each major program we offer and each geographic market in which we operate, and if we fail to compete effectively, we may lose our market share and our profitability may be adversely affected. The private education sector in China is highly fragmented and competitive.
We face significant competition in each industry we operate, and if we fail to compete effectively, we may lose our market share and our profitability may be adversely affected. The private education sector in China is highly fragmented and competitive. We face competition in each major program we offer and each geographic market in which we operate.
It remains uncertain how PRC government authorities will regulate overseas listing in general and whether we are required to complete filing or obtain any specific regulatory approvals from the CSRC, CAC or any other PRC government authorities for our overseas offerings.
It remains uncertain how PRC government authorities will regulate overseas listing in general in the future and whether we are required to complete filing or obtain any specific regulatory approvals from the CSRC, CAC or any other PRC government authorities for our overseas offerings.
Other Subsidiaries Primary Beneficiaries of Consolidated Affiliated Entities Consolidated Affiliated Entities Eliminations Consolidated Total US$ (In thousands) Net cash provided by/(used in) operating activities 7,682 (3,470 ) 233,032 (1,517,697 ) — (1,280,453 ) Loan and fund pool to entities within the Group (330,364 ) (330,364 ) (155,917 ) — 816,645 — Repayment of loan to entities within the Group 282,132 282,132 466 — (564,730 ) — Investment in entities within the Group — (44,269 ) — — 44,269 — Other investing activities 28,247 (24,610 ) (9,825 ) 1,174,720 — 1,168,532 Net cash provided by/(used in) investing activities (19,985 ) (117,111 ) (165,276 ) 1,174,720 296,184 1,168,532 Net proceeds from loan and fund pool from entities within the Group — 330,364 330,364 155,917 (816,645 ) — Repayment of loan to entities within the Group — (282,132 ) (282,132 ) (466 ) 564,730 — Proceeds from group capital contribution — — 44,269 — (44,269 ) — Other financing activities (221,997 ) — (8,861 ) — — (230,858 ) Net cash (used in)/provided by financing activities (221,997 ) 48,232 83,640 155,451 (296,184 ) (230,858 ) 12 Table of Contents For the Year Ended May 31, 2021 New Oriental Education & Technology Group Inc.
Other Subsidiaries Primary Beneficiaries of Consolidated Affiliated Entities Consolidated Affiliated Entities Eliminations Consolidated Total US$ (In thousands) Net cash provided by/(used in) operating activities 7,682 (3,470 ) 233,032 (1,517,697 ) — (1,280,453 ) Loan and fund pool to entities within the Group (330,364 ) (330,364 ) (155,917 ) — 816,645 — Repayment of loan to entities within the Group 282,132 282,132 466 — (564,730 ) — Investment in entities within the Group — (44,269 ) — — 44,269 — Other investing activities 28,247 (24,610 ) (9,825 ) 1,174,720 — 1,168,532 Net cash (used in)/provided by investing activities (19,985 ) (117,111 ) (165,276 ) 1,174,720 296,184 1,168,532 Net proceeds from loan and fund pool from entities within the Group — 330,364 330,364 155,917 (816,645 ) — Repayment of loan to entities within the Group — (282,132 ) (282,132 ) (466 ) 564,730 — Proceeds from group capital contribution — — 44,269 — (44,269 ) — Other financing activities (221,997 ) — (8,861 ) — — (230,858 ) Net cash (used in)/provided by financing activities (221,997 ) 48,232 83,640 155,451 (296,184 ) (230,858 ) For the Year Ended May 31, 2021 New Oriental Education & Technology Group Inc.
Any limitation on the ability of our subsidiaries to distribute dividends to us or on the ability of New Oriental China and its schools and subsidiaries to make payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends, or otherwise fund and conduct our business. 34 Table of Contents PRC regulation of loans to, and direct investment in, PRC entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us from making loans to our PRC subsidiaries or New Oriental China and its schools and subsidiaries or making additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
Any limitation on the ability of our subsidiaries to distribute dividends to us or on the ability of New Oriental China and its schools and subsidiaries to make payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends, or otherwise fund and conduct our business. 46 Table of Contents PRC regulation of loans to, and direct investment in, PRC entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us from making loans to our PRC subsidiaries or New Oriental China and its schools and subsidiaries or making additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
If we fail to receive such registrations or approvals, our ability to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business. 35 Table of Contents If any of New Oriental China and its schools and subsidiaries becomes the subject of a bankruptcy or liquidation proceeding, we may lose the ability to use and enjoy their assets, which could reduce the size of our operations and materially and adversely affect our business, ability to generate revenue and the market price of our common shares and/or ADSs.
If we fail to receive such registrations or approvals, our ability to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business. 47 Table of Contents If any of New Oriental China and its schools and subsidiaries becomes the subject of a bankruptcy or liquidation proceeding, we may lose the ability to use and enjoy their assets, which could reduce the size of our operations and materially and adversely affect our business, ability to generate revenue and the market price of our common shares and/or ADSs.
Based upon the nature and composition of our assets (in particular, the retention of substantial amounts of cash, deposits and investments), and the market price of our ADSs, we believe that we were a PFIC for U.S. federal income tax purposes for the taxable year ended May 31, 2022, and we will likely be a PFIC for our current taxable year unless the market price of our ADSs increases and/or we invest a substantial amount of the cash and other passive assets we hold in assets that produce or are held for the production of active income.
Based upon the nature and composition of our assets (in particular, the retention of substantial amounts of cash, deposits and investments), and the market price of our ADSs, we believe that we were a PFIC for U.S. federal income tax purposes for the taxable year ended May 31, 2023, and we will likely be a PFIC for our current taxable year unless the market price of our ADSs increases and/or we invest a substantial amount of the cash and other passive assets we hold in assets that produce or are held for the production of active income.
Any evaluation of our business and our prospects must be considered in light of the risks and uncertainties related to the recent change of regulatory policies on after-school tutoring services market.
Any evaluation of our business and our prospects must be considered in light of the risks related to the recent change of regulatory policies on after-school tutoring services market.
We conduct substantially all of our education business in China through a series of contractual arrangements with New Oriental China and its schools and subsidiaries and New Oriental China’s shareholder.
We conduct substantially all of our business in China through a series of contractual arrangements with New Oriental China and its schools and subsidiaries and New Oriental China’s shareholder.
If we are unable to expand our program, service and product offerings while increasing our total student enrollments and profitability, our business and growth may be adversely affected. 21 Table of Contents Our business is subject to fluctuations caused by seasonality or other factors beyond our control, which may cause our operating results to fluctuate from quarter to quarter.
If we are unable to expand our program, service and product offerings while increasing our total student enrollments and profitability, our business and growth may be adversely affected. 29 Table of Contents Our business is subject to fluctuations caused by seasonality or other factors beyond our control, which may cause our operating results to fluctuate from quarter to quarter.
We are subject to PRC laws and regulations governing the collecting, storing, sharing, using, processing, disclosure and protection of personal information and other data on the Internet and mobile platforms as well as privacy protection and cybersecurity. 25 Table of Contents In June 2021, the Standing Committee of the NPC promulgated the PRC Data Security Law, which took effect in September 2021.
We are subject to PRC laws and regulations governing the collecting, storing, sharing, using, processing, disclosure and protection of personal information and other data on the Internet and mobile platforms as well as privacy protection and cybersecurity. 34 Table of Contents In June 2021, the Standing Committee of the NPC promulgated the PRC Data Security Law, which took effect in September 2021.
Shortages of qualified teachers and/or staff or decreases in the quality of our instruction or service, whether actual or perceived, in one or more of our markets may have a material and adverse effect on our business. 18 Table of Contents Our historical financial and operating results are not indicative of our future performance; and our financial and operating results are difficult to forecast.
Shortages of qualified teachers and/or staff or decreases in the quality of our instruction or service, whether actual or perceived, in one or more of our markets may have a material and adverse effect on our business. 25 Table of Contents Our historical financial and operating results are not indicative of our future performance; and our financial and operating results are difficult to forecast.
The selected consolidated statement of operations data for the fiscal years ended May 31, 2020, 2021 and 2022 and the consolidated balance sheet data as of May 31, 2021 and 2022 have been derived from our audited consolidated financial statements, which are included in this annual report beginning on page F-1.
The selected consolidated statement of operations data for the fiscal years ended May 31, 2021, 2022 and 2023 and the consolidated balance sheet data as of May 31, 2022 and 2023 have been derived from our audited consolidated financial statements, which are included in this annual report beginning on page F-1.
We also may be subject to claims for indemnification related to these matters, and we cannot predict the impact that indemnification claims may have on our business or financial results. 27 Table of Contents We may need additional capital, and financing may not be available on terms acceptable to us, or at all.
We also may be subject to claims for indemnification related to these matters, and we cannot predict the impact that indemnification claims may have on our business or financial results. 37 Table of Contents We may need additional capital, and financing may not be available on terms acceptable to us, or at all.
For example, the COVID-19 resurgence caused by the Omicron variants in early 2022 adversely affected our operations in certain cities in China.
For example, the COVID-19 resurgence caused by the Omicron variants in 2022 adversely affected our operations in certain cities in China.
We face regulatory uncertainties in China concerning our employees’ participation in our share incentive plan. In February 2012, SAFE issued the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in a Stock Incentive Plan of an Overseas Publicly-Listed Company, or Circular 7.
We face regulatory measures in China concerning our employees’ participation in our share incentive plan. In February 2012, SAFE issued the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in a Stock Incentive Plan of an Overseas Publicly-Listed Company, or Circular 7.
The selected consolidated statement of operations data for the fiscal years ended May 31, 2018 and 2019 and the selected consolidated balance sheet data as of May 31, 2018, 2019 and 2020 have been derived from our audited consolidated financial statements for the fiscal years ended May 31, 2018, 2019 and 2020, which are not included in this annual report.
The selected consolidated statement of operations data for the fiscal years ended May 31, 2019 and 2020 and the selected consolidated balance sheet data as of May 31, 2019, 2020 and 2021 have been derived from our audited consolidated financial statements for the fiscal years ended May 31, 2019, 2020 and 2021, which are not included in this annual report.
If we fail to successfully execute our business strategies, our business and prospects may be materially and adversely affected. Significant uncertainties exist in relation to the interpretation and implementation of, or proposed changes to, the PRC laws, regulations and policies regarding the private education industry.
If we fail to successfully execute our business strategies, our business and prospects may be materially and adversely affected. Significant risks exist in relation to the interpretation and implementation of, or proposed changes to, the PRC laws, regulations and policies regarding the private education industry.
See “Risks Related to Our Business—Our business, financial condition and results of operations have been and are likely to continue to be materially and adversely affected by the outbreak of COVID-19.” If we are not able to continually enhance our online programs, services and products and online education systems and adapt them to rapid technological changes and student needs, we may lose market share and our business could be adversely affected.
See “Risks Related to Our Business—Our business, financial condition and results of operations have been and are likely to continue to be materially and adversely affected by the outbreak of COVID-19.” 32 Table of Contents If we are not able to continually enhance our online programs, services and products and online education systems and adapt them to rapid technological changes and student needs, we may lose market share and our business could be adversely affected.
Although our management concluded, and our independent registered public accounting firm reported, that we maintained effective internal control over financial reporting as of May 31, 2022, we cannot assure you that we will maintain effective internal control over financial reporting on an ongoing basis.
Although our management concluded, and our independent registered public accounting firm reported, that we maintained effective internal control over financial reporting as of May 31, 2023, we cannot assure you that we will maintain effective internal control over financial reporting on an ongoing basis.
Other Subsidiaries Primary Beneficiaries of Consolidated Affiliated Entities Consolidated Affiliated Entities Eliminations Consolidated Total US$ (In thousands) Third-party net revenues — 7,265 4,641 3,093,340 — 3,105,246 Inter-company revenues — 4,706 322,697 45,976 (373,379 ) — Total costs and operating expenses (100,182 ) (36,084 ) (274,050 ) (4,038,886 ) 361,443 (4,087,759 ) Income (loss) from subsidiaries and VIEs (1,057,770 ) (1,022,764 ) (1,088,225 ) — 3,168,759 — Other income, net 25,180 (15,184 ) 14,621 (45,042 ) (29,560 ) (49,985 ) Income (loss) before income tax expenses (1,132,772 ) (1,062,061 ) (1,020,316 ) (944,612 ) 3,127,263 (1,032,498 ) Less: income tax expenses — (195 ) (8,405 ) (127,712 ) — (136,312 ) Income (loss) from equity method investments (14,154 ) 6,452 63 (43,827 ) — (51,466 ) Net income (1,146,926 ) (1,055,804 ) (1,028,658 ) (1,116,151 ) 3,127,263 (1,220,276 ) For the Year Ended May 31, 2021 New Oriental Education & Technology Group Inc.
Other Subsidiaries Primary Beneficiaries of Consolidated Affiliated Entities Consolidated Affiliated Entities Eliminations Consolidated Total US$ (In thousands) Third-party net revenues — 7,265 4,641 3,093,340 — 3,105,246 Inter-company revenues — 4,706 322,697 45,976 (373,379 ) — Total operating cost and expenses (100,182 ) (36,084 ) (274,050 ) (4,038,886 ) 361,443 (4,087,759 ) (Loss)/income from subsidiaries and VIEs (1,057,770 ) (1,022,764 ) (1,088,225 ) — 3,168,759 — Other income, net 25,180 (15,184 ) 14,621 (45,042 ) (29,560 ) (49,985 ) (Loss)/income before income taxes and loss from equity method investments (1,132,772 ) (1,062,061 ) (1,020,316 ) (944,612 ) 3,127,263 (1,032,498 ) Provision for income taxes — (195 ) (8,405 ) (127,712 ) — (136,312 ) (Loss)/income from equity method investments (14,154 ) 6,452 63 (43,827 ) — (51,466 ) Net (loss)/income (1,146,926 ) (1,055,804 ) (1,028,658 ) (1,116,151 ) 3,127,263 (1,220,276 ) 14 Table of Contents For the Year Ended May 31, 2021 New Oriental Education & Technology Group Inc.
We have been involved in other claims and legal proceedings against us relating to infringement of third parties’ copyrights in materials distributed by us and the unauthorized use of a third party’s name in connection with the marketing and promotion of our programs, and may be subject to further claims in the future, particularly in light of the uncertainties in the interpretation and application of intellectual property laws and regulations.
We have been involved in other claims and legal proceedings against us relating to infringement of third parties’ copyrights in materials distributed by us and the unauthorized use of a third party’s name in connection with the marketing and promotion of our programs, and may be subject to further claims in the future, particularly in light of the potential changes in the interpretation and application of intellectual property laws and regulations.
Risks Related to Our Business The cessation of the K-9 Academic AST Services in compliance with regulatory developments has materially and adversely affected, and may continue to materially and adversely affect, our business, financial condition, results of operations and prospect.
Risk Factors—Risks Related to Our Business—The cessation of the K-9 Academic AST Services in compliance with regulatory developments has materially and adversely affected, and may continue to materially and adversely affect, our business, financial condition, results of operations and prospect.
In addition, our contractual arrangements have not been tested in a court of law as of the date of this annual report. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements for our operations in China, which may not be as effective in providing operational control as direct ownership” and “Item 3.
In addition, our contractual arrangements have not been tested in a court of law as of the date of this annual report. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements for our operations in China, which is not as effective in providing operational control as direct ownership” and “Item 3. Key Information—D.
Under such circumstances, we may be requested to unwind the contractual arrangements with respect to the operating entities of intelligent learning systems and devices. It is uncertain whether any new PRC laws, rules or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide.
Under such circumstances, we may be requested to unwind the contractual arrangements with respect to the operating entities of intelligent learning systems and devices. 42 Table of Contents It is uncertain whether any new PRC laws, rules or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide.
For example, we face risks associated with regulatory approvals on offshore offerings, anti-monopoly regulatory actions, regulations on the use of variable interest entities, regulations on the education industry, and oversight on cybersecurity and data privacy, as well as the lack of inspection on our auditors by the Public Company Accounting Oversight Board, or the PCAOB, which may impact our ability to conduct certain businesses, accept foreign investments, or list and conduct offerings on a United States or other foreign exchange.
For example, we face risks associated with regulatory approvals on offshore offerings, anti-monopoly regulatory actions, regulations on the use of variable interest entities, regulations on the education industry, regulations on online live-streaming and advertising, and oversight on cybersecurity and data privacy, as well as the lack of inspection on our auditors by the Public Company Accounting Oversight Board, or the PCAOB, which may impact our ability to conduct certain businesses, accept foreign investments, or list and conduct offerings on a United States or other foreign exchange.
Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—The controlling shareholder of Century Friendship, which is the sole shareholder of New Oriental China, may have potential conflicts of interest with us, and if any such conflicts of interest are not resolved in our favor, our business may be materially and adversely affected” for further details.
Risk Factors—Risks Related to Our Corporate Structure—The controlling shareholder of Century Friendship, which is the sole shareholder of New Oriental China, may have potential conflicts of interest with us, and if any such conflicts of interest are not resolved in our favor, our business may be materially and adversely affected” for further details.
The contribution of kindergartens have been immaterial to our business, we derived less than 1% of our total net revenues from our kindergartens for each of the fiscal years ended May 31, 2020, 2021 and 2022.
The contribution of kindergartens have been immaterial to our business, we derived less than 1% of our total net revenues from our kindergartens for each of the fiscal years ended May 31, 2021, 2022 and 2023.
Business Overview—Regulation—Regulations on Private Education—Regulations on After-School Tutoring.” 22 Table of Contents We adapt our tutoring programs and materials to new curriculum and tutoring material requirements promulgated from time to time.
Business Overview—Regulation—Regulations on Private Education—Regulations on After-School Tutoring.” 30 Table of Contents We adapt our tutoring programs and materials to new curriculum and tutoring material requirements promulgated from time to time.
Furthermore, the exact scope of “critical information infrastructure operators” under the current regulatory regime remains unclear, and the PRC government authorities may have wide discretion in the interpretation and enforcement of the applicable laws. Therefore, it is uncertain whether we would be deemed to be a critical information infrastructure operator under PRC law.
Furthermore, the exact scope of “critical information infrastructure operators” under the current regulatory regime remains unclear, and the PRC government authorities may have wide discretion within their scope of authority in the interpretation and enforcement of the applicable laws. Therefore, it is uncertain whether we would be deemed to be a critical information infrastructure operator under PRC law.
We rely on contractual arrangements for our operations in China, which may not be as effective in providing operational control as direct ownership. We have relied and expect to continue to rely on contractual arrangements with the variable interest entities, their respective subsidiaries and/or schools and their respective shareholders to operate substantially all of our education business.
We rely on contractual arrangements for our operations in China, which is not as effective in providing operational control as direct ownership. We have relied and expect to continue to rely on contractual arrangements with the variable interest entities, their respective subsidiaries and/or schools and their respective shareholders to operate substantially all of our education business.
Conversely, a significant depreciation of the RMB against the U.S. dollar may significantly reduce our reported earnings in U.S. dollars, which in turn could adversely affect the price of our common shares and/or ADSs. Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations.
Conversely, a significant depreciation of the RMB against the U.S. dollar may significantly reduce our reported earnings in U.S. dollars, which in turn could adversely affect the price of our common shares and/or ADSs. 55 Table of Contents Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations.
Any failure to effectively and efficiently manage changes of our business may materially and adversely affect our ability to capitalize on new business opportunities, which in turn may have a material adverse impact on our financial condition and results of operations. If we fail to successfully execute our business strategies, our business and prospects may be materially and adversely affected.
Any failure to effectively and efficiently manage changes of our business may materially and adversely affect our ability to capitalize on new business opportunities, which in turn may have a material adverse impact on our financial condition and results of operations. 22 Table of Contents If we fail to successfully execute our business strategies, our business and prospects may be materially and adversely affected.
These contractual arrangements enable Koolearn to (1) have power to direct the activities that most significantly affect the economic performance of Beijing Xuncheng and its subsidiaries; (2) receive substantially all of the economic benefits from Beijing Xuncheng and its subsidiaries in consideration for the services provided by Koolearn’s wholly-owned subsidiaries in China; and (3) have an exclusive option to purchase all or part of the equity interests in Beijing Xuncheng, when and to the extent permitted by PRC law, or request any existing shareholder of Beijing Xuncheng to transfer all or part of the equity interest in Beijing Xuncheng to another PRC person or entity designated by us at any time in our discretion.
These contractual arrangements enable East Buy to (1) have power to direct the activities that most significantly affect the economic performance of Beijing Xuncheng and its subsidiaries; (2) receive substantially all of the economic benefits from Beijing Xuncheng and its subsidiaries in consideration for the services provided by East Buy’s wholly-owned subsidiaries in China; and (3) have an exclusive option to purchase all or part of the equity interests in Beijing Xuncheng, when and to the extent permitted by PRC law, or request any existing shareholder of Beijing Xuncheng to transfer all or part of the equity interest in Beijing Xuncheng to another PRC person or entity designated by us at any time in our discretion.
If we are unable to maintain our competitive position or otherwise respond to competitive pressures effectively, we may lose our market share and our profitability may be adversely affected. 20 Table of Contents Our business, financial condition and results of operations have been and are likely to continue to be materially and adversely affected by the outbreak of COVID-19.
If we are unable to maintain our competitive position or otherwise respond to competitive pressures effectively, we may lose our market share and our profitability may be adversely affected. Our business, financial condition and results of operations have been and are likely to continue to be materially and adversely affected by the outbreak of COVID-19 .
Business Overview—Regulation—Regulations Relating to Advertising and Promotion.” While we have made significant efforts to ensure that our advertisements and promotions are in full compliance with applicable PRC laws and regulations, we cannot assure you that all the content contained in such advertisements and promoting materials is in compliance with relevant laws, regulations and regulatory requirements, especially given the tightened regulation by the government authorities in this regard.
Business Overview—Regulation—Regulations Relating to Advertising and Promotion.” 36 Table of Contents While we have made significant efforts to ensure that our advertisements and promotions are in full compliance with applicable PRC laws and regulations, we cannot assure you that all the content contained in such advertisements and promoting materials is in compliance with relevant laws, regulations and regulatory requirements, especially given the tightened regulation by the government authorities in this regard.
For existing leased properties lacking fire control procedures, we also encourage our schools to voluntarily relocate when condition permits to reduce our compliant risk. Any failure to comply with laws and regulations regarding food safety, product quality, online sales and online livestreaming could subject us to fines, penalties, other administrative measures or liability claims and may harm our reputation.
For existing leased properties lacking fire control procedures, we also encourage our schools to voluntarily relocate when condition permits to reduce our compliant risk. 39 Table of Contents Any failure to comply with laws and regulations regarding food safety, product quality, online sales and online livestreaming could subject us to fines, penalties, other administrative measures or liability claims and may harm our reputation.
Business Overview—Regulation—Regulations Relating to Food Safety,” “—Regulations Relating to Product Quality,” and “—Regulations Relating to Online Livestreaming and Online Sales” for more details. We cannot assure you that Koolearn fully complies with the laws and regulations in the food safety and product quality regime and the online sales and online livestreaming industry at a timely manner, or at all.
