{"url_path":"/sec/fedu/10-k/2026/item-3","section_key":"item-3","section_title":"Item 3 KEY INFORMATION","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-06-17","source_url":"https://www.sec.gov/Archives/edgar/data/1709819/0001193125-26-273350-index.html","accession_number":"0001193125-26-273350","cik":"0001709819","ticker":"FEDU","issuer_name":"Four Seasons Education (Cayman) Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1709819/0001193125-26-273350-index.html","primary_entity_key":"0001709819","primary_entity_name":"Four Seasons Education (Cayman) Inc."},"word_count":42327,"has_tables":true,"body_markdown":"ITEM 3. KEY INFORMATION\n\nOur Holding Company Structure and Contractual Arrangements with the VIEs\n\nFour Seasons Education (Cayman) Inc. is not an operating company in the People’s Republic of China (“China” or “PRC”), but a Cayman Islands holding company which does not conduct operations and has no equity ownership in the VIEs. PRC laws and regulations place certain restrictions on direct foreign investment ownership of China-based companies, and also places separate restrictions on foreign investment in the private education businesses. Accordingly, we conduct operations in the PRC principally through contractual arrangements among (i) our WFOE, namely Shanghai Fuxi Information Technology Service Co., Ltd., or Shanghai Fuxi, (ii) variable interest entities consolidated under U.S. GAAP, or the VIEs, namely Shanghai Luoliang Network Technology Co., Ltd. (formally known as Shanghai Four Seasons Education Training Co., Ltd.) and Shanghai Four Seasons Education Investment Management Co., Ltd., limited liability companies established under PRC law, and their subsidiaries, and (iii) the shareholders of the VIEs, which provides investors with exposure to foreign investment in the Chinese operating companies. Net revenues contributed by the VIEs accounted for 99.3%, 99.8% and 99.9% of our net revenues in the fiscal years ended February 29, 2024, February 28, 2025 and February 28, 2026, respectively. As used in this annual report, “we,” “us,” “our company,” and “our” refers to the Parent, a Cayman Islands company, and its subsidiaries. The VIEs are consolidated for accounting purposes when describing the consolidated financial information. Investors of our ADSs are not purchasing equity interest in the VIEs in China but instead are purchasing equity interest in the Parent, a holding company incorporated in the Cayman Islands, and may never hold equity interests in the VIEs.\n\nOur reference to control over the VIEs and our position of being the primary beneficiary of the VIEs for the accounting purposes are strictly in the context of the conditions that we met for consolidation of the VIEs under U.S. GAAP. Such conditions include that (i) we have the power to govern the activities which most significantly impact the VIEs’ economic performance, (ii) we are contractually obligated to absorb losses of the VIEs that could potentially be significant to the VIEs, and (iii) we are entitled to receive benefits from the VIEs that could potentially be significant to the VIEs. Only if we meet the aforementioned conditions for consolidation of the VIEs under U.S. GAAP, we will be deemed as the primary beneficiary of the VIEs, and the VIEs will be consolidated in our consolidated financial statements for accounting purposes.\n\nWFOE has entered into the following contractual arrangements with the VIEs and their shareholders, that enable the Company to (i) have power to direct the activities that most significantly affect the performance of the VIEs, and (ii) receive the benefits of the VIEs that could be significant to the VIEs. The Company is fully and exclusively responsible for the management of the VIEs, absorbs all risk of losses of the VIEs, and has the exclusive right to exercise all voting rights of the VIE shareholders. Therefore, the Company, through its WFOE, Shanghai Fuxi, has been determined to be the primary beneficiary of the VIEs and has consolidated the VIEs’ financial results of operations, assets and liabilities and cash flows in the Company’s consolidated financial statements.\n\nIn the opinion of Fangda Partners, our PRC counsel, save for the uncertainties disclosed in this annual report:\n\n•\nthe ownership structure of Shanghai Fuxi and the VIEs do not violate applicable PRC laws and regulations currently in effect; and\n\n \n\n7\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\n•\nthe contractual arrangements between Shanghai Fuxi, the VIEs and their respective shareholders governed by PRC law currently are valid and binding.\n\nA series of contractual agreements, including exclusive business service agreements, exclusive call option agreement, equity pledge agreement, shareholder voting rights proxy agreement and irrevocable power of attorney, and spousal consent letter by and among our WFOE, the VIEs and their respective shareholders. These contractual agreements include:\n\nExclusive Service Agreement\n\nPursuant to the exclusive service agreement, Shanghai Fuxi has the exclusive right to provide or designate any third party to provide technical services and management and consulting services to the VIEs. In exchange, the VIEs pay annual service fees to Shanghai Fuxi in an amount at Shanghai Fuxi’s discretion. Without the prior written consent of Shanghai Fuxi, the VIEs cannot accept services provided by or establishing similar corporation relationship with any third party. Shanghai Fuxi owns the exclusive intellectual property rights created as a result of the performance of this agreement unless otherwise provided by PRC laws or regulations. The agreement will remain effective unless terminated upon the full exercise of call option in accordance with the exclusive call option agreement or unilaterally terminated by Shanghai Fuxi with a notice 30 days in advance. Unless otherwise required by applicable PRC laws, the VIEs do not have any right to terminate the exclusive service agreement.\n\nExclusive Call Option Agreement\n\nPursuant to the call option agreement, the shareholders of the VIEs unconditionally and irrevocably granted Shanghai Fuxi or its designated third party exclusive call options to purchase from the shareholder part or all of its equity interests in the VIEs, as the case may be, at the nominal price or for the minimum amount of consideration permitted by the applicable PRC laws and regulations. Such shareholder will not grant a similar right or transfer any of the equity interests in the VIEs to any party other than Shanghai Fuxi or its designee, nor will it pledge, create or permit any security interest or similar encumbrance to be created on any of the equity interests. Shanghai Fuxi has sole discretion to decide when to exercise the option, and whether to exercise the option in part or in full. The agreement will remain effective unless terminated upon the full exercise of call option or unilaterally terminated by Shanghai Fuxi with a notice 30 days in advance.\n\nEquity Pledge Agreement\n\nPursuant to the equity pledge agreement, the shareholders of the VIEs unconditionally and irrevocably pledged all of its equity interests in the VIEs to Shanghai Fuxi, to respectively guarantee the performance of the VIEs of their obligations under the relevant contractual agreements. Should the VIEs or their shareholder breach or default under any of the contractual arrangements, Shanghai Fuxi has the right to require the transfer of the pledged equity interests to itself or its designee, to the extent permitted by PRC law, or require an auction or sale of the pledged equity interests and has priority in any proceeds from the auction or sale of such pledged interests. Moreover, Shanghai Fuxi has the right to collect any and all dividends in respect of the pledged equity interests during the term of the pledge. Without the prior written consent of Shanghai Fuxi, the shareholders of the VIEs shall not transfer or dispose the pledged equity interests or create or allow any encumbrance on the pledged equity interests that would prejudice Shanghai Fuxi’s interest. Unless the VIEs have fully performed all of their obligations in accordance with the contractual agreements, or the pledged equity interests have been fully transferred to Shanghai Fuxi or its respective designee in accordance with the exclusive call option agreement, or unilaterally terminated by Shanghai Fuxi with a 30-day prior notice, the equity interest pledge agreement will continue to remain in effect.\n\nThe shareholders of the VIEs have registered the equity pledge in favor of Shanghai Fuxi with the local counterpart of the State Administration for Industry and Commerce in accordance with PRC laws and regulations.\n\n \n\n8\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nShareholder Voting Rights Proxy Agreement and Irrevocable Power of Attorney\n\nThe shareholders of the VIEs have each executed a shareholder voting rights proxy agreement appointing Shanghai Fuxi, or any person designated by Shanghai Fuxi, as their proxy to act for all matters pertaining to such shareholding and to exercise all of their rights as shareholders, including but not limited to attending shareholders’ meetings and designating and appointing directors, supervisors, the chief executive officer and other senior management members, and selling, transferring, pledging or disposing the equity interests of the VIEs. Shanghai Fuxi may authorize or assign its rights to any other person or entity at its sole discretion without prior notice to or prior consent from the shareholders of the VIEs. The agreement will remain effective unless Shanghai Fuxi terminates the agreement by written notice or terminated upon the full exercise of call option in accordance with the exclusive call option agreement.\n\nSpousal Consent Letter\n\nPursuant to the spousal consent letter executed by the spouse of the shareholders of our VIEs, each of such spouse unconditionally and irrevocably agreed to the execution of exclusive service agreement, exclusive call option agreement, shareholder voting rights proxy agreement and irrevocable power of attorney and equity pledge agreement described above by the applicable shareholder. They further undertake not to make any assertions in connection with the equity interests of the VIEs held by the applicable shareholder, and confirm that the shareholder can perform the relevant transaction documents described above and further amend or terminate such transaction documents without the authorization or consent from such spouse. The spouse of each applicable shareholder agrees and undertakes that if he/she obtains any equity interests of the VIE held by the applicable shareholder for any reasons, he/she would be bound by the transaction documents described above and the amended and restated exclusive service agreement between Shanghai Fuxi and the VIE. The valid term of spousal consent letter is same as the term of the exclusive call option agreement.\n\nTerms contained in each set of contractual arrangements with the VIEs and their respective shareholders are substantially similar. As a result of the contractual arrangements, we have effective control over and are considered the primary beneficiary of the VIEs for accounting purposes, and we have consolidated the financial results of the VIEs in our consolidated financial statements.\n\nThe following diagram sets out details of our significant subsidiaries and VIEs as of May 31, 2026:\n\n \n\n(1) Mr. Peiqing Tian and Mr. Peihua Tian, hold 99.99% and 0.01% equity interest in Shanghai Luoliang Network Technology Co., Ltd., respectively.\n\n \n\n9\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\n(2) Mr. Peiqing Tian and Ms. Suhua Zhu, hold 70% and 30% equity interests in Shanghai Four Seasons Education Investment Management Co., Ltd., respectively.\n\n(3) Wuyuan Sijijiaozhong Tourism Inv Mgt Co., Ltd., Shanghai Four Seasons Education Investment Management Co., Ltd., and Shanghai Luoliang Network Technology Co., Ltd. hold 45.59%, 36.76% and 17.65% equity interests in Wuyuan Siji Gongda Study Camp Travel Development Co., Ltd., respectively.\n\n(4) 8 companies that operate in the fields including educational tourism and planning, enrichment learning services, faculty training, investment management, and management consulting.\n\n(5) 19 companies that operate in the fields including educational technology, tourism, education-related services, study trip development, culture development, corporate management, and publications.\n\nHowever, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations, and there can be no assurance that the PRC government will take a view that is not contrary to or otherwise different from the opinion of our PRC counsel. Control through these contractual arrangements may be less effective than direct ownership, and we could face heightened risks and costs in enforcing these contractual arrangements due to these substantial uncertainties. These contractual arrangements have not been tested in a court of law. If the PRC government finds these contractual arrangements non-compliant with the restrictions on direct foreign investment in the relevant industries, or if the relevant PRC laws, regulations, and rules or the interpretation thereof change in the future, we could be subject to severe penalties, including being prohibited from continuing operations, which could materially and adversely affect us and the VIEs’ business, financial condition, and results of operations, and/or the value of our ADSs or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. In addition, if any of these events causes us unable to direct the activities of the VIEs or lose the right to receive their economic benefits, we may not be able to consolidate the VIEs into our consolidated financial statements in accordance with U.S. GAAP, which could cause the value of our ADSs to significantly decline or become worthless. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Corporate Structure — Our business is subject to extensive regulation in the PRC. If the PRC government finds that the contractual arrangement that establishes our corporate structure for operating our business does not comply with applicable PRC laws and regulations, we could be subject to severe penalties.” and “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Uncertainties with respect to the PRC legal system could have a material adverse effect on us.”\n\nFurthermore, if the VIEs or their shareholders fail to perform their obligations under the contractual arrangements, we may be limited in our ability to enforce such contractual arrangements that give us effective control. If we are unable to maintain effective control over the VIEs, we would not be able to continue to consolidate their financial results in our consolidated financial statements. In the 2024, 2025 and 2026 fiscal years, substantially all of our revenue was derived from the operations of the VIEs. We rely on dividends and other distributions paid to us by our WFOE, Shanghai Fuxi, which in turn depends on the service fees paid to Shanghai Fuxi by the VIEs. There are significant PRC legal restrictions on the payment of dividends by PRC companies and restrictions on foreign exchange control and foreign investments, all of which may adversely affect our ability to access the revenue of Shanghai Fuxi and the VIEs. In the 2026 fiscal year, Shanghai Fuxi received service fees of RMB9.8 million (US$1.4 million) from the VIEs and did not distribute any dividends. Notwithstanding our business decisions to continue to invest and expand our PRC operations and launching new programs, our WFOE may receive service fees from the VIEs or make distributions to us in the future.\n\n \n\n10\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nWe face various risks and uncertainties related to doing business in China. Our business operations are primarily conducted in China, and we are subject to complex and evolving PRC laws and regulations. For example, we face risks associated with regulatory approvals on offshore offerings, anti-monopoly regulatory actions, regulations on the use of variable interest entities, 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. These risks could subject us and the VIEs to severe penalties, including being prohibited from continuing operations, which could materially and adversely affect us and the VIEs’ business, financial condition, and results of operations, and/or the value of our ADSs, or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause the value of our ADSs to significantly decline or become worthless. For a detailed description of risks related to doing business in China, “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC.”\n\nThe PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations in this nature may cause the value of such securities to significantly decline or become worthless. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — The PRC government’s oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs.”\n\nRisks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ADSs. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Uncertainties with respect to the PRC legal system could have a material adverse effect on us.”\n\nOn June 30, 2020, the Standing Committee of the National People’s Congress of the PRC, or the SCNPC promulgated the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region, or the Law of PRC on Safeguarding National Security in Hong Kong, the interpretation of which involves a degree of uncertainty. The PRC government has also announced recently that it would step up supervision of overseas listed PRC businesses, and check sources of funding for securities investment and control leverage ratios. The PRC government has also opened a probe into several U.S.-listed technology companies focusing on anti-monopoly, financial technology regulation and more recently, with the passage of the PRC Data Security Law, how companies collect, store, process and transfer personal data. Currently these laws (other than the Law of the PRC on Safeguarding National Security in Hong Kong) are expected to apply to China domestic businesses, rather than businesses in Hong Kong which operate under a different set of laws from China. However, there can be no assurance that the government of Hong Kong will not enact similar laws and regulations applicable to companies operating in Hong Kong. For example, the PRC government may pressure the government of Hong Kong to enact similar laws and regulations to those in the PRC, which may seek to exert control over offerings conducted overseas by Hong Kong companies. If any or all of the foregoing were to occur, and if our Hong Kong subsidiary elects to carry out substantive business activities in the future, it could lead to a material adverse change in our operations and limit or hinder our ability to offer securities to overseas investors or remain listed in the United States, which could cause the value of our ADSs to significantly decline or become worthless. As of the date of this annual report, our Hong Kong subsidiary has not received any inquiry or notice or any objection from any PRC authority or Hong Kong authority. See “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Implementation of the Law of the PRC on Safeguarding National Security in Hong Kong involves uncertainty, and the recent policy pronouncements by the PRC government regarding business activities of U.S.-listed PRC businesses may negatively impact our existing and future operations in Hong Kong.”\n\n \n\n11\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nPermissions Required from the PRC Authorities for Our Operations and those of the VIEs\n\nFour Seasons Education (Cayman) Inc. is a holding company with no operations of its own. We conduct business primarily through our subsidiaries and the VIEs in China. Our operations and those of the VIEs in China are governed by PRC laws and regulations. As of the date of this annual report, other than disclosed in “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—We are required to obtain various operating licenses and permits and to make registrations and filings for our business operations in China; failure to comply with these requirements may materially adversely affect our business and results of operations,” and “—Risks Related to Doing Business in the PRC—Our business is subject to various evolving PRC laws and regulations regarding data privacy and cybersecurity. Failure of cybersecurity and data privacy concerns could subject us to penalties, damage our reputation and brand, and harm our business and results of operations,” and based on the advice of our PRC counsel, Fangda Partners, we believe our PRC subsidiaries and the VIEs have obtained all of the material licenses and permits from the PRC government authorities that are necessary for our principal business operation, including, among others, the Private School Operation Permits, Fire Safety Permits, Food Operation Licenses, Permits for Operating Publications, Travel Agency Operation Permit, and the filing certificate of Information System Security Level Protection, and our Cayman Islands holding company does not need to obtain any licenses or permits from the PRC government authorities as it has no business operation in PRC. 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. Risk Factors—Risks Related to Our Business—We are required to obtain various operating licenses and permits and to make registrations and filings for our business operations in China; failure to comply with these requirements may materially adversely affect our business and results of operations,” and “—Risks Related to Doing Business in the PRC—Our business is subject to various evolving PRC laws and regulations regarding data privacy and cybersecurity. Failure of cybersecurity and data privacy concerns could subject us to penalties, damage our reputation and brand, and harm our business and results of operations.”\n\nFurthermore, in connection with our issuance of securities to foreign investors in the past, under current PRC laws, regulations, and rules, as of the date of this annual report, we, our PRC subsidiaries, and the VIEs (i) have not been required to obtain permissions from or complete filings with the China Securities Regulatory Commission, or the CSRC, (ii) have not been required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, and (iii) have not received or have not been denied such requisite permissions by the CSRC or the CAC. Our PRC counsel, Fangda Partners, has consulted the relevant government authorities, which acknowledged that, under the currently effective PRC laws and regulations, a company already listed in a foreign stock exchange before promulgation of the latest Cybersecurity Review Measures is not required to go through a cybersecurity review by the CAC to conduct a securities offering or maintain its listing status on the foreign stock exchange on which its securities have been listed. Therefore, we believe that under the currently effective PRC laws and regulations, our holding company, PRC subsidiaries and the VIEs are not required to go through a cybersecurity review by the CAC for conducting a securities offering or maintain our listing status on the NYSE.\n\n \n\n12\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOn February 17, 2023, the CSRC released the Overseas Listing Trial Measures and five supporting guidelines, which became effect on March 31, 2023. The Overseas Listing Trial Measures regulates both direct and indirect overseas offering and listing of PRC domestic companies’ securities by adopting a filing-based regulatory regime. Pursuant to the Overseas Listing Trial Measures, the principle of “substance over form” shall be followed when determining whether an offering and listing shall be deemed as an indirect overseas offering and listing by a PRC domestic company and if the issuer meets both the following criteria, the overseas securities offering and listing conducted by such issuer shall be deemed as indirect overseas offering by PRC domestic companies: (i) 50% or more of any of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in the PRC or its main place(s) of business are located in the PRC, or the majority of senior management staff in charge of its business operations and management are PRC citizens or have their habitual residence located in the PRC. Where an issuer submits an application for initial public offering to competent overseas regulators, such issuer must file with the CSRC within three business days after such application is submitted. The Overseas Listing Trial Measures also requires subsequent reports to be submitted to the CSRC on material events, such as change of control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings and listings. On the same day, the CSRC also published the Notice on the Administrative Arrangements for the Filing of Overseas Securities Offering and Listing by the Domestic Enterprises, or the Notice on Overseas Listing Measures. According to the Notice on Overseas Listing Measures, issuers that have already been listed in an overseas market by March 31, 2023, the date on which the Overseas Listing Measures became effective, such as our company, are not required to make any immediate filing. However, such issuers will be required to comply with the filing requirements under Overseas Listing Measures if and when they pursue any future securities offerings and listings outside of mainland China, including but not limited to follow-on offerings, secondary listings and going private transactions. If we fail to obtain required approval or complete other review or filing procedures, under the Overseas Listing Measures or otherwise, for any future securities offerings and listings outside of mainland China, including but not limited to follow-on offerings, secondary listings and going private transactions, we may face sanctions by the CSRC or other PRC regulatory authorities, including administrative penalties, such as order to rectify, warnings, fines or other actions that may materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs. Given the substantial uncertainties surrounding the latest CSRC filing requirements and the CAC cybersecurity review requirements, and such regulations are subject to change, we cannot assure you that our holding company, PRC subsidiaries or the VIEs will be able to complete the filings and fully comply with the relevant new rules on a timely basis, if the CSRC, CAC or other government authorities later promulgate new rules or explanations requiring that we obtain their approvals for our future overseas offerings.\n\n \n\n13\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nIn addition, implementation of industry-wide regulations directly targeting our operations could cause the value of our securities to significantly decline. Therefore, investors of our company and our business face potential uncertainty from actions taken by the PRC government affecting our business. The regulatory environment with respect to the industry that we have been operating in China is changing rapidly for the past years and therefore is subject to substantial uncertainties. According to the Double Alleviating Opinions, for non-academic tutoring, local authorities shall identify corresponding competent authorities for different tutoring categories, set forth standards and approve relevant non-academic tutoring institutions. However, as of the date of this annual report, there has no research and academic study travel, learning technology and content solutions related implementation rules or standards. In addition, as of the date of this annual report, there has no explicit implementation rules or interpretation deeming our online provision of video recordings accompanying our textbooks to our textbook users through our website as “online publishing” and thus may require certain permit. As PRC laws and regulations with respect to certain licenses and permissions are unclear and are subject to interpretations and enforcement of local governmental authorities, it is uncertain whether our research and academic study travel, learning technology, content solutions related business or online provision of video recordings may fall within the scope of business operations that require additional licenses or other licenses or permits, including without limitation the licenses and permits mentioned above and whether our subsidiaries and VIEs would be able to obtain and renew such approvals on a timely basis or at all. We have been closely monitoring the evolving regulatory environment and are making efforts to seek guidance from and cooperate with the government authorities to comply with relevant laws and regulation. As of the date of this annual report, we have no outstanding written notice of warning from, or been subject to penalties imposed by, the relevant government authorities for alleged failure by us to obtain relevant licenses or other licenses or permits related to our research and academic study travel, learning technology, content solutions or online provision of video recordings related business. If our holding company, PRC subsidiaries and the VIEs had inadvertently concluded that such approvals were not required, or if applicable laws, regulations or interpretations change in a way that requires us to obtain such approval in the future, our holding company, PRC subsidiaries and the VIEs may be unable to obtain such necessary approvals in a timely manner, or at all, and such approvals may be rescinded even if obtained. Any such circumstance could subject us to penalties, including fines, suspension of business and revocation of required licenses, significantly limit or completely hinder our ability to continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. For more detailed information, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — The PRC government’s oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs.” and “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — We are required to obtain various operating licenses and permits and to make registrations and filings for our business operations in China; failure to comply with these requirements may materially adversely affect our business and results of operations.”\n\nThe Holding Foreign Companies Accountable Act\n\nThe Holding Foreign Companies Accountable Act, or the HFCA Act, was signed into law on December 18, 2020. The HFCA Act states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection for the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.\n\nOn June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, or the AHFCA Act, which was signed into law on December 29, 2022, amending the HFCA Act and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.\n\nOn December 2, 2021, the SEC adopted final amendments implementing the disclosure and submission requirements under the HFCA Act, pursuant to which the SEC will identify a “Commission-Identified Issuer” if an issuer has filed an annual report containing an audit report issued by a registered public accounting firm that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction.\n\n \n\n14\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOn December 16, 2021, the PCAOB issued a report (\"PCAOB Determination 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.