{"url_path":"/sec/fedu/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS","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":7873,"has_tables":true,"body_markdown":"ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS\n\nYou should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors” and elsewhere in this annual report.\n\nA. Operating Results\n\nOverview\n\nWe are dedicated to providing diversified learning solutions in China. Since our inception in 2007, we have witnessed tremendous developments in China’s learning industry and continued to upgrade our business strategies to capture the new opportunities brought by technology advance and evolving learning needs.\n\nWe started our business initially focusing on math education for elementary school students in Shanghai, from where we actively seeking to expand during the past years.\n\nWe always keep a keen prospective for the evolving and developing industry. In addition to the course offerings that target improving learners and customers’ academic performance, we also began to expand our offerings by introducing study camp and learning trip in the recent years. This expansion aligns with our broader vision of integrating education with travel, leveraging the increasing demand for immersive and interactive learning experiences. In compliance with regulatory policies promulgated in 2021, we ceased offering the K-9 Academic AST Services in mainland China at the end of 2021. We have since realigned our business focus towards learning services, tourism services, as well as learning technology and content solutions to capture evolving customer needs. We are hosting a series of study camps, learning trips and interest-oriented classes, and have continued to integrate technology with learning, promote industry innovation, and lead industry development form our inception.\n\n \n\n106\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nWe have shifted, and will continue to, shift our focus towards enrichment educational products and services, and explore other business opportunities by leveraging our educational resources accumulated over our operating history. Our revenue was RMB125.4 million in the 2024 fiscal year, RMB251.1 million in the 2025 fiscal year and RMB254.4 million (US$37.1 million) in the 2026 fiscal year, respectively. 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 the 2026 fiscal year. Our adjusted net income, which exclude share-based compensation expenses, unrealized holding gain in investments and impairment loss on long-lived assets (net of tax effect), was RMB5.7 million in the 2024 fiscal year, RMB2.4 million in the 2025 fiscal year, and RMB28.3 million (US$4.1 million) in the 2026 fiscal year, respectively.\n\nMajor Factors Affecting Our Results of Operations\n\nOur results of operations are affected by various general factors affecting the learning solution and enrichment activity market in China, which include changes in population growth, disposable income per capita and level of urbanization, changes in demand from individual learners or educational institutions for learning solutions, changes in regulatory, legal and public policy landscape, changes in technology development, and general economic and business conditions in China and globally. Adverse changes in any of these factors could materially and negatively affect demand for our products and services and our results of operations.\n\nWe believe that our results of operations are more directly affected by specific factors relating to our business, which are primarily as follows:\n\nOur ability to deliver high-quality products and services in our existing businesses\n\nHistorically, our success largely depends on our deep understanding of, and close relationship with, our learners and customers. We seek to continue to maintain our competitive advantages in our existing businesses.