Business Overview—Regulation—Regulations Relating to Food Safety,” “—Regulations Relating to Product Quality,” and “—Regulations Relating to Online Livestreaming and Online Sales” for more details. We cannot assure you that East Buy fully complies with the laws and regulations in the food safety and product quality regime and the online sales and online livestreaming industry at a timely manner, or at all.
Any prolonged slowdown in the Chinese economy may reduce the demand for our products and services and materially and adversely affect our business and results of operations. 36 Table of Contents Our business, financial condition and results of operations, as well as our ability to obtain financing, may be adversely affected by the downturn in the global or PRC economy.
Any prolonged slowdown in the Chinese economy may reduce the demand for our products and services and materially and adversely affect our business and results of operations. Our business, financial condition and results of operations, as well as our ability to obtain financing, may be adversely affected by the downturn in the global or PRC economy.
This would result in such transfer being non-deductible expenses for the VIEs but still taxable income for our PRC subsidiaries. Such a transfer and the related tax burdens would reduce our after-tax income. A. Selected Financial Data Our Selected Consolidated Financial Data The following tables present the selected consolidated financial data of our company.
This would result in such transfer being non-deductible expenses for the VIEs but still taxable income for our PRC subsidiaries. Such a transfer and the related tax burdens would reduce our after-tax income. 11 Table of Contents A. Selected Financial Data Our Selected Consolidated Financial Data The following tables present the selected consolidated financial data of our company.
The corresponding liability was derecognized upon the effectiveness of the early termination. B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors Summary of Risk Factors Investing in our ADSs and/or common shares involves significant risks.
The corresponding liability was derecognized upon the effectiveness of the early termination. B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. 19 Table of Contents D. Risk Factors Summary of Risk Factors Investing in our ADSs and/or common shares involves significant risks.
We recorded nil, US$28.9 million and nil goodwill impairment losses for the years ended May 31, 2020, 2021 and 2022, respectively and recorded nil, US$2.9 million and nil intangible assets impairment losses for the years ended May 31, 2020, 2021 and 2022, respectively.
We recorded US$28.9 million, nil and nil goodwill impairment losses for the years ended May 31, 2021, 2022 and 2023, respectively and recorded US$2.9 million, nil and nil intangible assets impairment losses for the years ended May 31, 2021, 2022 and 2023, respectively.
Operating Results—Taxation—PRC.” 42 Table of Contents Before September 1, 2017, under the Private Education Law and its Implementation Rules, private schools that do not require reasonable returns enjoy the same preferential tax treatment as public schools, while the preferential tax treatment policies applicable to private schools requiring reasonable returns shall be separately formulated by the relevant authorities under the State Council.
Operating Results—Taxation—PRC.” Before September 1, 2017, under the Private Education Law and its Implementation Rules, private schools that do not require reasonable returns enjoy the same preferential tax treatment as public schools, while the preferential tax treatment policies applicable to private schools requiring reasonable returns shall be separately formulated by the relevant authorities under the State Council.
Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United States), or the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over China’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.
In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also regulates over China’s economic growth through allocating resources, regulating payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.
Since early 2022, there has been a recurrence of COVID-19 outbreaks in certain provinces of China due to the Delta and Omicron variants. As a result, the Chinese local authorities have reinstated similar emergency measures to contain further spread of COVID-19. The COVID-19 pandemic affected many aspects of our business since 2020.
Since early 2022, there has been a recurrence of COVID-19 outbreaks in certain provinces of China due to the Delta and Omicron variants. As a result, the Chinese local authorities reinstated similar emergency measures to contain further spread of COVID-19. 28 Table of Contents The COVID-19 pandemic affected many aspects of our business since 2020.
Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the services of our company in the future. For more detailed information, see “Item 3. Key Information—D.
Given the interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities are subject to changes, we may be required to obtain additional licenses, permits, filings or approvals for the services of our company in the future. For more detailed information, see “Item 3. Key Information—D.
To ensure compliance with the PRC laws and regulations, our online education business and online livestreaming business are operated by our majority-owned subsidiary, Koolearn Technology Holding Limited, or Koolearn, through a series of contractual arrangements with Beijing New Oriental Xuncheng Network Technology Co., Ltd., or Beijing Xuncheng, and its subsidiaries and shareholders.
To ensure compliance with the PRC laws and regulations, our online education business and online livestreaming business are operated by our majority-owned subsidiary, East Buy Holding Limited, or East Buy, through a series of contractual arrangements with Beijing New Oriental Xuncheng Network Technology Co., Ltd., or Beijing Xuncheng, and its subsidiaries and then shareholders.
If Hong Kong stamp duty is determined by the competent authority to apply to the trading or conversion of our ADSs, the trading price and the value of your investment in our common shares and/or ADSs may be affected. 50 Table of Contents
If Hong Kong stamp duty is determined by the competent authority to apply to the trading or conversion of our ADSs, the trading price and the value of your investment in our common shares and/or ADSs may be affected.
Demand for our programs, services and products may not increase as rapidly as we expect. 16 Table of Contents Furthermore, we may be unable to develop or license additional content on commercially reasonable terms and in a timely manner, or at all, to keep pace with changes in market demands.
Demand for our programs, services and products may not increase as rapidly as we expect. Furthermore, we may be unable to develop or license additional content on commercially reasonable terms and in a timely manner, or at all, to keep pace with changes in market demands.
Selected Condensed Consolidated Statements of Operations Information For the Year Ended May 31, 2022 New Oriental Education & Technology Group Inc.
Selected Condensed Consolidated Statements of Operations Information For the Year Ended May 31, 2023 New Oriental Education & Technology Group Inc.
We cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements on us. 37 Table of Contents In addition, the Cybersecurity Review Measures and the Draft Data Security Regulations stipulate certain circumstances that may trigger the cybersecurity review by the CAC.
We cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements on us. In addition, the Cybersecurity Review Measures and the Draft Data Security Regulations stipulate certain circumstances that may trigger the cybersecurity review by the CAC.
The impact of cessation of K-9 Academic AST Services in China includes the following items in our consolidated financial statements: Net Revenues Our total net revenues decreased by 27.4% from US$4,276.5 million for the fiscal year ended May 31, 2021 to US$3,105.2 million for the fiscal year ended May 31, 2022.
The impact of cessation of K-9 Academic AST Services in China includes the following items in our consolidated financial statements: Net Revenues Our total net revenues decreased by 27.4% from US$4,276.5 million for the fiscal year ended May 31, 2021 to US$3,105.2 million for the fiscal year ended May 31, 2022, and further decreased by 3.5% to US$2,997.8 million for the fiscal year ended May 31, 2023.
If the government authorities determine that our online tutoring services fall within the scope of business operations that require the above-mentioned licenses or other licenses or permits, we may not be able to obtain such licenses or permits on reasonable terms or in a timely manner or at all, and failure to obtain such licenses or permits may subject us to fines, legal sanctions or an order to suspend our online tutoring services.
If the government authorities determine that our online tutoring services fall within the scope of business operations that require the above-mentioned licenses or other licenses or permits, we may not be able to obtain such licenses or permits on reasonable terms or in a timely manner or at all, and failure to obtain such licenses or permits may subject us to fines, legal sanctions or an order to suspend our online tutoring services, which will materially and adversely affect our business operation.
In addition, the PRC legal system is based in part on government policies and internal rules and interpretations (some of which are not published on a timely basis or at all) that may have a retroactive effect. As a result, we may not be fully compliant with these policies, rules and interpretations.
In addition, the PRC legal system is based in part on government policies and internal rules and interpretations (some of which are not published on a timely basis or at all) that may have a retroactive effect. As a result, we may not be fully compliant with these laws, regulations and policies, as well as their interpretations and implementations.
For the fiscal years ended May 31, 2020, May 31, 2021, and May 31, 2022, New Oriental Education & Technology Group Inc. received repayment of loans of nil, nil, and US$282.1 million from our intermediate holding companies and subsidiaries, respectively.
For the fiscal years ended May 31, 2021, May 31, 2022 and May 31, 2023, New Oriental Education & Technology Group Inc. received repayment of loans of nil, US$282.1 million and US$290.0 million from our intermediate holding companies and subsidiaries, respectively.
We derived a significant portion of our total net revenues for the fiscal year ended May 31, 2022 from our operations in Beijing, Hangzhou, Shanghai, and Nanjing, and we expect these cities to continue to constitute important sources of our revenues.
We derived a significant portion of our total net revenues for the fiscal year ended May 31, 2023 from our operations in Beijing, Hangzhou, Guangzhou and Nanjing, and we expect these cities to continue to constitute important sources of our revenues.
We have been advised by our PRC legal counsel, however, that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations. Accordingly, there can be no assurance that the PRC regulatory authorities will not in the future take a view that is contrary to the above opinion of our PRC legal counsel.
We have been advised by our PRC legal counsel, however, that the interpretation and application of current and future PRC laws and regulations are subject to changes. Accordingly, there can be no assurance that the PRC regulatory authorities will not in the future take a view that is contrary to the above opinion of our PRC legal counsel.
Although the law in this regard is unclear, we treat the VIEs (including their subsidiaries) as being owned by us for U.S. federal income tax purposes, not only because we control their management decisions but also because we are entitled to substantially all of the economic benefits associated with these entities, and, as a result, we consolidate these entities’ operating results in our combined financial statements.
Although the law in this regard is unclear, we treat the VIEs (including their subsidiaries) as being owned by us for U.S. federal income tax purposes, not only because we exercise effective control over the operation of such entities but also because we are entitled to substantially all of the economic benefits associated with these entities, and, as a result, we consolidate these entities’ operating results in our combined financial statements.
See “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations Related to Privacy, Data Protection and Cybersecurity.” 26 Table of Contents Our advertising and promotional content may subject us to penalties and other administrative actions.
See “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations Related to Privacy, Data Protection and Cybersecurity.” Our advertising and promotional content may subject us to penalties and other administrative actions.
This could increase our and our shareholders’ effective income tax rates and may require us to deduct withholding tax from any dividends we pay to our non-PRC shareholders. Dividends we receive from our subsidiaries located in the PRC are subject to the PRC withholding tax.
This could increase our and our shareholders’ effective income tax rates and may require us to deduct withholding tax from any dividends we pay to our non-PRC shareholders. 57 Table of Contents Dividends we receive from our subsidiaries located in the PRC are subject to the PRC withholding tax.
Eight of our wholly-owned subsidiaries in China, including Beijing Hewstone Technology Co., Ltd., or Beijing Hewstone, Beijing Decision Education & Consulting Co., Ltd., or Beijing Decision and six other subsidiaries, are qualified as “high and new technology enterprises.” Beijing Smart Wood Technology Co., Ltd., or Beijing Smart Wood, Beijing Magnificence Technology Co., Ltd., or Beijing Magnificence and Beijing Sifenke Education Consulting Company Limited are in the process of renewing their qualification of “high and new technology enterprises.” Once the renewals are completed, these subsidiaries will be eligible for a favorable enterprise income tax rate of 15% starting from January 1, 2022.
Eight of our wholly-owned subsidiaries in China, including Beijing Smart Wood Technology Co., Ltd., or Beijing Smart Wood, Beijing Pioneer Technology Co., Ltd., or Beijing Pioneer, and six other subsidiaries, are qualified as “high and new technology enterprises.” Beijing Hewstone Technology Co., Ltd., or Beijing Hewstone and Beijing Decision Education & Consulting Co., Ltd., or Beijing Decision are in the process of renewing their qualification of “high and new technology enterprises.” Once the renewals are completed, these subsidiaries will be eligible for a favorable enterprise income tax rate of 15% starting from January 1, 2023.
However, if any disputes arise between any of our senior executives or key personnel and us, it may be difficult to successfully pursue legal actions against these individuals because of the uncertainties of China’s legal systems. We generate a significant portion of our revenues from certain cities in China.
However, if any disputes arise between any of our senior executives or key personnel and us, it may be difficult to successfully pursue legal actions against these individuals. We generate a significant portion of our revenues from certain cities in China.
Although Koolearn implements quality control standards and measures throughout its entire operating processes, there is no assurance that Koolearn’s quality control systems will prove to be effective at all times, or that it can identify any defects in our quality control systems in a timely manner.
Although East Buy implements quality control standards and measures throughout its entire operating processes, there is no assurance that East Buy’s quality control systems will prove to be effective at all times, or that it can identify any defects in our quality control systems in a timely manner.
See “Risks Related to Doing Business in China —Uncertainties exist with respect to the interpretation and implementation of the Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance, business, financial condition and results of operations.” 31 Table of Contents We have been further advised by our PRC legal counsel that if we and/or any of our PRC subsidiaries or consolidated affiliated entities are found to be in violation of any existing or future PRC laws or regulations or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities, including the Ministry of Education, which regulates the education industry, would have broad discretion in dealing with such violations, including: • revoking the business and operating licenses of our PRC subsidiaries or consolidated affiliated entities; • confiscating any of our income that they deem to be obtained through illegal operations; • discontinuing or restricting the operations of any related-party transactions among our PRC subsidiaries and our consolidated affiliated entities; • restricting our right to collect revenues or limiting our business expansion in China by way of entering into contractual arrangements; • imposing fines or other requirements with which we may not be able to comply; • requiring us to restructure our corporate structure or operations; • restricting or prohibiting our use of the proceeds of our future offering to finance our business and operations in China; or • taking other regulatory or enforcement actions that could be harmful to our business.
See “Risks Related to Doing Business in China—The interpretation and implementation of the Foreign Investment Law are subject to changes and it remains uncertain as to how it may impact the viability of our current corporate structure, corporate governance, business, financial condition and results of operations.” We have been further advised by our PRC legal counsel that if we and/or any of our PRC subsidiaries or consolidated affiliated entities are found to be in violation of any existing or future PRC laws or regulations or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities, including the Ministry of Education, which regulates the education industry, would have wide discretion within their scope of authority in dealing with such violations, including: • revoking the business and operating licenses of our PRC subsidiaries or consolidated affiliated entities; • confiscating any of our income that they deem to be obtained through illegal operations; • discontinuing or restricting the operations of any related-party transactions among our PRC subsidiaries and the consolidated affiliated entities; • restricting our right to collect revenues or limiting our business expansion in China by way of entering into contractual arrangements; • imposing fines or other requirements with which we may not be able to comply; • requiring us to restructure our corporate structure or operations; • restricting or prohibiting our use of the proceeds of our future offering to finance our business and operations in China; or • taking other regulatory or enforcement actions that could be harmful to our business.
However, due to the ambiguity of the definition of “Audio-visual Programs”, there is uncertainty as to whether our online courses fall within the definition of “Audio-visual Programs” and whether we are required to obtain the License for Online Transmission of Audio-Visual Programs.
However, due to the ambiguity of the definition of “Audio-visual Programs”, there is uncertainty as to whether our online business falls within the definition of “Audio-visual Programs” and whether we are required to obtain the License for Online Transmission of Audio-Visual Programs.
On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong.
On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, including our auditor which is headquartered in mainland China.
This may result in volatility and adversely affect the price of our common shares and ADSs. We have experienced, and expect to continue to experience, seasonal fluctuations in our revenues and results of operations, primarily due to seasonal changes in student enrollments.
This may result in volatility and adversely affect the price of our common shares and ADSs. We have experienced, and expect to continue to experience, seasonal fluctuations in our revenues and results of operations, primarily due to seasonal changes in student enrollments in educational business and some other services.
The controlling shareholder of Century Friendship, which is the sole shareholder of New Oriental China, may have potential conflicts of interest with us, and if any such conflicts of interest are not resolved in our favor, our business may be materially and adversely affected New Oriental China is the majority shareholder of Beijing Xuncheng, holding 77.488% of Beijing Xuncheng as of May 31, 2022.
The controlling shareholder of Century Friendship, which is the sole shareholder of New Oriental China, may have potential conflicts of interest with us, and if any such conflicts of interest are not resolved in our favor, our business may be materially and adversely affected New Oriental China is the sole shareholder of Beijing Xuncheng as of May 31, 2023.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

143 edited+69 added−22 removed343 unchanged
Biggest changeThe Beijing Measures provide, among others, that (i) no new Academic AST Institutions will be approved, while existing Academic AST Institutions will be subject to review and re-registration aimed at reducing their numbers by phases; the remaining Academic AST Institutions shall all be registered as non-profit; (ii) online Academic AST Institutions previously filed with the local education administration authorities will be subject to review and re-approval; the registration and ICP license of any disqualifying online Academic AST Institutions will be rescinded; (iii) after-school tutoring institutions are strictly prohibited from providing tutoring services on academic subjects during national holidays, weekends, winter and summer breaks; (iv) Academic AST Institutions are prohibited from (a) offering classes over contents outside of or in advance of the school curriculum, (b) offering classes based on any foreign curriculum, (c) soliciting and recruiting school teacher by offering excessive compensation, or (d) employing foreign personnel abroad to carry out training activities; non-Academic AST Institutions providers are prohibited from offering tutoring services on academic subjects; (v) prices for Academic AST Institutions will need to follow the guidelines from the government to prevent any excessive charging or excessive profit-seeking activity; (vi) Academic AST Institutions are prohibited from financing by way of listing its securities or conducting other capital market activities; listed companies may not invest in Academic AST Institutions through capital markets fundraising activities, and may not acquire assets of Academic AST Institutions by paying cash or issuing securities; foreign capital is prohibited from controlling or participating in Academic AST Institutions through merger and acquisitions, entrusted operations, joining franchise or using variable interest entities. 61 Table of Contents On August 25, 2021, the General Office of MOE issued the Administrative Measures for After-School Tutoring Materials for Primary and Secondary School Students (for Trial Implementation), which provide that, among others, (i) after-school tutoring materials for primary and secondary school students and staff preparing such tutoring materials shall meet certain requirements specified in such measures, which include, among others, tutoring materials shall follow the national curriculum standard and shall not provide contents in advance of the school curriculum; (ii) after-school tutoring institutions shall establish internal management system for the tutoring materials and the staff preparing such tutoring materials; (iii) after-school tutoring institutions shall conduct internal review of the tutoring materials and the local education administrations shall conduct external review of the tutoring materials; (iv) after-school tutoring institutions may only use tutoring materials that have been internally and externally reviewed or if the materials have been officially published; (v) after school tutoring institutions shall file with the relevant education administrations the tutoring materials and the staff preparing such materials; (vi) after-school tutoring institutions in violation of the measures will be subject to rectification and shall not use the relevant tutoring materials during the rectification period; if the after-school tutoring institution refuses to rectify within the time limit or if the violation is severe, its private school operation permit may be revoked by the local education administration.
Biggest changeThe Beijing Measures provide, among others, that (i) no new Academic AST Institutions will be approved, while existing Academic AST Institutions will be subject to review and re-registration aimed at reducing their numbers by phases; the remaining Academic AST Institutions shall all be registered as non-profit; (ii) online Academic AST Institutions previously filed with the local education administration authorities will be subject to review and re-approval; the registration and ICP license of any disqualifying online Academic AST Institutions will be rescinded; (iii) after-school tutoring institutions are strictly prohibited from providing tutoring services on academic subjects during national holidays, weekends, winter and summer breaks; (iv) Academic AST Institutions are prohibited from (a) offering classes over contents outside of or in advance of the school curriculum, (b) offering classes based on any foreign curriculum, (c) soliciting and recruiting school teacher by offering excessive compensation, or (d) employing foreign personnel abroad to carry out training activities; non-Academic AST Institutions providers are prohibited from offering tutoring services on academic subjects; (v) prices for Academic AST Institutions will need to follow the guidelines from the government to prevent any excessive charging or excessive profit-seeking activity; (vi) Academic AST Institutions are prohibited from financing by way of listing its securities or conducting other capital market activities; listed companies may not invest in Academic AST Institutions through capital markets fundraising activities, and may not acquire assets of Academic AST Institutions by paying cash or issuing securities; foreign capital is prohibited from controlling or participating in Academic AST Institutions through merger and acquisitions, entrusted operations, joining franchise or using variable interest entities.
Relevant government authorities shall enhance the supervision on the agreements entered into between non-profit private schools and its related party and shall review such transaction on an annual basis; and • online education activities using internet technology are encouraged by the regulatory authorities and shall comply with laws and regulations related to internet management.
Relevant government authorities shall enhance the supervision on the agreements entered into between non-profit private schools and its related party and shall review such transaction on an annual basis; • online education activities using internet technology are encouraged by the regulatory authorities and shall comply with laws and regulations related to internet management.
Regulations on Education APPs The Opinion on Guiding and Regulating the Healthy Development of Online Education Applications, issued by the MOE and seven other authorities on August 10, 2019, restates certain requirements that apply to online education application providers, as stated above, and further provides that: (1) online after-school tutoring institutions shall examine the teaching qualifications, education background and capability of their foreign teachers; (2) online education applications providers shall file information about themselves as well as their apps with education administration authorities at provincial level, and the MOE will promulgate detailed filing rules to guide such filing and make such filing results publicly available on official website; (3) online education applications providers whose apps mainly face juveniles shall limit the length of using time, specify age group of target users and strictly review the content of the apps, and the collection of personal information of juveniles shall be permitted by the custodian of such juveniles; (4) online education application providers shall build up data security systems covering the collection, storage, transfer, using and other respects of personal information, and shall set up a name verification system; (5) education authorities at provincial level shall set up negative lists of the online education apps.
Regulations on APPs The Opinion on Guiding and Regulating the Healthy Development of Online Education Applications, issued by the MOE and seven other authorities on August 10, 2019, restates certain requirements that apply to online education application providers, as stated above, and further provides that: (1) online after-school tutoring institutions shall examine the teaching qualifications, education background and capability of their foreign teachers; (2) online education applications providers shall file information about themselves as well as their apps with education administration authorities at provincial level, and the MOE will promulgate detailed filing rules to guide such filing and make such filing results publicly available on official website; (3) online education applications providers whose apps mainly face juveniles shall limit the length of using time, specify age group of target users and strictly review the content of the apps, and the collection of personal information of juveniles shall be permitted by the custodian of such juveniles; (4) online education application providers shall build up data security systems covering the collection, storage, transfer, using and other respects of personal information, and shall set up a name verification system; (5) education authorities at provincial level shall set up negative lists of the online education apps.
Pursuant to the second supplemental agreement dated February 1, 2021 entered into by and among Dexin Dongfang, Zhuhai Chongsheng, Xi’an Ruiying Huishi Network Technology Co., Ltd., or Xi’an Ruiying, Hainan Haiyue Dongfang Network Technology Co., Ltd., or Hainan Haiyue, Wuhan Dongfang Youbo Network Technology Co., Ltd., or Wuhan Dongfang, Beijing Xuncheng and its subsidiaries and all of its shareholders, Xi’an Ruiying, Hainan Haiyue and Wuhan Dongfang joined as parties to the contractual agreements between Dexin Dongfang, Beijing Xuncheng and its subsidiaries and shareholders (including the Exclusive Option Agreement, Exclusive Management Consultancy and Cooperation Agreement, Equity Pledge Agreement, Letters of Undertaking and Powers of Attorney) and the supplemental agreement.