\n\nOn August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol (the “Protocol”) with the CSRC and the Ministry of Finance (“MOF”) of the People's Republic of China, governing inspections and investigations of audit firms based in mainland China and Hong Kong. The Protocol remains unpublished and is subject to further explanation and implementation. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and the unfettered ability to transfer information to the SEC.\n\nOn December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous PCAOB Determination Report to the contrary. However, whether the PCAOB will continue to conduct inspections and investigations completely to its satisfaction of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditor’s, control, including positions taken by authorities of the PRC. The PCAOB is expected to continue to demand complete access to inspections and investigations against accounting firms headquartered in mainland China and Hong Kong in the future and states that it has already made plans to resume regular inspections in early 2023 and beyond. The PCAOB is required under the HFCA Act to make its determination on an annual basis with regards to its ability to inspect and investigate completely accounting firms based in the mainland China and Hong Kong. Should the PCAOB again encounter impediments to inspections and investigations in mainland China or Hong Kong as a result of positions taken by any authority in either jurisdiction, the PCAOB will make determinations under the HFCA Act as and when appropriate.\n\nOur auditor, Marcum Asia CPAs LLP, or MarcumAsia, the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United States), or the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. MarcumAsia, whose audit report is included in this annual report on Form 20-F, is headquartered in New York, New York, and is subject to inspection by the PCAOB on a regular basis. As a result, we do not expect to be identified as a “Commission-Identified Issuer” under the HFCA Act for the fiscal year ended February 28, 2026 after we file our annual report on Form 20-F for such fiscal year.\n\nFurthermore, these recent developments could also add uncertainties and we cannot assure you that the NYSE or regulatory authorities would not apply additional or more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. If our shares and ADSs are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. Such a prohibition would substantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our ADSs. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.\n\nFor more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — The PCAOB may be unable to inspect or fully investigate our auditors as required under the Holding Foreign Companies Accountable Act, or the HFCA Act. If the PCAOB is unable to conduct such inspections for two consecutive years beginning in 2021, the SEC will prohibit the trading of our ADSs. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections of our auditors would deprive our investors of the benefits of such inspections.”\n\n \n\n15\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nSummary of Risk Factors\n\nSet forth below is only a summary of the principal risks associated with an investment in our shares. See below under this “Item 3. Key Information — D. Risk Factors” for a detailed discussion of the numerous risks and uncertainties to which the Company is subject.\n\nRisks Related to Our Business\n\n•\nIf we are not able to develop new types of learning products, services or activities under the recent regulatory policies in China to successfully attract prospective learners and customers in a timely or cost-effective manner or to continue to attract learners and customers to purchase our existing products or services, our business, results of operations and prospects will continue to be materially and adversely affected.\n\n•\nFailure to successfully design and execute our growth strategies may materially and adversely affect our business and prospects.\n\n•\nWe may not be able to improve our current business to meet the demand of learners, customers and educational institutions on a timely basis and in a cost-effective manner. If the level of satisfaction of our learners, customers and educational institutions with our services declines, they may decide to withdraw from our programs and request refunds and our business, financial condition, results of operations and reputation would be adversely affected.\n\n•\nAny damage to our brand or the reputation of any of our learning centers or study camps may adversely affect our overall business, prospects, results of operations and financial condition.\n\n•\nGeneral declines or disruptions in the travel industry may materially and adversely affect our business and results of operations.\n\n•\nOur business could be disrupted if we lose the services of members of our senior management team.\n\n•\nWe face significant competition, and if we fail to compete effectively, we may lose our market share and our profitability may be adversely affected.\n\n•\nWe may not be able to continue to recruit, train and retain qualified faculty members, who are critical to the success of our business and effective delivery of our services and products.\n\n•\nOur historical financial and operating results, growth rates and profitability may not be indicative of future performance.\n\n•\nIf we fail to integrate or negotiate successfully any future acquisitions, our business and operating results could be materially and adversely affected.\n\n•\nWe are required to obtain various operating licenses and permits and to make registrations and filings for our business operations in China; failure to comply with these requirements may materially adversely affect our business and results of operations.\n\n•\nSome of our schools are restricted in their ability to distribute profits to their sponsors. The service arrangements between Shanghai Fuxi and our private schools may be regarded as circumventing this restriction.\n\nRisks Related to Our Corporate Structure\n\n•\nOur business is subject to extensive regulation in the PRC. If the PRC government finds that the contractual arrangement that establishes our corporate structure for operating our business does not comply with applicable PRC laws and regulations, we could be subject to severe penalties.\n\n•\nSubstantial uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure and business operations.\n\n \n\n16\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\n•\nWe rely on contractual arrangements with the VIEs and their respective shareholders in the form of private non-enterprise institutions for our operations in the PRC, which may not be as effective in providing control as direct ownership.\n\n•\nContractual arrangements between the VIEs and us may be subject to scrutiny by the PRC tax authorities and a finding that we or the VIEs owe additional taxes could materially reduce our net income and the value of your investment.\n\n•\nIf any of the VIEs becomes the subject of a bankruptcy or liquidation proceeding, we may lose the ability to use and enjoy assets held by such entity, which could materially and adversely affect our business, financial condition and results of operations.\n\nRisks Related to Doing Business in the PRC\n\n•\nChanges in PRC economy, or economic and political conditions or government policies in China, could have a material adverse effect on our business, financial conditions and results of operations. Substantially all of our business operations are conducted in China. Accordingly, our business, financial condition, results of operations and prospects are influenced by economic, political and legal developments in China. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Changes in PRC economy, or economic and political conditions or government policies in China, could have a material adverse effect on our business, financial conditions and results of operations.”\n\n•\nUncertainties with respect to the PRC legal system could have a material adverse effect on us. The PRC administrative and judicial authorities have significant discretion in interpreting, implementing or enforcing statutory rules and contractual terms, and it may be more difficult to predict the outcome of administrative and judicial proceedings and the level of legal protection we may enjoy in the PRC than under some more developed legal systems. Changes in the policies, regulations, rules, and the enforcement of laws of the PRC government may be made quickly with little advance notice. These uncertainties may affect our decisions on the policies and actions to be taken to comply with PRC laws and regulations, and may affect our ability to enforce our contractual or tort rights. In addition, the regulatory uncertainties may be exploited through unmerited legal actions or threats in an attempt to extract payments or benefits from us. Such uncertainties may therefore increase our operating expenses and costs, and materially and adversely affect our business and results of operations. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Uncertainties with respect to the PRC legal system could have a material adverse effect on us.”\n\n•\nThe PRC government’s oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs. The PRC government has significant oversight and discretion over the operation of our business, and it may intervene or influence our operations, which could result in a material adverse change in our operation and the value of our ADSs. The PRC government has recently indicated an intent to exert more oversight over overseas offerings by and foreign investment in China-based issuers like us. It remains uncertain how PRC government authorities will regulate overseas listing in general and whether we are required to complete filing or obtain any specific regulatory approvals from the CSRC, CAC or any other PRC government authorities for our overseas offerings. If the CSRC, CAC or other government authorities later promulgate new rules or explanations requiring that we obtain their approvals for our future overseas offerings, we may be unable to obtain such approvals in a timely manner, or at all, and such approvals may be rescinded even if obtained. Any such circumstance could significantly limit or completely hinder our ability to continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. In addition, implementation of industry-wide regulations directly targeting our operations could cause the value of our securities to significantly decline. Therefore, investors of our company and our business face potential uncertainty from actions taken by the PRC government affecting our business. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — The PRC government’s oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs.”\n\n \n\n17\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\n•\nOur business is subject to various evolving PRC laws and regulations regarding data privacy and cybersecurity. Failure of cybersecurity and data privacy concerns could subject us to penalties, damage our reputation and brand, and harm our business and results of operations. We routinely collect, store and use personal information and other data during the ordinary course of our business. If we are unable to protect the personal information and other data we collect, store and use from unauthorized access, use, disclosure, disruption, modification, or destruction, such problems or security breaches could cause a loss, give rise to our liabilities to the owners or subject of the information, or subject us to fines and other penalties. In addition, complying with various laws and regulations could cause us to incur substantial costs or require us to change our business practices, including our data practices, in a manner adverse to our business. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Our business is subject to various evolving PRC laws and regulations regarding data privacy and cybersecurity. Failure of cybersecurity and data privacy concerns could subject us to penalties, damage our reputation and brand, and harm our business and results of operations.”\n\n•\nWe are required to obtain various operating licenses and permits and to make registrations and filings for our business operations in China; failure to comply with these requirements may materially adversely affect our business and results of operations. If the government authorities determine that our enrichment learning services, research and academic study travel, learning technology and content solutions, online provision of video recordings related business fall within the scope of business operations that require additional licenses or other licenses or permits, including without limitation the licenses and permits mentioned above, we may not be able to obtain such licenses or permits on reasonable terms or in a timely manner or at all. Moreover, we may fail to maintain, renew or update any of our existing licenses, permits, approvals, registrations or filings in a timely manner and on commercially reasonable terms, or at all, which could materially and adversely affect our business, results of operations and financial condition. Besides, we may develop new business lines or make changes to the operations of certain of the current business of our PRC subsidiaries or the VIEs, which may require us to obtain additional licenses, approvals, permits, registrations and filings. However, there can be no assurance that we are, or will be, able to successfully obtain such licenses, approvals, permits, registrations and filings in a timely manner, or at all. Government authorities may also from time to time issue new laws, rules and regulations or enhance enforcement of existing laws, rules and regulations, which could also require us to obtain new and additional licenses, permits, approvals, registrations or filings. If we fail to obtain and maintain such required licenses and permits, as well as required registrations and filings, we may be subject to fines, legal sanctions or an order to suspend our online education services and our business, financial condition and operational results may be materially and adversely affected. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — We are required to obtain various operating licenses and permits and to make registrations and filings for our business operations in China; failure to comply with these requirements may materially adversely affect our business and results of operations.”\n\n•\nThe PCAOB may be unable to inspect or fully investigate our auditors as required under the Holding Foreign Companies Accountable Act, or the HFCA Act. If the PCAOB is unable to conduct such inspections for two consecutive years beginning in 2021, the SEC will prohibit the trading of our ADSs. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections of our auditors would deprive our investors of the benefits of such inspections. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — The PCAOB may be unable to inspect or fully investigate our auditors as required under the Holding Foreign Companies Accountable Act, or the HFCA Act. If the PCAOB is unable to conduct such inspections for two consecutive years beginning in 2021, the SEC will prohibit the trading of our ADSs. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections of our auditors would deprive our investors of the benefits of such inspections.”\n\n \n\n18\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\n•\nOur subsidiaries and the VIEs in the PRC are subject to restrictions on making dividends and other payments to us. We are a holding company and rely principally on dividends paid by our subsidiaries in the PRC. Current PRC regulations permit our subsidiaries in the PRC to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Under the applicable requirements of PRC law, our PRC subsidiaries may only distribute dividends after they have made allowances to fund certain statutory reserves. These reserves are not distributable as cash dividends. In addition, at the end of each fiscal year, each of our learning centers that are private schools in the PRC is required to allocate a certain amount to its development fund for the construction or maintenance of the school properties or purchase or upgrade of school facilities. Furthermore, if our subsidiaries or the VIEs in the PRC incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. In addition, to the extent cash or assets in our business is in the PRC or Hong Kong or a PRC or Hong Kong entity, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in, or the imposition of restrictions and limitations on, the ability of our holding company, our PRC subsidiaries, or the VIEs by the PRC government to transfer cash or assets. Cash may be transferred within our organization in the following manners: Under PRC laws, Four Seasons may, through its intermediary holding companies, provide funding to our PRC subsidiaries only through capital contributions or loans, and to the VIEs only through loans, subject to satisfaction of applicable government registration and approval requirements. Any such restrictions or requirements may materially affect such entities’ ability to make dividends or make payments, in service fees or otherwise, to us, which may materially and adversely affect our business, financial condition and results of operations. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Our subsidiaries and the VIEs in the PRC are subject to restrictions on making dividends and other payments to us.”\n\n•\nRestrictions on currency exchange may limit our ability to receive and use our revenues effectively. Substantially all of our revenue is denominated in Renminbi. As a result, restrictions on currency exchange may limit our ability to use revenue generated in Renminbi to fund any business activities we may have outside the PRC in the future or to make dividend payments to our shareholders and ADS holders in U.S. dollars. Under current PRC laws and regulations, Renminbi is freely convertible for current account items, such as trade and service-related foreign exchange transactions and dividend distributions. However, Renminbi is not freely convertible for direct investment or loans or investments in securities outside the PRC, unless such use is approved by SAFE. These limitations could affect our ability to obtain foreign exchange for capital expenditures. To the extent we need to convert and use any Renminbi-denominated revenue generated by the VIEs not paid to our PRC subsidiaries and revenue generated by our PRC subsidiaries not declared and paid as dividends, the limitations discussed above will restrict the convertibility of, and our ability to directly receive and use such revenue. As a result, our business and financial condition may be adversely affected. In addition, we cannot assure you that the PRC regulatory authorities will not impose more stringent restrictions on the convertibility of Renminbi in the future, especially with respect to foreign exchange transactions. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.”\n\n \n\n19\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\n•\nOur subsidiaries and the VIEs in the PRC are subject to restrictions on making dividends and other payments to us. We are a holding company and rely principally on dividends paid by our subsidiaries in the PRC. Current PRC regulations permit our subsidiaries in the PRC to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Under the applicable requirements of PRC law, our PRC subsidiaries may only distribute dividends after they have made allowances to fund certain statutory reserves. These reserves are not distributable as cash dividends. In addition, at the end of each fiscal year, each of our learning centers that are private schools in the PRC is required to allocate a certain amount to its development fund for the construction or maintenance of the school properties or purchase or upgrade of school facilities. Furthermore, if our subsidiaries or the VIEs in the PRC incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. In addition, to the extent cash or assets in our business is in the PRC or Hong Kong or a PRC or Hong Kong entity, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in, or the imposition of restrictions and limitations on, the ability of our holding company, our PRC subsidiaries, or the VIEs by the PRC government to transfer cash or assets. Cash may be transferred within our organization in the following manners: Under PRC laws, Four Seasons may, through its intermediary holding companies, provide funding to our PRC subsidiaries only through capital contributions or loans, and to the VIEs only through loans, subject to satisfaction of applicable government registration and approval requirements. Any such restrictions or requirements may materially affect such entities’ ability to make dividends or make payments, in service fees or otherwise, to us, which may materially and adversely affect our business, financial condition and results of operations. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Our subsidiaries and the VIEs in the PRC are subject to restrictions on making dividends and other payments to us.”\n\nRisks Related to our Ordinary Shares and ADSs\n\n•\nThe trading price of our ADSs is likely to be volatile, which could result in substantial losses to investors.\n\n•\nSubstantial future sales or perceived potential sales of our ADSs in the public market could cause the price of our ADSs to decline.\n\nCash and Asset Flows through Our Organization\n\nFour Seasons Education (Cayman) Inc. is a holding company with no operations of its own. We conduct operations in China primarily through our subsidiaries and the VIEs and their subsidiaries in China. As a result, although other means are available for us to obtain financing at the holding company level, the Parent’s ability to pay dividends to the shareholders and to service any debt it may incur depends upon dividends paid by our PRC subsidiaries and license and service fees paid by the VIEs to the WFOE in accordance with the VIE agreement. The Parent, our subsidiaries, WFOE and the VIEs may also transfer cash to each other. If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to the Parent. In addition, to the extent cash or assets in our business is in the PRC or Hong Kong or a PRC or Hong Kong entity, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in, or the imposition of restrictions and limitations on, the ability of our holding company, our PRC subsidiaries, or the VIEs by the PRC government to transfer cash or assets. Cash may be transferred within our organization in the following manners:\n\nUnder PRC laws, the Parent may, through its intermediary holding companies, provide funding to our PRC subsidiaries only through capital contributions or loans, and to the VIEs only through loans, subject to satisfaction of applicable government registration and approval requirements. The VIEs may transfer cash to our WFOE and other subsidiaries (“Other Subsidiaries”) as working capital support, or through service fees in accordance with the VIE agreement, and to the Parent through repayment of loans. The WFOE and Other Subsidiaries may also transfer cash to VIEs or other entities within our organization as working capital support.\n\n \n\n20\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nFor the details of the financial position, cash flows and results of operation of the VIEs, please refer to the “Item 3. Key information-Condensed Consolidating Schedule.”\n\nOur PRC subsidiaries and the VIEs are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies. The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders. For more details, see “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Holding Company Structure”, “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Our subsidiaries and the VIEs in the PRC are subject to restrictions on making dividends and other payments to us, and “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.”\n\nAs of the date of this annual report, none of our WFOE, Other Subsidiaries, or the VIEs has made any dividends or other distributions to the Parent. On January 16, 2018, we declared dividends of US$20 million to holders of our company’s ordinary shares of record as of February 1, 2018. The dividend was paid out of the proceeds from our initial public offering. In addition, we declared a cash dividend of US$0.23 per ordinary share, or US$2.30 per ADS on August 14, 2024, with the total dividend distribution of US$5.1 million.\n\nSubject to the passive foreign investment company rules discussed in detail under “Item 10. Additional Information — E. Taxation — Passive Foreign Investment Company”, the gross amount of any distribution that we make to United States Holders (as defined below) with respect to our ADSs or ordinary shares (including any amounts withheld to reflect PRC or other withholding taxes) will be taxable as a dividend, to the extent paid out of our current or accumulated earnings and profits, as determined under United States federal income tax principles. We currently do not, and we do not intend to, determine our earnings and profits on the basis of United States federal income tax principles. Therefore, a United States Holder should expect that any distribution paid generally will be reported as a “dividend” for United States federal income tax purposes. The amount of such dividend will include amounts withheld by us or our paying agent in respect of any foreign taxes. As of the date of this annual report, Four Seasons Education (Cayman) Inc. is not a PRC resident enterprise for PRC tax purposes, therefore the payments of dividend in respect of our ordinary share are not subject to PRC withholding tax. However, if we are considered a PRC tax resident enterprise for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax. See “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise,” which could result in unfavorable tax consequences to us and our non-PRC shareholders.” For further discussion on PRC and United States federal income tax considerations of an investment in the ADSs, see “Item 10 — Additional Information — E. Taxation.”\n\nFor the years ended February 29, 2024, February 28, 2025 and February 28, 2026, the WFOE invested nil, nil and nil to Other Subsidiaries as capital injection, respectively. For the years ended February 29, 2024, February 28, 2025 and February 28, 2026, Parent invested RMB20.9 million, nil, and nil to Other Subsidiaries, respectively. For the years ended February 29, 2024, February 28, 2025 and February 28, 2026, Parent transferred nil, nil, and RMB3.5 million to Other Subsidiaries as repayment of working capital support, respectively.\n\n \n\n21\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nFor the year ended February 28, 2026, (i) our WFOE transferred RMB49.0 million to VIEs as working capital support; (ii) the VIEs paid RMB9.8 million to our WFOE as service fee in accordance with VIE agreements, paid RMB15.6 million to Other Subsidiaries as service fee and repaid working capital support of RMB32.4 million to WFOE; and (iii) our Other Subsidiaries transferred RMB 0.6 million to the VIEs as service fee. For the year ended February 28, 2025, (i) our WFOE transferred nil to Other Subsidiaries as working capital support, and RMB47.4 million to VIEs as working capital support (ii) the VIEs paid RMB6.0 million to our WFOE as service fee in accordance with VIE agreements, paid RMB8.6 million to Other Subsidiaries as service fee, repaid working capital support of RMB60.5 million to WFOE and RMB0.02 million to our Other Subsidiaries; and (iii) our Other Subsidiaries transferred RMB0.3 million to the VIEs as working capital support, and RMB2.0 million to WFOE as working capital support. For the year ended February 29, 2024, (i) our WFOE transferred RMB2.0 million to Other Subsidiaries as working capital support, and RMB23.5 million to VIEs also as working capital support; (ii) the VIEs paid RMB3.6 million to our WFOE as service fee in accordance with VIE agreements, paid RMB4.1 million to Other Subsidiaries as service fee, repayment of working capital support of RMB25.2 million to WFOE and RMB3.6 million to our Other Subsidiaries; (iii) our Other Subsidiaries transferred RMB4.0 million to the VIEs as working capital support; and (iv) Other Subsidiaries transferred RMB2.7 million to WFOE as repayment of working capital support. Please see the condensed consolidating schedules set forth above and our consolidated financial statements within this annual report. We do not, at this time, intend to distribute earnings or settle amounts owed under the VIE Agreements. We currently do not have cash management policies in place that dictate how funds are transferred between the Parent, our subsidiaries and the VIEs. Rather, the funds can be transferred in accordance with the applicable PRC laws and regulations.\n\nFor purposes of illustration, the following discussion reflects the hypothetical taxes that might be required to be paid within mainland China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay a dividend in the future:\n\n \n\n \n\nCalculation(1)\n\n \n\nHypothetical pre-tax earnings(2)\n\n \n\n \n\n100.0\n\n%\n\nTax on earnings at statutory rate of 25%(3)\n\n \n\n \n\n(25.0\n\n%)\n\nNet earnings available for distribution\n\n \n\n \n\n75.0\n\n%\n\nWithholding tax at standard rate of 10%(4)\n\n \n\n \n\n(7.5\n\n%)\n\nNet distribution to Parent/Shareholders\n\n \n\n \n\n67.5\n\n%\n\nNote:\n\n(1)\nFor purposes of this example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount, not considering timing differences, is assumed to equal taxable income in China.\n\n(2)\nUnder the terms of the VIE agreements, our PRC subsidiaries may charge the VIEs for services provided to VIEs. These service fees shall be recognized as cost and expenses of the VIEs, with a corresponding amount as service income by our PRC subsidiaries and eliminate in consolidation. For income tax purposes, our PRC subsidiaries and VIEs file income tax returns on a separate company basis. The service fees paid are recognized as a tax deduction by the VIEs and as income by our PRC subsidiaries and are tax neutral.\n\n(3)\nCertain of our subsidiaries and VIEs qualify for a preferential income tax rate which is lower than the statutory rate of 25% in China. However, such rate is subject to qualification, is temporary in nature, and may not be available in a future period when distributions are paid. For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective.\n\n(4)\nThe PRC Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise, or FIE, to its immediate holding company outside of China. A lower withholding income tax rate of 5% is applied if the FIE’s immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with China, subject to a qualification review at the time of the distribution. For purposes of this hypothetical example, the table above assumes a maximum tax scenario under which the full withholding tax would be applied.\n\n \n\n22\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nCondensed Consolidating Schedule\n\nThe following table presents the condensed consolidating schedule of financial position, results of operations and cash flows for the VIEs and other entities as of the dates presented.