\n\nLearning Services. The performance of learning services hinges on the relevance and quality of the course content, the expertise and reputation of our instructors, and the effectiveness of our marketing and student recruitment efforts. Staying attuned to evolving customer demands and industry trends is crucial to ensuring the sustained competitiveness of our enrichment learning programs. Continuously investing in recruiting and retaining top-tier instructors, enhancing our curriculum design, and improving the technological infrastructure supporting our tutoring services are critical to driving enrollment and retention in this business segment. Maintaining the trust and satisfaction of students and parents is paramount for the success of our enrichment learning program offerings.\n\nTourism services. The results of operations of our trip-related services and study camp business depend on our abilities to retain existing participants and attract new ones by maintaining the consistency and quality of our services, successfully executing our pricing strategies, enhancing our operational efficiency, and to meet the evolving needs of our customers through introduction of new offerings and excellent experience. Our relationships with expanding pool of business partners serve as the foundation for us to provide a diverse selection of offerings from budget to premium products and services to satisfy the varied needs of our customers base.\n\nLearning technology and content solutions. The success of our learning technology and content solutions primarily depends on our abilities to continue to provide quality services to our existing customers leveraging our technology and content developing capabilities, in particular, to tailor our learning technology products and services to the needs of customers and to further develop our accumulated immense content library.\n\nWe believe our ability to deliver high-quality products and services well positions us to keep competitive in our existing businesses. However, any compromise in such ability may materially and adversely affect the success and growth of our existing businesses, thus negatively impacting our results of operations.\n\n \n\n107\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOur ability to broaden offerings of our learning solutions and enrichment activities\n\nOur results of operations are also affected by our ability to invest in and develop new service offerings and further penetrate our potential customer base.\n\nWe have accumulated deep understanding of China’s learning industry through years of operation and are well-positioned in delivering comprehensive learning services beyond traditional courses and textbooks. Going forward, we intend to further broaden our footprint and launch new products and services accommodating broader audience.\n\nOur ability to attract, train and retain talents\n\nTo manage and support our growth, it is critical for us to recruit, train and retain qualified talents, including teachers, research and development talents and management personnel, as well as other personnel in administrative and selling and marketing functions, in particular during the time as we are going through the transition of our business model.\n\nOur ability to attract, train and retain these qualified talents primarily depends on our ability to offer competitive compensation, effective and continued training opportunities and rotation opportunities within our organization as well as the development path to management opportunities.\n\nOur ability to manage costs and expenses\n\nOur ability to maintain and increase our operational efficiency also depends on our ability to effectively control our costs and expenses. Talent compensation is critical in ensuring development and delivery of high-quality products, contents and services. We offer competitive remuneration packages to attract and retain qualified personnel and expect to continue to do so in the future. Other important components of our costs and expenses include rental and operating expenses for our learning centers and study camps, as well as tourism related costs, such as transportation and accommodation expenses. As we continue to develop and expand our business, we expect our total costs and expenses will further increase, which is likely to be partially offset by our increasing economies of scale and improved operating efficiency.