Pursuant to the second supplemental agreement dated February 1, 2021 entered into by and among Dexin Dongfang, Zhuhai Chongsheng, Xi’an Ruiying Huishi Network Technology Co., Ltd., or Xi’an Ruiying, Hainan Haiyue Dongfang Network Technology Co., Ltd., or Hainan Haiyue, Wuhan Dongfang Youbo Network Technology Co., Ltd., or Wuhan Dongfang, Beijing Xuncheng and its subsidiaries and all of its shareholders, Xi’an Ruiying, Hainan Haiyue and Wuhan Dongfang joined as parties to the contractual agreements between Dexin Dongfang, Beijing Xuncheng and its subsidiaries and then shareholders (including the Exclusive Option Agreement, Exclusive Management Consultancy and Cooperation Agreement, Equity Pledge Agreement, Letters of Undertaking and Powers of Attorney) and the supplemental agreement.
Pursuant to share pledge agreements dated as of May 10, 2018 among Dexin Dongfang, Beijing Xuncheng and all of its shareholders, each shareholder of Beijing Xuncheng agreed to irrevocably and unconditionally pledge its equity interest in Beijing Xuncheng to Dexin Dongfang to secure the performance of obligations of Beijing Xuncheng, its shareholders, and relevant subsidiaries under the exclusive option agreement, the powers of attorney, the exclusive management consultancy and business cooperation agreement, and the letters of undertaking.
Pursuant to share pledge agreements dated as of May 10, 2018 among Dexin Dongfang, Beijing Xuncheng and all of its then shareholders, each of the then shareholder of Beijing Xuncheng agreed to irrevocably and unconditionally pledge its equity interest in Beijing Xuncheng to Dexin Dongfang to secure the performance of obligations of Beijing Xuncheng, its then shareholders, and relevant subsidiaries under the exclusive option agreement, the powers of attorney, the exclusive management consultancy and business cooperation agreement, and the letters of undertaking.
On May 10, 2018, each of Beijing Xuncheng’s shareholders executed a power of attorney whereby such shareholder irrevocably appoints Dexin Dongfang or any person designated by Dexin Dongfang as its attorney-in-fact to exercise on the shareholder’s behalf any and all rights the shareholder has in respect of its equity interests in Beijing Xuncheng.
On May 10, 2018, each of Beijing Xuncheng’s then shareholders executed a power of attorney whereby such shareholder irrevocably appoints Dexin Dongfang or any person designated by Dexin Dongfang as its attorney-in-fact to exercise on the then shareholder’s behalf any and all rights the then shareholder has in respect of its equity interests in Beijing Xuncheng.
Historically, our test preparation courses tend to have the highest revenue in our first fiscal quarter, which runs from June 1 to August 31 of each year, primarily because a significant number of students enroll in our courses during the summer vacation to prepare for admissions and assessment tests.
Our test preparation courses tend to have the highest revenue in our first fiscal quarter, which runs from June 1 to August 31 of each year, primarily because a significant number of students enroll in our courses during the summer vacation to prepare for admissions and assessment tests.
The power of attorney will remain effective as long as Beijing Xuncheng continues to hold any equity interest in its subsidiaries. Exclusive Management Consultancy and Cooperation Agreement . Exclusive Management Consultancy and Cooperation Agreement dated as of May 10, 2018 was entered into by and among Dexin Dongfang, Beijing Xuncheng and its subsidiaries, and all of its shareholders.
The power of attorney will remain effective as long as Beijing Xuncheng continues to hold any equity interest in its subsidiaries. Exclusive Management Consultancy and Cooperation Agreement . Exclusive Management Consultancy and Cooperation Agreement dated as of May 10, 2018 was entered into by and among Dexin Dongfang, Beijing Xuncheng and its subsidiaries, and all of its then shareholders.
We have been further advised by our PRC legal counsel that if the PRC government finds that the agreements that establish the structure for operating our education business in China do not comply with PRC regulatory restrictions on foreign investment in the education business, we could be subject to severe penalties.
We have been further advised by our PRC legal counsel that if the PRC government finds that the agreements that establish the structure for operating our business in China do not comply with PRC regulatory restrictions on foreign investment in the business, we could be subject to severe penalties.
We have been and are expected to continue to be dependent on New Oriental China and its schools and subsidiaries to operate our education business until we qualify for direct ownership of our education business in China under PRC laws and regulations and acquire New Oriental China as our direct, wholly-owned subsidiary.
We have been and are expected to continue to be dependent on New Oriental China and its schools and subsidiaries to operate our business until we qualify for direct ownership of our business in China under PRC laws and regulations and acquire New Oriental China as our direct, wholly-owned subsidiary.
Beijing Xuncheng’s shareholders also undertook that if they receive any profit distribution or dividend from Beijing Xuncheng, they will immediately pay or transfer such amount, subject to the relevant tax payment being made under the relevant laws and regulations, to Dexin Dongfang.
Beijing Xuncheng’s then shareholders also undertook that if they receive any profit distribution or dividend from Beijing Xuncheng, they will immediately pay or transfer such amount, subject to the relevant tax payment being made under the relevant laws and regulations, to Dexin Dongfang.
After such rectification is completed, the education authorities will review the filings. 63 Table of Contents On March 30, 2021, the Basic Education Department of the MOE promulgated the Circular on Further Strengthening the Sleep Management of Primary and Secondary School Students, which restates that offline after-school trainings shall end no later than 8:30 p.m. and online live trainings shall end no later than 9:00 p.m., and provides that no homework shall be arranged in any form such as pre-class preparation, after-class consolidation, homework practice and WeChat group punching.
After such rectification is completed, the education authorities will review the filings. 83 Table of Contents On March 30, 2021, the Basic Education Department of the MOE promulgated the Circular on Further Strengthening the Sleep Management of Primary and Secondary School Students, which restates that offline after-school trainings shall end no later than 8:30 p.m. and online live trainings shall end no later than 9:00 p.m., and provides that no homework shall be arranged in any form such as pre-class preparation, after-class consolidation, homework practice and WeChat group punching.
On February 7, 2021, the Anti-monopoly Commission of the State Council issued the Anti-monopoly Guidelines for the Internet Platform Economy Sector that aims at specifying some of the circumstances under which an activity of internet platforms may be identified as monopolistic act as well as classifying that concentrations involving variable interest entities shall also be subject to anti-monopoly review. 70 Table of Contents Regulations Relating to Anti Long-Arm Jurisdiction The MOFCOM issued Provisions on the List of Unreliable Entities, or the MOFCOM Order No. 4 of 2020, on September 19, 2020.
On February 7, 2021, the Anti-monopoly Commission of the State Council issued the Anti-monopoly Guidelines for the Internet Platform Economy Sector that aims at specifying some of the circumstances under which an activity of internet platforms may be identified as monopolistic act as well as classifying that concentrations involving variable interest entities shall also be subject to anti-monopoly review. 93 Table of Contents Regulations Relating to Anti Long-Arm Jurisdiction The MOFCOM issued Provisions on the List of Unreliable Entities, or the MOFCOM Order No. 4 of 2020, on September 19, 2020.
Although both the circular and the bulletin only apply to offshore enterprises controlled by PRC enterprises and not those by PRC individuals, the determination criteria set forth in the circular and administration clarification made in the bulletin may reflect the SAT’s general position on how the “de facto management body” test should be applied in determining the tax residency status of offshore enterprises and how the administration measures should be implemented, regardless of whether they are controlled by PRC enterprises or PRC individuals. 76 Table of Contents In addition, the SAT issued a bulletin in January 2014, to provide more guidance on the implementation of the above circular.
Although both the circular and the bulletin only apply to offshore enterprises controlled by PRC enterprises and not those by PRC individuals, the determination criteria set forth in the circular and administration clarification made in the bulletin may reflect the SAT’s general position on how the “de facto management body” test should be applied in determining the tax residency status of offshore enterprises and how the administration measures should be implemented, regardless of whether they are controlled by PRC enterprises or PRC individuals. 101 Table of Contents In addition, the SAT issued a bulletin in January 2014, to provide more guidance on the implementation of the above circular.
In addition, without Dexin Dongfang’s prior written consent, none of Beijing Xuncheng’s shareholders may transfer or permit to create any encumbrance, guarantee or security over its equity interests in Beijing Xuncheng.
In addition, without Dexin Dongfang’s prior written consent, none of Beijing Xuncheng’s then shareholders may transfer or permit to create any encumbrance, guarantee or security over its equity interests in Beijing Xuncheng.
Beijing Xuncheng’s shareholders agreed not to transfer or dispose of the pledged equity interests or create or allow any third party to create any encumbrance on the pledged equity interests without prior written consent of Dexin Dongfang.
Beijing Xuncheng’s then shareholders agreed not to transfer or dispose of the pledged equity interests or create or allow any third party to create any encumbrance on the pledged equity interests without prior written consent of Dexin Dongfang.
Exclusive Option Agreement . Exclusive Option Purchase Agreement dated as of May 10, 2018 was entered into by Dexin Dongfang, Beijing Xuncheng and all of its shareholders.
Exclusive Option Purchase Agreement dated as of May 10, 2018 was entered into by Dexin Dongfang, Beijing Xuncheng and all of its then shareholders.
Li Bamei, have executed a letter of undertaking dated May 10, 2018 whereby they undertake not to enter into any arrangement, including pledge, sale, disposal or creation of other third party rights, in relation to Century Friendship’s equity interests in New Oriental China which may adversely affect the implementation of the foregoing agreements entered into by New Oriental China unless they have obtained consent from Koolearn or Dexin Dongfang, and the counterparties or beneficiaries of such arrangement have executed written undertaking(s) to the effect that they will not affect the performance of the foregoing agreements entered into by New Oriental China.
Li Bamei, have executed a letter of undertaking dated May 10, 2018 whereby they undertake not to enter into any arrangement, including pledge, sale, disposal or creation of other third party rights, in relation to Century Friendship’s equity interests in New Oriental China which may adversely affect the implementation of the foregoing agreements entered into by New Oriental China unless they have obtained consent from East Buy or Dexin Dongfang, and the counterparties or beneficiaries of such arrangement have executed written undertaking(s) to the effect that they will not affect the performance of the foregoing agreements entered into by New Oriental China.
New Oriental China’s schools and subsidiaries hold the requisite licenses and permits necessary to conduct our education business and have been directly conducting our education business.
New Oriental China’s schools and subsidiaries hold the requisite licenses and permits necessary to conduct our business and have been directly conducting our business.
In addition, Beijing Xinyuanfang Human Resource Service Co., Ltd. and Dongfang Youxuan (Beijing) Technology Co., Ltd., each as a subsidiary of Beijing Xuncheng, executed a letter of acceptance dated January 12, 2022 whereby each assumed the same rights and obligations as Beijing Xuncheng’s subsidiary under the Exclusive Management Consultancy and Cooperation Agreement.
In addition, Beijing Xinyuanfang Human Resource Service Co., Ltd. and Dongfang Optimization (Beijing) Technology Co., Ltd., each as a subsidiary of Beijing Xuncheng, executed a letter of acceptance dated January 12, 2022 whereby each assumed the same rights and obligations as Beijing Xuncheng’s subsidiary under the Exclusive Management Consultancy and Cooperation Agreement.
As of the date of this annual report, Century Friendship directly held the entire equity interest in New Oriental China, the largest shareholder of Beijing Xuncheng. To ensure stability and continued validity and enforceability of the foregoing agreements, Century Friendship and its shareholders, our founder Mr. Yu and Ms.
As of the date of this annual report, Century Friendship directly held the entire equity interest in New Oriental China, the sole shareholder of Beijing Xuncheng. To ensure stability and continued validity and enforceability of the foregoing agreements, Century Friendship and its shareholders, our founder Mr. Yu and Ms.
Pursuant to the supplemental agreement dated October 10, 2019 entered into by and among Dexin Dongfang, Zhuhai Chongsheng Heli Network Technology Co., Ltd., or Zhuhai Chongsheng, a wholly-owned PRC subsidiary of Koolearn, Beijing Xuncheng and its subsidiaries and all of its shareholders, Zhuhai Chongsheng joined as a party to the contractual agreements between Dexin Dongfang, Beijing Xuncheng and its subsidiaries and shareholders (including the Exclusive Option Agreement, Exclusive Management Consultancy and Cooperation Agreement, Equity Pledge Agreement, Letters of Undertaking and Powers of Attorney).
Pursuant to the supplemental agreement dated October 10, 2019 entered into by and among Dexin Dongfang, Zhuhai Chongsheng Heli Network Technology Co., Ltd., or Zhuhai Chongsheng, a wholly-owned PRC subsidiary of East Buy, Beijing Xuncheng and its subsidiaries and all of its shareholders, Zhuhai Chongsheng joined as a party to the contractual agreements between Dexin Dongfang, Beijing Xuncheng and its subsidiaries and shareholders (including the Exclusive Option Agreement, Exclusive Management Consultancy and Cooperation Agreement, Equity Pledge Agreement, Letters of Undertaking and Powers of Attorney).
In addition, Century Friendship and its shareholders undertook not to participate in, invest in, own or manage any businesses competing with that of Beijing Xuncheng and its subsidiaries as long as they continue to hold equity interest in Beijing Xuncheng. 83 Table of Contents Supplemental Agreement .
In addition, Century Friendship and its shareholders undertook not to participate in, invest in, own or manage any businesses competing with that of Beijing Xuncheng and its subsidiaries as long as they continue to hold equity interest in Beijing Xuncheng. 110 Table of Contents Supplemental Agreement .
On November 9, 2020, our common shares commenced trading on the Main Board of the Hong Kong Stock Exchange under the stock code “9901.” We raised from our listing in Hong Kong approximately US$1.48 billion in net proceeds after deducting underwriting commissions, share issuance costs and the offering expenses. On March 10, 2021, we implemented a one-for-ten share split.
On November 9, 2020, our common shares commenced trading on the Main Board of the Hong Kong Stock Exchange under the stock code “9901.” We raised from our listing in Hong Kong approximately US$1.48 billion in net proceeds after deducting underwriting commissions, share issuance costs and the offering expenses. 67 Table of Contents On March 10, 2021, we implemented a one-for-ten share split.
Due to the lack of any additional interpretation from the regulatory authorities, it remains unclear what impact MIIT Circular 2006 will have on us or the other PRC internet companies with similar corporate structures and contractual arrangements. 72 Table of Contents Regulations on Copyright and Trademark Protection China has adopted legislation governing intellectual property rights, including copyrights, trademarks and domain names.
Due to the lack of any additional interpretation from the regulatory authorities, it remains unclear what impact MIIT Circular 2006 will have on us or the other PRC internet companies with similar corporate structures and contractual arrangements. Regulations on Copyright and Trademark Protection China has adopted legislation governing intellectual property rights, including copyrights, trademarks and domain names.
The power of attorney will remain effective as long as the shareholder holds any equity interest in Beijing Xuncheng.
The power of attorney will remain effective as long as the then shareholder holds any equity interest in Beijing Xuncheng.
Specifically, the Algorithm Recommendation Provisions require that such service providers shall provide users with options that are not specific to their personal characteristics, or provide users with convenient options to cancel algorithmic recommendation services. On July 7, 2022, the CAC issued the Measures on Security Assessment of the Cross-border Transfer of Data, with effective from September 1, 2022.
Specifically, the Algorithm Recommendation Provisions require that such service providers shall provide users with options that are not specific to their personal characteristics, or provide users with convenient options to cancel algorithmic recommendation services. 88 Table of Contents On July 7, 2022, the CAC issued the Measures on Security Assessment of the Cross-border Transfer of Data, with effective from September 1, 2022.
In October 2018, SAT further promulgated Notice on Issues Relating to Expanding Application Scope of the Policy for Temporary Exemption of Withholding Income Tax on Direct Investment by Overseas Investors with Distributed Profits, which became effective retroactively in January 2018, to implement Circular 102 in detail. PRC Value-Added Tax (VAT) .
In October 2018, SAT further promulgated Notice on Issues Relating to Expanding Application Scope of the Policy for Temporary Exemption of Withholding Income Tax on Direct Investment by Overseas Investors with Distributed Profits, which became effective retroactively in January 2018, to implement Circular 102 in detail. 103 Table of Contents PRC Value-Added Tax (VAT ).
Organizational Structure Except our online education business and e-commerce business that is operated by our majority-owned subsidiary, Kooleam, and its subsidiaries and consolidated variable interest entities, substantially all of our operations are conducted in China through contractual arrangements between our wholly-owned subsidiaries in China, New Oriental China (the variable interest entity) and New Oriental China’s schools and subsidiaries and shareholder.
Organizational Structure Except our e-commerce business and online education business that is operated by our majority-owned subsidiary, East Buy, and its subsidiaries and consolidated variable interest entities, substantially all of our operations are conducted in China through contractual arrangements between our wholly-owned subsidiaries in China, New Oriental China (the variable interest entity) and New Oriental China’s schools and subsidiaries and shareholder.
To date, however, no regulations have been promulgated by the relevant authorities in this regard. On November 7, 2016, the Standing Committee of the National People’s Congress promulgated the Amended Private Education Law, which became effective on September 1, 2017. The 2016 Amended Private Education Law was last amended and became effective on December 29, 2018.
To date, however, no regulations have been promulgated by the relevant authorities in this regard. 75 Table of Contents On November 7, 2016, the Standing Committee of the National People’s Congress promulgated the Amended Private Education Law, which became effective on September 1, 2017. The 2016 Amended Private Education Law was last amended and became effective on December 29, 2018.
Their speeches include direct program promotion speeches during which they directly explain the merits and advantages of our programs or general English learning methods, as well as inspirational speeches designed to motivate students to reach their full potential and strive for success. Demo Courses and Advertisements.
Their speeches include direct program promotion speeches during which they directly explain the merits and advantages of our programs or general English learning methods, as well as inspirational speeches designed to motivate students to reach their full potential and strive for success. 73 Table of Contents Demo Courses and Advertisements .
Where an outbound investment project falls within the scope of administration by verification and approval or record-filing but its investor within the PRC fails to obtain a valid verification and approval document or notice of record-filing, departments in charge of foreign exchange administration and customs, should, pursuant to the law, not process its application, and no financial enterprises should, pursuant to the law, provide relevant fund settlement and financing services.
Where an outbound investment project falls within the scope of administration by verification and approval or record-filing but its investor within the PRC fails to obtain a valid verification and approval document or notice of record-filing, departments in charge of foreign exchange administration and customs, should, pursuant to the law, not process its application, and no financial enterprises should, pursuant to the law, provide relevant fund settlement and financing services. 104 Table of Contents C.
In addition, we own an aggregate of approximately 56,000 square meters of space for our schools, learning centers and bookstores in Xi’an, Tianjin, Kunming, Wuhan, Guangzhou, Xiamen, Changsha, Hangzhou, Zhengzhou and Hefei. We lease all of our facilities for our schools, learning centers and bookstores in 87 other cities throughout China.
In addition, we own an aggregate of approximately 56,000 square meters of space for our schools, learning centers and bookstores in Xi’an, Tianjin, Kunming, Wuhan, Guangzhou, Xiamen, Changsha, Hangzhou, Zhengzhou and Hefei. We lease all of our facilities for our schools, learning centers and bookstores in over 50 other cities throughout China.
Regulations Relating to Online Livestreaming and Online Sales Pursuant to the Online Trading Supervision and Management Measures promulgated by the SAMR on March 15, 2021, and effective from May 1, 2021, online trading operators shall follow the principles of legality, propriety and necessity when collecting and using consumers’ personal information, and shall specifically notify consumers about the purpose, method and scope of the collection and use of such information and obtain the consumers’ consent.
Pursuant to the Online Trading Supervision and Management Measures promulgated by the SAMR on March 15, 2021, and effective from May 1, 2021, online trading operators shall follow the principles of legality, propriety and necessity when collecting and using consumers’ personal information, and shall specifically notify consumers about the purpose, method and scope of the collection and use of such information and obtain the consumers’ consent.
The April 2012 equity pledge agreements have been amended to reflect the foregoing change while the other terms of these agreements remain unchanged. The equity pledges of Century Friendship under the amended agreements have been registered with the Haidian District, Beijing branch of the SAMR. 81 Table of Contents Exclusive Option Agreement .
The April 2012 equity pledge agreements have been amended to reflect the foregoing change while the other terms of these agreements remain unchanged. The equity pledges of Century Friendship under the amended agreements have been registered with the Haidian District, Beijing branch of the SAMR. Exclusive Option Agreement .
We believe that our competitive and incentivizing remuneration package, career advancement opportunities, and systematic teacher training programs allow us to recruit, train and retain top quality teachers in the industry. As of May 31, 2022, we employed approximately 26,300 teachers, many of whom are from top universities in China or have studied overseas.
We believe that our competitive and incentivizing remuneration package, career advancement opportunities, and systematic teacher training programs allow us to recruit, train and retain top quality teachers in the industry. As of May 31, 2023, we employed approximately 26,600 teachers, many of whom are from top universities in China or have studied overseas.
We use our Quality Assurance Development (QAD) system to monitor and evaluate the performance of teachers. We identify the weaknesses of our teachers and provide tailored recommendations to them to address particular areas for improvement. 55 Table of Contents Career advancement and compensation We are committed to the career advancement of our teachers.
We use our Quality Assurance Development (QAD) system to monitor and evaluate the performance of teachers. We identify the weaknesses of our teachers and provide tailored recommendations to them to address particular areas for improvement. Career advancement and compensation We are committed to the career advancement of our teachers.
We distribute and sell books and other educational materials developed or licensed by us through our distribution channels, which consist of bookstores operated by us and third-party distributors. As of May 31, 2022, we had nine bookstores operated by us, and 196 third-party distributors, who provided us with access to a nationwide network of online and offline bookstores.
We distribute and sell books and other educational materials developed or licensed by us through our distribution channels, which consist of bookstores operated by us and third-party distributors. As of May 31, 2023, we had nine bookstores operated by us, and 241 third-party distributors, who provided us with access to a nationwide network of online and offline bookstores.
Online Education and Other Services through Koolearn We commenced our online education services in 2005 through the Koolearn.com platform as one of the earliest online education providers in China.
Online Education We commenced our online education services in 2005 through the Koolearn.com platform as one of the earliest online education providers in China.
Throughout our operating history, we have continually fine-tuned our teacher-training programs to strike a balance between standardized teaching to promote efficiency and creativity to foster innovation and inspiration. Utilizing our data insights from our OMO system, we ensure consistency in teaching quality across our courses.
Throughout our operating history, we have continually fine-tuned our teacher-training programs to strike a balance between standardized teaching to promote efficiency and creativity to foster innovation and inspiration. 72 Table of Contents Utilizing our data insights from our OMO system, we ensure consistency in teaching quality across our courses.
In compliance with the Alleviating Burden Opinion Regarding Compulsory Education and applicable rules, regulations and measures, we have ceased offering K-9 Academic AST Services in China since the end of 2021.