\n\nIn these tables, “Four Seasons” refers to Four Seasons Education (Cayman) Inc., the New York Stock Exchange listed company which is a Cayman Islands exempted company. “WFOE” refers to Four Seasons’ wholly-owned Chinese subsidiary, Shanghai Fuxi. “Subsidiaries” refers to subsidiaries of Four Seasons other than the WFOE. “VIEs” refers to Shanghai Luoliang Network Technology Co., Ltd. (“Shanghai Luoliang”), Shanghai Four Seasons Education Investment Management Co., Ltd. (“Four Seasons Investment”) and their subsidiaries.\n\n \n\n \n\nFor the Year Ended February 29, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOther\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFour Seasons\n\n \n\n \n\nWFOE\n\n \n\n \n\nSubsidiaries\n\n \n\n \n\nVIEs\n\n \n\n \n\nEliminations\n\n \n\n \n\nConsolidated\n\n \n\n \n\n(RMB in thousands)\n\n \n\nRevenue(1)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n3,516\n\n \n\n \n\n \n\n5,002\n\n \n\n \n\n \n\n124,568\n\n \n\n \n\n \n\n(7,641\n\n)\n\n \n\n \n\n125,445\n\n \n\nCost of revenue(1)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(4,083\n\n)\n\n \n\n \n\n(79,378\n\n)\n\n \n\n \n\n3,510\n\n \n\n \n\n \n\n(79,951\n\n)\n\nOperating expenses(1)\n\n \n\n \n\n(6,085\n\n)\n\n \n\n \n\n(5,085\n\n)\n\n \n\n \n\n(6,600\n\n)\n\n \n\n \n\n(42,254\n\n)\n\n \n\n \n\n5,260\n\n \n\n \n\n \n\n(54,764\n\n)\n\nOperating (loss) income\n\n \n\n \n\n(6,085\n\n)\n\n \n\n \n\n(1,569\n\n)\n\n \n\n \n\n(5,681\n\n)\n\n \n\n \n\n2,936\n\n \n\n \n\n \n\n1,129\n\n \n\n \n\n \n\n(9,270\n\n)\n\nSubsidy income\n\n \n\n \n\n—\n\n \n\n \n\n \n\n4\n\n \n\n \n\n \n\n610\n\n \n\n \n\n \n\n114\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n728\n\n \n\nInterest income, net\n\n \n\n \n\n6,518\n\n \n\n \n\n \n\n455\n\n \n\n \n\n \n\n10\n\n \n\n \n\n \n\n252\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n7,235\n\n \n\nRealized gain in investments\n\n \n\n \n\n3,207\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n3,207\n\n \n\nUnrealized holding gain in investments\n\n \n\n \n\n3,910\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n3,910\n\n \n\nOther income (expenses), net\n\n \n\n \n\n8\n\n \n\n \n\n \n\n306\n\n \n\n \n\n \n\n(75\n\n)\n\n \n\n \n\n(1,673\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,434\n\n)\n\nImpairment loss on long-term investments\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(500\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(500\n\n)\n\nLoss from investments in subsidiaries, VIEs and VIEs’ subsidiaries(2)\n\n \n\n \n\n(2,597\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,597\n\n \n\n \n\n \n\n—\n\n \n\nIncome (loss) before income taxes\n\n \n\n \n\n4,961\n\n \n\n \n\n \n\n(804\n\n)\n\n \n\n \n\n(5,136\n\n)\n\n \n\n \n\n1,129\n\n \n\n \n\n \n\n3,726\n\n \n\n \n\n \n\n3,876\n\n \n\nIncome tax expense\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(412\n\n)\n\n \n\n \n\n(689\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,101\n\n)\n\nNet income (loss)\n\n \n\n \n\n4,961\n\n \n\n \n\n \n\n(804\n\n)\n\n \n\n \n\n(5,548\n\n)\n\n \n\n \n\n440\n\n \n\n \n\n \n\n3,726\n\n \n\n \n\n \n\n2,775\n\n \n\nLess: Net loss attributable to noncontrolling interest\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2,186\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2,186\n\n)\n\nNet income (loss) attributable to Four Seasons Education (Cayman) Inc.\n\n \n\n \n\n4,961\n\n \n\n \n\n \n\n(804\n\n)\n\n \n\n \n\n(5,548\n\n)\n\n \n\n \n\n2,626\n\n \n\n \n\n \n\n3,726\n\n \n\n \n\n \n\n4,961\n\n \n\n \n\n \n\nFor the Year Ended February 28, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOther\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFour Seasons\n\n \n\n \n\nWFOE\n\n \n\n \n\nSubsidiaries\n\n \n\n \n\nVIEs\n\n \n\n \n\nEliminations\n\n \n\n \n\nConsolidated\n\n \n\n \n\n(RMB in thousands)\n\n \n\nRevenue(1)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n8,323\n\n \n\n \n\n \n\n11,647\n\n \n\n \n\n \n\n250,528\n\n \n\n \n\n \n\n(19,422\n\n)\n\n \n\n \n\n251,076\n\n \n\nCost of revenue(1)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(6,637\n\n)\n\n \n\n \n\n(197,304\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(203,941\n\n)\n\nOperating expenses(1)\n\n \n\n \n\n(2,209\n\n)\n\n \n\n \n\n(6,623\n\n)\n\n \n\n \n\n(8,589\n\n)\n\n \n\n \n\n(65,469\n\n)\n\n \n\n \n\n20,016\n\n \n\n \n\n \n\n(62,874\n\n)\n\nOperating (loss) income\n\n \n\n \n\n(2,209\n\n)\n\n \n\n \n\n1,700\n\n \n\n \n\n \n\n(3,579\n\n)\n\n \n\n \n\n(12,245\n\n)\n\n \n\n \n\n594\n\n \n\n \n\n \n\n(15,739\n\n)\n\nSubsidy income\n\n \n\n \n\n—\n\n \n\n \n\n \n\n4\n\n \n\n \n\n \n\n604\n\n \n\n \n\n \n\n805\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,413\n\n \n\nInterest income (expense), net\n\n \n\n \n\n15,712\n\n \n\n \n\n \n\n1,218\n\n \n\n \n\n \n\n7\n\n \n\n \n\n \n\n(737\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n16,200\n\n \n\nRealized loss in investments\n\n \n\n \n\n(3,062\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(3,062\n\n)\n\nUnrealized holding gain in investments\n\n \n\n \n\n2,022\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,022\n\n \n\nOther income (expenses), net\n\n \n\n \n\n62\n\n \n\n \n\n \n\n630\n\n \n\n \n\n \n\n9\n\n \n\n \n\n \n\n(846\n\n)\n\n \n\n \n\n(594\n\n)\n\n \n\n \n\n(739\n\n)\n\nLoss from investments in subsidiaries, VIEs and VIEs’ subsidiaries(2)\n\n \n\n \n\n(11,724\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n11,724\n\n \n\n \n\n \n\n—\n\n \n\nIncome (loss) before income taxes\n\n \n\n \n\n801\n\n \n\n \n\n \n\n3,552\n\n \n\n \n\n \n\n(2,959\n\n)\n\n \n\n \n\n(13,023\n\n)\n\n \n\n \n\n11,724\n\n \n\n \n\n \n\n95\n\n \n\nIncome tax expense\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(722\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(722\n\n)\n\nNet income (loss)\n\n \n\n \n\n801\n\n \n\n \n\n \n\n3,552\n\n \n\n \n\n \n\n(2,959\n\n)\n\n \n\n \n\n(13,745\n\n)\n\n \n\n \n\n11,724\n\n \n\n \n\n \n\n(627\n\n)\n\nLess: Net loss attributable to noncontrolling interest\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,428\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,428\n\n)\n\nNet income (loss) attributable to Four Seasons Education (Cayman) Inc.\n\n \n\n \n\n801\n\n \n\n \n\n \n\n3,552\n\n \n\n \n\n \n\n(2,959\n\n)\n\n \n\n \n\n(12,317\n\n)\n\n \n\n \n\n11,724\n\n \n\n \n\n \n\n801\n\n \n\n \n\n \n\n23\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\n \n\n \n\n \n\nFor the Year Ended February 28, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOther\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFour Seasons\n\n \n\n \n\nWFOE\n\n \n\n \n\nSubsidiaries\n\n \n\n \n\nVIEs\n\n \n\n \n\nEliminations\n\n \n\n \n\nConsolidated\n\n \n\n \n\n(RMB in thousands)\n\n \n\nRevenue(1)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n9,970\n\n \n\n \n\n \n\n13,388\n\n \n\n \n\n \n\n259,520\n\n \n\n \n\n \n\n(28,434\n\n)\n\n \n\n \n\n254,444\n\n \n\nCost of revenue(1)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(7,660\n\n)\n\n \n\n \n\n(190,182\n\n)\n\n \n\n \n\n9,051\n\n \n\n \n\n \n\n(188,791\n\n)\n\nOperating expenses(1)\n\n \n\n \n\n(4,822\n\n)\n\n \n\n \n\n(6,650\n\n)\n\n \n\n \n\n(8,463\n\n)\n\n \n\n \n\n(58,364\n\n)\n\n \n\n \n\n19,383\n\n \n\n \n\n \n\n(58,916\n\n)\n\nOperating (loss) income\n\n \n\n \n\n(4,822\n\n)\n\n \n\n \n\n3,320\n\n \n\n \n\n \n\n(2,735\n\n)\n\n \n\n \n\n10,974\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n6,737\n\n \n\nSubsidy income\n\n \n\n \n\n—\n\n \n\n \n\n \n\n2\n\n \n\n \n\n \n\n16\n\n \n\n \n\n \n\n173\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n191\n\n \n\nInterest income (expense), net\n\n \n\n \n\n7,535\n\n \n\n \n\n \n\n989\n\n \n\n \n\n \n\n3\n\n \n\n \n\n \n\n(2,521\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n6,006\n\n \n\nRealized gain in investments\n\n \n\n \n\n3,938\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n3,938\n\n \n\nUnrealized holding income in investments\n\n \n\n \n\n2,438\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,438\n\n \n\nInvestment income\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,224\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,224\n\n \n\nOther (expenses) income, net\n\n \n\n \n\n(15\n\n)\n\n \n\n \n\n(341\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n737\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n381\n\n \n\nGains from deregistration of subsidiaries\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n8,811\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n8,811\n\n \n\nLoss from investments in subsidiaries, VIEs and VIEs’ subsidiaries(2)\n\n \n\n \n\n21,713\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(21,713\n\n)\n\n \n\n \n\n—\n\n \n\nIncome (loss) before income taxes\n\n \n\n \n\n30,787\n\n \n\n \n\n \n\n5,194\n\n \n\n \n\n \n\n(2,716\n\n)\n\n \n\n \n\n18,174\n\n \n\n \n\n \n\n(21,713\n\n)\n\n \n\n \n\n29,726\n\n \n\nIncome tax expense\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(11\n\n)\n\n \n\n \n\n(624\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(635\n\n)\n\nNet income (loss)\n\n \n\n \n\n30,787\n\n \n\n \n\n \n\n5,194\n\n \n\n \n\n \n\n(2,727\n\n)\n\n \n\n \n\n17,550\n\n \n\n \n\n \n\n(21,713\n\n)\n\n \n\n \n\n29,091\n\n \n\nLess: Net loss attributable to noncontrolling interest\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,696\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,696\n\n)\n\nNet income (loss) attributable to Four Seasons Education (Cayman) Inc.\n\n \n\n \n\n30,787\n\n \n\n \n\n \n\n5,194\n\n \n\n \n\n \n\n(2,727\n\n)\n\n \n\n \n\n19,246\n\n \n\n \n\n \n\n(21,713\n\n)\n\n \n\n \n\n30,787\n\n \n\n \n\n \n\n(1)\nThe eliminations are mainly related to the service fees charged by our WFOE to the VIEs, and other subsidiaries to the VIEs.\n\n(2)\nThe eliminations are mainly related to the investment gain (loss) picked up from our subsidiaries and the VIEs.\n\nThe following tables present the summary balance sheets data for the VIEs and other entities as of the dates presented.\n\n \n\n \n\n24\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\n \n\n \n\nAs of February 28, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOther\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFour Seasons\n\n \n\n \n\nWFOE\n\n \n\n \n\nSubsidiaries\n\n \n\n \n\nVIEs\n\n \n\n \n\nEliminations\n\n \n\n \n\nConsolidated\n\n \n\n \n\n(RMB in thousands)\n\n \n\nCurrent assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n \n\n102,743\n\n \n\n \n\n \n\n48,707\n\n \n\n \n\n \n\n8,773\n\n \n\n \n\n \n\n50,548\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n210,771\n\n \n\nRestricted cash, current\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n496\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n496\n\n \n\nShort-term investments\n\n \n\n \n\n—\n\n \n\n \n\n \n\n13,905\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n13,905\n\n \n\nShort-term investments under fair value\n\n \n\n \n\n37,953\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n37,953\n\n \n\nLong-term investments under fair value, current\n\n \n\n \n\n3,584\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n3,584\n\n \n\nAmounts due from Four Seasons Group Companies(1)\n\n \n\n \n\n1,460\n\n \n\n \n\n \n\n38,823\n\n \n\n \n\n \n\n43,827\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(84,110\n\n)\n\n \n\n \n\n—\n\n \n\nOther current assets\n\n \n\n \n\n2,858\n\n \n\n \n\n \n\n1,753\n\n \n\n \n\n \n\n594\n\n \n\n \n\n \n\n25,064\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n30,269\n\n \n\nTotal current assets\n\n \n\n \n\n148,598\n\n \n\n \n\n \n\n103,188\n\n \n\n \n\n \n\n53,194\n\n \n\n \n\n \n\n76,108\n\n \n\n \n\n \n\n(84,110\n\n)\n\n \n\n \n\n296,978\n\n \n\nNon-current assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nRestricted cash, non-current\n\n \n\n \n\n127,449\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n579\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n128,028\n\n \n\nInvestments in subsidiaries and consolidated VIEs(2)\n\n \n\n \n\n117,724\n\n \n\n \n\n \n\n300\n\n \n\n \n\n \n\n103,700\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(221,724\n\n)\n\n \n\n \n\n—\n\n \n\nLong-term investments, net\n\n \n\n \n\n—\n\n \n\n \n\n \n\n36,000\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n36,000\n\n \n\nLong-term investment under fair value\n\n \n\n \n\n99,571\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n99,571\n\n \n\nOther non-current assets\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,708\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n168,857\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n170,565\n\n \n\nTotal non-current assets\n\n \n\n \n\n344,744\n\n \n\n \n\n \n\n38,008\n\n \n\n \n\n \n\n103,700\n\n \n\n \n\n \n\n169,436\n\n \n\n \n\n \n\n(221,724\n\n)\n\n \n\n \n\n434,164\n\n \n\nTotal assets\n\n \n\n \n\n493,342\n\n \n\n \n\n \n\n141,196\n\n \n\n \n\n \n\n156,894\n\n \n\n \n\n \n\n245,544\n\n \n\n \n\n \n\n(305,834\n\n)\n\n \n\n \n\n731,142\n\n \n\nAccrued expenses and other current liabilities\n\n \n\n \n\n1,043\n\n \n\n \n\n \n\n774\n\n \n\n \n\n \n\n1,718\n\n \n\n \n\n \n\n68,353\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n71,888\n\n \n\nAmounts due to Four Seasons group companies(1)\n\n \n\n \n\n36,432\n\n \n\n \n\n \n\n25,654\n\n \n\n \n\n \n\n9,540\n\n \n\n \n\n \n\n12,484\n\n \n\n \n\n \n\n(84,110\n\n)\n\n \n\n \n\n—\n\n \n\nLong-term borrowings\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n82,134\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n82,134\n\n \n\nOther liabilities\n\n \n\n \n\n1,256\n\n \n\n \n\n \n\n4,249\n\n \n\n \n\n \n\n413\n\n \n\n \n\n \n\n66,049\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n71,967\n\n \n\nTotal liabilities\n\n \n\n \n\n38,731\n\n \n\n \n\n \n\n30,677\n\n \n\n \n\n \n\n11,671\n\n \n\n \n\n \n\n229,020\n\n \n\n \n\n \n\n(84,110\n\n)\n\n \n\n \n\n225,989\n\n \n\nTotal equity\n\n \n\n \n\n454,611\n\n \n\n \n\n \n\n110,519\n\n \n\n \n\n \n\n145,223\n\n \n\n \n\n \n\n16,524\n\n \n\n \n\n \n\n(221,724\n\n)\n\n \n\n \n\n505,153\n\n \n\n \n\n \n\n25\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\n \n\n \n\nAs of February 28, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOther\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFour Seasons\n\n \n\n \n\nWFOE\n\n \n\n \n\nSubsidiaries\n\n \n\n \n\nVIEs\n\n \n\n \n\nEliminations\n\n \n\n \n\nConsolidated\n\n \n\n \n\n(RMB in thousands)\n\n \n\nCurrent assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n \n\n15,357\n\n \n\n \n\n \n\n23,364\n\n \n\n \n\n \n\n10,927\n\n \n\n \n\n \n\n86,533\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n136,181\n\n \n\nShort-term investments under fair value\n\n \n\n \n\n70,256\n\n \n\n \n\n \n\n18,000\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n88,256\n\n \n\nLong-term investments under fair value, current\n\n \n\n \n\n6,952\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n6,952\n\n \n\nAmounts due from Four Seasons Group Companies(1)\n\n \n\n \n\n1,409\n\n \n\n \n\n \n\n37,288\n\n \n\n \n\n \n\n37,075\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(75,772\n\n)\n\n \n\n \n\n—\n\n \n\nOther current assets\n\n \n\n \n\n1,092\n\n \n\n \n\n \n\n1,705\n\n \n\n \n\n \n\n735\n\n \n\n \n\n \n\n17,421\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n20,953\n\n \n\nTotal current assets\n\n \n\n \n\n95,066\n\n \n\n \n\n \n\n80,357\n\n \n\n \n\n \n\n48,737\n\n \n\n \n\n \n\n103,954\n\n \n\n \n\n \n\n(75,772\n\n)\n\n \n\n \n\n252,342\n\n \n\nNon-current assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nRestricted cash, non-current\n\n \n\n \n\n130,363\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n130,363\n\n \n\nInvestments in subsidiaries and consolidated VIEs(2)\n\n \n\n \n\n137,974\n\n \n\n \n\n \n\n300\n\n \n\n \n\n \n\n103,700\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(241,974\n\n)\n\n \n\n \n\n—\n\n \n\nLong-term investments, net\n\n \n\n \n\n—\n\n \n\n \n\n \n\n45,000\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n45,000\n\n \n\nLong-term investment under fair value\n\n \n\n \n\n143,886\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n143,886\n\n \n\nOther non-current assets\n\n \n\n \n\n—\n\n \n\n \n\n \n\n718\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n167,188\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n167,906\n\n \n\nTotal non-current assets\n\n \n\n \n\n412,223\n\n \n\n \n\n \n\n46,018\n\n \n\n \n\n \n\n103,700\n\n \n\n \n\n \n\n167,188\n\n \n\n \n\n \n\n(241,974\n\n)\n\n \n\n \n\n487,155\n\n \n\nTotal assets\n\n \n\n \n\n507,289\n\n \n\n \n\n \n\n126,375\n\n \n\n \n\n \n\n152,437\n\n \n\n \n\n \n\n271,142\n\n \n\n \n\n \n\n(317,746\n\n)\n\n \n\n \n\n739,497\n\n \n\nAccrued expenses and other current liabilities\n\n \n\n \n\n653\n\n \n\n \n\n \n\n958\n\n \n\n \n\n \n\n1,655\n\n \n\n \n\n \n\n57,118\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n60,384\n\n \n\nAmounts due to Four Seasons Group Companies(1)\n\n \n\n \n\n31,799\n\n \n\n \n\n \n\n6,440\n\n \n\n \n\n \n\n9,343\n\n \n\n \n\n \n\n28,190\n\n \n\n \n\n \n\n(75,772\n\n)\n\n \n\n \n\n—\n\n \n\nLong-term borrowings, current\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n9,000\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n9,000\n\n \n\nLong-term borrowings, non-current\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n81,000\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n81,000\n\n \n\nOther liabilities\n\n \n\n \n\n1,208\n\n \n\n \n\n \n\n3,265\n\n \n\n \n\n \n\n408\n\n \n\n \n\n \n\n69,450\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n74,331\n\n \n\nTotal liabilities\n\n \n\n \n\n33,660\n\n \n\n \n\n \n\n10,663\n\n \n\n \n\n \n\n11,406\n\n \n\n \n\n \n\n244,758\n\n \n\n \n\n \n\n(75,772\n\n)\n\n \n\n \n\n224,715\n\n \n\nTotal equity\n\n \n\n \n\n473,629\n\n \n\n \n\n \n\n115,712\n\n \n\n \n\n \n\n141,031\n\n \n\n \n\n \n\n26,384\n\n \n\n \n\n \n\n(241,974\n\n)\n\n \n\n \n\n514,782\n\n \n\n \n\n \n\n(1)\nThe eliminations are mainly related to the unpaid balance of service fees between our WFOE and the VIEs, as well as other interest-free advances from/to the VIEs.\n\n(2)\nThe eliminations are mainly related to the investments in subsidiaries and the VIEs.\n\n \n\n \n\nFor the Year Ended February 29, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOther\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFour Seasons\n\n \n\n \n\nWFOE\n\n \n\n \n\nSubsidiaries\n\n \n\n \n\nVIEs\n\n \n\n \n\nEliminations\n\n \n\n \n\nConsolidated\n\n \n\n \n\n(RMB in thousands)\n\n \n\nNet cash provided by (used in) operating activities\n\n \n\n \n\n931\n\n \n\n \n\n \n\n(144\n\n)\n\n \n\n \n\n(4,122\n\n)\n\n \n\n \n\n19,891\n\n \n\n \n\n—\n\n \n\n \n\n \n\n16,556\n\n \n\nNet cash provided by (used in) investing activities(1)\n\n \n\n \n\n131,070\n\n \n\n \n\n \n\n(1,216\n\n)\n\n \n\n \n\n(53,716\n\n)\n\n \n\n \n\n(2,270\n\n)\n\n \n\n \n\n(2,387\n\n)\n\n \n\n \n\n71,481\n\n \n\nNet cash provided by (used in) financing activities(1)\n\n \n\n \n\n1,129\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n38,946\n\n \n\n \n\n \n\n(1,194\n\n)\n\n \n\n \n\n2,387\n\n \n\n \n\n \n\n41,268\n\n \n\nEffect of exchange rate changes\n\n \n\n \n\n(4,117\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(4,117\n\n)\n\nNet increase (decrease) in cash, cash equivalents and restricted cash\n\n \n\n \n\n129,013\n\n \n\n \n\n \n\n(1,360\n\n)\n\n \n\n \n\n(18,892\n\n)\n\n \n\n \n\n16,427\n\n \n\n \n\n—\n\n \n\n \n\n \n\n125,188\n\n \n\nCash and cash equivalents and restricted cash at beginning of the year\n\n \n\n \n\n65,987\n\n \n\n \n\n \n\n28,138\n\n \n\n \n\n \n\n41,670\n\n \n\n \n\n \n\n41,263\n\n \n\n \n\n—\n\n \n\n \n\n \n\n177,058\n\n \n\nCash and cash equivalents and restricted cash at end of the year\n\n \n\n \n\n195,000\n\n \n\n \n\n \n\n26,778\n\n \n\n \n\n \n\n22,778\n\n \n\n \n\n \n\n57,690\n\n \n\n \n\n—\n\n \n\n \n\n \n\n302,246\n\n \n\n \n\n \n\n \n\n26\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\n \n\n \n\nFor the Year Ended February 28, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOther\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFour Seasons\n\n \n\n \n\nWFOE\n\n \n\n \n\nSubsidiaries\n\n \n\n \n\nVIEs\n\n \n\n \n\nEliminations\n\n \n\n \n\nConsolidated\n\n \n\n \n\n(RMB in thousands)\n\n \n\nNet cash provided by (used in) operating activities\n\n \n\n \n\n8,955\n\n \n\n \n\n \n\n1,759\n\n \n\n \n\n \n\n(11,705\n\n)\n\n \n\n \n\n20,996\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n20,005\n\n \n\nNet cash provided by (used in) investing activities(1)\n\n \n\n \n\n54,141\n\n \n\n \n\n \n\n20,170\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(56,747\n\n)\n\n \n\n \n\n(15,039\n\n)\n\n \n\n \n\n2,525\n\n \n\nNet cash (used in) provided by financing activities(1)\n\n \n\n \n\n(30,056\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2,300\n\n)\n\n \n\n \n\n29,684\n\n \n\n \n\n \n\n15,039\n\n \n\n \n\n \n\n12,367\n\n \n\nEffect of exchange rate changes\n\n \n\n \n\n2,152\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,152\n\n \n\nNet increase (decrease) in cash, cash equivalents and restricted cash\n\n \n\n \n\n35,192\n\n \n\n \n\n \n\n21,929\n\n \n\n \n\n \n\n(14,005\n\n)\n\n \n\n \n\n(6,067\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n37,049\n\n \n\nCash and cash equivalents and restricted cash at beginning of the year\n\n \n\n \n\n195,000\n\n \n\n \n\n \n\n26,778\n\n \n\n \n\n \n\n22,778\n\n \n\n \n\n \n\n57,690\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n302,246\n\n \n\nCash and cash equivalents and restricted cash at end of the year\n\n \n\n \n\n230,192\n\n \n\n \n\n \n\n48,707\n\n \n\n \n\n \n\n8,773\n\n \n\n \n\n \n\n51,623\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n339,295\n\n \n\n \n\n \n\n \n\nFor the Year Ended February 28, 2026\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOther\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFour Seasons\n\n \n\n \n\nWFOE\n\n \n\n \n\nSubsidiaries\n\n \n\n \n\nVIEs\n\n \n\n \n\nEliminations\n\n \n\n \n\nConsolidated\n\n \n\n \n\n(RMB in thousands)\n\n \n\nNet cash provided by (used in) operating activities\n\n \n\n \n\n9,058\n\n \n\n \n\n \n\n5,225\n\n \n\n \n\n \n\n(1,230\n\n)\n\n \n\n \n\n16,976\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n30,029\n\n \n\nNet cash used in investing activities(1)\n\n \n\n \n\n(89,947\n\n)\n\n \n\n \n\n(62,663\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(56,568\n\n)\n\n \n\n \n\n101,097\n\n \n\n \n\n \n\n(108,081\n\n)\n\nNet cash provided by financing activities(1)\n\n \n\n \n\n78\n\n \n\n \n\n \n\n32,095\n\n \n\n \n\n \n\n3,484\n\n \n\n \n\n \n\n74,502\n\n \n\n \n\n \n\n(101,097\n\n)\n\n \n\n \n\n9,062\n\n \n\nEffect of exchange rate changes\n\n \n\n \n\n(3,661\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(100\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(3,761\n\n)\n\nNet (decrease) increase in cash, cash equivalents and restricted cash\n\n \n\n \n\n(84,472\n\n)\n\n \n\n \n\n(25,343\n\n)\n\n \n\n \n\n2,154\n\n \n\n \n\n \n\n34,910\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(72,751\n\n)\n\nCash and cash equivalents and restricted cash at beginning of the year\n\n \n\n \n\n230,192\n\n \n\n \n\n \n\n48,707\n\n \n\n \n\n \n\n8,773\n\n \n\n \n\n \n\n51,623\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n339,295\n\n \n\nCash and cash equivalents and restricted cash at end of the year\n\n \n\n \n\n145,720\n\n \n\n \n\n \n\n23,364\n\n \n\n \n\n \n\n10,927\n\n \n\n \n\n \n\n86,533\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n266,544\n\n \n\n \n\n \n\n(1)\nThe eliminations are mainly related to (i) working capital from Four Seasons to its subsidiaries and the VIEs; (ii) working capital from WFOE to subsidiaries and the VIEs and the working capital repayment from subsidiaries and the VIEs to WFOE.\n\nEnforceability of Civil Liability\n\nWe are an exempted company incorporated in the Cayman Islands and all of our assets are located outside of the United States. All of our current operations are conducted in the PRC. In addition, all of our current directors and officers, namely Peiqing Tian, Yi Zuo, Shaoqing Jiang, Zongwei Li and Bing Yuan, reside within mainland China and Hong Kong and all of their assets are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers.\n\n \n\n27\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nThere is no statutory recognition in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), however, the courts of the Cayman Islands will, at common law, recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without any re-examination of the merits of the underlying dispute based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the liquidated sum for which such judgment has been given, provided such judgment (a) is given by a foreign court of competent jurisdiction, (b) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (c) is final and conclusive, (d) is not in respect of taxes, a fine or a penalty, (e) is not inconsistent with a Cayman Islands judgment in respect of the same matter, and (f) is not impeachable on the grounds of fraud and was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. Because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from U.S. courts would be enforceable in the Cayman Islands. A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.\n\nThe recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of reciprocity with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our director and officers if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States.\n\nThere is uncertainty as to whether the courts of Hong Kong would (i) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or (ii) entertain original actions brought in Hong Kong against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.\n\nA judgment of a court in the United States predicated upon U.S. federal or state securities laws may be enforced in Hong Kong at common law by bringing an action in a Hong Kong court on that judgment for the amount due thereunder, and then seeking summary judgment on the strength of the foreign judgment, provided that the foreign judgment, among other things, is (i) for a debt or a definite sum of money (not being taxes or similar charges to a foreign government taxing authority or a fine or other penalty) and (ii) final and conclusive on the merits of the claim, but not otherwise. Such a judgment may not, in any event, be so enforced in Hong Kong if (a) it was obtained by fraud; (b) the proceedings in which the judgment was obtained were opposed to natural justice; (c) its enforcement or recognition would be contrary to the public policy of Hong Kong; (d) the court of the United States was not jurisdictionally competent; or (e) the judgment was in conflict with a prior Hong Kong judgment.\n\nHong Kong has no arrangement for the reciprocal enforcement of judgments with the United States. As a result, there is uncertainty as to the enforceability in Hong Kong, in original actions or in actions for enforcement, of judgments of United States courts of civil liabilities predicated solely upon the federal securities laws of the United States or the securities laws of any State or territory within the United States.\n\nA. [Reserved]\n\nB. Capitalization and Indebtedness\n\nNot applicable.\n\n \n\n28\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nC. Reasons for the Offer and Use of Proceeds\n\nNot applicable.\n\nD. Risk Factors\n\nInvesting in our ADSs involves significant risks. You should carefully consider all of the information in this annual report before making an investment in our ADSs. Below please find the principal risks we face, organized under relevant headings. In the event that PRC regulations become applicable to companies in Hong Kong, the legal and operational risks associated with operating in China, as discussed in “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business and Industry,” may also apply to our operations in Hong Kong.\n\nRisks Related to Our Business\n\nIf we are not able to develop new types of learning products, services or activities under the recent regulatory policies in China to successfully attract prospective learners and customers in a timely or cost-effective manner or to continue to attract learners and customers to purchase our existing products or services, our business, results of operations and prospects will continue to be materially and adversely affected.\n\nThe success of our business in the future depends primarily on our ability to develop new types of learning products, services or activities to meet market needs while in compliance with the then effective regulatory policies in China. This will depend on several factors, including our ability to respond to changes in regulatory policies, market trends and demands, effectively market our services or solutions to a broader base of prospective learners and customers, develop additional high-quality learning content and technology solutions, provide consistent and high customer experience and respond effectively to competitive pressures. If we are unable to successfully attract prospective learners and customers with new types of learning products or services in a timely or cost-effective manner or if we are not able to continue to attract learners and customers to purchase our existing products or services and to increase the spending, there is no guarantee that our revenues may resume or maintain growth in the future, which may have a material adverse effect on our business, financial condition and results of operations.\n\nWe also engage in new initiatives from time to time to expand our offerings or market reach. For instance, we strive to establish new study camps across China to offer more enrichment activities to group and individual learners of all age. We may devote significant resources to our new initiatives, but fail to achieve expected results from such new initiatives. However, some of those new initiatives may be easily replicable by our competitors in a short timeframe, which may render our efforts less valuable. In addition, if such new initiatives are not well accepted by market, the reputation of our other offerings and our overall brand and reputation may be harmed. As a result, our overall business and results of operations may be materially and adversely affected. In addition, some of these new initiatives have not generated significant or any profit to date. We have limited experience responding quickly to changes and competing successfully for certain of these new areas. In addition, newer offerings may require more financial and managerial resources than available. Furthermore, there is limited operating history on which you can base your evaluation of the business and prospects of these relatively more recent offerings.\n\nWe are required to obtain various operating licenses and permits and to make registrations and filings for our business operations in China; failure to comply with these requirements may materially adversely affect our business and results of operations.\n\nUnder PRC laws and regulations, we are required to obtain a number of licenses, permits and approvals from, and make filings or complete registrations with, relevant government authorities in order to operate our current business.