\n\nEconomy and travel industry trends\n\nOur tourism business is driven by the demand for travel services in China. Demand for travel services primarily depends on the growth of the economy. Economic growth generally stimulates willingness to pay for travel services and their affordability, thus helping increase travel frequency and spending.\n\nOur business and results of operations can be adversely affected by disruptions in the travel industry, such as (i) the outbreaks of pandemics, epidemics, or fear of spread of contagious diseases, (ii) geopolitical uncertainty, political unrest, or civil strife, (iii) natural disasters or poor weather conditions, such as hurricanes, earthquakes, or tsunamis, and (iv) any travel restrictions or other security procedures implemented in connection with any major events in key markets.\n\nSeasonality\n\nOur business is subject to seasonal fluctuations in demand for our travel products and services as well as our learning services. Typically, the second quarter of each fiscal year generates the highest portion of our annual net revenues. This is primarily driven by increased consumer demand for leisure travel during the summer months, especially among our core customer base in China. Additionally, demand for learning services tends to peak during the summer and winter break when students have more time to dedicate to extracurricular learning. We expect such seasonal fluctuations to continue to impact our future financial results.\n\n \n\n108\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nKey Components of Results of Operations\n\nRevenue\n\nIn the fiscal years ended February 29, 2024, February 28, 2025 and 2026, we generated total net revenues of RMB125.4 million, RMB251.1 million and RMB254.4 million (US$37.1 million), respectively.\n\nThe primary sources of our revenues included: (i) learning services, mainly enrichment learning services, (ii) tourism services, offers customized tourism services to travel agencies, corporate customers, and individuals, including but not limited to services like chartered bus service, itinerary route schedule, sightseeing tour guidance, accommodation arrangement and (iii) learning technology and content solutions, mainly include course design and development services, digital learning system, student management platform and promotional assistance for educational institutions and K-12 schools, staff outsourcing services, etc.. The table below sets forth a breakdown of our revenue for the periods indicated (net of VAT and related surcharges).\n\n \n\n \n\nFor the Years Ended\n\n \n\n \n\n \n\nFebruary 29,\n\n \n\n \n\nFebruary 28,\n\n \n\n \n\nFebruary 28,\n\n \n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\n2026\n\n \n\n \n\n \n\nRMB\n\n \n\n \n\n%\n\n \n\n \n\nRMB\n\n \n\n \n\n%\n\n \n\n \n\nRMB\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\n \n\n \n\n(in thousands, except for percentage)\n\n \n\nLearning services\n\n \n\n \n\n65,842\n\n \n\n \n\n \n\n52.5\n\n \n\n \n\n \n\n108,047\n\n \n\n \n\n \n\n43.0\n\n \n\n \n\n \n\n130,805\n\n \n\n \n\n \n\n19,074\n\n \n\n \n\n \n\n51.4\n\n \n\nTourism services\n\n \n\n \n\n51,880\n\n \n\n \n\n \n\n41.4\n\n \n\n \n\n \n\n138,295\n\n \n\n \n\n \n\n55.1\n\n \n\n \n\n \n\n118,365\n\n \n\n \n\n \n\n17,260\n\n \n\n \n\n \n\n46.5\n\n \n\nLearning Technology and content solutions\n\n \n\n \n\n7,978\n\n \n\n \n\n \n\n6.4\n\n \n\n \n\n \n\n5,174\n\n \n\n \n\n \n\n2.1\n\n \n\n \n\n \n\n5,560\n\n \n\n \n\n \n\n811\n\n \n\n \n\n \n\n2.2\n\n \n\nLess: sales tax\n\n \n\n \n\n255\n\n \n\n \n\n \n\n0.3\n\n \n\n \n\n \n\n440\n\n \n\n \n\n \n\n0.2\n\n \n\n \n\n \n\n286\n\n \n\n \n\n \n\n43\n\n \n\n \n\n \n\n0.1\n\n \n\nTotal\n\n \n\n \n\n125,445\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n \n\n251,076\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n \n\n254,444\n\n \n\n \n\n \n\n37,102\n\n \n\n \n\n \n\n100.0\n\n \n\nCost of Revenue\n\nOur cost of revenue primarily consists of (i) tourism services related expense, which primarily consist of tour travel expense, accommodation expense and transportation expenditures, (ii) staff costs, which primarily consist of teaching salaries and other benefits for the teachers and related service providing staff, (iii) rental, utilities and maintenance costs for the learning centers, and (iv) depreciation of study camps and leasehold improvement of learning centers. Our cost of revenue as a percentage of net revenues were 63.7%, 81.2% and 74.2% for the fiscal years ended February 29, 2024, February 28, 2025 and February 28, 2026, respectively. The table below sets forth a breakdown of our cost of revenue for the periods indicated:\n\n \n\n \n\nFor the Years Ended\n\n \n\n \n\n \n\nFebruary 29,\n\n \n\n \n\nFebruary 28,\n\n \n\n \n\nFebruary 28,\n\n \n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\n2026\n\n \n\n \n\n \n\nRMB\n\n \n\n \n\n%\n\n \n\n \n\nRMB\n\n \n\n \n\n%\n\n \n\n \n\nRMB\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\n \n\n \n\n(in thousands, except for percentage)\n\n \n\nTourism service related expense\n\n \n\n \n\n45,786\n\n \n\n \n\n \n\n57.3\n\n \n\n \n\n \n\n131,482\n\n \n\n \n\n \n\n64.5\n\n \n\n \n\n \n\n108,517\n\n \n\n \n\n \n\n15,824\n\n \n\n \n\n \n\n57.5\n\n \n\nStaff costs\n\n \n\n \n\n23,853\n\n \n\n \n\n \n\n29.8\n\n \n\n \n\n \n\n40,072\n\n \n\n \n\n \n\n19.6\n\n \n\n \n\n \n\n49,433\n\n \n\n \n\n \n\n7,208\n\n \n\n \n\n \n\n26.2\n\n \n\nRental, utilities and maintenance costs\n\n \n\n \n\n457\n\n \n\n \n\n \n\n0.6\n\n \n\n \n\n \n\n5,121\n\n \n\n \n\n \n\n2.5\n\n \n\n \n\n \n\n10,101\n\n \n\n \n\n \n\n1,473\n\n \n\n \n\n \n\n5.4\n\n \n\nDepreciation and amortization\n\n \n\n \n\n2,167\n\n \n\n \n\n \n\n2.7\n\n \n\n \n\n \n\n2,161\n\n \n\n \n\n \n\n1.1\n\n \n\n \n\n \n\n5,625\n\n \n\n \n\n \n\n820\n\n \n\n \n\n \n\n3.0\n\n \n\nOther expenses\n\n \n\n \n\n7,688\n\n \n\n \n\n \n\n9.6\n\n \n\n \n\n \n\n25,105\n\n \n\n \n\n \n\n12.3\n\n \n\n \n\n \n\n15,115\n\n \n\n \n\n \n\n2,204\n\n \n\n \n\n \n\n7.9\n\n \n\nTotal\n\n \n\n \n\n79,951\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n \n\n203,941\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n \n\n188,791\n\n \n\n \n\n \n\n27,529\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n \n\n109\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOperating Expenses\n\nOur operating expenses primarily consist of general and administrative expenses and sales and marketing expenses. The table below sets forth a breakdown of our operating expenses for the periods indicated:\n\n \n\n \n\nFor the Years Ended\n\n \n\n \n\n \n\nFebruary 29,\n\n \n\n \n\nFebruary 28,\n\n \n\n \n\nFebruary 28,\n\n \n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\n2026\n\n \n\n \n\n \n\nRMB\n\n \n\n \n\n%\n\n \n\n \n\nRMB\n\n \n\n \n\n%\n\n \n\n \n\nRMB\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\n \n\n \n\n(in thousands, except for percentage)\n\n \n\nGeneral and administrative expenses\n\n \n\n \n\n44,337\n\n \n\n \n\n \n\n81.0\n\n \n\n \n\n \n\n48,849\n\n \n\n \n\n \n\n77.7\n\n \n\n \n\n \n\n48,420\n\n \n\n \n\n \n\n7,060\n\n \n\n \n\n \n\n82.2\n\n \n\nSales and marketing expenses\n\n \n\n \n\n6,753\n\n \n\n \n\n \n\n12.3\n\n \n\n \n\n \n\n14,025\n\n \n\n \n\n \n\n22.3\n\n \n\n \n\n \n\n10,496\n\n \n\n \n\n \n\n1,530\n\n \n\n \n\n \n\n17.8\n\n \n\nImpairment loss on other long-lived assets\n\n \n\n \n\n3,674\n\n \n\n \n\n \n\n6.7\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nTotal\n\n \n\n \n\n54,764\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n \n\n62,874\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n \n\n58,916\n\n \n\n \n\n \n\n8,590\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\nGeneral and Administrative Expenses\n\nOur general and administrative expenses primarily consist of (i) staff costs and employee benefits for our executive, finance, legal, information technology, human resources and other administrative personnel, (ii) office rent, utility and other expenses, (iii) cost of third-party professional services, and (iv) share-based compensation expenses for our administrative personnel. Our general and administrative expense as a percentage of net revenues were 35.4%, 19.5% and 19.0% for the fiscal years ended February 29, 2024, February 28, 2025 and February 28, 2026, respectively.\n\nSales and Marketing Expenses\n\nSales and marketing expenses primarily consist of promotional and advertising expenses and salaries and benefits for our sales and marketing personnel. Historically, we have relied on word-of-mouth referrals for our student recruitment. As such, we have incurred relatively low sales and marketing expenses. Our selling and marketing expenses as a percentage of net revenues were 5.4%, 5.6% and 4.1% for the fiscal years ended February 29, 2024, February 28, 2025 and February 28, 2026, respectively.\n\nTaxation\n\nCayman Islands\n\nFour Seasons Education (Cayman) Inc. is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, Four Seasons Education (Cayman) Inc. is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands.\n\nHong Kong\n\nUnder the current Hong Kong Inland Revenue Ordinance, the Group’s subsidiary, Four Seasons Education (Hong Kong) Limited, which domiciled in Hong Kong, has introduced a two-tiered profits tax rate regime which is applicable to any year of assessment commencing on or after April 1, 2018. The profits tax rate for the first HK dollar 2,000 of profits of corporations will be lowered to 8.25%, while profits above that amount will continue to be subject to the tax rate of 16.5%. Additionally, payments of dividends by the subsidiary incorporated in Hong Kong to the Company are not subject to any Hong Kong withholding tax. No provision for Hong Kong Profits tax has been made in the consolidated financial statements as it has no assessable income for the years ended February 29, 2024, February 28, 2025 and 2026.\n\n \n\n110\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nPRC\n\nUnder the Law of the People’s Republic of China on Enterprise Income Tax (“EIT Law”), the Group’s subsidiaries and VIEs incorporated in the PRC are subject to statutory rate of 25%with the following exceptions.\n\nFor qualified small and low-profit enterprises, from January 1, 2023 to December 31, 2027, 25% of the first RMB3.0 million of the assessable profit before tax is subject to the tax rate of 20%. For the years ended February 29, 2024, February 28, 2025 and 2026, some PRC subsidiaries are qualified small and low-profit enterprises as defined, and thus are eligible for the above preferential tax rates for small and low-profit enterprises.\n\nWe are subject to VAT at a rate of 6%, less any deductible VAT we have already paid or borne. We are also subject to surcharges on VAT payments in accordance with PRC law. In addition, most of the VIEs involved in the non-diploma education service industry choose the simplified method of taxation where the VAT collection rate is 3%.\n\nAs a Cayman Islands holding company, we may receive dividends from our WFOE through Four Seasons Education HK. The PRC Enterprise Income Tax Law and its implementing rules provide that dividends paid by a PRC entity to a non-resident enterprise for income tax purposes is subject to PRC withholding tax at a rate of 10%, subject to reduction by an applicable tax treaty with China. Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10% if the Hong Kong enterprise directly holds at least 25% of the PRC enterprise. Pursuant to the Notice of the State Administration of Taxation on the Issues concerning the Application of the Dividend Clauses of Tax Agreements, or SAT Circular 81, a Hong Kong resident enterprise must meet the following conditions, among others, in order to apply the reduced withholding tax rate: (i) it must be a company; (ii) it must directly own the required percentage of equity interests and voting rights in the PRC resident enterprise; and (iii) it must have directly owned such required percentage in the PRC resident enterprise throughout the 12 months prior to receiving the dividends. In August 2015, the State Administration of Taxation promulgated the Administrative Measures for Non-Resident Taxpayers to Enjoy Treatment under Tax Treaties, or SAT Circular 60, which became effective on November 1, 2015. SAT Circular 60 provides that non-resident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax. Instead, non-resident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file the necessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. The State Administration of Taxation promulgated the Administrative Measures for Non-resident Taxpayers to Enjoy Treatment under Treaties, or SAT Circular 35, which became effective on January 1, 2020 and replaced the Circular 60. SAT Circular 35 reiterates that that non-resident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax and may apply the reduced withholding tax rate upon self-assessment. Comparing to the SAT Circular 60, the SAT Circular 35 does not require the non-resident enterprises to file the supporting documents when performing tax filing. Instead, the non-resident enterprises are required to retain the supporting documents for the post-tax filing examinations by the relevant tax authorities. Accordingly, Four Seasons Education HK may be able to benefit from the 5% withholding tax rate for the dividends it receives from Shanghai Fuxi, if it satisfies the conditions prescribed under SAT Circular 81 and other relevant tax rules and regulations. However, according to SAT Circular 81 and SAT Circular 35, if the relevant tax authorities consider the transactions or arrangements we have are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust the favorable withholding tax in the future.\n\nIf our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. 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.”\n\n \n\n111\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nCritical Accounting Estimates\n\nWe prepare our consolidated financial statements in accordance with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. We continually evaluate these judgments and estimates based on our own experience, knowledge and assessment of current business and other conditions, and our expectations regarding the future based on available information and assumptions that we believe to be reasonable. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.\n\nFor the year ended February 28, 2026, we identified no critical accounting estimates in the preparation of our financial statements.\n\nRecent Accounting Pronouncements\n\nA list of recent accounting announcements that are relevant to us is included in note 2(ae) to our consolidated financial statements included elsewhere in this annual report.\n\n \n\n112\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nResults of Operations\n\nThe table below sets forth a summary of our consolidated results of operations for the periods indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.