In compliance with the Alleviating Burden Opinion and applicable rules, regulations and measures, we have ceased offering K-9 Academic AST Services in China since the end of 2021.
Pursuant to the second supplemental agreement, Xi’an Ruiying, Hainan Haiyue and Wuhan Dongfang assumed the same rights and share the same obligations as Dexin Dongfang and Zhuhai Chongsheng under the contractual agreements and the supplemental agreement. Acceptance Letter .
Pursuant to the second supplemental agreement, Xi’an Ruiying, Hainan Haiyue and Wuhan Dongfang assumed the same rights and share the same obligations as Dexin Dongfang and Zhuhai Chongsheng under the contractual agreements and the supplemental agreement. Third Supplemental Agreement.
We have been advised by our PRC legal counsel, however, that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations. Accordingly, there can be no assurance that the PRC regulatory authorities will not in the future take a view that is contrary to the above opinion of our PRC legal counsel.
We have been advised by our PRC legal counsel, however, that the interpretation and application of current and future PRC laws and regulations are subject to changes. Accordingly, there can be no assurance that the PRC regulatory authorities will not in the future take a view that is contrary to the above opinion of our PRC legal counsel.
The Internet Culture Measures require ICP operators engaging in Internet culture activities to obtain an Internet culture business operations license from the Ministry of Culture in accordance with the Internet Culture Measures.
The Internet Culture Measures require ICP operators engaging in Internet culture activities to obtain an Internet culture operation license from the Ministry of Culture in accordance with the Internet Culture Measures.
Pursuant to the supplemental agreement, Zhuhai Chongsheng assumed the same rights and share the same obligations as Dexin Dongfang under the contractual agreements. Second Supplemental Agreement .
Pursuant to the supplemental agreement, Zhuhai Chongsheng assumed the same rights and share the same obligations as Dexin Dongfang under the contractual agreements. Acceptance Letter .
The pledge takes effect upon registration with the relevant authorities and will remain in effect until the satisfaction of all contractual obligations of Beijing Xuncheng, its subsidiaries and its shareholders under the principal agreements or the termination of the principal agreements or 30 days after Dexin Dongfang provides a written termination notice to other parties, whichever is later.
The pledge takes effect upon registration with the relevant authorities and will remain in effect until the satisfaction of all contractual obligations of Beijing Xuncheng, its subsidiaries and its then shareholders under the principal agreements or the termination of the principal agreements or 30 days after Dexin Dongfang provides a written termination notice to other parties, whichever is later. 109 Table of Contents Exclusive Option Agreement .
In the fiscal years ended May 31, 2020, 2021 and 2022, the total amount of service fees that our PRC subsidiaries received from New Oriental China and its schools and subsidiaries under all the service agreements was US$440.3 million, US$376.5 million and US$280.8 million, respectively.
In the fiscal years ended May 31, 2021, 2022 and 2023, the total amount of service fees that our PRC subsidiaries received from New Oriental China and its schools and subsidiaries under all the service agreements was US$376.5 million, US$280.8 million and US$696.0 million, respectively.
We have since evolved into a comprehensive online education services provider under Koolearn Technology Holding Limited, our majority-owned subsidiary, and offer comprehensive online education courses to students through Koolearn.com , including college educational services.
We have since evolved into a comprehensive online education services provider under East Buy Holding Limited (formerly known as Koolearn Technology Holding Limited), our majority-owned subsidiary, and offer comprehensive online education courses to students through Koolearn.com, including college educational services.
Our Proprietary Teaching Content and Methodologies We emphasize the quality of our teaching content which is crucial to the effectiveness of our teaching methodologies. We had approximately 3,000 personnel involved in our content development as of May 31, 2022. Our proprietary seven-step teaching method ensures that we standardize and maintain consistent teaching quality across our educational services.
Our Proprietary Teaching Content and Methodologies We emphasize the quality of our teaching content which is crucial to the effectiveness of our teaching methodologies. We had approximately 1,400 personnel involved in our content development as of May 31, 2023. Our proprietary seven-step teaching method ensures that we standardize and maintain consistent teaching quality across our educational services.
Beijing Dexin Dongfang Network Technology Co., Ltd., or Dexin Dongfang, a wholly-owned PRC subsidiary of Koolearn, has entered into contractual arrangements with Beijing Xuncheng, its subsidiaries and shareholders, which enables us, through Koolearn, to: • have the power to direct the activities and most significantly affect the economic performance of Beijing Xuncheng and its subsidiary; • receive substantially all of the economic benefits from Beijing Xuncheng and its subsidiary; and • have an exclusive option to purchase all or part of the equity interest in Beijing Xuncheng, when and to the extent permitted by PRC law, or request any existing shareholder of Beijing Xuncheng to transfer all or part of the equity interest in Beijing Xuncheng to another PRC person or entity designated by us at any time in our discretion. 82 Table of Contents These contractual arrangements are summarized in the following paragraphs.
Beijing Dexin Dongfang Network Technology Co., Ltd., or Dexin Dongfang, a wholly-owned PRC subsidiary of East Buy, has entered into contractual arrangements with Beijing Xuncheng, its subsidiaries and then shareholders, which enables us, through East Buy, to: • have the power to direct the activities and most significantly affect the economic performance of Beijing Xuncheng and its subsidiary; • receive substantially all of the economic benefits from Beijing Xuncheng and its subsidiary; and • have an exclusive option to purchase all or part of the equity interest in Beijing Xuncheng, when and to the extent permitted by PRC law, or request any existing shareholder of Beijing Xuncheng to transfer all or part of the equity interest in Beijing Xuncheng to another PRC person or entity designated by us at any time in our discretion.
We conduct substantially all of our education business in China through contractual arrangements between our wholly-owned subsidiaries in China, and the VIEs and their shareholders. In the fiscal years ended May 31, 2020, 2021 and 2022, the consolidated affiliated entities contributed in aggregate 96.5%, 99.9% and 99.6% of our total net revenues, respectively.
As a result, we conduct substantially all of our business in China through contractual arrangements between our wholly-owned subsidiaries in China, and the VIEs and their shareholders. In the fiscal years ended May 31, 2021, 2022 and 2023, the consolidated affiliated entities contributed in aggregate 99.9%, 99.6% and 99.5% of our total net revenues, respectively.
However, due to the ambiguity of the definition of “Radio and Television Programs,” there is uncertainty as to whether our online courses fall within such definition.
However, due to the ambiguity of the definition of “Radio and Television Programs,” there is uncertainty as to whether our online business falls within such definition.
Contractual Arrangements with Beijing Xuncheng, Its Subsidiaries and Shareholders Subsequent to the voluntary delisting from the National Equities Exchange and Quotations in China in February 2018, Beijing Xuncheng went through a series of restructuring transactions and became a variable interest entity controlled by Koolearn, our majority-owned subsidiary which operates our online education business, through a series of contractual arrangements.
Contractual Arrangements with Beijing Xuncheng, Its Subsidiaries and Shareholders Subsequent to the voluntary delisting from the National Equities Exchange and Quotations in China in February 2018, Beijing Xuncheng went through a series of restructuring transactions and became a variable interest entity controlled by East Buy, our majority-owned subsidiary, through a series of contractual arrangements.
Pursuant to the five equity pledge agreements dated April 23, 2012 among New Oriental China, Century Friendship and five of our wholly-owned subsidiaries in China, namely Beijing Hewstone, Beijing Decision, Shanghai Smart Words, Beijing Pioneer and Beijing Smart Wood, Century Friendship agreed to pledge its equity interests in New Oriental China to these five subsidiaries to secure New Oriental China’s and its schools and subsidiaries’ performance of their obligations under the relevant principal agreements, and Century Friendship has agreed not to transfer, sell, pledge, dispose of or otherwise create any encumbrance on its equity interests in New Oriental China without the prior written consents of our wholly-owned subsidiaries in China.
The purpose of the transfers was to further strengthen our corporate structure by simplifying the shareholding structure of New Oriental China. 107 Table of Contents Pursuant to the five equity pledge agreements dated April 23, 2012 among New Oriental China, Century Friendship and five of our wholly-owned subsidiaries in China, namely Beijing Hewstone, Beijing Decision, Shanghai Smart Words, Beijing Pioneer and Beijing Smart Wood, Century Friendship agreed to pledge its equity interests in New Oriental China to these five subsidiaries to secure New Oriental China’s and its schools and subsidiaries’ performance of their obligations under the relevant principal agreements, and Century Friendship has agreed not to transfer, sell, pledge, dispose of or otherwise create any encumbrance on its equity interests in New Oriental China without the prior written consents of our wholly-owned subsidiaries in China.
In addition, if the incomes derived by any of the following applicants from China are dividends, the relevant applicant may be directly determined as having the status of a “beneficial owner”: • The government of the other contracting party to the relevant DTA; • A company that is a resident of, and is listed on the market of, the other contracting party to the relevant DTA; • A resident individual of the other contracting party to the relevant DTA; or • Where one or more parties referred to in Item (1) through Item (3) directly or indirectly hold 100% of the shares of the applicant, and the mid-tier in the case of indirect shareholding is a resident of China or a resident of the other contracting party to the relevant DTA.
In addition, if the incomes derived by any of the following applicants from China are dividends, the relevant applicant may be directly determined as having the status of a “beneficial owner”: • The government of the other contracting party to the relevant DTA; • A company that is a resident of, and is listed on the market of, the other contracting party to the relevant DTA; • A resident individual of the other contracting party to the relevant DTA; or • Where one or more parties referred to in Item (1) through Item (3) directly or indirectly hold 100% of the shares of the applicant, and the mid-tier in the case of indirect shareholding is a resident of China or a resident of the other contracting party to the relevant DTA. 102 Table of Contents Further, according to Circular 9, agents or designated payees are not beneficial owners.
In our fiscal year ended May 31, 2022, we developed and edited approximately 289 titles and distributed approximately 14.5 million books authored or licensed by us in China. Most of the materials distributed by us are education-related and include the materials that we use in our courses and titles that we market for use in different education areas.
In our fiscal year ended May 31, 2023, we developed and edited approximately 516 titles and distributed approximately 17.0 million books authored or licensed by us in China. Most of the materials distributed by us are education-related and include the materials that we use in our courses and titles that we market for use in different education areas.
Upon discovery of any information whose release or transmission is prohibited by applicable laws or regulations, the private school shall immediately cease the transmission of that information and take further remedial actions, such as deleting that information, to prevent it from spreading. Records pertaining to the situation shall be kept and reported to the appropriate authorities.
Upon discovery of any information whose release or transmission is prohibited by applicable laws or regulations, the private school shall immediately cease the transmission of that information and take further remedial actions, such as deleting that information, to prevent it from spreading.
Key Information—D. Risk Factors—Risks Related to Doing Business in China—Uncertainties with respect to the PRC legal system could adversely affect us.” 84 Table of Contents D. Property, Plants and Equipment Our headquarters are located in Beijing, China, where we own approximately 49,000 square meters of office and training center.
Key Information—D. Risk Factors—Risks Related to Doing Business in China—Uncertainties with respect to the enforcement of laws, and changes in laws and regulations in China could adversely affect us.” D. Property, Plants and Equipment Our headquarters are located in Beijing, China, where we own approximately 49,000 square meters of office and training center.
Complying with the requirements of the M&A Rules to complete acquisitions of PRC companies by foreign investors could be time-consuming, and any required approval processes, including obtaining approval from the MOFCOM, may delay or inhibit the ability to complete such transactions. 75 Table of Contents Regulations on Taxation PRC Enterprise Income Tax .
Complying with the requirements of the M&A Rules to complete acquisitions of PRC companies by foreign investors could be time-consuming, and any required approval processes, including obtaining approval from the MOFCOM, may delay or inhibit the ability to complete such transactions.
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 Administrative Measures for Copyright Protection Related to the Internet. Trademark . The PRC Trademark Law, most recently revised in April 2019, protects the proprietary rights to registered trademarks.
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 Administrative Measures for Copyright Protection Related to the Internet. 96 Table of Contents Trademark . The PRC Trademark Law protects the proprietary rights to registered trademarks.
Our intelligent learning systems and devices have been tested and adopted in nearly 60 cities in China. The contribution of intelligent learning systems and devices has been immaterial to our business for the fiscal year ended May 31, 2022.
Our intelligent learning systems and devices have been tested and adopted in nearly 60 cities in China, and we had 183,000 active paid users in the fiscal year ended May 31, 2023. The contribution of intelligent learning systems and devices has been immaterial to our business for the fiscal year ended May 31, 2023.
In addition, SAFE has strengthened its oversight of the flow and use of the paid-in capital of a foreign-invested company settled in RMB converted from foreign currencies. The use of such RMB paid-in capital may not be changed without SAFE’s approval.
In addition, SAFE has strengthened its oversight of the flow and use of the paid-in capital of a foreign-invested company settled in RMB converted from foreign currencies. The use of such RMB paid-in capital may not be changed without SAFE’s approval. Violations of Circular 142 will result in severe monetary or other penalties.
In addition, the Internet Information Measures also provide that ICP providers that operate in sensitive and strategic sectors, including news, publishing, education, health care, medicine and medical devices, must obtain additional approvals from the relevant authorities in charge of those sectors as well.
In addition, the Internet Information Measures also provide that ICP providers that operate in sensitive and strategic sectors, including news, publishing, education, health care, medicine and medical devices, must obtain additional approvals from the relevant authorities in charge of those sectors as well. New Oriental China, Beijing Xuncheng, Beijing Bilin Dongfang Education Technology Co. Ltd., Leci Network Technology (Beijing) Co,.
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 winter and summer 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 overseas 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 winter and summer 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 overseas 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. 79 Table of Contents On July 28, 2021, the General Office of MOE promulgated the Notice on Further Clarifying the Scope of Academic Subjects and Non-Academic Subjects of After-School Tutoring in the Compulsory Education, which specifies that according to the national curriculum on compulsory education, when after-school institutions carry out tutoring, morality and rule of law, Chinese, history, geography, mathematics, foreign language (including English, Japanese, Russian), physics, chemistry and biology are classified as academic subjects, while sports (or sports and health), art (or music, art), and comprehensive practical activities (including information technology education, labor and technology education) are classified as non-academic subjects.
On May 6, 2020, the General Office of the MOE promulgated the Notice on the Negative List of Advanced Training in Six Subjects of Compulsory Education (for Trial Implementation), which prohibits after-school tutoring institutions from providing advanced training that do not follow the formal school curricula to students in primary schools and secondary schools, and sets forth the typical activities that shall be regarded as advanced training in the six subjects of Chinese, mathematics, English, physics, chemistry and biology.
Additionally, State Council Circular 80 requests that competent local authorities formulate relevant local standards for after-school tutoring institutions within their administrative area. 78 Table of Contents On May 6, 2020, the General Office of the MOE promulgated the Notice on the Negative List of Advanced Training in Six Subjects of Compulsory Education (for Trial Implementation), which prohibits after-school tutoring institutions from providing advanced training that do not follow the formal school curricula to students in primary schools and secondary schools, and sets forth the typical activities that shall be regarded as advanced training in the six subjects of Chinese, mathematics, English, physics, chemistry and biology.
Regulations Relating to Private Education Fees On August 17, 2020, MOE and other four departments jointly promulgated the Opinions on Further Strengthening and Regulating the Administration of Education Fees, or the Education Fees Opinions, which reiterate the previous provision that the fee level of for-profit private schools is open for market adjustment and can be determined by for-profit private schools at their own discretion, while the fee-collecting regulatory policies for non-profit private schools shall be formulated by the provincial governments.
The school and its staff shall not seek any economic benefit from organizing its own students to attend an Overseas Study Tour. 90 Table of Contents Regulations Relating to Private Education Fees On August 17, 2020, MOE and other four departments jointly promulgated the Opinions on Further Strengthening and Regulating the Administration of Education Fees, or the Education Fees Opinions, which reiterate the previous provision that the fee level of for-profit private schools is open for market adjustment and can be determined by for-profit private schools at their own discretion, while the fee-collecting regulatory policies for non-profit private schools shall be formulated by the provincial governments.
As of the date of this annual report, certain local government authorities have promulgated rules that require non-academic tutoring service providers in areas such as art, music, physics, among others, to obtain private school operation permit. 62 Table of Contents Regulations on Kindergarten On September 11, 1989, the MOE issued the Kindergarten Management Regulations.
As of the date of this annual report, certain local government authorities have promulgated rules that require non-academic tutoring service providers in areas such as art, music, physics, among others, to obtain private school operation permit.
Regulations Relating to Food Safety According to the Administrative Measures for Food Operation License, entities or individuals involved in food operation and catering service in the PRC shall obtain the food operation license.
Regulations Relating to Food Safety According to the Administrative Measures for Food Operation License, entities or individuals involved in food operation and catering service in the PRC shall obtain the food operation license. Applications of food operation license shall be filed according to such food operator’s operating types.
An overseas investor that is entitled to but has not actually enjoyed the policy of temporary exemption of withholding income tax under this Notice may apply to retroactively enjoy such policy within three years from the date of actual payment of relevant tax and for refund of the tax already paid. 77 Table of Contents According to the Circular 102, for the temporary exemption of overseas investors from payment of withholding income tax, the following conditions must be satisfied at the same time: (1) Direct investment made by overseas investors with the profits distributed thereto, includes their activities of equity investment with the distributed profits such as capital increase, new establishment and equity purchase and excludes the increase through purchase or distribution and purchase of the shares of listed companies (excluding the conforming strategic investment), specifically including: (i) Increasing through purchase or distribution of the paid-in capital or capital reserve of resident enterprises within PRC; (ii) Investing in new establishment of resident enterprises within PRC; (iii) Purchasing the shares of resident enterprises within China from nonaffiliated parties; and (iv) Other methods prescribed by the Ministry of Finance and the SAT.
According to the Circular 102, for the temporary exemption of overseas investors from payment of withholding income tax, the following conditions must be satisfied at the same time: (1) Direct investment made by overseas investors with the profits distributed thereto, includes their activities of equity investment with the distributed profits such as capital increase, new establishment and equity purchase and excludes the increase through purchase or distribution and purchase of the shares of listed companies (excluding the conforming strategic investment), specifically including: (i) Increasing through purchase or distribution of the paid-in capital or capital reserve of resident enterprises within PRC; (ii) Investing in new establishment of resident enterprises within PRC; (iii) Purchasing the shares of resident enterprises within China from nonaffiliated parties; and (iv) Other methods prescribed by the Ministry of Finance and the SAT.
Our program, service and product offerings include six major areas: test preparation courses; non-academic tutoring; intelligent learning system and devices; online education and other services through Koolearn; overseas study consulting services; and educational materials and distribution.
Our program, service and product offerings include six major areas: test preparation courses; non-academic tutoring; intelligent learning system and devices; private label products and livestreaming e-commerce business, and online education through East Buy; overseas study consulting services; and educational materials and distribution.
Regulations Relating to Advertising and Promotion The principal regulations governing advertising businesses in China are the PRC Advertising Law and the Advertising Administrative Regulations. These laws, rules and regulations require companies that engage in advertising activities to obtain a business license that explicitly includes advertising in the business scope from the SAMR or its local branches.
These laws, rules and regulations require companies that engage in advertising activities to obtain a business license that explicitly includes advertising in the business scope from the SAMR or its local branches.
For students in lower-tier cities, we broadcast courses delivered by well-known teachers from top-tier cities through our OMO system, and the local assistant lecturers monitor and provide in-person guidance and interactions with students onsite.
For example, for students in most cities, we primarily deliver courses in offline classroom settings, supported with interactive online learning components. For students in lower-tier cities, we broadcast courses delivered by well-known teachers from top-tier cities through our OMO system, and the local assistant lecturers monitor and provide in-person guidance and interactions with students onsite.
Regulations on Tourism Tourism Law of the PRC, which was promulgated by the Standing Committee of the NPC and most recently amended on October 26, 2018, provides that, among other things, to engage in the businesses of outbound tourism, a travel agency shall obtain corresponding business permit, and the specific conditions shall be provided for by the State Council and that when organizing an outbound touring group, or organizing or receiving an inbound touring group, a travel agency shall, in accordance with the relevant provisions, arrange for a tour leader or tour guide to accompany the touring group in the whole tour.
Risk Factors—Risks Related to Doing Business in China—If we fail to obtain and maintain the licenses and approvals required for online business in China, our business, financial condition and results of operations may be materially and adversely affected.” Regulations on Tourism Tourism Law of the PRC, which was promulgated by the Standing Committee of the NPC and most recently amended on October 26, 2018, provides that, among other things, to engage in the businesses of outbound tourism, a travel agency shall obtain corresponding business permit, and the specific conditions shall be provided for by the State Council and that when organizing an outbound touring group, or organizing or receiving an inbound touring group, a travel agency shall, in accordance with the relevant provisions, arrange for a tour leader or tour guide to accompany the touring group in the whole tour.
Number of Schools Number of learning centers Number of bookstores Beijing 5 21 1 Shanghai 1 32 1 Guangzhou 1 30 1 Wuhan 1 25 1 Yangzhou 1 2 — Tianjin 1 17 — Xi’ an 1 24 1 Nanjing 3 30 — Shenyang 1 9 — Chongqing 1 25 1 Chengdu 1 24 — Shenzhen 1 11 — Xiangyang 1 7 — Taiyuan 1 25 — Haerbin 1 8 1 Changsha 1 18 — Jinan 1 24 — Zhengzhou 1 15 — Hangzhou 1 49 — Changchun 2 19 1 Shijiazhuang 1 10 — Suzhou 2 33 — Zhuzhou 1 — — Anshan 1 — — Hefei 1 21 — Kunming 1 6 — Wuxi 1 12 — Foshan 1 4 — Fuzhou 1 17 — Yichang 1 — — Nanchang 1 10 — Jingzhou 1 — — Dalian 1 6 — 52 Table of Contents Number of Schools Number of learning centers Number of bookstores Lanzhou 1 7 1 Huangshi 1 1 — Ningbo 1 4 — Xiamen 1 15 — Qingdao 2 16 — Nanning 1 4 — Xuzhou 1 6 — Zhenjiang 1 2 — Xiangtan 1 — — Luoyang 1 5 — Nantong 1 1 — Hohhot 1 7 — Jilin 1 — — Guiyang 1 3 — Tangshan 1 4 — Urumqi 1 2 — Shiyan 1 1 — Quanzhou 1 2 — Wenzhou 1 4 — Weifang 1 2 — Zhuhai 1 2 — Jinzhou 1 — — Baoding 1 3 — Yantai 1 2 — Taian 1 — — Kaifeng 1 — — Cangzhou 1 — — Anyang 1 — — Handan 1 — — Zhangzhou 1 — — Nanyang 1 — — Zhongshan 1 — — Yinchuan 1 — — Shaoxing 1 4 — Huzhou 1 1 — Hong Kong 1 — — Yancheng 1 — — Jiaozuo 1 1 — Dongguan 1 2 — Haikou 1 — — Yiwu 1 — — Jinhua 1 — — Xining 1 — — Mianyang 1 — — Baotou 1 — — Changshu 1 — — Yuci 1 — — Huizhou 1 — — Chengde 1 — — Zhangjiagang 1 — — Hebi 1 — — Zhumadian 1 — — Weihai 1 — — Xuchang 1 — — Changzhou 1 — — Huaian 1 — — Taizhou 1 1 — Yixing 1 — — Wuhu 1 — — Langfang 1 — — 53 Table of Contents Number of Schools Number of learning centers Number of bookstores Kunshan 1 1 — Jiujiang 1 — — Xianyang 1 — — Zhoukou 1 — — Baoji 1 — — Total 107 637 9 Our Programs, Services and Products We provide a wide variety of educational programs, services and products.