\n\n \n\n29\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nAs part of the efforts to fully comply with the Opinion and applicable rules, regulations and measures, we ceased offering the K-9 Academic AST Services in PRC at the end of 2021, spun off some of the subsidiaries engaged in K-9 Academic AST Services and stopped to renew our Permits for Operating Private School. For the non-academic tutoring services, the Opinion requires that local governmental authorities shall clarify the competent authorities for administering the non-academic after-school tutoring institutions, by classifying sports, culture and art, science and technology and other non-academic subjects, formulate standards among different classification of non-academic tutoring and conduct strict examination before granting permission. As of the date of this annual report, certain local governmental authorities have promulgated rules that require non-academic tutoring service providers in areas such as art, music, physics, among others, to obtain Permits for Operating Private School. We have obtained the Permits for Operating Private School as required, or are otherwise in the process of applying for such operation permits in accordance with the local rules and policies.\n\nAccording to the General Office of the State Council promulgated the Opinions on Further Promotion of Tourism Investment and Consumption, which became effective on August 4, 2015, research and academic study travel shall be included into the category of comprehensive competence-oriented education of students. In addition, the PRC Tourism Law, the Travel Agency Regulations and the Implementing Rules of Travel Agency Regulations requires that a travel agency must obtain a license from the national tourism administration or the provincial-level tourism administration it authorizes to conduct outbound travel business, and a license from the provincial-level tourism administration or the municipal tourism administration it authorizes to conduct domestic and inbound travel agency business. If we fail to renew the corresponding travel agency business license and engage in domestic tourism, inbound tourism, or outbound tourism, we might be ordered to make corrections by the tourism administrative department or the industrial and commercial administrative department, confiscation of illegal gains and implosion of fine.\n\nFurthermore, we offer certain video recordings accompanying our math textbooks for the course 'Math point to point' to our textbook users through our online website. If relevant government authorities deem that our online provision of video recordings constitutes “online publishing service,” we may be required to obtain an Online Publishing License. However, there is uncertainty regarding what activity constitutes online publishing service that is subject to such licensing requirements. See “Item 4. Information on the Company — B. Business Overview — Regulation —Regulations on Publishing and Distribution of Publications” for more information.\n\nBased on the advice of our PRC counsel, Fangda Partners, we believe our PRC subsidiaries and the VIEs have obtained all of the material licenses and permits from the PRC government authorities that are necessary for our principal business operation and our Cayman holding company does not need to obtain any licenses or permits from the PRC government authorities as it has no business operation in PRC. If the government authorities determine that our quality education and tutoring, research and academic study travel, learning technology, content solutions or online provision of video recordings related business fall within the scope of business operations that require additional licenses or other licenses or permits, including without limitation the licenses and permits mentioned above, we may not be able to obtain such licenses or permits on reasonable terms or in a timely manner or at all. Moreover, we may fail to maintain, renew or update any of our existing licenses, permits, approvals, registrations or filings in a timely manner and on commercially reasonable terms, or at all, which could materially and adversely affect our business, results of operations and financial condition. Besides, we may develop new business lines or make changes to the operations of certain of the current business of our PRC subsidiaries or the VIEs, which may require us to obtain additional licenses, approvals, permits, registrations and filings. However, there can be no assurance that we are, or will be, able to successfully obtain such licenses, approvals, permits, registrations and filings in a timely manner, or at all. Government authorities may also from time to time issue new laws, rules and regulations or enhance enforcement of existing laws, rules and regulations, which could also require us to obtain new and additional licenses, permits, approvals, registrations or filings. If we fail to obtain and maintain such required licenses and permit, as well as required registrations and filings, we may be subject to fines, legal sanctions or an order to suspend our online education services and our business, financial condition and operational results may be materially and adversely affected.\n\n \n\n30\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nSome of our schools are restricted in their ability to distribute profits to their sponsors. The service arrangements between Shanghai Fuxi and our private schools may be regarded as circumventing this restriction.\n\nAccording to the Private Education Law, prior to its amendment on November 7, 2016, the sponsor of a private school may elect to require reasonable returns. A sponsor that requires reasonable returns can receive dividends after deducting relevant payments to statutory reserves, and a sponsor that does not require reasonable returns cannot receive dividends from the private school. The amended law abolished such distinction. According to the amended Private Education Law, private schools can be established as non-profit or for-profit entities. Sponsors of for-profit schools may obtain operating profits, while sponsors of non-profit schools may not. Existing private schools must re-register as either non-profit school or for-profit schools. However, the amended Private Education Law remains silent on the specific measures for the re-registration process, which, according to the amended law, will be regulated by the corresponding laws and regulations promulgated by local authorities. As of the date of this annual report, some local regulations have promulgated regulations requiring non-academic after-school tutoring institutions to complete such registration within a certain period of time, otherwise they will face penalties such as refunding fees and suspending operations.\n\nCurrently we have one school that has entered into service agreements with Shanghai Fuxi. The sponsor of this school has not elected to require reasonable returns. According to the relevant service agreements between this schools and Shanghai Fuxi, a significant portion of any profits earned by this school will be paid to Shanghai Fuxi as service fees. As advised by Fangda Partners, our PRC counsel, our right to receive the service fees from our schools under our contractual arrangements should not be regarded as the distribution of returns, dividends or profits to the sponsors of our schools under the PRC laws and regulations, and therefore does not contravene any PRC laws and regulations. However, if the relevant PRC government authorities take a different view, for example, if the local authorities view some of these schools as non-profit schools and such service fees as “operating profits” taken by the sponsors, the authorities may find these private schools and their respective sponsors in violation of PRC laws and regulations. The authorities may seek to confiscate any or all of the service fees that have been paid by these schools to Shanghai Fuxi, or even revoke the educational permits of these schools, which may materially and adversely affect our business and financial results.\n\nFailure to successfully design and execute our growth strategies may materially and adversely affect our business and prospects.\n\nIt is paramount that we properly design our growth strategies amidst the current regulatory policies and competitive environment. Our current growth strategies include continuing to enhance services with better experience and wider offerings, enhancing technology and content solution business, and further investment to strengthen our fundamental capabilities. We may not succeed in executing our growth strategies due to a number of factors, including, without limitation, the following:\n\n•\nwe may fail to promote our current business in existing markets or identify, or market our current business in new markets with sufficient growth potential;\n\n•\nwe may fail to obtain the material requisite licenses and permits necessary to our principial business operation at our desired locations from local authorities or face risks in opening without the requisite licenses and permits;\n\n•\nwe may not be able to further expand our existing content library or learning technology and content solutions;\n\n•\nwe may not be able to retain core talents that are critical to our business;\n\n•\nwe may fail to maintain our competitive advantages in the market;\n\n•\nwe may not be able to expand the scale of our current business in a cost-effective and timely manner;\n\n•\nwe may not be able to replicate our successful growth model in Shanghai in other geographic markets; and\n\n \n\n31\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\n•\nwe may not be able to successfully identify new business opportunities, if any, or successfully cooperate with our local business partners or integrate acquired businesses with our current service offerings and achieve anticipated synergies.\n\nIf we fail to successfully execute our growth strategies, we may not be able to maintain our growth rate and our business and prospects may be materially and adversely affected as a result.\n\nWe may not be able to continue to recruit, train and retain qualified faculty members, who are critical to the success of our business and effective delivery of our services and products.\n\nOur faculty is critical to maintaining the quality of our services and products and our brand and reputation. Our ability to continue to attract teachers with the necessary experience and qualifications is therefore a significant contributing factor to the success of our operations. There are a limited number of teachers with the experience, expertise and qualifications to meet our requirements. Further, the Measures for Punishment for Violation of Professional Ethics of Elementary and Secondary School Teachers, promulgated by the PRC Ministry of Education in 2014 and revised in 2018, prohibits teachers at elementary and secondary schools from providing paid tutoring in schools or in out-of-school learning centers. Some provinces and cities have also adopted rules which prohibit public school teachers from teaching on a part-time basis at private schools or learning centers. As a result, we currently employ most of our teachers on a full-time basis. Therefore, to recruit qualified and experienced teachers, including those with public school experience, we must provide candidates with competitive compensation packages and particularly, offer attractive career development opportunities to compete with the perceived security of a public school teaching job. In addition, we must also provide continued training to our teachers to ensure that they stay abreast of changes in learner demands and other key trends necessary to teach effectively. Although we have not experienced major difficulties in recruiting, training or retaining qualified teachers in the past, we may not always be able to recruit, train and retain enough qualified teachers in the future to keep pace with our business development while maintaining consistently high teaching quality in the different markets we serve. In addition, PRC laws and regulations require teachers to have requisite licenses and qualifications if they teach academic or non-academic subjects. However, we cannot assure you that our teachers can all apply for and obtain the teaching licenses and relevant qualifications in a timely manner or at all due to various reasons, such as the time gap between the recruitment and the newly-recruited teachers taking the exam and ultimately obtaining the teacher license or relevant qualifications. If some of our teachers, due to various reasons, are unable to apply for and obtain the requisite teaching licenses or relevant qualifications on a timely basis, or at all, we may be required to rectify such non-compliance and may not be able to continue to retain such teachers. A shortage of qualified teachers or a decline in the quality of our teachers’ performance, whether actual or perceived, or a significant increase in compensation we must pay to retain qualified teachers, would have a material adverse effect on our business, financial condition and results of operations.\n\nWe may not be able to improve our current business to meet the demand of learners, customers and educational institutions on a timely basis and in a cost-effective manner. If the level of satisfaction of our learners, customers and educational institutions with our services declines, they may decide to withdraw from our programs and request refunds and our business, financial condition, results of operations and reputation would be adversely affected.\n\nWe constantly update and improve our learning services as well as learning technology and content solutions to meet market demand for learners, customers and educational institutions. Since certain of our current business, such as tourism services, have a relatively limited operating history, we cannot assure you that such business will turn out to be successful in the long term.\n\n \n\n32\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nWe have been improving and will continue to improve our service quality and content quality of our current business to better serve the interests of our existing learners, customers and educational institutions. However, improvements of service and content quality and upgrades of our services and solutions may involve significant costs and we cannot guarantee that the improved services or solutions will meet the demand of learners, customers and educational institutions more precisely, or at all. Launching new business may also require us to invest in learning content and technology development, train new teachers or re-train existing ones, increase marketing efforts and re-allocate resources away from other uses. We may have limited experience with the new business we launched, and may need to modify our systems and strategies. If we are not able to continue to improve our current business or not able to do so in a cost-effective manner to meet their demand, our results of operations and financial performance may suffer as a result.\n\nThe success of our business largely depends on our ability to deliver a satisfactory learning experience. For instance, our enrichment learning programs may fail to arouse or maintain a learner’s interests in the subject, fail to improve a learner’s capacity and a learner may perform below expectations even after using our services, or fail to continually update and enhance our learning materials and teaching methods to accommodate the ever-changing admission and assessment processes. A learner’s learning experience may also suffer if his or her interaction with our teachers does not meet expectations. If a significant number of learners fail to become interested in the subject or fail to improve their capabilities after using our services or if they are not satisfied with our service or their learning experiences, they may decide not to purchase our services or solutions again, and our business, financial condition, results of operations and reputation would be adversely affected.\n\nIf we are not able to continue to innovate our technology, our business, financial condition, operating results and prospects could be harmed.\n\nWe rely on innovative technology to fuel our growth. For instance, our Intellectual Math Lab is empowered by our self-developed intelligent class content development system as well as AI-driven teaching methodologies such as speech recognition of mathematical formula, complicated integrated math questions and automatic tracking and assessment report. We also provide learning technology and content solutions premised on our core technology capabilities empowering private learning institutions in China. Therefore, if we cannot continue to innovate our technology, we may not be able to continue to develop our business or empower other industry players, which may harm our business, financial condition, operating results and prospects.\n\nAny damage to our brand or the reputation of any of our learning centers or study camps may adversely affect our overall business, prospects, results of operations and financial condition.\n\nWe believe that market awareness of our “Four Seasons Education” brand and our solid reputation in the industry have contributed significantly to the success of our business, and that maintaining and enhancing our brand are critical to maintaining our competitive advantage. Our brand and reputation could be adversely affected under many circumstances, including the following:\n\n•\nour learners and customers are not satisfied with our programs and related services;\n\n•\nwe fail to properly manage accidents or other events that injure our learners and customers;\n\n•\nour faculty or staff behave or are perceived to behave inappropriately or illegally;\n\n•\nour faculty or staff fail to appropriately supervise learners and customers under their care;\n\n•\nwe fail to conduct proper background checks on our faculty or staff;\n\n•\nwe lose a license, permit or other authorization to operate a learning center or study camp;\n\n•\nwe do not maintain consistent quality for learning services and products;\n\n•\nour facilities do not meet the standards expected by learners and customers; and\n\n \n\n33\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\n•\nlearning center or study camp operators with lower quality abuse our brand name or those with brand names similar to ours by conducting fraudulent activities and creating confusion among learners and customers.\n\nThe likelihood that any of the foregoing may occur increases as we continue our business development. These events could influence the perception of our offerings not only by our learners and customers, but also by other constituencies in the industry and the general public. Moreover, an event that directly damages the reputation of one of our learning centers or study camps could adversely affect the reputation and operations of our other facilities. As we mainly rely on word-of-mouth referrals to attract prospective learners and customers, if our brand name or reputation deteriorates, our overall business, prospects, results of operations and financial condition could be materially and adversely affected.\n\nGeneral declines or disruptions in the travel industry may materially and adversely affect our business and results of operations.\n\nOur business is significantly affected by the trends that occur in the travel industry in China and globally, including the accommodation reservation, transportation ticketing, and packaged-tour and in-destination activity sectors. As the travel industry is highly sensitive to personal discretionary spending levels, it tends to decline during general economic downturns. Other trends or events that tend to reduce travel and are likely to reduce our revenues include:\n\n•\nactual or threatened war or terrorist activities;\n\n•\nincreasing prices in the hotel, transportation ticketing, or other travel-related sectors;\n\n•\nincreasing occurrence of travel-related accidents;\n\n•\npolitical unrest, civil strife, or other geopolitical uncertainty;\n\n•\nnatural disasters or poor weather conditions, such as hurricanes, earthquakes, or tsunamis, as well as the physical effects of climate change, which may include more frequent or severe storms, flooding, rising sea levels, water shortage, droughts, and wildfires; and\n\n•\nany travel restrictions in China or elsewhere in the world.\n\nWe could be severely and adversely affected by declines or disruptions in the travel industry and, in many cases, have little or no control over the occurrence of such events. Such events could result in a decrease in demand for our travel and travel-related products and services. This decrease in demand, depending on the scope and duration, could adversely affect our business and financial performance over the short and long term.\n\n \n\n34\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOur historical financial and operating results, growth rates and profitability may not be indicative of future performance.\n\nOur revenue increased from RMB125.4 million in the 2024 fiscal year to RMB251.1 million in the 2025 fiscal year, and further to RMB254.4 million (US$37.1 million) in the 2026 fiscal year. We recorded net income of RMB2.8 million in the 2024 fiscal year, net loss of RMB0.6 million in the 2025 fiscal year, and net income of RMB29.1 million (US$4.2 million) in fiscal year 2026. Any evaluation of our business and our prospects must be considered in light of the risks and uncertainties encountered by companies at our stage of development. In addition, our past results may not be indicative of future performance because of any new businesses developed or acquired by us. Substantial uncertainties exist with respect to the profitability and cash generating capability of such new businesses. Furthermore, our results of operations may vary from period to period in response to a variety of other factors beyond our control, including general economic conditions and regulations or government actions pertaining to the private education service industry in the PRC, changes in spending on private education, our ability to control cost of revenue and operating expenses, and non-recurring charges incurred in connection with acquisitions or other extraordinary transactions or under unexpected circumstances. Due to the above factors, we believe that our historical financial and operating results, growth rates and profitability may not be indicative of our future performance and you should not rely on our past results or our historic growth rates as indications of our future performance. Furthermore, our net income margins may decline or we may incur additional net losses in the future and may not be able to maintain profitability on a quarterly or annual basis.\n\nWe face significant competition, and if we fail to compete effectively, we may lose our market share and our profitability may be adversely affected.\n\nThe learning services, tourism services and learning technology and content solutions market in the PRC is rapidly evolving, highly fragmented and competitive, and we expect competition to persist and potentially intensify. We face competition in each type of service or products we offer and in each geographic market in which we operate. Our competitors include providers of learning and travel services, learning technology and content solutions.\n\nOur learner enrollment and sales of products or solutions may decrease due to this competition. Some of our competitors may have more resources than we do, and may be able to devote greater resources than we can to the development, promotion and sale of their solutions, programs, services and products and respond more quickly than we can to changes in learner needs, market trends or new technologies. We will also face increased competition as we expand our operations. We cannot assure you that we will be able to compete successfully against current or future competitors. If we are unable to maintain our competitive position or otherwise respond to competitive pressure effectively, we may lose our market share and our profitability may be adversely affected.\n\nOur business could be disrupted if we lose the services of members of our senior management team.\n\nOur success depends in part on the continued application of skills, efforts and motivation of our officers and senior management team. We may experience changes in our senior management in the future for reasons beyond our control. In addition, key management personnel could leave us to join our competitors. Losing the services of key members of senior management or experienced personnel may be disruptive to and cause uncertainty for our business. We depend upon the services of our senior management team, who collectively have significant experience with our company and within the whole industry. If one or more members of our senior management team are unable or unwilling to continue in their present positions for health, family or other reasons, we may not be able to replace them easily, or at all. Our inability to attract and retain qualified senior management members and teaching staff in a timely manner could materially and adversely affect our business, prospects, results of operations and financial condition.\n\n \n\n35\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nIf we fail to integrate or negotiate successfully any future acquisitions, our business and operating results could be materially and adversely affected.\n\nWe have acquired additional other businesses and may continue to do so in the future. If we are unable to successfully integrate the acquired businesses, our business and operating results may be harmed. We may be unable to identify appropriate acquisition targets. If we do identify an appropriate acquisition target, we may not be able to negotiate the terms of the acquisition successfully, finance the acquisition or integrate the acquired businesses into our existing business and operations. Furthermore, completing a potential acquisition and integrating an acquired business may strain our resources and require significant management time. In addition, the businesses we acquire may be loss making or have existing liabilities or other risks that we may not be able to effectively manage or may not be aware of at the time we acquire them, which may impact our ability to realize the expected benefits from the acquisition or our financial performance. If we fail to integrate the acquired businesses in a timely manner or at all, we may not be able to achieve the anticipated benefits or synergy from the acquired businesses, which may adversely affect our business growth.\n\nOur business is subject to seasonal fluctuations, which may cause our results of operations to fluctuate from term to term, and in turn result in volatility in and adversely affect the price of our ADSs.\n\nOur 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 have experienced, and expect to continue to experience, seasonal fluctuations in our revenues and results of operations, primarily due to seasonal changes in learner and customers’ demand. However, Our business is subject to seasonal fluctuations as our costs and expenses vary, and certain costs and expenses significantly during the fiscal year and do not necessarily correspond with the timing of recognition of our revenue. Our learners and customers typically pay prior to the commencement of a term, and we recognize revenue from the delivery of services on a straight-line basis over the term. Overall, although the historical seasonality of our business has been relatively mild, we expect to continue to experience seasonal fluctuations in our results of operations. These fluctuations may result in volatility in and adversely affect the price of our ADSs.\n\nAccidents, injuries or other harm suffered by our learners and customers or other people on our premises may adversely affect our reputation, subject us to liability and cause us to incur substantial expenses.\n\nIn the event of accidents or injuries or other harm to learners and customers or other people on our premises, including those caused by or otherwise arising from the actions or negligence of our employees or contractors on our premises, our facilities may be perceived to be unsafe, which may result in decreased learners' enrollment. We could also face claims alleging that we are negligent and provide inadequate supervision to our employees or contractors, and therefore be liable for harm caused by them or are otherwise liable for injuries suffered by our learners and customers or other people on our premises. Our insurance coverage may not be adequate to fully protect us from claims of all kinds and we cannot guarantee that we will be able to obtain sufficient liability insurance in the future on commercially reasonable terms or at all. A liability claim against us or any of our employees or independent contractors could adversely affect our reputation and ability to attract and retain learners and customers. Even if unsuccessful, such a claim could create unfavorable publicity, cause us to incur substantial expenses and divert the time and attention of our management.\n\n \n\n36\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nMisconduct, error and failure to follow laws, regulations and our corporate governance policies by our employees may adversely impact our brand image, reputation, business and results of operations, and we may be held liable for these inappropriate activities.\n\nMisconduct, including illegal, fraudulent or collusive activities, unauthorized business conducts and behavior, misuse of corporate authorization, or errors by our employees or their failure to perform their duties could subject us to legal liability and negative publicity. Our employees may conduct fraudulent activities to bypass our internal systems and to complete shadow transactions and/or transactions outside our official or authorized procedures. They may conduct activities in violation of law against unfair competition, which may expose us to unfair competition allegations and risks or conduct activities that may damage our reputation, corporate culture or internal working environment. We have experienced such incidents in the past and may continue to experience or be subject to incidents of similar nature in the future. We terminated employment with the involved employees for serious misconducts and recovered our losses from those employees in certain cases. While we have been strengthening our code of conduct and related internal policies, including updating our employees’ code of conduct and anti-bribery policy, we cannot assure you that such incidents will not occur in the future. It is not always possible to identify and deter such misconduct, and the precautions we take to detect and prevent these activities may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to prevent such misconduct. Such misconduct could damage our brand and reputation, which could adversely affect our business and results of operations.\n\nIf we fail to protect our intellectual property rights, our brand and business may suffer.