Number of Schools Number of learning centers Number of bookstores Beijing 5 20 1 Shanghai 1 26 1 Guangzhou 1 39 1 Wuhan 1 26 1 Yangzhou 1 4 — Tianjin 1 15 — Xi’ an 1 24 1 Nanjing 2 41 — Shenyang 1 9 — Chongqing 1 22 1 Chengdu 1 23 — Shenzhen 1 16 — Xiangyang 1 7 — Taiyuan 1 21 — Haerbin 1 6 1 Changsha 1 23 — Jinan 1 20 — Zhengzhou 1 16 — Hangzhou 1 46 — Changchun 1 18 1 Shijiazhuang 1 11 — Suzhou 2 33 — Hefei 1 26 — Kunming 1 6 — Wuxi 1 14 — Foshan 1 5 — Fuzhou 1 20 — Nanchang 1 11 — Dalian 1 7 — Lanzhou 1 8 1 Huangshi 1 — — Ningbo 1 3 — Xiamen 1 15 — Qingdao 2 19 — Nanning 1 4 — Xuzhou 1 4 — Zhenjiang 1 5 — Luoyang 1 3 — Nantong 1 2 — Hohhot 1 5 — Jilin 1 — — Guiyang 1 1 — Tangshan 1 6 — Urumqi 1 2 — Shiyan 1 — — Quanzhou 1 3 — Wenzhou 1 3 — Weifang 1 4 — Zhuhai 1 3 — Baoding 1 3 — Yantai 1 4 — Kaifeng 1 — — Handan 1 — — Nanyang 1 — — 69 Table of Contents Number of Schools Number of learning centers Number of bookstores Shaoxing 1 3 — Huzhou 1 — — Hong Kong 1 — — Yancheng 1 — — Jiaozuo 1 1 — Dongguan 1 2 — Haikou 1 — — Yiwu 1 — — Xining 1 — — Mianyang 1 — — Changshu 1 — — Jinzhong 1 — — Huizhou 1 — — Chengde 1 — — Zhangjiagang 1 — — Zhumadian 1 — — Weihai 1 — — Xuchang 1 — — Changzhou 1 — — Huaian 1 3 — Taizhou 1 1 — Wuhu 1 — — Langfang 1 — — Kunshan 1 1 — Total 85 663 9 Our Programs, Services and Products We provide a wide variety of educational programs, services and products.
In addition, advertisements shall accurately describe the product information, including its function, composition, price, use, origin, quality and other information, and shall not deceive or mislead customers. PRC advertising laws and regulations also impose prohibitions and restrictions on advertisements. For instance, superlative wordings such as “the best,” “the most” are prohibited from use in advertisements.
In addition, advertisements shall accurately describe the product information, including its function, composition, price, use, origin, quality and other information, and shall not deceive or mislead customers. PRC advertising laws and regulations also impose prohibitions and restrictions on advertisements.
For example, we face competition from companies that focus on test preparation services in China. 56 Table of Contents We believe that the principal competitive factors in our markets include the following: • brand recognition; • nationwide coverage and high level of scalability; • high teaching quality with superior content; • breadth and quality of program, service and product offerings; • overall student experience; and • innovative technology capabilities.
We believe that the principal competitive factors in our markets include the following: • brand recognition; • nationwide coverage and high level of scalability; • high teaching quality with superior content; • breadth and quality of program, service and product offerings; • overall student experience; and • innovative technology capabilities.
In October 2018, we announced a share repurchase program, pursuant to which we were authorized to repurchase our own common shares or ADSs with an aggregate value of up to US$200 million during the period from October 29, 2018 through May 31, 2019.
In February 2023, the English name of Koolearn has been changed from “Koolearn Technology Holding Limited” to “East Buy Holding Limited.” In October 2018, we announced a share repurchase program, pursuant to which we were authorized to repurchase our own common shares or ADSs with an aggregate value of up to US$200 million during the period from October 29, 2018 through May 31, 2019.
There were no capital contributions made by any PRC governmental authorities to our schools. Nor did any of our schools ever receive donations from any third parties, including PRC governmental authorities or any third party enterprises.
Nor did any of our schools ever receive donations from any third parties, including PRC governmental authorities or any third party enterprises.
New Oriental China and Beijing Xuncheng have obtained the ICP licenses. 64 Table of Contents Regulations on Internet Culture Activities The Ministry of Culture of the PRC promulgated the Internet Culture Administration Tentative Measures, or the Internet Culture Measures, on May 10, 2003, which were last amended on December 15, 2017.
Ltd. and Beijing Siku Yunshu Software Technology Co., Ltd. have obtained the ICP licenses. Regulations on Internet Culture Activities The Ministry of Culture of the PRC promulgated the Internet Culture Administration Tentative Measures, or the Internet Culture Measures, on May 10, 2003, which were last amended on December 15, 2017.
Relevant governmental authorities of each critical industry and sector shall be responsible for formulating eligibility criteria and determining the scope of critical information infrastructure operator in the respective industry or sector and operators will be informed about the final determination as to whether they are categorized as critical information infrastructure operators. 66 Table of Contents On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law, which took effect on November 1, 2021.
Relevant governmental authorities of each critical industry and sector shall be responsible for formulating eligibility criteria and determining the scope of critical information infrastructure operator in the respective industry or sector and operators will be informed about the final determination as to whether they are categorized as critical information infrastructure operators.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

123 edited+31 added−36 removed116 unchanged
Biggest changeFor the Years Ended May 31, (in thousands of US$) 2020 2021 2022 Net revenues of the reportable segments: Educational services and test preparation courses 3,040,741 3,667,270 2,535,318 Online education and other services 152,542 210,591 136,705 Overseas study consulting services 259,817 278,594 325,901 Total net revenues of the reportable segments 3,453,100 4,156,455 2,997,924 Total net revenues of our company 3,578,682 4,276,539 3,105,246 Operating cost and expenses of the reportable segments: Cost of revenues: Educational services and test preparation courses (1,304,239 ) (1,680,779 ) (1,442,156 ) Online education and other services (84,896 ) (145,428 ) (68,732 ) Overseas study consulting services (124,718 ) (127,841 ) (165,673 ) Selling and marketing: Educational services and test preparation courses (218,739 ) (326,708 ) (273,344 ) Online education and other services (126,471 ) (175,092 ) (79,428 ) Overseas study consulting services (56,352 ) (61,259 ) (72,847 ) General and administrative: Educational services and test preparation courses (729,125 ) (955,211 ) (1,308,742 ) Online education and other services (69,060 ) (124,897 ) (72,361 ) Overseas study consulting services (58,133 ) (60,580 ) (61,258 ) Total operating cost and expenses of the reportable segments (2,771,733 ) (3,657,795 ) (3,544,541 ) Total operating cost and expenses of our company (3,179,679 ) (4,159,273 ) (4,087,759 ) Fiscal Year Ended May 31, 2022 Compared to Fiscal Year Ended May 31, 2021 Net Revenues of Reportable Segments Net Revenues of Educational Services and Test Preparation Courses Net revenues from our educational services and test preparation courses decreased by 30.9% from US$3,667.3 million for the fiscal year ended May 31, 2021 to US$2,535.3 million for the fiscal year ended May 31, 2022, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2022 Compared to Fiscal Year Ended May 31, 2021—Net Revenues—Educational Programs and Services.” Net Revenues of Online Education and Other Services Net revenues from online education decreased by 35.1% from US$210.6 million for the fiscal year ended May 31, 2021 to US$136.7 million for the fiscal year ended May 31, 2022, primarily due to the decreased student enrolments of online education.
Biggest changeFor the Years Ended May 31, (in thousands of US$) 2021 2022 2023 Net revenues of the reportable segments: Educational services and test preparation courses 3,667,270 2,535,318 1,825,212 Private label products and livestreaming e-commerce and other services 210,591 136,705 647,161 Overseas study consulting services 278,594 325,901 354,764 Total net revenues of the reportable segments 4,156,455 2,997,924 2,827,137 Total net revenues of our company 4,276,539 3,105,246 2,997,760 Operating cost and expenses of the reportable segments: Cost of revenues: Educational services and test preparation courses (1,680,779 ) (1,442,156 ) (773,989 ) Private label products and livestreaming e-commerce and other services (145,428 ) (68,732 ) (364,645 ) Overseas study consulting services (127,841 ) (165,673 ) (179,284 ) Selling and marketing: Educational services and test preparation courses (326,708 ) (273,344 ) (217,915 ) Private label products and livestreaming e-commerce and other services (175,092 ) (79,428 ) (89,302 ) Overseas study consulting services (61,259 ) (72,847 ) (80,528 ) General and administrative: Educational services and test preparation courses (955,211 ) (1,308,742 ) (503,345 ) Private label products and livestreaming e-commerce and other services (124,897 ) (72,361 ) (50,658 ) Overseas study consulting services (60,580 ) (61,258 ) (61,861 ) Total operating cost and expenses of the reportable segments (3,657,795 ) (3,544,541 ) (2,321,527 ) Total operating cost and expenses of our company (4,159,273 ) (4,087,759 ) (2,807,714 ) Fiscal Year Ended May 31, 2023 Compared to Fiscal Year Ended May 31, 2022 Net Revenues of Reportable Segments Net Revenues of Educational Services and Test Preparation Courses Net revenues from our educational services and test preparation courses decreased by 28.0% from US$2,535.3 million for the fiscal year ended May 31, 2022 to US$1,825.2 million for the fiscal year ended May 31, 2023, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2023 Compared to Fiscal Year Ended May 31, 2022—Net Revenues—Net Service Revenues.” Net Revenues of Private Label Products and Livestreaming E-commerce and Other Services Net revenues from private label products and livestreaming e-commerce and other services increased by 373.4% from US$136.7 million for the fiscal year ended May 31, 2022 to US$647.2 million for the fiscal year ended May 31, 2023, significant increase in the sales of East Buy private label products through our livestreaming e-commerce platform in the fiscal year ended May 31, 2023 as we expanded the product categories of private label products.
Our general and administrative expenses primarily consist of compensation and benefits of administrative staff, R&D expenses, costs of third-party professional services, rental and utilities payments relating to office and administrative functions, and depreciation and impairment of property and equipment and other long-lived assets used in our general and administrative activities.
Expenses Our general and administrative expenses primarily consist of compensation and benefits of administrative staff, R&D expenses, costs of third-party professional services, rental and utilities payments relating to office and administrative functions, and depreciation and impairment of property and equipment and other long-lived assets used in our general and administrative activities.
Operating Cost and Expenses . Our total operating cost and expenses decreased by 1.7% from US$4,159.3 million in the fiscal year ended May 31, 2021 to US$4,087.8 million in the fiscal year ended May 31, 2022.
Our total operating cost and expenses decreased by 1.7% from US$4,159.3 million in the fiscal year ended May 31, 2021 to US$4,087.8 million in the fiscal year ended May 31, 2022.
These segments were aggregated as other services for the fiscal year ended May 31, 2022. For the fiscal year ended May 31, 2022, we identified educational services and test preparation courses, online education and other services and overseas study consulting services as our three reportable segments.
These segments were aggregated as other services for the fiscal year ended May 31, 2022. We identified educational services and test preparation courses, online education and other services and overseas study consulting services as our three reportable segments for the fiscal year ended May 31, 2022.
Risk Factors—Risks Related to Our Corporate Structure” for more information, including the risk factors titled “If the PRC government finds that the agreements that establish the structure for operating some of our China business do not comply with applicable PRC laws and regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations” and “We rely on contractual arrangements for our operations in China, which may not be as effective in providing operational control as direct ownership.” Dividend Distributions Under PRC law, each of our PRC subsidiaries, variable interest entities and their respective subsidiaries which is not a for-profit private school is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory surplus reserve until such reserve reaches 50% of its registered capital and to further set aside a portion of its after-tax profit to fund the reserve fund at the discretion of our board of directors.
Risk Factors—Risks Related to Our Corporate Structure” for more information, including the risk factors titled “If the PRC government finds that the agreements that establish the structure for operating some of our China business do not comply with applicable PRC laws and regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations” and “We rely on contractual arrangements for our operations in China, which is not as effective in providing operational control as direct ownership.” Dividend Distributions Under PRC law, each of our PRC subsidiaries, variable interest entities and their respective subsidiaries which is not a for-profit private school is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory surplus reserve until such reserve reaches 50% of its registered capital and to further set aside a portion of its after-tax profit to fund the reserve fund at the discretion of our board of directors.
We conduct substantially all of our education business in China through contractual arrangements with the variable interest entities, and their schools and subsidiaries and shareholders. See “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with New Oriental China, Its Schools and Subsidiaries and Its Shareholder” and “Item 4. Information on the Company—C.
We conduct substantially all of our business in China through contractual arrangements with the variable interest entities, and their schools and subsidiaries and shareholders. See “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with New Oriental China, Its Schools and Subsidiaries and Its Shareholder” and “Item 4. Information on the Company—C.
Our main websites are located at www.xdf.cn www.neworiental.org and www.koolearn.com. In addition, we have registered other domain names, including including dogwood.com.cn , blingabc.com , ileci.com , 51pigai.com and steamxdf.com .
Our main websites are located at www.xdf.cn, www.neworiental.org, www.eastbuy.com and www.koolearn.com. In addition, we have registered other domain names, including dogwood.com.cn, blingabc.com, ileci.com, 51pigai.com and steamxdf.com.
General and administrative expenses for each of our reportable segments primarily consist of compensation and benefits of administrative staff of our reportable segments, compensation and benefits, rental and utilities payments relating to office and administrative functions of our reportable segments, depreciation and amortization of property and equipment used in the general and administrative activities of our reportable segments and, to a lesser extent, costs to develop our curriculum. 92 Table of Contents The following table lists our net revenues and operating cost and expenses by reportable segment for the periods indicated.
General and administrative expenses for each of our reportable segments primarily consist of compensation and benefits of administrative staff of our reportable segments, compensation and benefits, rental and utilities payments relating to office and administrative functions of our reportable segments, depreciation and amortization of property and equipment used in the general and administrative activities of our reportable segments and, to a lesser extent, costs to develop our curriculum. 122 Table of Contents The following table lists our net revenues and operating cost and expenses by reportable segment for the periods indicated.
Among our schools in four major cities from which we derived a significant portion of our revenues in the fiscal year ended May 31, 2022, three schools are subject to the standard 25% enterprise income tax rate and one school was not required by the governing tax bureau to pay any EIT from its establishment through May 31, 2022.
Among our schools in four major cities from which we derived a significant portion of our revenues in the fiscal year ended May 31, 2023, three schools are subject to the standard 25% enterprise income tax rate and one school was not required by the governing tax bureau to pay any EIT from its establishment through May 31, 2023.
As of May 31, 2022, we had 28 main works of art copyrights and 45 main software copyrights in China relating to various aspects of our operations, and 16 main trademark registrations in China, of which “ ,” “ ,” and “ “ have been recognized as “well-known trademarks” in civil action adjudicated and/or administrative determination in China.
As of May 31, 2023, we had 28 main works of art copyrights and 45 main software copyrights in China relating to various aspects of our operations, and 16 main trademark registrations in China, of which “ ,” “ ,” and “ ” have been recognized as “well-known trademarks” in civil action adjudicated and/or administrative determination in China.
Results of Operations” for a discussion of known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our net revenues, income from operations, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial condition. 100 Table of Contents E.
Results of Operations” for a discussion of known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our net revenues, income from operations, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial condition. E.
Selling and marketing expenses for our educational services and test preparation courses decreased by 16.3% from US$326.7 million for the fiscal year ended May 31, 2021 to US$273.3 million for the fiscal year ended May 31, 2022, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2022 Compared to Fiscal Year Ended May 31, 2021— Operating Costs and Expenses—Selling and Marketing Expenses.” 93 Table of Contents • General and Administrative Expenses.
Selling and marketing expenses for our educational services and test preparation courses decreased by 16.3% from US$326.7 million for the fiscal year ended May 31, 2021 to US$273.3 million for the fiscal year ended May 31, 2022, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2022 Compared to Fiscal Year Ended May 31, 2021— Operating Costs and Expenses—Selling and Marketing Expenses.” • General and Administrative Expenses .
As a result of the foregoing, our net loss for the fiscal year ended May 31, 2022 was US$1,220.3 million, compared to net income of US$230.0 million for the fiscal year ended May 31, 2021. Fiscal Year Ended May 31, 2021 Compared to Fiscal Year Ended May 31, 2020 Net Revenues.
As a result of the foregoing, our net loss for the fiscal year ended May 31, 2022 was US$1,220.3 million, compared to net income of US$230.0 million for the fiscal year ended May 31, 2021.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors” or in other parts of this annual report on Form 20-F. A.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors” or in other parts of this annual report on Form 20-F. 112 Table of Contents A.
Cost of revenues for overseas study consulting services increased by 29.6% from US$127.8 million for the fiscal year ended May 31, 2021 to US$165.7 million for the fiscal year ended May 31, 2022, primarily due to an increase in consulting application costs. • Selling and Marketing Expenses.
Cost of revenues for overseas study consulting services increased by 29.6% from US$127.8 million for the fiscal year ended May 31, 2021 to US$165.7 million for the fiscal year ended May 31, 2022, primarily due to an increase in consulting application costs. 125 Table of Contents • Selling and Marketing Expenses .
Organizational Structure—Contractual Arrangements with Beijing Xuncheng, Its Subsidiaries and Shareholders” for a summary of these contractual arrangements. In the fiscal years ended May 31, 2020, 2021 and 2022, the consolidated affiliated entities contributed in aggregate 96.5%, 99.9% and 99.6%, respectively, of our total net revenues.
Organizational Structure—Contractual Arrangements with Beijing Xuncheng, Its Subsidiaries and Shareholders” for a summary of these contractual arrangements. In the fiscal years ended May 31, 2021, 2022 and 2023, the consolidated affiliated entities contributed in aggregate 99.9%, 99.6% and 99.5%, respectively, of our total net revenues.
We employed approximately 54,200 and 26,300 teachers as of May 31, 2021 and 2022, respectively. 90 Table of Contents • Cost of Revenues . Our cost of revenues decreased by 13.9% from US$ 2,036.9 million in the fiscal year ended May 31, 2021 to US$1,754.3 million in the fiscal year ended May 31, 2022.
We employed approximately 54,200 and 26,300 teachers as of May 31, 2021 and 2022, respectively. • Cost of Revenues . Our cost of revenues decreased by 13.9% from US$ 2,036.9 million in the fiscal year ended May 31, 2021 to US$1,754.3 million in the fiscal year ended May 31, 2022.
For non-vested equity shares granted to employees and directors, we record share-based compensation expenses based on the quoted market price of our ADSs on the grant date and amortize the expenses over the vesting periods of the non-vested equity shares. Taxation Cayman Islands We are incorporated in the Cayman Islands.
For non-vested equity shares granted to employees and directors, we record share-based compensation expenses based on the quoted market price of our ADSs on the grant date and amortize the expenses over the vesting periods of the non-vested equity shares. 116 Table of Contents Taxation Cayman Islands We are incorporated in the Cayman Islands.
We have purchased limited liability insurance for some of our schools and learning centers. We also provide social security insurance for our employees as required by local governmental authorities. We maintain key-man life insurance. We consider our insurance coverage to be in line with that of other private education providers in China. D. Trend Information Please refer to “—A.
We have purchased limited liability insurance for some of our schools and learning centers. We also provide social security insurance for our employees as required by local governmental authorities. We consider our insurance coverage to be in line with that of other private education providers in China. D. Trend Information Please refer to “—A.
The following table sets forth the allocation of our share-based compensation expenses (including Koolearn’s share-based compensation expenses), both in absolute amount and as a percentage of total share-based compensation expenses, among our employees based on the nature of work which they were assigned to perform.
The following table sets forth the allocation of our share-based compensation expenses (including East Buy’s share-based compensation expenses), both in absolute amount and as a percentage of total share-based compensation expenses, among our employees based on the nature of work which they were assigned to perform.
The following table sets forth a summary of our cash and cash equivalents, restricted cash and short-term investments inside and outside China as of May 31, 2022.
The following table sets forth a summary of our cash and cash equivalents, restricted cash and short-term investments inside and outside China as of May 31, 2023.
Cost of revenues for educational programs and services primarily consists of teaching fees and performance-linked bonuses paid to our teachers and rental payments for our schools and learning centers and, to a lesser degree, depreciation and amortization of property and equipment used in the provision of educational services, as well as costs of course materials.
Cost of revenues for educational services and test preparation courses primarily consists of teaching fees and performance-linked bonuses paid to our teachers and rental payments for our schools and learning centers and, to a lesser degree, depreciation and amortization of property and equipment used in the provision of educational services, as well as costs of course materials.
This decrease was primarily due to the decrease in revenues from educational services and test preparation courses from US$3,667.3 million in the fiscal year ended May 31, 2021 to US$2,535.3 million in the fiscal year ended May 31, 2022 mainly as a result of the cessation of K-9 Academic AST services. • Books and Other Services .
This decrease was primarily due to the decrease in revenues from educational services and test preparation courses from US$3,667.3 million in the fiscal year ended May 31, 2021 to US$2,535.3 million in the fiscal year ended May 31, 2022 mainly as a result of the cessation of K-9 Academic AST services. • Net Product Revenues .
Our net cash used in operating activities in the fiscal year ended May 31, 2022 reflected net loss of US$1,220.3 million, as adjusted by the reconciliation of certain non-cash items, including US$192.3 million in depreciation and US$133.0 million in share-based compensation expense.
Net cash used in operating activities amounted to US$1,280.5 million in the fiscal year ended May 31, 2022. Our net cash used in operating activities in the fiscal year ended May 31, 2022 reflected net loss of US$1,220.3 million, as adjusted by the reconciliation of certain non-cash items, including US$192.3 million in depreciation and US$133.0 million in share-based compensation expense.
On January 30, 2019, the board of directors of Koolearn approved an employee’s share option plan, or the Kooleam Post-IPO Share Option Scheme, under which Koolearn is authorized to issue up to 91,395,910 shares in Koolearn pursuant to awards granted to, among others, directors, employees of Koolearn or its affiliate.
On January 30, 2019, the board of directors of East Buy approved an employee’s share option plan, or the East Buy Post-IPO Share Option Scheme, under which East Buy is authorized to issue up to 91,395,910 shares in East Buy pursuant to awards granted to, among others, directors, employees of East Buy or its affiliate.
Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of May 31, 2022. 97 Table of Contents Holding Company Structure Overview New Oriental is a holding company with no material operations of its own.
Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of May 31, 2023. 128 Table of Contents Holding Company Structure Overview New Oriental is a holding company with no material operations of its own.
We have developed our computerized assessment testing system which tests students’ capabilities and presents summary reports on students’ performance in class and within their student group. Interactive courseware. We have developed digital interactive courseware which standardizes course materials and provides more interaction between teachers and students. 99 Table of Contents Realskill.
We have developed our computerized assessment testing system which tests students’ capabilities and presents summary reports on students’ performance in class and within their student group. Interactive courseware . We have developed digital interactive courseware which standardizes course materials and provides more interaction between teachers and students. Realskill .
Selling and Marketing Expenses . Our selling and marketing expenses primarily consist of human resources expenses and other expenses relating to advertising, seminars, marketing and promotional trips and other community activities for brand promotion purpose. General and Administrative Expenses .
Expenses Our selling and marketing expenses primarily consist of human resources expenses and other expenses relating to advertising, seminars, marketing and promotional trips and other community activities for brand promotion purpose. 115 Table of Contents General and Administrative .
We believe our strong technology capabilities enable us to deliver a superior learning experience and improve our operational efficiency. We employ experienced research and development personnel to build, maintain and upgrade our technologies and systems. We had approximately 4,000, 5,100 and 3,000 research and development personnel as of May 31, 2020, 2021 and 2022, respectively.
We believe our strong technology capabilities enable us to deliver a superior learning experience and improve our operational efficiency. We employ experienced research and development personnel to build, maintain and upgrade our technologies and systems. We had approximately 5,100, 3,000 and 2,900 research and development personnel as of May 31, 2021, 2022 and 2023, respectively.
Net cash provided by investing activities amounted to US$1,168.5 million in the fiscal year ended May 31, 2022, compared to net cash used in investing activities of US$2,177.6 million in the fiscal year ended May 31, 2021 and US$1,256.4 million in the fiscal year ended May 31, 2020.
Net cash used in investing activities amounted to US$37.4 million in the fiscal year ended May 31, 2023, compared to net cash provided by investing activities of US$1,168.5 million in the fiscal year ended May 31, 2022 and net cash used in investing activities of US$2,177.6 million in the fiscal year ended May 31, 2021.
The COV1D-19 outbreak may continue affect our business operations and its financial condition and operating results for the fiscal year 2023, including but not limited to negative impact to our total revenues, fair value adjustments or impairment to our long term investments and impairment of long-lived assets. Selected Statements of Operations Items Net Revenues.
The COV1D-19 outbreak may affect our business operations and its financial condition and operating results for future years, including but not limited to negative impact to our total revenues, fair value adjustments or impairment to our long term investments and impairment of long-lived assets. Selected Statements of Operations Items Net Revenues.
As of May 31, 2022, the payment due within one year and thereafter for our operating lease commitments amounted to US$686.1 million. Our long-term debt obligations consist of the principal amount and cash interests in connection with unsecured senior notes issued in July 2020.
As of May 31, 2023, the payment due within one year and thereafter for our operating lease commitments amounted to US$480.8 million. Our long-term debt obligations consist of the principal amount and cash interests in connection with unsecured senior notes issued in July 2020.
Net cash used in financing activities in the fiscal year ended May 31, 2022 was primarily attributable to the bonds repurchase in the amount of US$222.0 million.
Net cash used in financing activities in the fiscal year ended May 31, 2022 was primarily attributable to the unsecured senior notes repurchase in the amount of US$222.0 million.
General and administrative expenses for our educational services and test preparation courses increased by 37.0% from US$955.2 million for the fiscal year ended May 31, 2021 to US$1,308.7 million for the fiscal year ended May 31, 2022, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2022 Compared to Fiscal Year Ended May 31, 2021—Operating Costs and Expenses—General and Administrative Expenses.” Operating Cost and Expenses of Online Education and Other Services • Cost of Revenues.
General and administrative expenses for our educational services and test preparation courses increased by 37.0% from US$955.2 million for the fiscal year ended May 31, 2021 to US$1,308.7 million for the fiscal year ended May 31, 2022, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2022 Compared to Fiscal Year Ended May 31, 2021—Operating Costs and Expenses—General and Administrative Expenses.” Operating Cost and Expenses of Private Label Products and Livestreaming E-commerce and Other Services • Cost of Revenues .
In the fiscal years ended May 31, 2020, 2021 and 2022, we generated total net revenues of US$3,578.7 million, US$4,276.5 million and US$3,105.2 million, respectively. Our revenues are net of PRC business taxes and related surcharges as well as refunds.
In the fiscal years ended May 31, 2021, 2022 and 2023, we generated total net revenues of US$4,276.5 million, US$3,105.2 million, and US$2,997.8 million respectively. Our revenues are net of PRC business taxes and related surcharges as well as refunds.
Additional factors affecting operating cash flow included an decrease in the deferred revenue in the amount of US$925.0 million due to the increased amount of course fees received during the period, and an decrease in the accrued expenses and other current liabilities account of US$315.8 million, primarily due to an decrease in accrued employee salary expenses and welfare benefits.
Additional factors affecting operating cash flow included an decrease in the deferred revenue in the amount of US$925.0 million, and an decrease in the accrued expenses and other current liabilities account of US$315.8 million, primarily due to an decrease in accrued employee salary expenses and welfare benefits.
Our capital expenditures were US$309.5 million, US$429.2 million and US$150.7 million in the fiscal years ended May 31, 2020, 2021 and 2022, respectively. Our capital expenditures are incurred primarily in connection with facility acquisitions, leasehold improvements and investments in equipment, technology and operating systems.
Our capital expenditures were US$429.2 million, US$150.7 million and US$143.0 million in the fiscal years ended May 31, 2021, 2022 and 2023, respectively. Our capital expenditures are incurred primarily in connection with facility acquisitions, leasehold improvements and investments in equipment, technology and operating systems.
This decrease was due to cessation of K-9 Academic AST services during the year ended May 31, 2022 to be in compliance with applicable regulations, rules and policies in China. • Educational Programs and Services .
This decrease was due to cessation of K-9 Academic AST services during the year ended May 31, 2022 to be in compliance with applicable regulations, rules and policies in China. • Net Service Revenues .
Material cash requirements Our material cash requirements as of May 31, 2022 and any subsequent interim period primarily include our capital expenditures, operating lease commitments, and long-term debt obligations. The expansion of our existing program, service and product offerings to new areas and launch of new business initiatives have required investment.
Material cash requirements Our material cash requirements as of May 31, 2023 and any subsequent interim period primarily include our capital expenditures, operating lease commitments, long-term debt obligations and funds used for share repurchase. The expansion of our existing program, service and product offerings to new areas and launch of new business initiatives have required investment.
Net revenues from our educational services and test preparation courses accounted for 85.0%, 85.8% and 81.6%, respectively, of our total net revenues in the fiscal years ended May 31, 2020, 2021 and 2022.
Revenues from educational services and test preparation courses accounted for 85.8%, 81.6% and 60.9%, respectively, of our total net revenues in the fiscal years ended May 31, 2021, 2022 and 2023.
For the Years Ended May 31, 2020 2021 2022 (in thousands, except percentages) US$ % US$ % US$ % Allocation of Share-based Compensation Expense: Cost of revenues 2,224 3.6 6,698 9.7 (131 ) (0.1 ) Selling and marketing 4,227 6.8 6,922 10.1 (2,437 ) (1.8 ) General and administrative 55,606 89.6 55,260 80.2 135,536 101.9 Total 62,057 100.0 68,880 100.0 132,968 100.0 For options granted to our employees and directors, we record share-based compensation expenses based on the fair value of our common shares underlying options as of the date of option grant and amortize the expenses over the vesting periods of the options.
For the Years Ended May 31, 2021 2022 2023 (in thousands, except percentages) US$ % US$ % US$ % Allocation of Share-based Compensation Expense: Cost of revenues 6,698 9.7 (131 ) (0.1 ) 2,749 3.1 Selling and marketing 6,922 10.1 (2,437 ) (1.8 ) 5,750 6.4 General and administrative 55,260 80.2 135,536 101.9 81,289 90.5 Total 68,880 100.0 132,968 100.0 89,788 100.0 For options granted to our employees and directors, we record share-based compensation expenses based on the fair value of our common shares underlying options as of the date of option grant and amortize the expenses over the vesting periods of the options.
Cost of revenues for online education and other services decreased by 52.7% from US$145.4 million for the fiscal year ended May 31, 2021 to US$68.7 million for the fiscal year ended May 31, 2022, primarily due to a decrease in teaching staff costs and course research staff costs. • Selling and Marketing Expenses.
Cost of revenues for private label products and livestreaming e-commerce and other services decreased by 52.7% from US$145.4 million for the fiscal year ended May 31, 2021 to US$68.7 million for the fiscal year ended May 31, 2022, primarily due to a decrease in teaching staff costs and course research staff costs. • Selling and Marketing Expenses .
Additional factors affecting operating cash flow included an increase in the deferred revenue in the amount of US$61.9 million due to the increased amount of course fees received during the period, and an increase in the accrued expenses and other current liabilities account of US$63.7 million, primarily due to an increase in accrued employee salary expenses and welfare benefits.
Additional factors affecting operating cash flow included an increase in the deferred revenue in the amount of US$469.3 million due to the increased amount of course fees received during the period, and an increase in the accrued expenses and other current liabilities account of US$83.4 million, primarily due to an increase in accrued employee salary expenses and welfare benefits.
Selling and marketing expenses for online education and other services decreased by 54.6% from US$175.1 million for the fiscal year ended May 31, 2021 to US$79.4 million for the fiscal year ended May 31, 2022, primarily due to a decrease in staff costs. • General and Administrative Expenses.
Selling and marketing expenses for private label products and livestreaming e-commerce and other services decreased by 54.6% from US$175.1 million for the fiscal year ended May 31, 2021 to US$79.4 million for the fiscal year ended May 31, 2022, primarily due to a decrease in staff costs. • General and Administrative Expenses .
As of May 31, 2021 and 2022, US$612.3 million and US$864.0 million, respectively, of these assets were denominated in U.S. dollars, and US$4,500.0 million and US$2,788.4 million, respectively, of these assets were denominated in RMB and the remaining are denominated in other foreign currencies, including British pounds and Hong Kong dollars.
As of May 31, 2022 and 2023, US$864.0 million and US$1,013.3 million, respectively, of these assets were denominated in U.S. dollars, and US$2,788.4 million, respectively US$1,240.6 million, of these assets were denominated in RMB and the remaining are denominated in other foreign currencies, including British pounds and Hong Kong dollars.
Net revenues from overseas study consulting services accounted for 7.3%, 6.5% and 10.5%, respectively, of our total net revenues in the fiscal years ended May 31, 2020, 2021 and 2022.
Net revenues from overseas study consulting services accounted for 6.5%, 10.5% and 11.8%, respectively, of our total net revenues in the fiscal years ended May 31, 2021, 2022 and 2023.
The following table sets forth the components of our operating cost and expenses as a percentage of total net revenues for the periods indicated.
Operating Cost and Expenses Our operating cost and expenses consist of cost of revenues, selling and marketing expenses and general and administrative expenses. The following table sets forth the components of our operating cost and expenses as a percentage of total net revenues for the periods indicated.
Our operations not conducted through contractual arrangements with the variable interest entities primarily consist of the leasing of our commercial property. As of May 31, 2021 and 2022, the consolidated affiliated entities accounted for an aggregate of 68.0% and 51.9%, respectively, of our total assets, and 92.6% and 95.4%, respectively, of our total liabilities.
Our operations not conducted through contractual arrangements with the variable interest entities primarily consist of the leasing of our commercial property. As of May 31, 2022 and 2023, the consolidated affiliated entities accounted for an aggregate of 51.9% and 56.1%, respectively, of our total assets, and 95.4% and 95.2%, respectively, of our total liabilities.
For the years ended May 31, 2020 and 2021, the number of shares used in calculating basic and diluted net income per common share have been retrospectively adjusted to reflect the ADS ratio change from one ADS representing one common share to one ADS representing ten common shares, which became effective on April 8, 2022.
For the year ended May 31, 2021, the number of shares used in calculating basic and diluted net income per common share have been retrospectively adjusted to reflect the ADS ratio change from one ADS representing one common share to one ADS representing ten common shares, which became effective on April 8, 2022. 119 Table of Contents Fiscal Year Ended May 31, 2023 Compared to Fiscal Year Ended May 31, 2022 Net Revenues .
We regularly back up our database on a server hosted at an Internet data center to minimize the impact of data loss due to system failures. We do not capitalize any related costs.
We regularly back up our database on a server hosted at an Internet data center to minimize the impact of data loss due to system failures.
Application of 5G We have partnered with hardware service providers and telecom operators to provide remote education services leveraging 5G technologies to further differentiate us from smaller-scale peers and at the same time reduce reliance on local teachers.
We do not capitalize any related costs. 131 Table of Contents Application of 5G We have partnered with hardware service providers and telecom operators to provide remote education services leveraging 5G technologies to further differentiate us from smaller-scale peers and at the same time reduce reliance on local teachers.
As of May 31, 2022, the net assets of our PRC subsidiaries and variable interest entities and their schools and subsidiaries which were restricted due to statutory reserve requirements and other applicable laws and regulations, and thus not available for distribution, were in aggregate US$693.2 million, and the net assets of our PRC subsidiaries and variable interest entities and their schools and subsidiaries which were unrestricted and thus available for distribution were in aggregate US$2.053 million.
As of May 31, 2023, the net assets of our PRC subsidiaries and variable interest entities and their schools and subsidiaries which were restricted due to statutory reserve requirements and other applicable laws and regulations, and thus not available for distribution, were in aggregate US$935.0 million, and the net assets of our PRC subsidiaries and variable interest entities and their schools and subsidiaries which were unrestricted and thus available for distribution were in aggregate US$1,549.3 million.
Our OMO system leverages big data analysis to enhance our operational efficiency, including understanding students’ learning needs and generating customized teaching content and services for each student, as well as allowing teachers to prepare lessons through a standardized and structured process.
We have built strong data analytics capabilities using algorithms, models and data analytics tools. Our OMO system leverages big data analysis to enhance our operational efficiency, including understanding students’ learning needs and generating customized teaching content and services for each student, as well as allowing teachers to prepare lessons through a standardized and structured process.
Educational Programs and Services. Our educational programs and services consist of educational services and test preparation courses, and online education and other services. Revenues from educational services and test preparation courses accounted for 85.0%, 85.8% and 81.6%, respectively, of our total net revenues in the fiscal years ended May 31, 2020, 2021 and 2022.
Net revenues from our educational services and test preparation courses accounted for 85.8%, 81.6% and 60.9%, respectively, of our total net revenues in the fiscal years ended May 31, 2021, 2022 and 2023.
Risk Factors—Risks Related to Our Corporate Structure—We may rely on dividends and other distributions on equity paid by our wholly-owned subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiaries or New Oriental China and its schools and subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business” for more information. 98 Table of Contents Furthermore, cash transfers from our PRC subsidiaries to our Hong Kong-incorporated intermediate holding companies are subject to PRC government control of currency conversion.
Risk Factors—Risks Related to Our Corporate Structure—We may rely on dividends and other distributions on equity paid by our wholly-owned subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiaries or New Oriental China and its schools and subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business” for more information.
The following table sets forth a summary of our cash flows for the periods indicated: For the Years Ended May 31, (in thousands of US$) 2020 2021 2022 Net cash provided by/(used in) operating activities 804,455 1,130,085 (1,280,453 ) Net cash (used in)/provided by investing activities (1,256,370 ) (2,177,639 ) 1,168,532 Net cash (used in)/provided by financing activities (17,862 ) 1,654,084 (230,858 ) Effect of foreign exchange rate changes (29,026 ) 106,173 (94,821 ) Net change in cash and cash equivalents (498,803 ) 712,703 (437,600 ) Cash and cash equivalents and restricted cash at beginning of the period 1,418,227 919,424 1,632,127 Cash and cash equivalents and restricted cash at end of the period 919,424 1,632,127 1,194,527 Operating Activities Net cash used in operating activities amounted to US$1,280.5 million in the fiscal year ended May 31, 2022.
The following table sets forth a summary of our cash flows for the periods indicated: For the Years Ended May 31, (in thousands of US$) 2021 2022 2023 Net cash provided by/(used in) operating activities 1,130,085 (1,280,453 ) 971,008 Net cash (used in)/provided by investing activities (2,177,639 ) 1,168,532 (37,411 ) Net cash provided by/(used in) financing activities 1,654,084 (230,858 ) (246,867 ) Effect of foreign exchange rate changes 106,173 (94,821 ) (75,830 ) Net change in cash and cash equivalents 712,703 (437,600 ) 610,900 Cash and cash equivalents and restricted cash at beginning of the period 919,424 1,632,127 1,194,527 Cash and cash equivalents and restricted cash at end of the period 1,632,127 1,194,527 1,805,427 126 Table of Contents Operating Activities Net cash provided by operating activities amounted to US$971.0 million in the fiscal year ended May 31, 2023.
As of May 31, 2020, 2021 and 2022, the total amount of service fees payable to our PRC subsidiaries from the variable interest entities under the service agreements was US$429.8 million, US$462.6 million and US$321.9 million, respectively.
As of May 31, 2021, 2022 and 2023, the total amount of service fees payable to our PRC subsidiaries from the variable interest entities under the service agreements was US$548.2 million, US$580.8 million US$61.8 million, respectively.
For the Years Ended May 31, 2020 2021 2022 (in thousands, except percentages) US$ % US$ % US$ % Net revenues 3,578,682 100.0 4,276,539 100.0 3,105,246 100.0 Operating cost and expenses: Cost of revenues (1,588,899 ) (44.4 ) (2,036,875 ) (47.6 ) (1,754,291 ) (56.5 ) Selling and marketing (445,259 ) (12.4 ) (600,778 ) (14.0 ) (466,895 ) (15.0 ) General and administrative (1,145,521 ) (32.0 ) (1,489,826 ) (34.8 ) (1,866,573 ) (60.1 ) Impairment loss on intangible assets and goodwill — — (31,794 ) (0.7 ) — — Total operating cost and expenses (3,179,679 ) (88.9 ) (4,159,273 ) (97.3 ) (4,087,759 ) (131.6 ) Cost of Revenues .
For the Years Ended May 31, 2021 2022 2023 (in thousands, except percentages) US$ % US$ % US$ % Net revenues 4,276,539 100.0 3,105,246 100.0 2,997,760 100.0 Operating cost and expenses: Cost of revenues (2,036,875 ) (47.6 ) (1,754,291 ) (56.5 ) (1,409,438 ) (47.0 ) Selling and marketing (600,778 ) (14.0 ) (466,895 ) (15.0 ) (444,693 ) (14.8 ) General and administrative (1,489,826 ) (34.8 ) (1,866,573 ) (60.1 ) (953,583 ) (31.8 ) Impairment loss on intangible assets and goodwill (31,794 ) (0.7 ) — — — — Total operating cost and expenses (4,159,273 ) (97.3 ) (4,087,759 ) (131.6 ) (2,807,714 ) (93.6 ) Cost of Revenues .
Discussion of Segment Operations For the fiscal years ended May 31, 2020 and 2021, we previously identified seven operating segments, including (i) K-12 AST, test preparation, and other courses, (ii) primary and secondary school education, (iii) online education, (iv) content development and distribution, (v) pre-school education, (vi) overseas study consulting services, and (vii) study tour.
Discussion of Segment Operations For the fiscal year ended May 31, 2021, we previously identified seven operating segments, including (i) K-12 AST, test preparation, and other courses, (ii) primary and secondary school education, (iii) online education, (iv) content development and distribution, (v) pre-school education, (vi) overseas study consulting services, and (vii) study tour. 121 Table of Contents For the fiscal year ended May 31, 2022, as a result of the changes in the regulatory environment, we reduced our operating segments from seven to four.
We track the number of teachers, schools and learning centers as a key indicator for our operating cost and expenses and manage our expenditures and budget accordingly. Our total numbers of schools and learning centers were 122 and 1,547, respectively, as of May 31, 2021, compared to 104 and 1,361, respectively, as of May 31, 2020.
We track the number of teachers, schools and learning centers as a key indicator for our operating cost and expenses and manage our expenditures and budget accordingly. Our total numbers of schools and learning centers were 85 and 663, respectively, as of May 31, 2023, compared to 107 and 637, respectively, as of May 31, 2022.
Cost of revenues for our educational services and test preparation courses increased by 28.9% from US$1,304.2 million for the fiscal year ended May 31, 2020 to US$1,680.8 million for the fiscal year ended May 31, 2021, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2021 Compared to Fiscal Year Ended May 31, 2020—Operating Costs and Expenses—Cost of Revenues.” • Selling and Marketing Expenses.
Cost of revenues for our educational services and test preparation courses decreased by 46.3% from US$1,442.2 million for the fiscal year ended May 31, 2022 to US$774.0 million for the fiscal year ended May 31, 2023, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2023 Compared to Fiscal Year Ended May 31, 2022—Operating Costs and Expenses—Cost of Revenues.” • Selling and Marketing Expenses .
(2)(3) -Basic 0.26 0.20 (0.70 ) -Diluted 0.26 0.20 (0.70 ) Weighted average shares used in calculating basic net income/(loss) per common share (3) 1,584,295,760 1,645,463,440 1,696,419,232 Weighted average shares used in calculating diluted net income/(loss) per common share (3) 1,595,368,900 1,651,982,384 1,696,419,232 Cost of revenues 2,224 6,698 (131 ) Selling and marketing 4,227 6,922 (2,437 ) General and administrative 55,606 55,260 135,536 Total 62,057 68,880 132,968 (1) Share-based compensation expenses are included in our operating cost and expenses as follows: For the Years Ended May 31, (in thousands of US$) 2020 2021 2022 Cost of revenues 2,224 6,698 (131 ) Selling and marketing 4,227 6,922 (2,437 ) General and administrative 55,606 55,260 135,536 Total 62,057 68,880 132,968 (2) Each ADS represents ten common shares.
(2) -Basic 0.20 (0.70 ) 0.11 -Diluted 0.20 (0.70 ) 0.10 Weighted average shares used in calculating basic net income/(loss) per common share 1,645,463,440 1,696,419,232 1,678,264,547 Weighted average shares used in calculating diluted net income/(loss) per common share 1,651,982,384 1,696,419,232 1,685,631,987 (1) Share-based compensation expenses are included in our operating cost and expenses as follows: For the Years Ended May 31, (in thousands of US$) 2021 2022 2023 Cost of revenues 6,698 (131 ) 2,749 Selling and marketing 6,922 (2,437 ) 5,750 General and administrative 55,260 135,536 81,289 Total 68,880 132,968 89,788 (2) Each ADS represents ten common shares.
Net cash provided by investing activities in the fiscal year ended May 31, 2022 was primarily attributable to proceeds from maturity of short-term investments of US$2,041.0 million, partially offset by purchase of short-term investments of US$540.8 million and purchase of property and equipment of US$150.7 million. 96 Table of Contents Net cash used in investing activities in the fiscal year ended May 31, 2021 was primarily attributable to net purchase of short term held-to-maturity investments in the amount of US$801.3 million, purchase of term deposits in the amount of US$1,203.6 million and the purchase of property and equipment in the amount of US$429.2 million in connection with the expansion of our school network.
Net cash used in investing activities in the fiscal year ended May 31, 2021 was primarily attributable to net purchase of short term investments in the amount of US$801.3 million, purchase of term deposits in the amount of US$1,203.6 million and the purchase of property and equipment in the amount of US$429.2 million in connection with the expansion of our school network.
An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that could reasonably have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.
Since our financial reporting process inherently relies on the use of estimates and assumptions, actual results may differ from these estimates under different assumptions or conditions. 132 Table of Contents An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that could reasonably have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.
We recognize revenues from course fees collected for enrollment in our educational services and test preparation courses and online education proportionally as we deliver the instruction over the period of the course.
We recognize revenues from course fees collected for enrollment in our educational services and test preparation courses and online education proportionally as we deliver the instruction over the period of the course. We recognize revenues from the sales of private label products when control of the promised goods is transferred to the customer.
As of May 31, 2022, options to obtain an aggregate of 35,911,985 shares in Koolearn remained outstanding under the Koolearn Pre-IPO Share Option Scheme. Options to obtain 837,500 shares in Koolearn were forfeited and no shares were cancelled in the fiscal year ended May 31, 2022.
As of May 31, 2023, options to obtain an aggregate of 27,084,385 shares in East Buy remained outstanding under the East Buy Pre-IPO Share Option Scheme. No options were forfeited and no shares were cancelled in the fiscal year ended May 31, 2023.
Our operating segment, educational materials and distribution, individually did not exceed the 10% quantitative threshold during the fiscal year ended May 31, 2022, and as a result, was aggregated in other services. Prior period segment information has been restated to conform to the fiscal year of 2022 presentation.
Our operating segment, educational materials and distribution, individually did not exceed the 10% quantitative threshold during the fiscal year ended May 31, 2022, and as a result, was aggregated in others.
General and administrative expenses for online education and othe services decreased by 42.1% from US$124.9 million for the fiscal year ended May 31, 2021 to US$72.4 million for the fiscal year ended May 31, 2022, primarily due to a decrease in share-based compensation expenses and staff costs. Operating Cost and Expenses of Overseas Study Consulting Services • Cost of Revenues.
General and administrative expenses for private label products and livestreaming e-commerce and other services decreased by 42.1% from US$124.9 million for the fiscal year ended May 31, 2021 to US$72.4 million for the fiscal year ended May 31, 2022, primarily due to a decrease in share-based compensation expenses and staff costs.
Pursuant to contractual arrangements that our wholly-owned subsidiaries in China have with the variable interest entities, the earnings and cash of variable interest entities and their schools and subsidiaries are used to pay service fees in RMB to our PRC subsidiaries in the manner and amount set forth in these agreements.
Our PRC subsidiaries are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. 129 Table of Contents Pursuant to contractual arrangements that our wholly-owned subsidiaries in China have with the variable interest entities, the earnings and cash of variable interest entities and their schools and subsidiaries are used to pay service fees in RMB to our PRC subsidiaries in the manner and amount set forth in these agreements.
General and administrative expenses for overseas study consulting services increased by 1.1% from US$60.6 million for the fiscal year ended May 31, 2021 to US$61.3 million for the fiscal year ended May 31, 2022.
General and administrative expenses for overseas study consulting services increased by 1.1% from US$60.6 million for the fiscal year ended May 31, 2021 to US$61.3 million for the fiscal year ended May 31, 2022. B. Liquidity and Capital Resources Our principal source of liquidity has been cash generated from operating activities.
Since the adoption of our 2016 Share Incentive Plan, we have granted a total of 50,922,168 non-vested equity shares, among which, 19,595,518 and nil were granted in the fiscal years ended May 31, 2021 and 2022, respectively, 428,228 and 1,536,112 shares were forfeited in the fiscal years ended May 31, 2021 and 2022, respectively.
Since the adoption of our 2016 Share Incentive Plan, we have granted a total of 71,681,298 non-vested equity shares, among which, nil and 20,759,130 were granted in the fiscal years ended May 31, 2022 and 2023, respectively, 1,536,112 and 1,324,092 shares were forfeited in the fiscal years ended May 31, 2022 and 2023, respectively.
Our cash and cash equivalents consist of cash on hand and liquid investments that are unrestricted as to withdrawal or use, have maturities of three months or less and are placed with banks and other financial institutions.
As of May 31, 2023, we had US$1,663.0 million and US$142.4 million in cash and cash equivalents and restricted cash, respectively. Our cash and cash equivalents consist of cash on hand and liquid investments that are unrestricted as to withdrawal or use, have maturities of three months or less and are placed with banks and other financial institutions.
Selling and marketing expenses for our educational services and test preparation courses increased by 49.4% from US$218.7 million for the fiscal year ended May 31, 2020 to US$326.7 million for the fiscal year ended May 31, 2021, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2021 Compared to Fiscal Year Ended May 31, 2020— Operating Costs and Expenses—Selling and Marketing Expenses.” 94 Table of Contents • General and Administrative Expenses.
Selling and marketing expenses for our educational services and test preparation courses decreased by 20.3% from US$273.3 million for the fiscal year ended May 31, 2022 to US$217.9 million for the fiscal year ended May 31, 2023, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2023 Compared to Fiscal Year Ended May 31, 2022— Operating Costs and Expenses—Selling and Marketing Expenses.” • General and Administrative Expenses .
Hainan Haiyue, Hainan Dongfang Zhixin Technology Company Limited, Zhuhai Zekai Software Technology Company Limited, Hainan Dongfang Huizhi Technology Company Limited enjoyed the enterprise income tax of 15% because of the preferential corporate income tax policies for local tax concessions.
Hainan Dongfang Zhixin Technology Company Limited, Zhuhai Zekai Software Technology Company Limited, Zhuhai Chongshengheli Network Technology Co., Ltd and Tibet Tianli enjoyed the EIT tax rate of 15% because of the preferential corporate income tax policies for local tax concessions.
Once their renewals are completed, these companies will be eligible for a favorable EIT rate of 15% starting from January 1, 2022 again.
Currently, these enterprises are in process of renewing their qualification of HNTE. Once their renewals are completed, these enterprises will be eligible for a favorable EIT rate of 15% starting January 1, 2023 again.
Net revenues from online education and other services accounted for 4.3%, 4.9% and 4.4%, respectively, of our total net revenues in the fiscal years ended May 31, 2020, 2021 and 2022.
Net revenues from private label products and livestreaming e-commerce and other services accounted for 4.9%, 4.4% and 21.6%, respectively, of our total net revenues in the fiscal years ended May 31, 2021, 2022 and 2023.
Fiscal Year Ended May 31, 2021 Compared to Fiscal Year Ended May 31, 2020 Net Revenues of Reportable Segments Net Revenues of Educational Services and Test Preparation Courses Net revenues from our educational services and test preparation courses increased by 20.6% from US$3,040.7 million for the fiscal year ended May 31, 2020 to US$3,667.3 million for the fiscal year ended May 31, 2021, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2021 Compared to Fiscal Year Ended May 31, 2020—Net Revenues—Educational Programs and Services.” Net Revenues of Online Education and Other Services Net revenues from online education and other services increased by 38.1% from US$152.5 million for the fiscal year ended May 31, 2020 to US$210.6 million for the fiscal year ended May 31, 2021, primarily due to the increased student enrolments of online education.
Fiscal Year Ended May 31, 2022 Compared to Fiscal Year Ended May 31, 2021 Net Revenues of Reportable Segments Net Revenues of Educational Services and Test Preparation Courses Net revenues from our educational services and test preparation courses decreased by 30.9% from US$3,667.3 million for the fiscal year ended May 31, 2021 to US$2,535.3 million for the fiscal year ended May 31, 2022, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2022 Compared to Fiscal Year Ended May 31, 2021—Net Revenues—Net Service Revenues.” 124 Table of Contents Net Revenues of Private Label Products and Livestreaming E-commerce and Other Services Net revenues from private label products and livestreaming e-commerce and other services decreased by 35.1% from US$210.6 million for the fiscal year ended May 31, 2021 to US$136.7 million for the fiscal year ended May 31, 2022, primarily due to the decreased student enrolments of online education.
During the COVID-19 outbreak, our continued investment in OMO system enabled us to swiftly and effectively move our offline classes to online live broadcasting classes while maintaining the high quality of our services.
During the COVID-19 outbreak, our continued investment in OMO system enabled us to swiftly and effectively move our offline classes to online live broadcasting classes while maintaining the high quality of our services. China began to modify its zero-COVID policy at the end of 2022, and most of the travel restrictions and quarantine requirements were lifted in December.
On July 13, 2018, the board of directors of Koolearn approved an employee’s share option plan, or the Kooleam Pre-IPO Share Option Scheme, under which Koolearn is authorized to issue up to 47,836,985 shares in Koolearn pursuant to awards granted to the directors, senior management, employees and contractors of Koolearn.
On July 13, 2018, the board of directors of East Buy approved an employee’s share option plan, or the East Buy Pre-IPO Share Option Scheme, under which East Buy is authorized to issue up to 47,836,985 shares in East Buy pursuant to awards granted to any director, employee, contractor or affiliate of East Buy (including nominees and/or trustees of any employee benefit trusts established for them).
Options to obtain 52,837,312 shares in Koolearn shares were either forfeited or cancelled in the fiscal year ended May 31, 2022. 87 Table of Contents We account for share-based compensation expenses in accordance with an authoritative accounting pronouncement, which requires share-based compensation expense to be determined based on the fair value of our common shares as of their grant date.
We account for share-based compensation expenses in accordance with an authoritative accounting pronouncement, which requires share-based compensation expense to be determined based on the fair value of our common shares as of their grant date.

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Item 6. [Reserved]

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

53 edited+9 added−2 removed48 unchanged
Biggest changeHsieh * † 05/14/2021 06/30/2023 * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2023 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 Robin Yanhong Li * † 05/14/2021 06/30/2023 * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2023 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 Denny Ting Bun Lee * † 05/14/2021 06/30/2023 * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2023 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 John Zhuang Yang * † 05/14/2021 06/30/2023 * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2023 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 * Less than 1% of our total outstanding voting securities. † Non-vested equity share awards.
Biggest changeHsieh * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 Robin Yanhong Li * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 Denny Ting Bun Lee * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 John Zhuang Yang * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 * Less than 1% of our total outstanding voting securities. † Non-vested equity share awards. 138 Table of Contents East Buy Share Option Schemes On July 13, 2018, the board of directors of East Buy approved an employee’s share option plan, or the East Buy Pre-IPO Share Option Scheme, under which East Buy is authorized to issue up to 47,836,985 shares in East Buy pursuant to awards granted to any director, employee, contractor or affiliate of East Buy (including nominees and/or trustees of any employee benefit trusts established for them).
Our compensation committee consists of Mr. Robin Yanhong Li, Mr. Denny Ting Bun Lee and Dr. John Zhuang Yang. Mr. Li is the chairman of our compensation committee. All of the members of our compensation committee satisfy the “independence” requirements of Section 303A of the NYSE Listed Company Manual.
Compensation Committee • Our compensation committee consists of Mr. Robin Yanhong Li, Mr. Denny Ting Bun Lee and Dr. John Zhuang Yang. Mr. Li is the chairman of our compensation committee. All of the members of our compensation committee satisfy the “independence” requirements of Section 303A of the NYSE Listed Company Manual.
Name Common Shares Underlying Outstanding NES Exercise Price (US$/ Share) Date of Grant Date of Vest Michael Minhong Yu * † 05/14/2021 06/30/2023 * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2023 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 Chenggang Zhou * † 05/14/2021 06/30/2023 * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2023 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 Zhihui Yang * † 05/14/2021 06/30/2023 * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2023 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 Louis T.
Name Common Shares Underlying Outstanding NES Exercise Price (US$/ Share) Date of Grant Date of Vest Michael Minhong Yu * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 Chenggang Zhou * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 Zhihui Yang * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 Louis T.
The nominating and corporate governance committee is responsible for, among other things: • selecting and recommending to the board nominees for election or re-election to the board, or for appointment to fill any vacancy; • reviewing annually with the board the current composition of the board with regards to characteristics such as independence, age, skills, experience and availability of service to us; • advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken; and • monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
The nominating and corporate governance committee is responsible for, among other things: 140 Table of Contents • selecting and recommending to the board nominees for election or re-election to the board, or for appointment to fill any vacancy; • reviewing annually with the board the current composition of the board with regards to characteristics such as independence, age, skills, experience and availability of service to us; • advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken; and • monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
We may grant the following types of awards under our 2006 plan: • options to purchase our common shares; • restricted shares, which are common shares issued to the grantee that are subject to transfer restrictions, right of first refusal, repurchase, forfeiture, and other terms and conditions as established by our plan administrator; and restricted share units, which may be earned upon the passage of time or the attainment of performance criteria and which may be settled for cash, common shares or other securities, or a combination of cash, common shares or other securities as established by our plan administrator; • share appreciation rights, which entitle the grantee the right to common shares or cash compensation measured by the appreciation in the value of common shares; and 104 Table of Contents • dividend equivalent rights, which entitle the grantee to compensation measured by dividends paid with respect to common shares.
We may grant the following types of awards under our 2006 plan: • options to purchase our common shares; • restricted shares, which are common shares issued to the grantee that are subject to transfer restrictions, right of first refusal, repurchase, forfeiture, and other terms and conditions as established by our plan administrator; and restricted share units, which may be earned upon the passage of time or the attainment of performance criteria and which may be settled for cash, common shares or other securities, or a combination of cash, common shares or other securities as established by our plan administrator; • share appreciation rights, which entitle the grantee the right to common shares or cash compensation measured by the appreciation in the value of common shares; and • dividend equivalent rights, which entitle the grantee to compensation measured by dividends paid with respect to common shares.
In the fiscal year ended May 31, 2022, the nominating and corporate governance committee passed resolutions by unanimous written consent once. Duties of Directors Under Cayman Islands law, our directors have a duty of loyalty to act honestly in good faith with a view to our best interests.
In the fiscal year ended May 31, 2023, the nominating and corporate governance committee passed resolutions by unanimous written consent once. Duties of Directors Under Cayman Islands law, our directors have a duty of loyalty to act honestly in good faith with a view to our best interests.
Yu received his bachelor’s degree in English from Peking University. 102 Table of Contents Mr. Chenggang Zhou has served as our director since November 2010 and chief executive officer since September 2016. Mr.
Yu received his bachelor’s degree in English from Peking University. 134 Table of Contents Mr. Chenggang Zhou has served as our director since November 2010 and chief executive officer since September 2016. Mr.
In the fiscal year ended May 31, 2022, the audit committee held meetings or passed resolutions by unanimous written consent three times, and also approved certain other matters together with the rest of the board members twice, including the audit committee’s approval of two quarterly earnings releases, semi-annual result and annual result. Compensation Committee .
In the fiscal year ended May 31, 2023, the audit committee held meetings or passed resolutions by unanimous written consent twice, and also approved certain other matters together with the rest of the board members three times, including the audit committee’s approval of two quarterly earnings releases, semi-annual result and annual result.
(4) Includes (i) common shares and (ii) non-vested equity shares that will vest within 60 days after September 16, 2022 held by all of our directors and senior executive officers as a group. (5) Tigerstep Developments Limited, a company incorporated in the British Virgin Islands, is wholly owned by Mr. Michael Minhong Yu.
(4) Includes (i) common shares and (ii) non-vested equity shares that will vest within 60 days after September 15, 2023 held by all of our directors and senior executive officers as a group. (5) Tigerstep Developments Limited, a company incorporated in the British Virgin Islands, is wholly owned by Mr. Michael Minhong Yu.
Lee graduated from the Hong Kong Polytechnic University majoring in accounting and is a member of The Hong Kong Institute of Certified Public Accountants and The Chartered Association of Certified Accountants. Dr. John Zhuang Yang has served as our independent director since August 2007.
Lee graduated from the Hong Kong Polytechnic University majoring in accounting and is a member of The Hong Kong Institute of Certified Public Accountants and The Chartered Association of Certified Accountants. 135 Table of Contents Dr. John Zhuang Yang has served as our independent director since August 2007.
Hsieh 58 Director Robin Yanhong Li 53 Independent Director Denny Ting Bun Lee 54 Independent Director John Zhuang Yang 67 Independent Director Mr. Michael Minhong Yu is the founder of our company and has served as the chairman of our board of directors since August 2001. He was also our chief executive officer from 2001 to September 2016. Mr.
Hsieh 58 Director Robin Yanhong Li 54 Independent Director Denny Ting Bun Lee 55 Independent Director John Zhuang Yang 68 Independent Director Mr. Michael Minhong Yu is the founder of our company and has served as the chairman of our board of directors since August 2001. He was also our chief executive officer from 2001 to September 2016. Mr.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management The following table sets forth information regarding our executive officers and directors as of the date of this annual report. Name Age Position/Title Michael Minhong Yu 59 Executive Chairman Chenggang Zhou 60 Director and Chief Executive Officer Zhihui Yang 48 Executive President and Chief Financial Officer Louis T.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management The following table sets forth information regarding our executive officers and directors as of the date of this annual report. Name Age Position/Title Michael Minhong Yu 60 Executive Chairman Chenggang Zhou 61 Director and Chief Executive Officer Zhihui Yang 49 Executive President and Chief Financial Officer Louis T.
Yu currently serves as the chairman of the board and non-executive director of Koolearn Technology Holding Limited (HKEX: 1797). Mr. Yu also serves as Standing Committee Member of the Central Committee of the China Democratic League. Prior to founding our first school in 1993, Mr. Yu was an English instructor at Peking University from 1985 to 1991. Mr.
Yu currently serves as the chairman of the board and non-executive director of East Buy Holding Limited (HKEX: 1797). Mr. Yu also serves as Standing Committee Member of the Central Committee of the China Democratic League. Prior to founding our first school in 1993, Mr. Yu was an English instructor at Peking University from 1985 to 1991. Mr.
All of the members of our audit committee satisfy the “independence” requirements of Section 303A of the NYSE Listed Company Manual and Rule 10A-3 under the Exchange Act. Our board of directors has determined that Mr.
All of the members of our audit committee satisfy the “independence” requirements of Section 303A of the NYSE Listed Company Manual and Rule 10A-3 under the Exchange Act. 139 Table of Contents Our board of directors has determined that Mr.
On January 30, 2019, the board of directors of Koolearn approved an employee’s share option plan, or the Kooleam Post-IPO Share Option Scheme, under which Koolearn is authorized to issue up to 91,395,910 shares in Koolearn pursuant to awards granted to, among others, directors, employees of Koolearn or its affiliate.
On January 30, 2019, the board of directors of East Buy approved an employee’s share option plan, or the East Buy Post-IPO Share Option Scheme, under which East Buy is authorized to issue up to 91,395,910 shares in East Buy pursuant to awards granted to, among others, directors, employees of East Buy or its affiliate.
The term of each award under our 2006 plan will be specified in an award agreement, but the term of an ISO shall not exceed ten years from the date of grant thereof. Vesting Schedule .
The term of each award under our 2006 plan will be specified in an award agreement, but the term of an ISO shall not exceed ten years from the date of grant thereof. 137 Table of Contents Vesting Schedule .
In the fiscal year ended May 31, 2022, our board held meetings or passed resolutions by unanimous written consent 11 times. Committees of the Board of Directors We have established three fully independent committees under the board of directors: the audit committee, the compensation committee and the nominating and corporate governance committee.
In the fiscal year ended May 31, 2023, our board held meetings or passed resolutions by unanimous written consent ten times. Committees of the Board of Directors We have established three fully independent committees under the board of directors: the audit committee, the compensation committee and the nominating and corporate governance committee.
In addition, we made contributions to the pension insurance, medical insurance, housing fund, unemployment and other benefits for the benefits of our executive officers and non-executive directors in the aggregate amount of US$138,625. See “—Share Incentives” below for more information.
In addition, we made contributions to the pension insurance, medical insurance, housing fund, unemployment and other benefits for the benefits of our executive officers and non-executive directors in the aggregate amount of US$82.7 thousand. See “—Share Incentives” below for more information.
Share Ownership The following table sets forth information with respect to the beneficial ownership of our common shares by: • each of our directors and executive officers; and • each person known to us who owns beneficially more than 5% of our common shares. 108 Table of Contents Except as specifically noted, the beneficial ownership is as of September 16, 2022.
Share Ownership The following table sets forth information with respect to the beneficial ownership of our common shares by: • each of our directors and executive officers; and • each person known to us who owns beneficially more than 5% of our common shares. 141 Table of Contents Except as specifically noted, the beneficial ownership is as of September 15, 2023.
Unless we decide to follow home country practice, the following amendments to the 2016 plan require approval from our shareholders (i) increase of the number of shares available under the 2016 plan, (ii) extension of the term of the 2016 plan, (iii) extension of the exercise period of an option beyond ten years, and (iv) any other amendments about which shareholders’ approval are necessary and desirable under applicable laws or stock exchange rules. 105 Table of Contents The remaining terms of the 2016 plan are substantially identical to the terms of the 2006 plan described above.
Unless we decide to follow home country practice, the following amendments to the 2016 plan require approval from our shareholders (i) increase of the number of shares available under the 2016 plan, (ii) extension of the term of the 2016 plan, (iii) extension of the exercise period of an option beyond ten years, and (iv) any other amendments about which shareholders’ approval are necessary and desirable under applicable laws or stock exchange rules.
(3) Includes (i) 169,235,000 common shares held by Tigerstep Developments Limited, a British Virgin Islands company wholly owned by Mr. Michael Minhong Yu and (ii) 3,255,360 ADSs (each representing ten underlying common shares), which consist of 3,215,054 ADSs held by Tigerstep Developments Limited and 40,306 ADSs held by Mr. Yu. Through a trust arrangement, Mr.
(3) Includes (i) 169,235,000 common shares held by Tigerstep Developments Limited, a British Virgin Islands company wholly owned by Mr. Michael Minhong Yu and (ii) 3,283,716 ADSs (each representing ten underlying common shares), which consist of 3,215,054 ADSs held by Tigerstep Developments Limited and 68,662 ADSs held by Mr. Yu. Through a trust arrangement, Mr.
B. Compensation of Directors and Executive Officers For the fiscal year ended May 31, 2022, we paid an aggregate of approximately US$6.0 million in cash to our executive officers and non-executive directors as a group.
B. Compensation of Directors and Executive Officers For the fiscal year ended May 31, 2023, we paid an aggregate of approximately US$4.9 million in cash to our executive officers and non-executive directors as a group.