\n\nWe consider our copyrights, trademarks, trade names and Internet domain names invaluable to our ability to continue to develop and enhance our brand recognition. Unauthorized use of our copyrights, trademarks, trade names and domain names may damage our reputation and brand. We have registered 22 of our brand names and logos as registered trademarks in the PRC. Our proprietary curricula and course materials satisfying requirements specified by PRC copyright law are protected by copyrights. Unauthorized use of any of our intellectual property may adversely affect our business and reputation. We rely on a combination of copyright, trademark and trade secrets laws to protect our intellectual property rights. Nevertheless, third parties may obtain and use our intellectual property without due authorization. It would not be difficult for third parties to obtain and copy our course materials, since they are physically provided to our learners and customers. The practice of intellectual property rights enforcement by the PRC regulatory authorities is at an early stage of development and is subject to significant uncertainty. We may also need to resort to litigation and other legal proceedings to enforce our intellectual property rights. Any such action, litigation or other legal proceedings could result in substantial costs and diversion of our management’s attention and resources and could disrupt our business. In addition, we cannot assure you that we will be able to enforce our intellectual property rights effectively or otherwise prevent others from the unauthorized use of our intellectual property. Failure to adequately protect our intellectual property could materially and adversely affect our business, financial condition and results of operations.\n\n \n\n37\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nWe may encounter disputes from time to time relating to our use of the intellectual property of third parties or allegations of infringement of the intellectual properties of third parties and we may be unable to be authorized to use third-party copyrighted materials.\n\nWe cannot assure you that our learning materials, marketing materials, products, programs or other intellectual property developed or used by us do not or will not infringe upon valid copyrights or other intellectual property rights held by third parties. We may encounter disputes from time to time over rights and obligations concerning intellectual property, and we may not prevail in those disputes. In addition, we are unable to register the trademarks of some of our major brand names and logos such as “Four Seasons Education” in Chinese characters. Therefore, there is no assurance that we can continue to use such trademarks in the PRC. We may be required to explore the possibility of acquiring trademarks or entering into an exclusive licensing agreement with the third party, which will cause us to incur additional costs. Third parties may bring claims against us alleging our infringement of their intellectual property rights. Third parties bringing such claims may be able to obtain an injunction to prevent us from delivering our services or using trademarks containing the alleged infringing intellectual property. Any such intellectual property infringement claim could result in costly litigation and divert our management attention and resources and could damage our reputation. If a PRC court or tribunal holds that we have infringed any trademark belonging to others, we may be forced to change our brand names or logos. Our teachers may, against our policies, use third-party copyrighted materials without proper authorization in our classes. We may incur liability for unauthorized duplication or distribution of materials posted on our websites or used in our classes.\n\nWe have limited insurance coverage with respect to our business and operations.\n\nWe are exposed to various risks associated with our business and operations, and we have limited insurance coverage. See “Item 4. Information on the Company — B. Business Overview — Insurance” for more information. We could be held liable for accidents that occur at our learning centers, study camps and other facilities, including indoor facilities where we organize certain learning trip activities and temporary housing facilities that we lease for our students from time to time. In the event of on-site food poisoning, personal injuries, fires or other accidents suffered by students or other people, we could face claims alleging that we were negligent, provided inadequate supervision or were otherwise liable for the injuries. We are also exposed to risks including, among other things, accidents or injuries in our schools, loss of key management and personnel, business interruption, natural disasters, terrorist attacks and social instability or any other events beyond our control. The insurance industry in the PRC is still at an early stage of development, and as a result insurance companies in the PRC offer limited business related insurance products. We do not have any business disruption insurance, product liability insurance or key-man life insurance. Any business disruption, legal proceeding or natural disaster or other events beyond our control could result in substantial costs and diversion of our resources, which may materially and adversely affect our business, financial condition and results of operations.\n\nSystem disruptions to our websites or computer systems could damage our reputation and limit our ability to retain learners and customers and increase learner enrollment.\n\nThe performance and reliability of our websites and computer systems are critical to our reputation and ability to retain learners and customers and increase enrollment. Any system error or failure, sudden and significant increases in online traffic or hacking of our systems, could disrupt or slow access to our websites. We cannot assure you that we will be able to expand our online infrastructure in a timely and cost-effective manner to meet the increasing demands of our learners and customers. In addition, our computer systems store and process important information including class schedules, registration information and learner data and could be vulnerable to interruptions or malfunctions due to events beyond our control, such as natural disasters and technology failures. We may suffer disruption to our operations if there is a failure of the database system or the backup system. Any disruption to our computer systems could therefore have a material adverse effect on our operations and ability to retain learners and customers and increase enrollment.\n\n \n\n38\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nWe face risks related to natural and other disasters, including outbreaks of health epidemics such as COVID-19, and other extraordinary events, which could significantly disrupt our operations.\n\nOur business could be materially and adversely affected by natural and other disasters, including earthquakes, fire, floods, environmental accidents, power loss, communication failures and similar events. Additionally, our business could be materially and adversely affected by the outbreak of COVID-19, monkeypox, H7N9 bird flu, H1N1 swine influenza, severe acute respiratory syndrome (SARS), Ebola or another health epidemic. We have not suffered any material loss or experienced any significant increase in costs as a result of any natural and other disaster, health epidemics or other extraordinary event, other than the negative impact of COVID-19 on our business operations in the past. However, any such occurrence in any of the cities in which we have major operations could cause us to temporary close our learning centers, affect our abilities to manage learning centers, acquire and retain customers and recruit talents, or result in supply chain shortages or logistics disruptions, and our learner attendance and our business could be materially and adversely affected by any such occurrence in any of the cities in which we have major operations.\n\nIf we grant employees share options or other equity incentives in the future, our net income could be adversely affected.\n\nWe granted share options to our independent directors, executive officers and employees in the past under our 2015 Share Incentive Plan, 2017 Share Incentive Plan and 2025 Share Incentive Plan. We are required to account for share-based compensation in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation, which generally requires a company to recognize, as an expense, the fair value of share options and other equity incentives to employees based on the fair value of equity awards on the date of the grant, with the compensation expense recognized over the period in which the recipient is required to provide service in exchange for the equity award. As of May 31, 2026, holders of our outstanding options were entitled to purchase a total of 1,256,350 ordinary shares. As a result, we incurred share-based compensation expense of RMB1.7 million (US$0.2 million) in the 2026 fiscal year. If we grant more options or other equity incentives in the future, we could incur significant compensation charges and our results of operations could be adversely affected.\n\nIf we fail to implement and maintain an effective system of internal controls, we may be unable to accurately or timely report our results of operations or prevent fraud, and investor confidence and the market price of our ADSs may be materially and adversely affected.\n\nOur independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. As discussed in our Annual Report on Form 20-F for the year ended February 28, 2025, our management concluded that there was a material weakness in our internal control over financial reporting, that we lack sufficient and appropriate review over the financial reporting in accordance with U.S. GAAP. Following the identification of the material weakness, we have taken measures to remediate the material weakness including but not limited to: (a) refining the relevant controls caliber and incorporate enhanced communication and documentation procedures for preparation of financial statements and (b) implementing additional supervision and review activities by qualified personnel and the development and use of checklists to assist in the financial reporting processes. During the fiscal year ended February 28, 2026, we have completed the design, implementation and testing of the newly designed and enhanced controls and determined that, as of February 28, 2026, the prior year’s material weakness has been remediated. See “Item 15. Controls and Procedures — Changes in Internal Control over Financial Reporting.”\n\nHowever, we cannot assure you that we will not identify any additional material weaknesses or significant deficiencies in the future. Our failure to maintain an effective system of internal control could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our ADSs, may be materially and adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud.\n\n \n\n39\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nRisks Related to Our Corporate Structure\n\nOur business is subject to extensive regulation in the PRC. If the PRC government finds that the contractual arrangement that establishes our corporate structure for operating our business does not comply with applicable PRC laws and regulations, we could be subject to severe penalties.\n\nOur business is subject to extensive regulations in the PRC. The PRC government regulates various aspects of our business and operations, such as standards of school establishment and operations, student recruitment activities and tuition levels. The laws and regulations applicable to the after-school education sector are subject to frequent change, and new laws and regulations may be adopted, some of which may have a negative effect on our business, either retroactively or prospectively.\n\nForeign ownership in education services is subject to significant regulations in the PRC. The PRC government regulates the provision of education services through strict licensing requirements. PRC laws and regulations currently require a foreign entity that invests in the education business in China to be an educational institution with certain qualifications and experience in providing high quality education outside China. Our Cayman Islands holding company is not an educational institution and does not provide education services. Due to these restrictions, we conduct operations in the PRC principally through contractual arrangements among (i) our WFOE, namely Shanghai Fuxi Information Technology Service Co., Ltd., or Shanghai Fuxi, (ii) variable interest entities consolidated under U.S. GAAP, or the VIEs, namely Shanghai Luoliang Network Technology Co., Ltd. (formally known as Shanghai Four Seasons Education and Training Co., Ltd.) and Shanghai Four Seasons Education Investment Management Co., Ltd., limited liability companies established under PRC law, and their subsidiaries, and (iii) the shareholders of the VIEs, which provides investors with exposure to foreign investment in the Chinese operating companies. We have been and expect to continue to be dependent on the VIEs to operate our business. See “Item 4. Information on the Company — C. Organizational Structure” for more information.\n\nHowever, as we are a Cayman Islands holding company with no equity ownership in the variable interest entities, investors in our ADSs or the ordinary shares thus are not purchasing equity interest in the variable interest entities in China but instead are purchasing equity interest in a Cayman Islands holding company. If the PRC government deems that our contractual arrangements with the variable interest entities do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. We may not be able to repay the notes and other indebtedness, and our shares may decline in value or become worthless, if we are unable to assert our contractual control rights over the assets of the variable interest entities, which contribute to 36.7% of our total assets as of February 28, 2026. Our holding company in the Cayman Islands, the variable interest entities, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the variable interest entities and, consequently, significantly affect the financial performance of the variable interest entities and our company as a group.\n\nIf our ownership structure and contractual arrangements are found to violate any PRC laws or regulations, or if we are found to be required but failed to obtain any of the permits or approvals for our private education business, the relevant PRC regulatory authorities, including the Ministry of Education, which regulates the education industry in the PRC, the Ministry of Commerce, which regulates foreign investments in the PRC, the Ministry of Civil Affairs, which regulates the registration of schools in the PRC, and the State Administration of Industry and Commerce, which regulates the registration and operation of education training companies in the PRC, would have broad discretion in imposing fines or punishments upon us for such violations, including:\n\n•\nrevoking the business and operating licenses of ours and/or the VIEs’;\n\n•\ndiscontinuing or restricting any related-party transactions between us and the VIEs;\n\n•\nimposing fines and penalties, or additional requirements for our operations which we, or the VIEs may not be able to comply with;\n\n•\nrequiring us to restructure the ownership and control structure or our current schools;\n\n \n\n40\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\n•\nrestricting or prohibiting our use of the proceeds of our initial public offering to finance our business and operations in the PRC, particularly the expansion of our business through strategic acquisitions; or\n\n•\nrestricting the use of financing sources by us or the VIEs or otherwise restricting our or their ability to conduct business.\n\nAs of the date of this annual report, similar ownership structure and contractual arrangements have been used by many PRC-based companies listed overseas, including a number of education companies listed in the United States. To our knowledge, none of the fines or punishments listed above has been imposed on any of these public companies, including companies in the education, learning services and research and academic study travel industry, in relation to these types of contractual arrangements. However, we cannot assure you that such fines or punishments will not be imposed on us or any other companies in the future. If any of the above fines or punishments is imposed on us, our business, financial condition and results of operations could be materially and adversely affected. If any of these penalties results in our inability to direct the activities of VIEs and their after-school training institutions and subsidiaries that most significantly impact their economic performance, and/or our failure to receive the economic benefits from VIEs and their after-school training institutions and subsidiaries, we may not be able to consolidate VIEs and their learning centers and subsidiaries in our financial statements in accordance with U.S. GAAP. However, we do not believe that such actions would result in the liquidation or dissolution of our company, our wholly-owned subsidiaries in the PRC or VIEs and their learning centers or subsidiaries.\n\nSubstantial uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure and business operations.\n\nThe “variable interest entity” structure has been adopted by many PRC-based companies, including us, to obtain necessary licenses and permits in the industries that are currently subject to foreign investment restrictions in China. See “Item 3. Key Information — D. Risk Factors —Risks Related to Our Corporate Structure” and “Item 4. Information on the Company—C. Organizational Structure.”\n\nOn March 15, 2019, the PRC National People’s Congress promulgated the Foreign Investment Law, or the 2019 FIL, which became effective from January 1, 2020 and replaced the trio of existing laws regulating foreign investments in China, namely, the PRC Equity Joint Venture Law, the PRC Cooperative Joint Venture Law and the Wholly Foreign-owned Enterprise Law, together with their implementation rules and ancillary regulations.\n\nPursuant to the 2019 FIL, “foreign investments” refer to investment activities conducted by foreign investors directly or “indirectly” in the PRC, which include any of the following circumstances: (i) foreign investors setting up foreign-invested enterprises in the PRC solely or jointly with other investors, (ii) foreign investors obtaining shares, equity interests, property portions or other similar rights and interests of enterprises within the PRC, (iii) foreign investors investing in new projects in the PRC solely or jointly with other investors, and (iv) investment in other methods as specified in laws, administrative regulations, or as stipulated by the State Council. Although the 2019 FIL does not introduce the concept of “control” in determining whether a company should be considered as a foreign-invested enterprise, nor does it provide the “variable interest entity” structure as a method of foreign investment, as relevant government authorities may promulgate more laws, regulations or rules on the interpretation and implementation of the 2019 FIL, the possibility can’t be ruled out that the concept of “control” as stated in the 2015 Draft FIL may be embodied in, or the “variable interest entity” structure adopted by us may be deemed as a method of foreign investment by, any of such future laws, regulations and rules. If our consolidated “variable interest entity” were deemed as a foreign-invested enterprise under any of such future laws, regulations and rules, and any of the businesses that we operate would be in any “negative list” for foreign investment and therefore be subject to any foreign investment restrictions or prohibitions, further actions required to be taken by us under such laws, regulations and rules may materially and adversely affect our business and financial condition.\n\n \n\n41\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nWe rely on contractual arrangements with the VIEs and their respective shareholders in the form of private non-enterprise institutions for our operations in the PRC, which may not be as effective in providing control as direct ownership.\n\nWe have relied and expect to continue to rely on the contractual arrangements with the VIEs and their shareholders in the form of private non-enterprise institutions, including Mr. Peiqing Tian, our largest shareholder, to operate our business. For a description of these contractual arrangements, see “Item 4. Information on the Company — C. Organizational Structure.”\n\nThe revenue contribution of the VIEs entities has historically accounted for 99.3%, 99.8% and 99.9% of our consolidated revenue for the years ended February 29, 2024, February 28, 2025 and 2026, respectively. However, contractual arrangements may not be as effective as direct equity ownership in providing us with control over the VIEs and our learning centers. Any failure by the VIEs and the learning centers controlled and held by the VIEs and their shareholders to perform their obligations under the contractual arrangements would have a material adverse effect on the financial position and performance of our company. For example, the contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with arbitral procedures as contractually stipulated. The commercial arbitration system in the PRC is not as developed as some other jurisdictions, such as the United States.\n\nAs a result, uncertainties in the commercial arbitration system or legal system in the PRC could limit our ability to enforce these contractual arrangements. In addition, if the legal structure and the contractual arrangements were found to violate any existing or future PRC laws and regulations, we may be subject to fines or other legal or administrative sanctions.\n\nIf the imposition of government actions causes us to lose our right to direct the activities of the VIEs or our right to receive substantially all the economic benefits and residual returns from the VIEs and we are not able to restructure our ownership structure and operations in a satisfactory manner, we would no longer be able to consolidate the financial results of the VIEs.\n\nOur largest shareholder, Mr. Peiqing Tian, may have potential conflicts of interest with us and not act in the best interests of our company.\n\nMr. Peiqing Tian is the controlling shareholder of Shanghai Luoliang Network Technology Co., Ltd. and Shanghai Four Seasons Education Investment Management Co., Ltd. He is also the largest shareholder of our company. We cannot assure you that Mr. Peiqing Tian will act in the best interests of our company. We rely on Mr. Peiqing Tian to comply with the terms and conditions of the contractual arrangements. Although Mr. Peiqing Tian is obligated to honor his contractual obligations with respect to the VIEs, he may nonetheless breach or cause the VIEs to breach or refuse to renew the existing contractual arrangements that allow us to effectively exercise control over the VIEs and to receive economic benefits from them. If Mr. Peiqing Tian does not honor his contractual obligations with respect to the VIEs, we may exercise our exclusive option to purchase, or cause our designee to purchase, all or part of the equity interest in Shanghai Luoliang Network Technology Co., Ltd. and Shanghai Four Seasons Education Investment Management Co., Ltd. to the extent permitted by PRC law. If we cannot resolve any disputes between us and the shareholders of Shanghai Luoliang Network Technology Co., Ltd. and Shanghai Four Seasons Education Investment Management Co., Ltd., we would have to rely on arbitration or legal proceedings, which could result in disruption of our business and substantial uncertainty as to the outcome of any such legal proceedings.\n\n \n\n42\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nContractual arrangements between the VIEs and us may be subject to scrutiny by the PRC tax authorities and a finding that we or the VIEs owe additional taxes could materially reduce our net income and the value of your investment.\n\nUnder PRC laws and regulations, transactions between related parties should be conducted on an arm’s-length basis and may be subject to audit or challenge by the PRC tax authorities. We could face material adverse tax consequences if the PRC tax authorities determine that the contractual arrangements among our subsidiary in the PRC, the VIEs and their shareholders are not conducted on an arm’s-length basis and adjust the income of the VIEs through the transfer pricing adjustment.\n\nA transfer pricing adjustment could, among other things, result in, for PRC tax purposes, increased tax liabilities of the VIEs. In addition, the PRC tax authorities may require us to disgorge our prior tax benefits, and require us to pay additional taxes for prior tax years and impose late payment fees and other penalties on the VIEs for underpayment of prior taxes. To date, similar contractual arrangements have been used by many public companies, including companies listed in the United States, and, to our knowledge, the PRC tax authorities have not imposed any material penalties on those companies. However, we cannot assure you that such penalties will not be imposed on any other companies or us in the future. Our net income may be reduced if the tax liabilities of the VIEs materially increase or if they are found to be subject to additional tax obligations, late payment fees or other penalties.\n\nIf any of the VIEs becomes the subject of a bankruptcy or liquidation proceeding, we may lose the ability to use and enjoy assets held by such entity, which could materially and adversely affect our business, financial condition and results of operations.\n\nWe currently conduct our operations in the PRC through contractual arrangements with the VIEs and the shareholders of Shanghai Luoliang Network Technology Co., Ltd. and Shanghai Four Seasons Education Investment Management Co., Ltd. As part of these arrangements, substantially all of our education-related assets that are critical to the operation of our business are held by the VIEs. If any of these entities goes bankrupt and all or part of their assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations. If any of the VIEs undergoes a voluntary or involuntary liquidation proceeding, its equity owner or unrelated third-party creditors may claim rights relating to some or all of these assets, which would hinder our ability to operate our business and could materially and adversely affect our business, our ability to generate revenue and the market price of our ADSs.\n\nIf the custodians or authorized users of our controlling non-tangible assets, including chops and seals, fail to fulfill their responsibilities, or misappropriate or misuse these assets, our business and operations could be materially and adversely affected.\n\nUnder PRC law, legal documents for corporate transactions, including agreements and contracts that our business relies on, are executed using the chop or seal of the signing entity or with the signature of a legal representative whose designation is registered and filed with the relevant PRC industry and commerce authorities.\n\nIn order to maintain the physical security of our chops, we generally have them stored in secured locations accessible only to authorized employees. Although we monitor such authorized employees, the procedures may not be sufficient to prevent all instances of abuse or negligence. There is a risk that our employees could abuse their authority, for example, by entering into a contract not approved by us or seeking to gain control of one of our subsidiaries or the VIEs. If any employee obtains, misuses or misappropriates our chops and seals or other controlling intangible assets for whatever reason, we could experience disruption to our normal business operations. We may have to take corporate or legal action, which could involve significant time and resources to resolve and divert management from our operations.\n\n \n\n43\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nPRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of our initial public offering to make loans or additional capital contributions to our PRC subsidiaries and the VIEs, which could harm our liquidity and our ability to fund and expand our business.\n\nTo utilize the proceeds of the initial public offering in the manner described in “Use of Proceeds” in the registration statement, we currently have plans for using 25% of the proceeds in China. As an offshore holding company of our PRC subsidiaries and the VIEs, we are permitted under PRC laws and regulations to provide funding to Shanghai Fuxi, our wholly-owned PRC subsidiary, through loans or capital contributions, and to the VIEs through loans. However, such uses are subject to PRC regulations and approvals. For example:\n\n•\nloans by us to Shanghai Fuxi, which is a foreign-invested enterprise, cannot exceed statutory limits and must be registered or filed with the State Administration of Foreign Exchange of the PRC, or SAFE, or its local counterparts;\n\n•\nloans by us to the VIEs, which are domestic PRC entities, must be filed with the relevant government authorities and must also be filed with SAFE or its local counterparts; and\n\n•\ncapital contributions to Shanghai Fuxi must be filed with the Ministry of Commerce or its local counterparts and must also be registered with the local bank authorized by SAFE.\n\nThere is currently no statutory limit to the amount of funding that we can provide to Shanghai Fuxi through capital contribution, and we can provide funding to Shanghai Fuxi, the VIEs through loans as long as the loan amount does not exceed twice the amount of their net assets calculated in accordance with PRC GAAP. The maximum aggregate amount that we can loan to Shanghai Fuxi, the VIEs may vary with changes in the relevant entities’ net assets at the time of calculation. As of the date of this annual report, subject to completion of statutory procedures with relevant government authorities and banks, we can loan an estimated maximum of approximately RMB253.6 million (US$37.0 million) to Shanghai Fuxi and an estimated maximum of approximately RMB520.0 million (US$75.8 million) to the VIEs.\n\nIn addition, on March 30, 2015, SAFE promulgated SAFE Circular 19, a notice regulating the conversion by a foreign-invested company of its capital contribution in foreign currency into Renminbi. The notice requires that the capital of a foreign-invested company settled in Renminbi converted from foreign currencies shall be used only for purposes within the business scope as approved by the applicable government authorities and may not be used for equity investments in the PRC unless such activity is set forth in the business scope or is otherwise permissible under PRC laws or regulations. SAFE further strengthened its supervision of the flow and use of such capital of a foreign-invested company settled in Renminbi converted from foreign currencies. The use of such Renminbi capital may not be changed without SAFE’s approval. Violations of SAFE Circular 19 will result in severe penalties including hefty fines. As we expect to use the proceeds of our initial public offering in China in the form of RMB, Shanghai Fuxi, the VIEs will need to convert any capital contributions or loans from U.S. dollars to RMB before using such capital contribution or loans. As a result, SAFE Circular 19 may significantly limit our ability to transfer the net proceeds from our initial public offering to our operations in the PRC through our PRC subsidiaries, which may adversely affect our ability to expand our business.\n\nWe expect that PRC laws and regulations may continue to limit our use of proceeds from our initial public offering or from other financing sources. We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, if at all, with respect to future loans or capital contributions by us to our entities in the PRC. If we fail to receive such registrations or approvals, our ability to use the proceeds of our initial public offering and to capitalize our PRC operations may be hindered, which could adversely affect our liquidity and our ability to fund and expand our business.\n\n \n\n44\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nRisks Related to Doing Business in the PRC\n\nChanges in PRC economy, or economic and political conditions or government policies in China, could have a material adverse effect on our business, financial conditions and results of operations.\n\nSubstantially all of our business operations are conducted in China. Accordingly, our business, financial condition, results of operations and prospects are influenced by economic, political and legal developments in China. The economy in China differs from the economies of most developed countries in many respects, including the degree of government involvement, level of development, growth rate, control of foreign exchange and currency conversion, access to financing and allocation of resources. 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 obligations denominated in foreign currencies, setting monetary policy and providing preferential treatment to particular industries or companies. While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. Any adverse changes in economic conditions or policies in China may have a material adverse effect on the overall economic growth of China. The PRC government has implemented various measures to encourage economic development and guide the allocation of resources. While some of these measures benefit the overall PRC economy, they may also have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments, conversion of foreign exchange into Renminbi or changes in tax regulations and practices that are applicable to us. Continued policies regarding strengthening the management and supervision of the control of foreign currency could adversely affect our business development.\n\nThe global macroeconomic environment is facing challenges. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Business — We face risks related to natural and other disasters and other extraordinary events, which could significantly disrupt our operations.” The PRC economy has shown slower growth compared to the previous decade since 2012 and whether this slowdown will continue is still unknown. In addition, there is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and China. Unrest, terrorist threats and potential for war in the Middle East and elsewhere may increase market volatility across the globe. Recently, the Russia-Ukraine conflict has caused, and continues to intensify, significant geopolitical tensions in Europe and across the global. The resulting sanctions are expected to have significant impacts on the economic conditions of the targeted countries and markets. There is significant uncertainty about the future relationship between the United States and China with respect to trade policies, treaties, government regulations and tariffs. There have also been concerns on the relationship between China and other countries, including the surrounding Asian countries, which may potentially have economic effects. Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China. Any severe or prolonged slowdown in the global or PRC economy may materially and adversely affect our business, results of operations and financial condition. In addition, continued turbulence in the international markets may adversely affect our ability to access capital markets to meet liquidity needs.\n\nUncertainties with respect to the PRC legal system could have a material adverse effect on us.\n\nThe PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions in a civil law system may be cited as reference but have limited precedential value. Since 1979, newly introduced PRC laws and regulations have significantly enhanced the protections of interest relating to foreign investments in the PRC. However, since these laws and regulations are relatively new and the PRC legal system continues to evolve rapidly, the interpretations of such laws and regulations may not always be consistent, and enforcement of these laws and regulations involves significant uncertainties, any of which could limit the available legal protections.\n\n \n\n45\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nIn addition, the PRC administrative and judicial authorities have significant discretion in interpreting, implementing or enforcing statutory rules and contractual terms, and it may be more difficult to predict the outcome of administrative and judicial proceedings and the level of legal protection we may enjoy in the PRC than under some more developed legal systems. These uncertainties may affect our decisions on the policies and actions to be taken to comply with PRC laws and regulations, and may affect our ability to enforce our contractual or tort rights. In addition, the regulatory uncertainties may be exploited through unmerited legal actions or threats in an attempt to extract payments or benefits from us. Such uncertainties may therefore increase our operating expenses and costs, and materially and adversely affect our business and results of operations.\n\nHong Kong is a Special Administrative Region of the PRC and enjoys its own limited autonomy as defined by the Basic Law of Hong Kong. Hong Kong’s legal system, which is different from that of mainland China, is based on common law and has its own laws and regulations, but some of the national laws of the PRC are made applicable in Hong Kong under the Basic Law. It has been speculated that there may be increased alignment between PRC laws and regulations and the Basic Law or that PRC laws and regulations will be applied directly in Hong Kong. If certain PRC laws and regulations relevant to our business operations were to become applicable in Hong Kong in the future, we may face legal and operational risks and uncertainties relating to our operations in Hong Kong.\n\nImplementation of the Law of the PRC on Safeguarding National Security in Hong Kong involves uncertainty, and the recent policy pronouncements by the PRC government regarding business activities of U.S.-listed PRC businesses may negatively impact our existing and future operations in Hong Kong.\n\nOn June 30, 2020, the Standing Committee of the NPC promulgated the Law of the PRC on Safeguarding National Security in Hong Kong. The interpretation of the Law of the PRC on Safeguarding National Security in Hong Kong involves a degree of uncertainty. Recently, the PRC government announced that it would step up supervision of overseas listed PRC businesses. Under the new measures, the PRC government will enhance regulation of cross-border data flows and security, crack down on illegal activity in the securities market and punish fraudulent securities issuance, market manipulation and insider trading. The PRC government will also check sources of funding for securities investment and control leverage ratios. The PRC government has also opened a probe into several U.S.-listed technology companies focusing on anti-monopoly, financial technology regulation and more recently, with the passage of the PRC Data Security Law, how companies collect, store, process and transfer personal data. Currently these laws (other than the Law of the PRC on Safeguarding National Security in Hong Kong) are expected to apply to China domestic businesses, rather than businesses in Hong Kong which operate under a different set of laws from China. However, there can be no assurance that the government of Hong Kong will not enact similar laws and regulations applicable to companies operating in Hong Kong.\n\nWe and the VIEs conduct business operations in the PRC although we have established a subsidiary in Hong Kong, Four Seasons Education (Hong Kong) Limited, as a holding company to facilitate overseas securities offering. As of the date of this annual report, Four Seasons Education (Hong Kong) Limited has not received any inquiry or notice or any objection from any PRC authority or Hong Kong authority. Although none of our or the VIEs’ business activities appears to be within the current targeted areas of concern mentioned above by the PRC government as our Hong Kong subsidiary is a holding company with no business operations as of the date of the annual report, given the PRC government’s significant oversight over the conduct of business operations in China and in Hong Kong, and in light of the PRC government’s recent extension of authority not only in China but into Hong Kong, there are risks and uncertainties which we cannot foresee for the time being, and rules and regulations in the PRC can change quickly with little or no advance notice. For example, the PRC government may pressure the government of Hong Kong to enact similar laws and regulations to those in the PRC, which may seek to exert control over offerings conducted overseas by Hong Kong companies. If any or all of the foregoing were to occur, and if our Hong Kong subsidiary elects to carry out substantive business activities in the future, it could lead to a material adverse change in our operations and limit or hinder our ability to offer securities to overseas investors or remain listed in the U.S., which could cause the value of our ADSs to significantly decline or become worthless.\n\n \n\n46\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nThe PRC government’s oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs.\n\nWe conduct business primarily in China. Our operations in China are governed by PRC laws and regulations. The PRC government has significant oversight and discretion over the operation of our business, and it may influence our operations, which could result in a material adverse change in our operation and the value of our ADSs.\n\nThe PRC government has recently indicated an intent to exert more oversight over overseas offerings by and foreign investment in China-based issuers like us. For example, on July 6, 2021, relevant PRC government authorities promulgated the Opinions on Lawfully and Strictly Cracking Down Illegal Securities Activities, which stated that the administration and supervision of overseas-listed China-based companies will be strengthened, and the special provisions of the State Council on overseas issuance and listing of shares by such companies will be revised, clarifying the responsibilities of the relevant domestic industry regulatory authorities and other regulatory authorities. On December 24, 2021, the State Council issued a draft Regulations of the State Council on the Administration of Overseas Issuance and Listing of Securities by Domestic Companies (Draft for Comments), or the Draft Provisions, and the CSRC issued a draft Measures for the Record-Filing of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments), for public comments. On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures and five supporting guidelines, which came into effect on March 31, 2023. The Overseas Listing Trial Measures regulates both direct and indirect overseas offering and listing of PRC domestic companies’ securities by adopting a filing-based regulatory regime. Pursuant to the Overseas Listing Trial Measures, the principle of “substance over form” shall be followed when determining whether an offering and listing shall be deemed as an indirect overseas offering and listing by a PRC domestic company and if the issuer meets both the following criteria, the overseas securities offering and listing conducted by such issuer shall be deemed as indirect overseas offering by PRC domestic companies: (i) 50% or more of any of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in the PRC or its main place(s) of business are located in the PRC, or the majority of senior management staff in charge of its business operations and management are PRC citizens or have their habitual residence located in the PRC. Where an issuer submits an application for initial public offering to competent overseas regulators, such issuer must file with the CSRC within three business days after such application is submitted. The Overseas Listing Trial Measures also requires subsequent reports to be submitted to the CSRC on material events, such as change of control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings and listings. On the same day, the CSRC also published the Notice on the Administrative Arrangements for the Filing of Overseas Securities Offering and Listing by the Domestic Enterprises, or the Notice on Overseas Listing Measures. According to the Notice on Overseas Listing Measures, issuers that have already been listed in an overseas market by March 31, 2023, the date on which the Overseas Listing Measures will become effective, such as our company, are not required to make any immediate filing. However, such issuers will be required to comply with the filing requirements under Overseas Listing Measures if and when they pursue any future securities offerings and listings outside of mainland China, including but not limited to follow-on offerings, secondary listings and going private transactions. If we fail to obtain required approval or complete other review or filing procedures, under the Overseas Listing Measures or otherwise, for any future securities offerings and listings outside of mainland China, including but not limited to follow-on offerings, secondary listings and going private transactions, we may face sanctions by the CSRC or other PRC regulatory authorities, including administrative penalties, such as order to rectify, warnings, fines or other actions that may materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs.\n\n \n\n47\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nIn addition, on December 28, 2021, the CAC, the National Development and Reform Commission, or the NDRC, the Ministry of Industry and Information Technology, or the MIIT, and several other PRC government authorities jointly issued the Cybersecurity Review Measures, which took effect on February 15, 2022. Pursuant to the Cybersecurity Review Measures, in addition to “critical information infrastructure operators”, network platform operators engaging in data processing activities that affect or may affect national security are subject to cybersecurity review. The relevant government authorities may initiate the cybersecurity review against the relevant operators if the authorities believe that the network products or services or data processing activities of such operators affect or may affect national security. In addition, the Cybersecurity Review Measures provides that network platform operators holding personal information of over one million users must apply with the Cybersecurity Review Office for a cybersecurity review before public offering at a foreign stock exchange. The cybersecurity review will evaluate, among others, the risk of critical information infrastructure, core data, important data, or a large amount of personal information being affected, controlled, or maliciously used by foreign government and the network information security risk in connection with the listing. There are substantial uncertainties as to the interpretation, application, and enforcement of the Cybersecurity Review Measures.\n\nFurthermore, on September 24, 2024, the CAC promulgated the Regulations on Internet Data Security Management, or the Internet Data Security Management Regulations, which became effective on January 1, 2025. The Regulations on the Internet Data Security require that if a network data processor carries out network data processing activities that affects or may affect national security, it shall conduct a national security review in accordance with relevant state regulations, and emphasized special protection of important data. In addition, the Regulations on the Network Data Security require that data processors that process “important data” must conduct an annual data security risk assessment, and submit the assessment report of the preceding year to the municipal cybersecurity department. Important data refers to data in a specific field, a specific group, a specific region, or of a certain precision and scale, which, once tampered with, damaged, leaked, or illegally accessed or illegally utilized, may directly jeopardize national security, economic operation, social stability, public health and safety. However, there has been no clarifications from the relevant authorities as of the date of this annual report as to the standards for determining whether an activity is one that “affects or may affect national security”. As advised by our PRC Legal Counsel, Fangda Partners, we do not expect ourselves to be subject to cybersecurity review with the CAC or requirements to submit an annual data security risk assessment report to the relevant authorities for the following reasons: (i) we do not possess a large amount of personal information and our business does not have a bearing on national security and thus the data we process may not be classified as core or important data by the authorities, (ii) we are not required to go through cybersecurity review by the CAC, (iii) we have not received any notice from any authorities identifying our PRC subsidiaries or VIEs as a CIIO or online platform operators and thus requiring us to go through cybersecurity review or network data security review by the CAC; and (iv) we have not received any notice from any authorities indicating the data we process is classified as “important data” and thus requiring us to prepare and submit annual data security risk assessment reports. However, as the Regulations on the Network Data Security are still relatively new, there remains uncertainty as to how the Regulations on the Network Data Security will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Regulations on the Network Data Security.\n\nIt remains uncertain how PRC government authorities will regulate overseas listing in general and whether we are required to complete filing or obtain any specific regulatory approvals from the CSRC, CAC or any other PRC government authorities for our overseas offerings. If the CSRC, CAC or other government authorities later promulgate new rules or explanations requiring that we obtain their approvals for our future overseas offerings, we may be unable to obtain such approvals in a timely manner, or at all, and such approvals may be rescinded even if obtained. Any such circumstance could significantly limit or completely hinder our ability to continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. In addition, implementation of industry-wide regulations directly targeting our operations could cause the value of our securities to significantly decline. Therefore, investors of our company and our business face potential uncertainty from actions taken by the PRC government affecting our business.\n\n \n\n48\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOur business is subject to various evolving PRC laws and regulations regarding data privacy and cybersecurity. Failure of cybersecurity and data privacy concerns could subject us to penalties, damage our reputation and brand, and harm our business and results of operations.\n\nWe routinely collect, store and use personal information and other data during the ordinary course of our business. If we are unable to protect the personal information and other data we collect, store and use from unauthorized access, use, disclosure, disruption, modification, or destruction, such problems or security breaches could cause a loss, give rise to our liabilities to the owners or subject of the information, or subject us to fines and other penalties. In addition, complying with various laws and regulations could cause us to incur substantial costs or require us to change our business practices, including our data practices, in a manner adverse to our business.\n\nIn general, we expect that data security and data protection compliance will receive greater attention and focus from regulators, both domestically and globally, as well as attract continued or greater public scrutiny and attention going forward, which could increase our compliance costs and subject us to heightened risks and challenges associated with data security and protection. If we are unable to manage these risks, we could become subject to penalties, including fines, suspension of business and revocation of required licenses, and our reputation and results of operations could be materially and adversely affected.\n\nThe PRC regulatory and enforcement regime with regard to data security and data protection is evolving and may be subject to different interpretations or significant changes. Moreover, different PRC regulatory bodies, including the Standing Committee of the NPC, the Ministry of Industry and Information Technology, or the MIIT, the CAC, the MPS and the SAMR, have enforced data privacy and protections laws and regulations with varying standards and applications. We are subject to PRC laws and regulations governing the collection, storing, sharing, using, processing, disclosure and protection of personal information and other data on the internet and mobile platforms including, without limitation, the PRC Civil Code, the PRC Cybersecurity Law, the PRC Data Security Law and the PRC Personal Information Protection Law. The following are examples of certain recent PRC regulatory activities in this area:\n\nData Security\n\n \n\n49\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\n•\nIn June 2021, the Standing Committee of the NPC promulgated the PRC Data Security Law, which took effect in September 2021. The PRC Data Security Law, among other things, provides for security review procedure for data-related activities that may affect national security. In January 2022, the CAC, together with other authorities, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022 and replaces its predecessor regulation. Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators that procure internet products and services and network platform operators engaging in data processing activities must be subject to the cybersecurity review if their activities affect or may affect national security. The Cybersecurity Review Measures further stipulates that network platform operators that hold personal information of over one million users shall apply with the Cybersecurity Review Office for a cybersecurity review before any public offering at a foreign stock exchange. In August 2021, the state council promulgated the Regulations on Critical Information Infrastructure Security Protection, which became effective on September 1, 2021. Pursuant to this regulation, critical information infrastructure means key network facilities or information systems of critical industries or sectors, such as public communication and information service, energy, transportation, water conservation, finance, public services, e-government affairs and national defense science, the damage, malfunction or data leakage of which may endanger national security, people’s livelihoods and the public interest. 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. As of the date of this annual report, no detailed rules or implementation rules have been issued by any authority and we have not been informed that we are a critical information infrastructure operator by any government authorities. 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. If we are deemed to be a critical information infrastructure operator under the PRC cybersecurity laws and regulations, we may be subject to obligations in addition to what we have fulfilled under the PRC cybersecurity laws and regulations.\n\n•\nOn July 7, 2022, the CAC issued the Measures for Security Assessment of Cross-border Data Transfer, or the Security Assessment Measures, which came into effect on September 1, 2022. Pursuant to the Security Assessment Measures, a data processor shall apply to competent authorities for security assessment prior to transferring any data abroad if the transfer involves (i) important data; (ii) personal information transferred overseas by a CIIO and a data processor that has processed personal information of more than one million individuals; (iii) personal information transferred overseas by a data processor who has already provided personal information of 100,000 persons or sensitive personal information of 100,000 persons overseas since January 1 of the previous year; or (iv) other circumstances as requested by the CAC. Furthermore, in order to guide and assist data processors in submitting data export security assessments in a standardized and orderly manner, the CAC prepared the Guidelines for Data Export Security Assessment Application (Version 2.0) in March 2024, which provide specific requirements for the method, process, and materials required for submitting a data export security assessment application and simplify the materials required to be submitted by the data processors.\n\n•\nOn September 24, 2024, the CAC promulgated the Internet Data Security Management Regulations, which became effective on January 1, 2025. The Internet Data Security Management Regulations provides that if a network data processor carries out network data processing activities that affect or may affect national security, it shall conduct a national security review in accordance with relevant state regulations. In addition, the Regulations on the Network Data Security require that data processors that process “important data” must conduct an annual data security risk assessment, and submit the assessment report of the preceding year to relevant authorities.\n\nThe Anti-monopoly Guidelines for the Platform Economy Sector\n\n \n\n50\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\n•\nThe Anti-monopoly Guidelines for the Platform Economy Sector published by the Anti-monopoly Committee of the State Council, effective on February 7, 2021, prohibits collection of user information through coercive means by online platforms operators.\n\n•\nIn August 2021, the Standing Committee of the NPC promulgated the PRC Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021. We update our privacy policies from time to time to meet the latest regulatory requirements of PRC government authorities and adopt technical measures to protect data and ensure cybersecurity in a systematic way. Nonetheless, the Personal Information Protection Law elevates the protection requirements for personal information processing, and many specific requirements of this law remain to be clarified by the CAC, other regulatory authorities, and courts in practice. We may be required to make further adjustments to our business practices to comply with the personal information protection laws and regulations.\n\n•\nOn August 1, 2022, the Standing Committee further amended the Anti-Monopoly Law, which, among others, (i) emphasized that business operators with a dominant market position shall not engage in any conduct of abusing a dominant market position by utilizing data and algorithm, technology, and platform rules, (ii) increased the fines on business operators for illegal concentration to “no more than ten percent of the preceding year’s sales revenue of the business operators if the concentration of business operators has or may have an effect of excluding or limiting competition; or a fine of up to RMB5 million if the concentration of business operators does not have an effect of excluding or limiting competition,” and (iii) increased the fines on business operators that reaching monopoly agreements to “no less than one percent but no more than ten percent of the preceding year’s sales revenue of the business operators, or a fine of up to RMB5 million if no sales revenue in the preceding year; and if such monopoly agreements have not been implemented, a fine of up to RMB3 million.”\n\nMany of the data-related legislations are relatively new and certain concepts thereunder remain subject to interpretation by the regulators. If any data that we possess belongs to data categories that are subject to heightened scrutiny, we may be required to adopt stricter measures for protection and management of such data. The Cybersecurity Review Measures and the Internet Data Security Management Regulations remain unclear on whether the relevant requirements will be applicable to companies that are already listed in the United States, such as us. We cannot predict the impact of the Cybersecurity Review Measures and the Internet Data Security Management Regulations, if any, at this stage, and we will closely monitor and assess any development in the rule-making process. If the Cybersecurity Review Measures and the enacted version of the Internet Data Security Management Regulations mandate clearance of cyber security review and other specific actions to be taken by issuers like us, we face uncertainties as to whether these additional procedures can be completed by us timely, or at all, which may subject us to government enforcement actions and investigations, fines, penalties, suspension of our non-compliant operations, or removal of our app from the relevant application stores, and materially and adversely affect our business and results of operations. As of the date of this annual report, we have not been involved in any formal investigations on cyber security review made by the CAC on such basis.\n\nIn general, compliance with the existing PRC laws and regulations, as well as additional laws and regulations that PRC regulatory bodies may enact in the future, related to data security and personal information protection, may be costly and result in additional expenses to us, and subject us to negative publicity, which could harm our reputation and business operations. As advised by our PRC counsel, there are also uncertainties with respect to how such laws and regulations will be implemented and interpreted in practice as they are relatively new. We may need to adjust our business to comply with the data security and cyber security requirements from time to time and we have taken measures to comply with applicable data-related laws and regulations.\n\n \n\n51\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nIn addition, regulatory authorities around the world have adopted or are considering a number of legislative and regulatory proposals concerning data protection. These legislative and regulatory proposals, if adopted, and the uncertain interpretations and application thereof could, in addition to the possibility of fines, result in an order requiring that we change our data practices and policies, which could have an adverse effect on our business and results of operations. The European Union General Data Protection Regulation (“GDPR”), which came into effect on May 25, 2018, includes operational requirements for companies that receive or process personal data of residents of the European Economic Area. The GDPR establishes new requirements applicable to the processing of personal data, affords new data protection rights to individuals and imposes penalties for serious data breaches. Individuals also have a right to compensation under the GDPR for financial or non-financial losses. In the event that residents of the European Economic Area access our website or our mobile apps and input protected information, we may become subject to provisions of the GDPR.\n\nUnder the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise,” which could result in unfavorable tax consequences to us and our non-PRC shareholders.