(2) For each person and group included in this table, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of (i) 1,699,375,793, being the number of common shares outstanding as of September 16, 2022 and (ii) the number of non-vested equity shares held by such person or group that will vest within 60 days after September 16, 2022.
(2) For each person and group included in this table, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of (i) 1,655,124,293, being the number of common shares outstanding as of September 15, 2023 and (ii) the number of non-vested equity shares held by such person or group that will vest within 60 days after September 15, 2023.
As of May 31, 2022, an aggregate of 16,495,845 non-vested equity shares remain outstanding under the 2016 Share Incentive Plan, excluding non-vested equity shares that were forfeited or cancelled after the relevant grant date. The following paragraphs describe the principal terms of the 2016 plan. Amendment of the Plan .
As of May 31, 2023, an aggregate of 30,271,273 non-vested equity shares remain outstanding under the 2016 Share Incentive Plan, excluding non-vested equity shares that were forfeited or cancelled after the relevant grant date. The following paragraphs describe the principal terms of the 2016 plan. Amendment of the Plan .
Lee currently also serves as the chairman of the audit committees and independent non-executive director on the boards of NIO Inc. (NYSE: NIO; HKEX: 9866; SGX: NIO) and Jianpu Technology Inc. (NYSE: JT). From April 2002 to June 2022, Mr.
Denny Ting Bun Lee has served as our independent director since September 2006. Mr. Lee currently also serves as the chairman of the audit committees and independent non-executive director on the boards of NIO Inc. (NYSE: NIO; HKEX: 9866; SGX: NIO) and Jianpu Technology Inc. (NYSE: JT). From April 2002 to June 2022, Mr.
We also enter into standalone confidentiality and non-compete agreements with our key full-time employees. Our contract teachers generally enter into exclusive service agreements with us.
We enter into employment contracts with our full-time employees which contain standard confidentiality provisions. We also enter into standalone confidentiality and non-compete agreements with our key full-time employees. Our contract teachers generally enter into exclusive service agreements with us.
Employees We had 69,438, 88,126 and 46,653 full-time employees and 11,689, 17,086 and 6,418 contract teachers and staff as of May 31, 2020, 2021 and 2022, respectively.
Employees We had 88,126, 46,653 and 50,438 full-time employees and 17,086, 6,418 and 5,068 contract teachers and staff as of May 31, 2021, 2022 and 2023, respectively.
The following table summarizes, as of September 16, 2022, the outstanding non-vested equity shares granted under our 2016 plan to our directors and executive officers (taking into account the one-for-ten share split that took effect on March 10, 2021).
The remaining terms of the 2016 plan are substantially identical to the terms of the 2006 plan described above. The following table summarizes, as of September 15, 2023, the outstanding non-vested equity shares granted under our 2016 plan to our directors and executive officers (taking into account the one-for-ten share split that took effect on March 10, 2021).
Hsieh * * Robin Yanhong Li * * Denny Ting Bun Lee * * John Zhuang Yang * * All Directors and Executive Officers as a Group (4) 210,247,315 12.4 Principal Shareholders: Tigerstep Developments Limited (5) 201,385,540 11.9 * Less than 1% (1) Beneficial ownership is determined in accordance with the rules of the SEC.
Hsieh * * Robin Yanhong Li * * Denny Ting Bun Lee * * John Zhuang Yang * * All Directors and Executive Officers as a Group (4) 211,651,075 12.8 Principal Shareholders: Tigerstep Developments Limited (5) 201,385,540 12.2 GIC Private Limited (6) 84,984,093 5.1 * Less than 1% (1) Beneficial ownership is determined in accordance with the rules of the SEC.
As of September 16, 2022, we had 1,699,375,793 common shares issued and outstanding, and Deutsche Bank Trust Company Americas, as the depositary of our ADS facility, was the only record holder of our common shares in the United States, holding approximately 70.8% of our total outstanding common shares.
As of September 15, 2023, we had 1,655,124,293 common shares issued and outstanding, and Deutsche Bank Trust Company Americas, as the depositary of our ADS facility, was the only record holder of our common shares in the United States, holding approximately 54.8% of our total outstanding common shares.
Li has served as the chairman of the board of directors of Baidu since its inception in January 2000 and as its chief executive officer since February 2004. He served as the president of Baidu from February 2000 to December 2003. Prior to founding Baidu, Mr.
(NASDAQ: BIDU; HKEX: 9888), a leading AI company with strong Internet foundation. Mr. Li has served as the chairman of the board of directors of Baidu since its inception in January 2000 and as its chief executive officer since February 2004. He served as the president of Baidu from February 2000 to December 2003. Prior to founding Baidu, Mr.
The 2006 plan expired in January 2016. No additional awards may be granted under the 2006 plan after its expiration, but the expiration of the plan would not impair any award previously granted under the plan. We do not have any outstanding awards under our 2006 plan. The following paragraphs describe the principal terms of the 2006 plan.
The 2006 plan expired in January 2016. No additional awards may be granted under the 2006 plan after its expiration, but the expiration of the plan would not impair any award previously granted under the plan.
The compensation committee is responsible for, among other things: • reviewing and approving the total compensation package for our chief executive officer; • reviewing and recommending to the board with respect to the compensation of our directors; and • reviewing periodically and approving any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, and employee pension and welfare benefit plans. 107 Table of Contents In the fiscal year ended May 31, 2022, the compensation committee passed resolutions by unanimous written consent once.
The compensation committee is responsible for, among other things: • reviewing and approving the total compensation package for our chief executive officer; • reviewing and recommending to the board with respect to the compensation of our directors; and • reviewing periodically and approving any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, and employee pension and welfare benefit plans.
Hsieh also serves as an independent director since May 2014, of JD.com Inc. (Nasdaq: JD; HKEX: 9618), a leading technology driven e-commerce company in China listed on Nasdaq and the Hong Kong Stock Exchange, and an independent director since November 2016, and chairman of the audit committee from 2016 to 2019, of Yum China Holdings, Inc.
(Nasdaq: JD; HKEX: 9618), a leading technology driven e-commerce company in China listed on Nasdaq and the Hong Kong Stock Exchange, and an independent director of YUM China (NYSE: YUMC; HKEX: 9987) from November 2016 to June 2023, and chairman of the audit committee from 2016 to 2019, of Yum China Holdings, Inc. From May 2017 to October 2019, Mr.
The decrease in the number of employees, contract teachers and staff as of May 31, 2022 was primarily due to the cessation of our K-9 Academic AST services, in order to comply with the government policies in China. We enter into employment contracts with our full-time employees which contain standard confidentiality provisions.
The decrease in the number of employees as of May 31, 2022, and the decreases in the number of contract teachers and staff as of May 31, 2022 was primarily due to the cessation of our K-9 Academic AST services, in order to comply with the government policies in China.
Shares Beneficially Owned Number (1) % (2) Directors and Executive Officers: Michael Minhong Yu (3) 201,788,600 11.9 Chenggang Zhou * * Zhihui Yang * * Louis T.
Shares Beneficially Owned Number (1) % (2) Directors and Executive Officers: Michael Minhong Yu (3) 202,072,160 12.2 Chenggang Zhou * * Zhihui Yang * * Louis T.
Yang holds a Ph.D. degree in business administration from Columbia University, a master’s degree in sociology from Columbia University, a master’s degree in international and public affairs from the Woodrow Wilson School of Public and International Affairs at Princeton University, and a bachelor’s degree from the English Language and Literature Department of Peking University. 103 Table of Contents Employment Agreements We have entered into employment agreements with each of our executive officers.
Yang holds a Ph.D. degree in business administration from Columbia University, a master’s degree in sociology from Columbia University, a master’s degree in international and public affairs from the Woodrow Wilson School of Public and International Affairs at Princeton University, and a bachelor’s degree from the English Language and Literature Department of Peking University.
The registered address of Tigerstep Developments Limited is Marcy Building, 2nd Floor, P.O. Box 2416, Road Town, Tortola, the British Virgin Islands. None of our existing shareholders have different voting rights from other shareholders.
The registered address of Tigerstep Developments Limited is Marcy Building, 2nd Floor, P.O. Box 2416, Road Town, Tortola, the British Virgin Islands.
As of May 31, 2022, options to obtain an aggregate of 35,911,985 shares in Koolearn remained outstanding under the Koolearn Pre-IPO Share Option Scheme. Options to obtain 837,500 shares in Koolearn were forfeited and no shares were cancelled in the fiscal year ended May 31, 2022.
As of May 31, 2023, options to obtain an aggregate of 27,084,385 shares in East Buy remained outstanding under the East Buy Pre-IPO Share Option Scheme. No options were forfeited and no shares were cancelled in the fiscal year ended May 31, 2023.
All of the members of our nominating and corporate governance committee satisfy the “independence” requirements of Section 303A of NYSE Listed Company Manual. The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees.
The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees.
Hsieh served as our president, and from December 2005 to April 2015, he served as our chief financial officer. Mr. Hsieh currently serves as the global chief financial officer, since April 2021, and board director, since June 2021, of Hesai Technology, a global leader in 3-D Lidar solutions. Mr.
Hsieh currently serves as the global chief financial officer, since April 2021, and board director, since June 2021, of Hesai Technology, a global leader in 3-D Lidar solutions. Mr. Hsieh also serves as an independent director since May 2014, of JD.com Inc.
The number of beneficial owners of our ADSs in the United States is much larger than the one record holder of our common shares in the United States.
The number of beneficial owners of our ADSs in the United States is much larger than the one record holder of our common shares in the United States. F. Disclosure of Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable. 142 Table of Contents
As of May 31, 2022, options to obtain an aggregate of 45,994,093 shares in Koolearn remained outstanding under the Koolearn Post-IPO Share Option Scheme. Options to obtain 52,837,312 shares in Koolearn shares were either forfeited or cancelled in the fiscal year ended May 31, 2022. 106 Table of Contents C.
As of May 31, 2023, options to obtain an aggregate of 40,462,810 shares in East Buy remained outstanding under the East Buy Post-IPO Share Option Scheme. Options to obtain 1,216,275 shares in East Buy shares were either forfeited or cancelled in the fiscal year ended May 31, 2023.
Yang worked for PricewaterhouseCoopers as a senior auditor. Mr. Yang received his bachelor’s degree in economics from Guanghua School of Management of Peking University. Mr. Louis T. Hsieh has served as our director since March 2007 and senior advisor since January 2016. From May 2009 to January 2016, Mr.
Yang served as the financial director of Beijing Hua De Xin Investment Co., Ltd. from July 2002 to March 2006. From August 1997 and May 2002, Mr. Yang worked for PricewaterhouseCoopers as a senior auditor. Mr. Yang received his bachelor’s degree in economics from Guanghua School of Management of Peking University. Mr. Louis T.
He held multiple positions since he joined our company in April 2006, including vice president of finance, deputy director of president office and senior financial manager. Prior to joining us, Mr. Yang served as the financial director of Beijing Hua De Xin Investment Co., Ltd. from July 2002 to March 2006. From August 1997 and May 2002, Mr.
He held multiple positions since he joined our company in April 2006, including vice president of finance, deputy director of president office and senior financial manager. Mr. Yang has served as an independent director of DiDi Global Inc. (OTC: DIDIY) since April 2023. Prior to joining us, Mr.
(NYSE: YUMC; HKEX: 9987), the leading operator of restaurant chains in China including KFC and Pizza Hut.. From May 2017 to October 2019, Mr. Hsieh served as the global chief financial officer of NIO Inc. (NYSE: NIO; HKEX: 9866; SGX: NIO), a leading electric car original equipment manufacturer. Prior to joining us in 2005, Mr.
Hsieh served as the global chief financial officer of NIO Inc. (NYSE: NIO; HKEX: 9866; SGX: NIO), a leading electric car original equipment manufacturer. Prior to joining us in 2005, Mr. Hsieh was the chief financial officer of ARIO Data Networks, Inc. in San Jose, California from 2004 to 2005. Prior to that, Mr.
To our knowledge, we are not owned or controlled, directly or indirectly, by another corporation, by any foreign government or by any other natural or legal persons, severally or jointly. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
Hsieh was the managing director and the Asia-Pacific tech/media/telecoms head of UBS Capital Asia Pacific, the private equity division of UBS AG. From 1997 to 2000, Mr. Hsieh was a technology investment banker at JP Morgan in San Francisco, California, where he was a vice president, and Credit Suisse First Boston in Palo Alto, California, where he was an associate.
Hsieh was a technology investment banker at JP Morgan in San Francisco, California, where he was a vice president, and Credit Suisse First Boston in Palo Alto, California, where he was an associate. From 1990 to 1996, Mr. Hsieh was a corporate and securities attorney at White & Case LLP in Los Angeles. Mr.
From 1990 to 1996, Mr. Hsieh was a corporate and securities attorney at White & Case LLP in Los Angeles. Mr. Hsieh holds a bachelor’s degree in industrial engineering and engineering management from Stanford University, an MBA degree from the Harvard Business School, and a J.D. degree from the University of California at Berkeley. Mr.
Hsieh holds a bachelor’s degree in industrial engineering and engineering management from Stanford University, an MBA degree from the Harvard Business School, and a J.D. degree from the University of California at Berkeley. Mr. Robin Yanhong Li has served as our independent director since September 2006. Mr. Li is a co-founder of Baidu, Inc.
Nominating and Corporate Governance Committee . Our nominating and corporate governance committee consists of Dr. John Zhuang Yang, Mr. Robin Yanhong Li and Mr. Denny Ting Bun Lee. Dr. Yang is the chairman of our nominating and corporate governance committee.
Denny Ting Bun Lee. Dr. Yang is the chairman of our nominating and corporate governance committee. All of the members of our nominating and corporate governance committee satisfy the “independence” requirements of Section 303A of NYSE Listed Company Manual.
Li received a bachelor’s degree in information science from Peking University and a master’s degree in computer science from the State University of New York at Buffalo. Mr. Denny Ting Bun Lee has served as our independent director since September 2006. Mr.
Li worked as an engineer at Infoseek, a pioneer in the Internet search engine industry, and as a senior consultant for IDD Information Services. Mr. Li received a bachelor’s degree in information science from Peking University and a master’s degree in computer science from the State University of New York at Buffalo. Mr.
Hsieh was the chief financial officer of ARIO Data Networks, Inc. in San Jose, California from 2004 to 2005. Prior to that, Mr. Hsieh was a managing director for the private equity firm of Darby Asia Investors (HK) Limited from 2002 to 2003. From 2000 to 2002, Mr.
Hsieh was a managing director for the private equity firm of Darby Asia Investors (HK) Limited from 2002 to 2003. From 2000 to 2002, Mr. Hsieh was the managing director and the Asia-Pacific tech/media/telecoms head of UBS Capital Asia Pacific, the private equity division of UBS AG. From 1997 to 2000, Mr.
Koolearn Share Option Schemes On July 13, 2018, the board of directors of Koolearn approved an employee’s share option plan, or the Kooleam Pre-IPO Share Option Scheme, under which Koolearn is authorized to issue up to 47,836,985 shares in Koolearn pursuant to awards granted to the directors, senior management, employees and contractors of Koolearn.
On March 9, 2023, the shareholders of East Buy approved an employee’s share incentive scheme, or the East Buy 2023 Scheme, under which East Buy is authorized to issue up to 101,351,871 shares in East Buy pursuant to awards granted to, among others, directors, employees of East Buy or its affiliate.
Removed
Robin Yanhong Li has served as our independent director since September 2006. Mr. Li is a co-founder of Baidu, Inc. (NASDAQ: BIDU; HKEX: 9888), a leading AI company with strong Internet foundation. Mr.
Added
Hsieh has served as our director since March 2007 and senior advisor since January 2016. From May 2009 to January 2016, Mr. Hsieh served as our president, and from December 2005 to April 2015, he served as our chief financial officer. Mr.
Removed
Li worked as an engineer at Infoseek, a pioneer in the Internet search engine industry, and as a senior consultant for IDD Information Services. Mr. Li currently serves on the board of Trip.com, an online travel agency in China (NASDAQ: TCOM; HKEX: 9961) and iQIYI (NASDAQ: IQ). Mr.
Added
Employment Agreements We have entered into employment agreements with each of our executive officers.
Added
We do not have any outstanding awards under our 2006 plan. 136 Table of Contents The following paragraphs describe the principal terms of the 2006 plan. Types of Awards .
Added
The East Buy Post-IPO Share Option Scheme was terminated following the effectiveness of the East Buy 2023 Scheme (as defined below) in March 2023, provided that any granted and unexercised options made under the Post-IPO Share Option Scheme immediately before the termination shall continue to be valid and exercisable in accordance with the terms of the grant and original Post-IPO Share Option Scheme rules.
Added
As of May 31, 2023, awards to obtain an aggregate of 30,314,000 shares in East Buy remained outstanding under the East Buy 2023 Scheme. Awards to obtain 145,000 shares in East Buy shares were either forfeited or cancelled in the fiscal year ended May 31, 2023. C.
Added
In the fiscal year ended May 31, 2023, the compensation committee passed resolutions by unanimous written consent once, and also approved certain other matters together with the rest of the board members once. Nominating and Corporate Governance Committee • Our nominating and corporate governance committee consists of Dr. John Zhuang Yang, Mr. Robin Yanhong Li and Mr.
Added
(6) Represents (i) 73,701,510 common shares, including 28,124,830 common shares represented by 2,812,483 ADSs, and (ii) 11,282,583 common shares, including 6,346,660 common shares represented by 634,666 ADSs, beneficially owned by GIC Private Limited, or GIC, as reported in a Schedule 13G filed by GIC with the SEC on June 1, 2023 (the “Schedule 13G”).
Added
As reported in the Schedule 13G, GIC has the sole voting and disposal power over 73,701,510 shares it beneficially owns and shares voting and disposal power over 11,282,583 shares it beneficially owns with the Monetary Authority of Singapore. GIC is wholly-owned by the Government of Singapore, who disclaims beneficial ownership of such shares, as reported in the Schedule 13G.
Added
The address of GIC is 168 Robinson Road, #37-01 Capital Tower, Singapore 068912. None of our existing shareholders have different voting rights from other shareholders. To our knowledge, we are not owned or controlled, directly or indirectly, by another corporation, by any foreign government or by any other natural or legal persons, severally or jointly.

Item 7. Management's Discussion & Analysis

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

9 edited+1 added−0 removed10 unchanged
Biggest changeAs of May 31, 2022, amounts due from Metropolis Holding were US$3.8 million, which represented prepaid rent and rental deposit. Loans to Related Parties Beijing Dianshi Jingwei Technology Co., Ltd., or Dianshi Jingwei, is an equity method investee of us.
Biggest changeAs of May 31, 2023, amounts due to Metropolis Holding were US$0.2 million, which represented accrued but unpaid service fee. 143 Table of Contents Loans to Related Parties Beijing Dianshi Jingwei Technology Co., Ltd., or Dianshi Jingwei, is an equity method investee of us.
Pursuant to this deed, we undertake, among other things, not to, and procure our group entities not to, carry on engage or participate in online education services within China, except for (i) making minority investments in a business that provide online education services in China, or (ii) operating our existing Blingabc and Leci businesses with the restrictions set forth in the deed of non-competition undertakings, provided, however, if we propose to issue or transfer any equity interest in these businesses, Koolearn has the option to purchase all or any portion of the offered equity interest.
Pursuant to this deed, we undertake, among other things, not to, and procure our group entities not to, carry on engage or participate in online education services within China, except for (i) making minority investments in a business that provide online education services in China, or (ii) operating our existing Blingabc and Leci businesses with the restrictions set forth in the deed of non-competition undertakings, provided, however, if we propose to issue or transfer any equity interest in these businesses, East Buy has the option to purchase all or any portion of the offered equity interest.
Related Party Transactions Agreements with Koolearn Deed of Non-Competition Undertakings On March 28, 2019, Koolearn completed its initial public offering and the listing of its shares on the Main Board of The Stock Exchange of Hong Kong Limited, or the HKEx.
Related Party Transactions Agreements with East Buy Deed of Non-Competition Undertakings On March 28, 2019, East Buy completed its initial public offering and the listing of its shares on the Main Board of The Stock Exchange of Hong Kong Limited, or the HKEx.
As of May 31, 2022, 22 of our operating entities rented office space from Metropolis Holding pursuant to a series of lease agreements. The terms and conditions, including rental rates, of these lease agreements are generally the same as other tenants in the same building.
As of May 31, 2023, 18 of our operating entities rented office space from Metropolis Holding pursuant to a series of lease agreements. The terms and conditions, including rental rates, of these lease agreements are generally the same as other tenants in the same building.
As of May 31, 2022, the outstanding balance of the loans was US$40.2 million, which was fully impaired. Transactions with Other Related Parties During the fiscal year ended May 31, 2022, we recorded revenue in the amount of US$41 thousand from other related parties.
As of May 31, 2022, the outstanding balance of the loans was US$40.2 million, which was fully impaired. Transactions with Other Related Parties During the fiscal year ended May 31, 2023, we recorded revenue in the amount of US$2.1 million from other related parties.
These lease agreements are typically three years and can be renewed upon mutual agreements upon expiration. The lease arrangements were approved by all of our directors, including all of the disinterested directors. During the fiscal year ended May 31, 2022, we accrued a total of US$11.6 million rent to Metropolis Holding.
These lease agreements are typically three years and can be renewed upon mutual agreements upon expiration. The lease arrangements were approved by all of our directors, including all of the disinterested directors. During the fiscal year ended May 31, 2023, we accrued a total of US$8.4 million rent to Metropolis Holding.
We issued a deed of non-competition undertakings on August 28, 2018 in favor of Koolearn with respect to the ongoing relationship between us and Koolearn after the listing of Koolearn’s securities on the HKEx.
We issued a deed of non-competition undertakings on August 28, 2018 in favor of East Buy with respect to the ongoing relationship between us and East Buy after the listing of East Buy’s securities on the HKEx.
The foregoing undertaking will end if Kooleam’s securities cease to be listed on HKEx or 12 months after we cease to be the controlling shareholder of Koolearn, whichever is earlier. 109 Table of Contents Contractual Arrangements with New Oriental China, Its Schools, Subsidiaries and Shareholder See “Item 4. Information on the Company—C.
The foregoing undertaking will end if East Buy’s securities cease to be listed on HKEx or 12 months after we cease to be the controlling shareholder of East Buy, whichever is earlier. Contractual Arrangements with New Oriental China, Its Schools, Subsidiaries and Shareholder See “Item 4. Information on the Company—C.
As of May 31, 2022, we had US$2.7 million in aggregate due from other related parties and US$199 thousand in aggregate due to other related parties. C. Interests of Experts and Counsel Not applicable.
As of May 31, 2023, we had US$7.3 million in aggregate due from other related parties and US$110 thousand in aggregate due to other related parties. C. Interests of Experts and Counsel Not applicable.
Added
As of May 31, 2023, amounts due from Metropolis Holding were US$3.8 million, which represented prepaid rent and rental deposit. In addition, Metropolis Holding, as a property management company, also provided property management services to the Company for several rented floors of office space.

Other EDU 10-K year-over-year comparisons