\n\nThe PRC Enterprise Income Tax Law and its implementing rules provide that enterprises established outside of the PRC whose “de facto management bodies” are located in the PRC are considered “resident enterprises” under PRC tax laws. The implementing rules define the term “de facto management bodies” as a management body which substantially manages, or has control over the business, personnel, finance and assets of an enterprise. On April 22, 2009, the State Administration of Taxation issued SAT Circular 82, which provides that a foreign enterprise controlled by a PRC company or a group of PRC companies will be classified as a “resident enterprise” with its “de facto management body” located within the PRC if all of the following requirements are satisfied: (1) the senior management and core management departments in charge of its daily operations function are mainly in the PRC; (2) its financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (3) its major assets, accounting books, company seals, and minutes and files of its board and shareholders’ meetings are located or kept in the PRC; and (4) at least half of the enterprise’s directors with voting right or senior management reside in the PRC. The State Administration of Taxation issued a bulletin SAT Circular 45 on July 27, 2011 to provide more guidance on the implementation of SAT Circular 82. The bulletin clarifies certain matters relating to resident status determination, post-determination administration and competent tax authorities. 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 general position of the State Administration of Taxation on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises and the administration measures should be implemented, regardless of whether they are controlled by PRC enterprises or PRC individuals.\n\nIn addition, the State Administration of Taxation issued a bulletin SAT Circular 9 on January 29, 2014 to provide more guidance on the implementation of SAT Circular 82. This bulletin further provides that, among other things, an entity that is classified as a “resident enterprise” in accordance with the circular shall file the application for classifying its status of residential enterprise with the local tax authorities where its main domestic investors are registered.\n\nFrom the year in which the entity is determined as a “resident enterprise,” any dividend, profit and other equity investment gain shall be taxed in accordance with the PRC Enterprise Income Tax Law and its implementing rules.\n\nAs the tax resident status of an enterprise is subject to the determination by the PRC tax authorities, if we are deemed as a PRC “resident enterprise,” we will be subject to PRC Enterprise Income Tax on our worldwide income at a uniform tax rate of 25%, although dividends distributed to us from our existing PRC subsidiaries and any other PRC subsidiaries which we may establish from time to time could be exempt from the PRC dividend withholding tax due to our PRC “resident recipient” status. This could have a material adverse effect on our overall effective tax rate, our income tax expenses and our net income. Furthermore, dividends, if any, paid to our shareholders and ADS holders may be decreased as a result of the decrease in distributable profits. In addition, if we were to be considered a PRC “resident enterprise,” dividends we pay with respect to our ADSs or ordinary shares and the gains realized from the transfer of our ADSs or ordinary shares may be considered income derived from sources within the PRC and be subject to PRC withholding tax, which could have a material adverse effect on the value of your investment in us and the price of our ADSs.\n\n \n\n52\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nThere are significant uncertainties under the PRC Enterprise Income Tax Law relating to the withholding tax liabilities of our PRC subsidiaries, and dividends payable by our PRC subsidiaries to our offshore subsidiaries may not qualify to enjoy certain treaty benefits.\n\nUnder the PRC Enterprise Income Tax Law and its implementation rules, the profits of a foreign-invested enterprise generated through operations, which are distributed to its immediate holding company outside the PRC, will be subject to a withholding tax rate of 10%. Pursuant to a special arrangement between Hong Kong and the PRC, such rate may be reduced to 5% if a Hong Kong resident enterprise owns more than 25% of the equity interest in the PRC company. Our WFOE is wholly owned by our Hong Kong subsidiary.\n\nMoreover, under the Notice of the State Administration of Taxation on Issues regarding the Administration of the Dividend Provision in Tax Treaties promulgated on February 20, 2009, the taxpayer needs to satisfy certain conditions to enjoy the benefits under a tax treaty. These conditions include: (1) the taxpayer must be the beneficial owner of the relevant dividends, and (2) the corporate shareholder to receive dividends from the PRC subsidiaries must have continuously met the direct ownership thresholds during the 12 consecutive months preceding the receipt of the dividends. Further, the State Administration of Taxation promulgated the Notice on How to Understand and Recognize the “Beneficial Owner” in Tax Treaties on October 27, 2009, which limits the “beneficial owner” to individuals, enterprises or other organizations normally engaged in substantive operations, and sets forth certain detailed factors in determining the “beneficial owner” status. Further, the SAT promulgated the Notice on Issues Related to the “Beneficial Owner” in Tax Treaties on February 3, 2018, which sets forth certain detailed factors in determining the “beneficial owner” status.\n\nEntitlement to a lower tax rate on dividends according to tax treaties or arrangements between the PRC central government and governments of other countries or regions is subject to inspection or approval of the relevant tax authorities. As a result, we cannot assure you that we will be entitled to any preferential withholding tax rate under tax treaties for dividends received from our PRC subsidiaries.\n\nWe face uncertainties with respect to indirect transfers of the equity interests in PRC resident enterprises by their non-PRC holding companies.\n\nPursuant to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or SAT Circular 698, issued by the State Administration of Taxation on December 10, 2009, where a foreign investor transfers the equity interests in a PRC resident enterprise indirectly via disposition of the equity interests of an overseas holding company, and such overseas holding company is located in a tax jurisdiction that (1) has an effective tax rate less than 12.5% or (2) does not tax foreign income of its residents, the foreign investor shall report the indirect transfer to the competent PRC tax authority. The PRC tax authority will examine the nature of such indirect transfer, and if the tax authority considers that the foreign investor has adopted an “abusive arrangement” in order to reduce, avoid or defer PRC taxes, it may disregard the existence of the overseas holding company and re-characterize the indirect transfer such that gains derived from such indirect transfer may be subject to PRC withholding tax at a rate of up to 10%. SAT Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price lower than the fair market value, the competent tax authority has the power to make a reasonable adjustment to the taxable income of the transaction. SAT Circular 698 is retroactively effective from January 1, 2008.\n\nThere is uncertainty as to the application of SAT Circular 698. For example, while the term “indirect transfer” is not clearly defined, it is understood that the relevant PRC tax authorities have jurisdiction regarding requests for information over a wide range of foreign entities having no direct contact with the PRC. Moreover, the relevant authority has not yet promulgated any formal provisions or formally declared or stated how to calculate the effective tax rates in foreign tax jurisdictions, and the process and format of the reporting of an Indirect Transfer to the competent tax authority of the relevant PRC resident enterprise remain unclear. In addition, there are no formal declarations with regard to how to determine whether a foreign investor has adopted an abusive arrangement in order to reduce, avoid or defer PRC tax.\n\n \n\n53\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nThe State Administration of Taxation issued Bulletin on Several Issues concerning the Enterprise Income Tax on the Indirect Transfers of Properties by Non-Resident Enterprises, or SAT Bulletin 7, on February 3, 2015, which replaced or supplemented certain rules under SAT Circular 698. Under SAT Bulletin 7, an “indirect transfer” of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises may be re-characterized and treated as a direct transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax.\n\nAccording to SAT Bulletin 7, “PRC taxable assets” include assets attributed to an establishment in the PRC, immoveable properties in the PRC, and equity investments in PRC resident enterprises. In respect of an indirect offshore transfer of assets of a PRC establishment, the relevant gain is to be regarded as effectively connected with the PRC establishment and therefore included in its enterprise income tax filing, and would consequently be subject to PRC enterprise income tax at a rate of 25%. Where the underlying transfer relates to the immoveable properties in the PRC or to equity investments in a PRC resident enterprise, which is not effectively connected to a PRC establishment of a non-resident enterprise, a PRC enterprise income tax at 10% would apply, subject to available preferential tax treatment under applicable tax treaties or similar arrangements, and the party who is obligated to make the transfer payments has the withholding obligation. There is uncertainty as to the implementation details of SAT Bulletin 7. If SAT Bulletin 7 was determined by the tax authorities to be applicable to some of our transactions involving PRC taxable assets, our offshore subsidiaries conducting the relevant transactions might be required to spend valuable resources to comply with SAT Bulletin 7 or to establish that the relevant transactions should not be taxed under SAT Bulletin 7.\n\nAs a result, we and our non-PRC shareholders may have the risk of being taxed for the disposition of our ordinary shares or ADS and may be required to spend valuable resources to comply with SAT Circular 698 and SAT Bulletin 7 or to establish that we or our non-PRC shareholders should not be taxed as an indirect transfer, which may have a material adverse effect on our financial condition and results of operations or the investment by non-PRC investors in us.\n\nRestrictions on currency exchange may limit our ability to receive and use our revenues effectively.\n\nSubstantially all of our revenue is denominated in Renminbi. As a result, restrictions on currency exchange may limit our ability to use revenue generated in Renminbi to fund any business activities we may have outside the PRC in the future or to make dividend payments to our shareholders and ADS holders in U.S. dollars. Under current PRC laws and regulations, Renminbi is freely convertible for current account items, such as trade and service-related foreign exchange transactions and dividend distributions. However, Renminbi is not freely convertible for direct investment or loans or investments in securities outside the PRC, unless such use is approved by SAFE. For example, foreign exchange transactions under our subsidiary’s capital account, including principal payments in respect of foreign currency-denominated obligations, remain subject to significant foreign exchange controls and the approval requirement of SAFE. These limitations could affect our ability to obtain foreign exchange for capital expenditures.\n\nOur PRC subsidiaries are permitted to declare dividends to our offshore subsidiary holding their equity interest, convert the dividends into a foreign currency and remit to its shareholder outside the PRC. In addition, in the event that our PRC subsidiaries liquidate, proceeds from the liquidation may be converted into foreign currency and distributed outside the PRC to our overseas subsidiary holding its equity interest. Furthermore, in the event that Shanghai Luoliang Network Technology Co., Ltd. or Shanghai Four Seasons Education Investment Management Co., Ltd. liquidates, our PRC subsidiaries may, pursuant to a power of attorney it has entered into with Mr. Peiqing Tian or Ms. Suhua Zhu, require Mr. Peiqing Tian or Ms. Suhua Zhu to transfer all assets they might receive in connection with the liquidation of Shanghai Luoliang Network Technology Co., Ltd. or Shanghai Four Seasons Education Investment Management Co., Ltd., Ltd. to our PRC subsidiaries at no consideration or the minimum consideration as permitted under PRC laws. Our PRC subsidiaries then may distribute such proceeds to us after converting them into foreign currency and remit them outside the PRC in the form of dividends or other distributions. Once remitted outside the PRC, dividends, distributions or other proceeds from liquidation paid to us will not be subject to restrictions under PRC regulations on its further transfer or use.\n\n \n\n54\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOther than the above distributions by and through our PRC subsidiaries which are permitted to be made without the necessity to obtain further approvals, any conversion of the Renminbi-denominated revenue generated by the VIEs for direct investment, loan or investment in securities outside the PRC will be subject to the limitations discussed above. To the extent we need to convert and use any Renminbi-denominated revenue generated by the VIEs not paid to our PRC subsidiaries and revenue generated by our PRC subsidiaries not declared and paid as dividends, the limitations discussed above will restrict the convertibility of, and our ability to directly receive and use such revenue. As a result, our business and financial condition may be adversely affected. In addition, we cannot assure you that the PRC regulatory authorities will not impose more stringent restrictions on the convertibility of Renminbi in the future, especially with respect to foreign exchange transactions.\n\nOur subsidiaries and the VIEs in the PRC are subject to restrictions on making dividends and other payments to us.\n\nWe are a holding company and rely principally on dividends paid by our subsidiaries in the PRC. Current PRC regulations permit our subsidiaries in the PRC to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Under the applicable requirements of PRC law, our PRC subsidiaries may only distribute dividends after they have made allowances to fund certain statutory reserves. These reserves are not distributable as cash dividends. In addition, at the end of each fiscal year, each of our learning centers that are private schools in the PRC is required to allocate a certain amount to its development fund for the construction or maintenance of the school properties or purchase or upgrade of school facilities. Furthermore, if our subsidiaries or the VIEs in the PRC incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. In addition, to the extent cash or assets in our business is in the PRC or Hong Kong or a PRC or Hong Kong entity, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in, or the imposition of restrictions and limitations on, the ability of our holding company, our PRC subsidiaries, or the VIEs by the PRC government to transfer cash or assets. Cash may be transferred within our organization in the following manners: Under PRC laws, Four Seasons may, through its intermediary holding companies, provide funding to our PRC subsidiaries only through capital contributions or loans, and to the VIEs only through loans, subject to satisfaction of applicable government registration and approval requirements. Any such restrictions or requirements may materially affect such entities’ ability to make dividends or make payments, in service fees or otherwise, to us, which may materially and adversely affect our business, financial condition and results of operations.\n\nFluctuations in the value of the Renminbi may have a material adverse effect on your investment.\n\nThe change in value of the Renminbi against the U.S. dollar and other currencies is affected by various factors such as changes in political and economic conditions in the PRC. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar, and the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, the Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future.\n\nAny significant appreciation or revaluation of the Renminbi may have a material adverse effect on the value of, and any dividends payable on, our ADSs in foreign currency terms. More specifically, if we decide to convert our Renminbi into U.S. dollars, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount available to us. To the extent that we need to convert U.S. dollars we receive from our initial public offering into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion. In addition, appreciation or depreciation in the exchange rate of the Renminbi to the U.S. dollar could materially and adversely affect the price of our ADSs in U.S. dollars without giving effect to any underlying change in our business or results of operations.\n\n \n\n55\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nThe approval of or filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.\n\nThe Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in 2006 and amended in 2009, requires an overseas special purpose vehicle formed for listing purposes through acquisitions of PRC domestic companies and controlled by PRC persons or entities to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. The interpretation and application of the regulations remain unclear, and our offshore offerings may ultimately require approval of the CSRC. If the CSRC approval is required, it is uncertain whether we can or how long it will take us to obtain the approval and, even if we obtain such CSRC approval, the approval could be rescinded. Any failure to obtain or delay in obtaining the CSRC approval for any of our offshore offerings, or a rescission of such approval if obtained by us, would subject us to sanctions imposed by the CSRC or other PRC regulatory authorities, which could include fines and penalties on our operations in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect our business, financial condition, and results of operations.\n\nOn July 6, 2021, the relevant PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law, or the Opinions on Security Activities. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies. As a follow-up, on December 24, 2021, the State Council issued a draft Regulations of the State Council on the Administration of Overseas Issuance and Listing of Securities by Domestic Companies (Draft for Comments), or the Draft Provisions, and the CSRC issued a draft Measures for the Record-Filing of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments), or the Draft Administration Measures, for public comments.\n\nThe Draft Provisions and the Draft Administration Measures propose to establish a new filing-based regime to regulate overseas offerings of stocks, depository receipts, convertible corporate bond, or other equity securities, and overseas listing of these securities for trading, by domestic companies. According to the Draft Provisions and the Draft Administration Measures, an overseas offering and listing by a domestic company, whether directly or indirectly, shall be filed with the CSRC. Specifically, the examination and determination of an indirect offering and listing will be conducted on a substance-over-form basis, and an offering and listing shall be considered as an indirect overseas offering and listing by a domestic company if the issuer meets the following conditions: (i) the operating income, gross profit, total assets, or net assets of the domestic enterprise in the most recent fiscal year was more than 50% of the relevant line item in the issuer’s audited consolidated financial statement for that year; and (ii) senior management personnel responsible for business operations and management are mostly PRC citizens or are ordinarily resident in the PRC, and the main place of business is in the PRC or carried out in the PRC. According to the Draft Administration Measures, the issuer or its affiliated domestic company, as the case may be, shall file with the CSRC for its initial public offering, follow-on offering and other equivalent offering activities. Particularly, the issuer shall submit the filing with respect to its initial public offering and listing within three business days after its initial filing of the listing application, and submit the filing with respect to its follow-on offering within three business days after completion of the follow-on offering. Failure to comply with the filing requirements may result in fines to the relevant domestic companies, suspension of their businesses, revocation of their business licenses and operation permits and fines on the controlling shareholder and other responsible persons. The Draft Administration Measures also sets forth certain regulatory red lines for overseas offerings and listings by domestic enterprises.\n\n \n\n56\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nAs a follow-up, on December 24, 2021, the State Council issued a draft Regulations of the State Council on the Administration of Overseas Issuance and Listing of Securities by Domestic Companies (Draft for Comments), or the Draft Provisions, and the CSRC issued a draft Measures for the Record-Filing of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments), or the Draft Administration Measures, for public comments. On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures and five supporting guidelines, which came into effect on March 31, 2023. According to the Overseas Listing Trial Measures, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedure and report relevant information to the CSRC; if a domestic company fails to complete the filing procedure or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines; (2) if the issuer meets both of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period; (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in China; and (3) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and where an issuer makes an application for listing in an overseas market, the issuer shall submit filings with the CSRC within three business days after such application is submitted.\n\nOn the same day, the CSRC also held a press conference for the release of the Overseas Listing Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that the domestic companies that have already been listed overseas on or before the effective date of the Overseas Listing Trial Measures (i.e. March 31, 2023) shall be deemed as existing issuers, or the Existing Issuers. Existing Issuers are not required to complete the filling procedures, and they shall be required to file with the CSRC when subsequent matters such as refinancing are involved.\n\nAccording to the Overseas Listing Trial Measures, an overseas listed company shall file with the CSRC within three business days after the completion of its subsequent securities offering on the same market, and an overseas listed company shall file with the CSRC within three business days after its application of its offering and listing on a different market. If an overseas listed company purchase PRC domestic assets through a single or multiple acquisitions, share swaps, shares transfers or other means, and such purchase constitutes direct or indirect listing of PRC domestic assets, a filing with the CSRC is also required. In addition, an overseas listed company is required to report to the CSRC the occurrence of any of the following material events within three business days after the occurrence and announcement thereof: (i) a change of control of the listed company; (ii) the investigation, sanction or other measures undertaken by any foreign securities regulatory agencies or relevant competent authorities in respect of the listed company; (iii) a change of listing status or transfer of listing segment; and (iv) the voluntary or mandatory delisting of the listed company. If there is any material change of the principal business of the listed company after the overseas offering and listing so that the listed company is no longer required to file with the CSRC, it shall file a specific report and a legal opinion issued by a domestic law firm to the CSRC within three business days after the occurrence hereof.\n\n \n\n57\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nGiven the substantial uncertainties surrounding the latest CSRC filing requirements at this stage, we cannot assure you that we will be able to complete the filings and fully comply with the relevant new rules on a timely basis, if at all. If we fail to obtain required approval or complete other review or filing procedures, under the Overseas Listing Measures or otherwise, for any future securities offerings and listings outside of mainland China, including but not limited to follow-on offerings, secondary listings and going private transactions, we may face sanctions by the CSRC or other PRC regulatory authorities, including administrative penalties, such as order to rectify, warnings, fines or other actions that may materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs. In addition, we cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements on us. If it is determined in the future that approval and filing from the CSRC or other regulatory authorities or other procedures, including the cybersecurity review under the Cybersecurity Review Measures and the Internet Data Security Management Regulations, are required for our offshore offerings, it is uncertain whether we can or how long it will take us to obtain such approval or complete such filing procedures and any such approval or filing could be rescinded or rejected. Any failure to obtain or delay in obtaining such approval or completing such filing procedures for our offshore offerings, or a rescission of any such approval or filing if obtained by us, would subject us to sanctions by the CSRC or other PRC regulatory authorities for failure to seek CSRC approval or filing or other government authorization for our offshore offerings. These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs. The CSRC or other PRC regulatory authorities also may take actions requiring us, or making it advisable for us, to halt our offshore offerings before settlement and delivery of the shares offered. Consequently, if investors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory procedures for our prior offshore offerings, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation, and the trading price of our ADSs.\n\nCertain PRC regulations, including the M&A Rules and national security regulations, may require a complicated review and approval process which could make it more difficult for us to pursue growth through acquisitions in the PRC.\n\nThe M&A Rules established additional procedures and requirements that could make merger and acquisition activities in the PRC by foreign investors more time-consuming and complex. For example, the Ministry of Commerce must be notified in the event a foreign investor takes control of a PRC domestic enterprise. In addition, certain acquisitions of domestic companies by offshore companies that are related to or affiliated with the same entities or individuals of the domestic companies, are subject to approval by the Ministry of Commerce. In addition, the Implementing Rules Concerning Security Review on Mergers and Acquisitions by Foreign Investors of Domestic Enterprises, issued by the Ministry of Commerce in August 2011, require that mergers and acquisitions by foreign investors in “any industry with national security concerns” be subject to national security review by the Ministry of Commerce. In addition, any activities attempting to circumvent such review process, including structuring the transaction through a proxy or contractual control arrangement, are strictly prohibited.\n\nThere is significant uncertainty regarding the interpretation and implementation of these regulations relating to merger and acquisition activities in the PRC. In addition, complying with these requirements could be time-consuming, and the required notification, review or approval process may materially delay or affect our ability to complete merger and acquisition transactions in the PRC. As a result, our ability to seek growth through acquisitions may be materially and adversely affected.\n\n \n\n58\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nIn addition, if the Ministry of Commerce determines that we should have obtained its approval for our entry into contractual arrangements with the VIEs and their shareholders, we may be required to file for remedial approvals. We cannot assure you that we would be able to obtain such approval from the Ministry of Commerce. We may also be subject to administrative fines or penalties by the Ministry of Commerce that may require us to limit our business operations in the PRC, delay or restrict the conversion and remittance of our funds in foreign currencies into the PRC or take other actions that could have material and adverse effect on our business, financial condition and results of operations.\n\nA failure by the beneficial owners of our shares who are PRC residents to comply with certain PRC foreign exchange regulations could restrict our ability to distribute profits, restrict our overseas and cross-border investment activities and subject us to liability under PRC law.\n\nSAFE has promulgated regulations, including the Notice on Relevant Issues Relating to Foreign Exchange Control on Domestic Residents’ Investment and Financing and Round-Trip Investment through Special Purpose Vehicles, or SAFE Circular 37, effective on July 4, 2014, and its appendices, that require PRC residents, including PRC institutions and individuals, to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.” The term “control” under SAFE Circular 37 is broadly defined as the operation rights, beneficiary rights or decision-making rights acquired by the PRC residents in the offshore special purpose vehicles by such means as acquisition, trust, proxy, voting rights, repurchase, convertible bonds or other arrangements. SAFE Circular 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiaries. Further, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for foreign exchange evasion.\n\nThese regulations apply to our direct and indirect shareholders who are PRC residents and may apply to any offshore acquisitions or share transfers that we make in the future if our shares are issued to PRC residents.\n\nHowever, in practice, different local SAFE branches may have different views and procedures on the application and implementation of SAFE regulations, and since SAFE Circular 37 was recently issued, there remains uncertainty with respect to its implementation.\n\nAs of the date of this annual report, all PRC residents known to us that currently hold direct or indirect interests in our company have completed the necessary registrations with SAFE as required by SAFE Circular 37. However, we cannot assure you that these individuals or any other direct or indirect shareholders or beneficial owners of our company who are PRC residents will be able to successfully complete the registration or update the registration of their direct and indirect equity interest as required in the future. If they fail to make or update the registration, our PRC subsidiaries could be subject to fines and legal penalties, and SAFE could restrict our cross-border investment activities and our foreign exchange activities, including restricting our PRC subsidiaries’ ability to distribute dividends to, or obtain loans denominated in foreign currencies from, our company, or prevent us from contributing additional capital into our PRC subsidiaries. As a result, our business operations and our ability to make distributions to you could be materially and adversely affected.\n\n \n\n59\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nEmployee participants in our share incentive plan who are PRC citizens may be required to register with SAFE. We also face regulatory uncertainties in the PRC that could restrict our ability to grant share incentive awards to our employees who are PRC citizens.\n\nPursuant to the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in a Stock Incentive Plan of an Overseas Publicly-Listed Company issued by SAFE on February 15, 2012, or SAFE Circular 7, a qualified PRC agent (which could be the PRC subsidiary of the overseas-listed company) is required to file, on behalf of “domestic individuals” (both PRC residents and non-PRC residents who reside in the PRC for a continuous period of not less than one year, excluding the foreign diplomatic personnel and representatives of international organizations) who are granted shares or share options by the overseas-listed company according to its share incentive plan, an application with SAFE to conduct SAFE registration with respect to such share incentive plan, and obtain approval for an annual allowance with respect to the purchase of foreign exchange in connection with the share purchase or share option exercise. Such PRC individuals’ foreign exchange income received from the sale of shares and dividends distributed by the overseas listed company and any other income shall be fully remitted into a collective foreign currency account in the PRC opened and managed by the PRC domestic agent before distribution to such individuals. In addition, such domestic individuals must also retain an overseas entrusted institution to handle matters in connection with their exercise of share options and their purchase and sale of shares. The PRC domestic agent also needs to update registration with SAFE within three months after the overseas-listed company materially changes its share incentive plan or make any new share incentive plans.\n\nFrom time to time, we need to apply for or update our registration with SAFE or its local branches on behalf of our employees who receive options or other equity-based incentive grants under our share incentive plan or material changes in our share incentive plan. However, we may not always be able to make applications or update our registration on behalf of our employees who hold any type of share incentive awards in compliance with SAFE Circular 7, nor can we ensure you that such applications or update of registration will be successful. If we or the participants of our share incentive plan who are PRC citizens fail to comply with SAFE Circular 7, we and/or such participants of our share incentive plan may be subject to fines and legal sanctions, there may be additional restrictions on the ability of such participants to exercise their share options or remit proceeds gained from sale of their shares into the PRC, and we may be prevented from further granting share incentive awards under our share incentive plan to our employees who are PRC citizens.\n\nOur leased property interests may be defective and our right to lease the properties may be challenged.\n\nAccording to the PRC Land Administration Law, land in urban districts is owned by the state. The owner of a property built on state-owned land must possess the proper land and property title certificate to demonstrate that it is the owner of the premises and that it has the right to enter into lease contracts with the tenants or to authorize a third party to sublease the premises. Our right to lease the premises may be interrupted or adversely affected if our landlords are not the property owners and the actual property owners should appear.\n\nIn addition, the title certificate usually records the approved use of the state-owned land by the government and the property owner is obligated to follow the approved use requirement when making use of the property. In the case of failure to utilize the property in accordance with the approved use, the land administration authorities may order the tenant to cease utilizing the premises or even invalidate the contract between the landlord and the tenant. If our use of the leased premises is not in full compliance with the approved use of the land, we may be unable to continue to use the property, which may cause disruption to our business.\n\nOur failure to comply with certain requirements under labor contract laws in the PRC may adversely affect our results of operations.\n\nThe current PRC labor contract law imposes greater liabilities on employers and significantly affects the cost of an employer’s decision to reduce its workforce. Furthermore, the PRC government has promulgated new laws and regulations to enhance labor protections in recent years, such as the Labor Contract Law and the Social Insurance Law. If we are subject to penalties or incur significant liabilities in connection with labor disputes or investigations, our business and results of operations may be adversely affected.\n\n \n\n60\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nThe PCAOB may be unable to inspect or fully investigate our auditors as required under the Holding Foreign Companies Accountable Act, or the HFCA Act. If the PCAOB is unable to conduct such inspections for two consecutive years beginning in 2021, the SEC will prohibit the trading of our ADSs. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections of our auditors would deprive our investors of the benefits of such inspections.\n\nThe Holding Foreign Companies Accountable Act, or the HFCA Act, was signed into law on December 18, 2020. The HFCA Act states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection for the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.\n\nOn June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, or the AHFCA Act, which was signed into law on December 29, 2022, amending the HFCA Act and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.\n\nOn December 2, 2021, the SEC adopted final amendments implementing the disclosure and submission requirements under the HFCA Act, pursuant to which the SEC will identify a “Commission-Identified Issuer” if an issuer has filed an annual report containing an audit report issued by a registered public accounting firm that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction.\n\nOn December 16, 2021, the PCAOB issued PCAOB Determination 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.\n\nOn August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol (the “Protocol”) with the CSRC and the Ministry of Finance (“MOF”) of the People's Republic of China, governing inspections and investigations of audit firms based in mainland China and Hong Kong. The Protocol remains unpublished and is subject to further explanation and implementation. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and the unfettered ability to transfer information to the SEC.\n\nOn December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous PCAOB Determination Report to the contrary. However, whether the PCAOB will continue to conduct inspections and investigations completely to its satisfaction of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditor’s, control, including positions taken by authorities of the PRC. The PCAOB is expected to continue to demand complete access to inspections and investigations against accounting firms headquartered in mainland China and Hong Kong in the future and states that it has already made plans to resume regular inspections in early 2023 and beyond. The PCAOB is required under the HFCA Act to make its determination on an annual basis with regards to its ability to inspect and investigate completely accounting firms based in the mainland China and Hong Kong. Should the PCAOB again encounter impediments to inspections and investigations in mainland China or Hong Kong as a result of positions taken by any authority in either jurisdiction, the PCAOB will make determinations under the HFCA Act as and when appropriate.\n\n \n\n61\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOur auditor, Marcum Asia CPAs LLP, or MarcumAsia, the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United States), or the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. MarcumAsia, whose audit report is included in this annual report on Form 20-F, is headquartered in New York, New York, and is subject to inspection by the PCAOB on a regular basis. As a result, we do not expect to be identified as a “Commission-Identified Issuer” under the HFCA Act for the fiscal year ended February 28, 2026 after we file our annual report on Form 20-F for such fiscal year.\n\nFurthermore, these recent developments could also add uncertainties and we cannot assure you that the New York Stock Exchange (“NYSE”) or regulatory authorities would not apply additional or more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. If our shares and ADSs are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. Such a prohibition would substantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our ADSs. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.\n\nRisks Related to our Ordinary Shares and ADSs\n\nThe trading price of our ADSs is likely to be volatile, which could result in substantial losses to investors.\n\nThe trading price of our ADSs is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, akin to the performance and fluctuation of the market prices of other companies with business operations located mainly in the PRC that have listed their securities in the United States. A number of Chinese companies have listed or are in the process of listing their securities on U.S. stock markets. The securities of some of these companies have experienced significant volatility, including price declines in connection with their initial public offerings. The trading performances of these Chinese companies’ securities after their offerings may affect the perception and attitudes of investors toward Chinese companies listed in the United States in general and consequently may impact the trading performance of our ADSs, regardless of our actual operating performance.\n\nIn addition to market and industry factors, the price and trading volume for our ADSs may be highly volatile due to a number of factors, including the following:\n\n•\nregulatory developments affecting us or our industry;\n\n•\nactual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results;\n\n•\nchanges in the market condition, market potential and competition in our industry;\n\n•\nannouncements by us or our competitors of new education services, expansions, investments, acquisitions, strategic partnerships or joint ventures;\n\n•\nfluctuations in global and Chinese economies;\n\n•\nchanges in financial estimates by securities analysts;\n\n•\nadverse publicity about us;\n\n•\nadditions or departures of our key personnel and senior management;\n\n•\nrelease of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities;\n\n•\npotential litigation or regulatory investigations; and\n\n \n\n62\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\n•\nproceedings instituted recently by the SEC against five PRC-based accounting firms, including our independent registered public accounting firm.\n\nAny of these factors may result in large and sudden changes in the volume and price at which our ADSs will trade.\n\nIn the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.\n\nSubstantial future sales or perceived potential sales of our ADSs in the public market could cause the price of our ADSs to decline.\n\nSales of substantial amounts of our ADSs in the public market, or the perception that these sales could occur, could adversely affect the market price of our ADSs. The total number of ordinary shares outstanding as of February 28, 2026 was 22,614,376. The ADSs sold in our initial public offering will be freely tradable by persons other than our “affiliates” without restriction or further registration under the Securities Act. All of the other ordinary shares outstanding are available for sale, subject to volume and other restrictions as applicable under Rules 144 and 701 under the Securities Act. Certain major holders of our ordinary shares have the right to request us to register under the Securities Act the sale of their shares, subject to the applicable lock-up periods in connection with our initial public offering. Registration of these shares under the Securities Act would result in ADSs representing these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration. Sales of these registered shares in the form of ADSs in the public market could cause the price of our ADSs to decline significantly.\n\nIf securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market price for our ADSs and trading volume could decline.\n\nThe trading market for our ADSs will depend in part on the research and reports that securities or industry analysts publish about us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who covers us downgrades our ADSs or publishes inaccurate or unfavorable research about our business, the market price for our ADSs would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our ADSs to decline.\n\nBecause we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our ADSs for return on your investment.\n\nWe currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our ADSs as a source for any future dividend income.\n\n \n\n63\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOur board of directors has complete discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. In either case, all dividends are subject to certain restrictions under Cayman Islands law, namely our company may pay a dividend out of either profit or share premium account, and provided always that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our ADSs will likely depend entirely upon any future price appreciation of our ADSs. On January 16, 2018, we declared dividends of US$20 million to holders of our company’s ordinary shares of record as of February 1, 2018. In addition, we declared a cash dividend of US$0.23 per ordinary share, or US$2.30 per ADS on August 14, 2024, with the total dividend distribution of US$5.1 million.\n\nWe cannot guarantee that our ADSs will appreciate in value or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs.\n\nWe believe that we were a passive foreign investment company for United States federal income tax purposes for our taxable year ended February 28, 2026, and we may be a PFIC for our current taxable year, which could result in adverse United States federal income tax consequences to United States holders of our ADSs or ordinary shares.\n\nBased on the market price of our ADSs, the value of our assets and the composition of our income and assets, we believe that we were a “passive foreign investment company” for United States federal income tax purposes (a “PFIC”) for our taxable year ended February 28, 2026 and we may be a PFIC for our current taxable year. We will be a PFIC for United States federal income tax purposes for any taxable year if either (1) at least 75% of our gross income for such year is passive income or (2) at least 50% of the value of our assets (generally based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income. Because a separate determination must be made after the close of each taxable year as to whether we were a PFIC for that year, we cannot assure you that we will or will not be a PFIC for the current or any future taxable year. Such determination may depend in part upon the value of our goodwill and other unbooked intangibles not reflected on our balance sheet (which may depend upon the market price of the ADSs or ordinary shares from time to time, which may fluctuate significantly) and also may be affected by how, and how quickly, we spend our liquid assets and the cash we generate from our operations and raise in any offering.\n\nBecause we believe that we were a PFIC for our taxable year ended February 28, 2026, certain adverse United States federal income tax consequences could apply to United States Holders (as defined in “Item 10. Additional Information — E. Taxation — Certain United States Federal Income Tax Considerations”) with respect to any “excess distribution” received from us and any gain from a sale or other disposition of the ADSs or ordinary shares. See “Item 10. Additional Information — E. Taxation — Certain United States Federal Income Tax Considerations — Passive Foreign Investment Company.”\n\n \n\n64\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOur memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our ordinary shares and ADSs.\n\nWe have adopted a second amended and restated memorandum and articles of association. Our memorandum and articles of association contain provisions to limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. For example, our board of directors has the authority subject to any resolution of the shareholders to the contrary, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares, in the form of ADS or otherwise. Preferred shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue preferred shares, the price of our ADSs may fall and the voting and other rights of the holders of our ordinary shares and ADSs may be materially and adversely affected.\n\nYou may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law and we conduct the majority of our operations in China.\n\nWe are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands and the common law of the Cayman Islands. The rights of our shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England and Wales, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.\n\nThe Cayman Islands courts are also unlikely (i) to recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws, or (ii) to impose liabilities against us, in original actions brought in the Cayman Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature.\n\nThere is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will, at common law, recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without any re-examination of the merits of the underlying dispute based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the liquidated sum for which judgment has been given provided certain conditions are met. In addition, as a company primarily operating in China, there are significant legal and other obstacles for U.S. authorities to obtaining information needed for investigations or litigations. Moreover, local authorities often are constrained in their ability to assist U.S. authorities and overseas investors. For example, according to Article 177 of the PRC Securities Law which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. Accordingly, without the consent of the competent PRC securities regulators and relevant authorities, no organization or individual may provide the documents and material relating to securities business activities to overseas parties.\n\n \n\n65\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nAs a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of our board of directors or our large shareholders and limited remedies than they would as public shareholders of a company incorporated in the United States.\n\nCertain judgments obtained against us by our shareholders may not be enforceable.\n\nWe are an exempted company incorporated in the Cayman Islands and all of our assets are located outside of the United States.\n\nAll of our current operations are conducted in the PRC. In addition, all of our current directors and officers, namely Peiqing Tian, Yi Zuo, Shaoqing Jiang, Zongwei Li and Bing Yuan, reside within mainland China and Hong Kong and all of their assets are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers.\n\nIn addition, judgment of United States courts will not be directly enforced in Hong Kong. There are currently no treaties or other arrangements providing for reciprocal enforcement of foreign judgments between Hong Kong and the United States. There is uncertainty as to whether the courts of Hong Kong would (i) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or (ii) entertain original actions brought in Hong Kong against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States. A judgment of a court in the United States predicated upon U.S. federal or state securities laws may be enforced in Hong Kong at common law by bringing an action in a Hong Kong court on that judgment for the amount due thereunder, and then seeking summary judgment on the strength of the foreign judgment, provided that the foreign judgment, among other things, is (i) for a debt or a definite sum of money (not being taxes or similar charges to a foreign government taxing authority or a fine or other penalty) and (ii) final and conclusive on the merits of the claim, but not otherwise. Such a judgment may not, in any event, be so enforced in Hong Kong if (a) it was obtained by fraud; (b) the proceedings in which the judgment was obtained were opposed to natural justice; (c) its enforcement or recognition would be contrary to the public policy of Hong Kong; (d) the court of the United States was not jurisdictionally competent; or (e) the judgment was in conflict with a prior Hong Kong judgment. Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States. As a result, there is uncertainty as to the enforceability in Hong Kong, in original actions or in actions for enforcement, of judgments of United States courts of civil liabilities predicated solely upon the federal securities laws of the United States or the securities laws of any State or territory within the United States.\n\nWe are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.\n\nBecause we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:\n\n•\nthe rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;\n\n•\nthe sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;\n\n•\nthe sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and\n\n•\nthe selective disclosure rules by issuers of material nonpublic information under Regulation.\n\n \n\n66\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nIn addition, we intend to publish our results semiannually through press releases, distributed pursuant to the rules and regulations of the New York Stock Exchange. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information, which would be made available to you, were you investing in a U.S. domestic issuer.\n\nAs a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the corporate governance listing standards under the New York Stock Exchange; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the corporate governance listing standards under the New York Stock Exchange.\n\nAs a Cayman Islands company listed on New York Stock Exchange, we are subject to the corporate governance listing standards under the New York Stock Exchange. However, New York Stock Exchange Listed Company Manual permits a foreign private issuer like us to follow the corporate governance practices of its home country.\n\nCertain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the corporate governance listing standards under the New York Stock Exchange. Shareholders of exempted companies in the Cayman Islands like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest. We currently follow and intend to continue to follow Cayman Islands corporate governance practices in lieu of the corporate governance requirements of New York Stock Exchange that a listed company must have (i) a majority of the board be independent; (ii) an audit committee of at least three independent directors; and (iii) hold an annual meeting of shareholders no later than one year after the end of our fiscal year. Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States.\n\nTo the extent we choose to follow home country practice with respect to corporate governance matters, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.\n\nThe voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to vote your ordinary shares.\n\nHolders of ADSs do not have the same rights as our registered shareholders. As a holder of our ADSs, you will not have any direct right to attend general meetings of our shareholders or to cast any votes at such meetings. You will only be able to exercise the voting rights which are carried by the underlying ordinary shares represented by your ADSs indirectly by giving voting instructions to the depositary in accordance with the provisions of the deposit agreement. Under the deposit agreement, you may vote only by giving voting instructions to the depositary. Upon receipt of your voting instructions, the depositary will vote the underlying ordinary shares represented by your ADSs in accordance with these instructions. You will not be able to directly exercise your right to vote with respect to the underlying ordinary shares unless you withdraw such ordinary shares and become the registered holder of such ordinary shares prior to the record date for the general meeting. Under our second amended and restated memorandum and articles of association, the minimum notice period required to be given by our company to our registered shareholders for convening a general meeting is seven days.\n\n \n\n67\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nWhen a general meeting is convened, you may not receive sufficient advance notice of the meeting to withdraw the underlying ordinary shares represented by your ADSs and become the registered holder of such ordinary shares to allow you to attend the general meeting and to vote directly with respect to any specific matter or resolution to be considered and voted upon at the general meeting. In addition, under our second amended and restated memorandum and articles of association, for the purposes of determining those shareholders who are entitled to attend and vote at any general meeting, our directors may close our register of members and/or fix in advance a record date for such meeting, and such closure of our register of members or the setting of such a record date may prevent you from withdrawing the ordinary shares underlying your ADSs and becoming the registered holder of such shares prior to the record date, so that you would not be able to attend the general meeting or to vote directly. If we ask for your instructions, the depositary will notify you of the upcoming vote and will arrange to deliver our voting materials to you. We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the underlying ordinary shares represented by your ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions. This means that you may not be able to exercise your right to direct how the ordinary shares underlying your ADSs are voted and you may have no legal remedy if the ordinary shares underlying your ADSs are not voted as you requested.\n\nThe depositary for our ADSs will give us a discretionary proxy to vote the ordinary shares underlying your ADSs if you do not give voting instructions to the depositary to direct how the ordinary shares underlying your ADSs are voted, except in limited circumstances, which could adversely affect your interests.\n\nUnder the deposit agreement for the ADSs, if you do not give voting instructions to the depositary to direct how the ordinary shares underlying your ADSs are voted, the depositary will give us a discretionary proxy to vote the ordinary shares underlying your ADSs at shareholders’ meetings unless:\n\n•\nwe have failed to timely provide the depositary with notice of meeting and related voting materials;\n\n•\nwe have instructed the depositary that we do not wish a discretionary proxy to be given;\n\n•\nwe have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting;\n\n•\na matter to be voted on at the meeting would have a material adverse impact on shareholders; or\n\n•\nthe voting at the meeting is to be made on a show of hands.\n\nThe effect of this discretionary proxy is that if you do not give voting instructions to the depositary to direct how the ordinary shares underlying your ADSs are voted, you cannot prevent the ordinary shares underlying your ADSs from being voted, except under the circumstances described above. This may make it more difficult for shareholders to influence the management of our company. Holders of our ordinary shares are not subject to this discretionary proxy.\n\n \n\n68\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nYou may not receive dividends or other distributions on our ordinary shares and you may not receive any value for them, if it is illegal or impractical to make them available to you.\n\nThe depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on ordinary shares or other deposited securities underlying our ADSs, after deducting its fees and expenses. You will receive these distributions in proportion to the number of ordinary shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act but that are not properly registered or distributed under an applicable exemption from registration. The depositary may also determine that it is not feasible to distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may determine not to distribute such property. We have no obligation to register under U.S. securities laws any ADSs, ordinary shares, rights or other securities received through such distributions. We also have no obligation to take any other action to permit the distribution of ADSs, ordinary shares, rights or anything else to holders of ADSs. This means that you may not receive distributions we make on our ordinary shares or any value for them if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of our ADSs.\n\nYou may experience dilution of your holdings due to inability to participate in rights offerings.\n\nWe may, from time to time, distribute rights to our shareholders, including rights to acquire securities.\n\nUnder the deposit agreement, the depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exempt from registration under the Securities Act with respect to all holders of ADSs, or are registered under the provisions of the Securities Act.\n\nThe depositary may, but is not required to, attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unable to establish an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have a registration statement declared effective. Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings as a result.\n\nYou may be subject to limitations on transfer of your ADSs.\n\nYour ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including in connection with corporate events such as rights offering, during which time the depositary needs to maintain an exact number of ADS holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays. The depositary may refuse to deliver, transfer or register transfers of our ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.\n\n \n\n69\n\n \n\n[Table of Contents](#toc_page)"}