\n\n \n\n \n\nFor the Years Ended\n\n \n\n \n\n \n\nFebruary 29,\n\n \n\n \n\nFebruary 28,\n\n \n\n \n\nFebruary 28,\n\n \n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\n2026\n\n \n\n \n\n \n\nRMB\n\n \n\n \n\n%\n\n \n\n \n\nRMB\n\n \n\n \n\n%\n\n \n\n \n\nRMB\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\n \n\n \n\n(in thousands, except for percentages)\n\n \n\nSummary Consolidated Statements of Operations:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nRevenue\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n--Revenue from third parties\n\n \n\n \n\n123,076\n\n \n\n \n\n98.1\n\n \n\n \n\n \n\n250,656\n\n \n\n \n\n99.8\n\n \n\n \n\n \n\n254,430\n\n \n\n \n\n \n\n37,100\n\n \n\n \n\n \n\n100.0\n\n \n\n--Revenue from related parties\n\n \n\n \n\n2,369\n\n \n\n \n\n1.9\n\n \n\n \n\n \n\n420\n\n \n\n \n\n0.2\n\n \n\n \n\n \n\n14\n\n \n\n \n\n \n\n2\n\n \n\n \n\n \n\n-\n\n \n\nTotal Revenue\n\n \n\n \n\n125,445\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n \n\n251,076\n\n \n\n \n\n \n\n100.0\n\n \n\n \n\n \n\n254,444\n\n \n\n \n\n \n\n37,102\n\n \n\n \n\n \n\n100.0\n\n \n\n--Cost of revenue from third parties\n\n \n\n \n\n(75,442\n\n)\n\n \n\n \n\n(60.1\n\n)\n\n \n\n \n\n(184,716\n\n)\n\n \n\n \n\n(73.5\n\n)\n\n \n\n \n\n(180,795\n\n)\n\n \n\n \n\n(26,363\n\n)\n\n \n\n \n\n(71.1\n\n)\n\n--Cost of revenue from related parties\n\n \n\n \n\n(4,509\n\n)\n\n \n\n \n\n(3.6\n\n)\n\n \n\n \n\n(19,225\n\n)\n\n \n\n \n\n(7.7\n\n)\n\n \n\n \n\n(7,996\n\n)\n\n \n\n \n\n(1,166\n\n)\n\n \n\n \n\n(3.1\n\n)\n\nCost of revenue\n\n \n\n \n\n(79,951\n\n)\n\n \n\n \n\n(63.7\n\n)\n\n \n\n \n\n(203,941\n\n)\n\n \n\n \n\n(81.2\n\n)\n\n \n\n \n\n(188,791\n\n)\n\n \n\n \n\n(27,529\n\n)\n\n \n\n \n\n(74.2\n\n)\n\nGross profit\n\n \n\n \n\n45,494\n\n \n\n \n\n \n\n36.3\n\n \n\n \n\n \n\n47,135\n\n \n\n \n\n \n\n18.8\n\n \n\n \n\n \n\n65,653\n\n \n\n \n\n \n\n9,573\n\n \n\n \n\n \n\n25.8\n\n \n\nOperating expenses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nGeneral and administrative expenses\n\n \n\n \n\n(44,337\n\n)\n\n \n\n \n\n(35.4\n\n)\n\n \n\n \n\n(48,849\n\n)\n\n \n\n \n\n(19.5\n\n)\n\n \n\n \n\n(48,420\n\n)\n\n \n\n \n\n(7,060\n\n)\n\n \n\n \n\n(19.0\n\n)\n\nSales and marketing expenses\n\n \n\n \n\n(6,753\n\n)\n\n \n\n \n\n(5.4\n\n)\n\n \n\n \n\n(14,025\n\n)\n\n \n\n \n\n(5.6\n\n)\n\n \n\n \n\n(10,496\n\n)\n\n \n\n \n\n(1,530\n\n)\n\n \n\n \n\n(4.1\n\n)\n\nImpairment loss on other long-lived assets\n\n \n\n \n\n(3,674\n\n)\n\n \n\n \n\n(2.9\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nOperating (loss) income\n\n \n\n \n\n(9,270\n\n)\n\n \n\n \n\n(7.4\n\n)\n\n \n\n \n\n(15,739\n\n)\n\n \n\n \n\n(6.3\n\n)\n\n \n\n \n\n6,737\n\n \n\n \n\n \n\n983\n\n \n\n \n\n \n\n2.7\n\n \n\nSubsidy income\n\n \n\n \n\n728\n\n \n\n \n\n \n\n0.6\n\n \n\n \n\n \n\n1,413\n\n \n\n \n\n \n\n0.6\n\n \n\n \n\n \n\n191\n\n \n\n \n\n \n\n28\n\n \n\n \n\n \n\n0.1\n\n \n\nInterest income, net\n\n \n\n \n\n7,235\n\n \n\n \n\n \n\n5.8\n\n \n\n \n\n \n\n16,200\n\n \n\n \n\n \n\n6.5\n\n \n\n \n\n \n\n6,006\n\n \n\n \n\n \n\n876\n\n \n\n \n\n \n\n2.3\n\n \n\nRealized gain (loss) in investments\n\n \n\n \n\n3,207\n\n \n\n \n\n \n\n2.6\n\n \n\n \n\n \n\n(3,062\n\n)\n\n \n\n \n\n(1.2\n\n)\n\n \n\n \n\n3,938\n\n \n\n \n\n \n\n574\n\n \n\n \n\n \n\n1.5\n\n \n\nUnrealized holding gain in investments\n\n \n\n \n\n3,910\n\n \n\n \n\n \n\n3.1\n\n \n\n \n\n \n\n2,022\n\n \n\n \n\n \n\n0.8\n\n \n\n \n\n \n\n2,438\n\n \n\n \n\n \n\n356\n\n \n\n \n\n \n\n1.0\n\n \n\nOther (expenses) income, net\n\n \n\n \n\n(1,434\n\n)\n\n \n\n \n\n(1.2\n\n)\n\n \n\n \n\n(739\n\n)\n\n \n\n \n\n(0.4\n\n)\n\n \n\n \n\n381\n\n \n\n \n\n \n\n55\n\n \n\n \n\n \n\n0.1\n\n \n\nInvestment income\n\n \n\n \n\n—\n\n \n\n \n\n \n\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\n \n\n \n\n177\n\n \n\n \n\n \n\n0.5\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\n—\n\n \n\n \n\n \n\n8,811\n\n \n\n \n\n \n\n1,284\n\n \n\n \n\n \n\n3.5\n\n \n\nImpairment loss on long-term investments\n\n \n\n \n\n(500\n\n)\n\n \n\n \n\n(0.5\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nIncome before income taxes\n\n \n\n \n\n3,876\n\n \n\n \n\n \n\n3.0\n\n \n\n \n\n \n\n95\n\n \n\n \n\n \n\n(0.0\n\n)\n\n \n\n \n\n29,726\n\n \n\n \n\n \n\n4,333\n\n \n\n \n\n \n\n11.7\n\n \n\nIncome tax expense\n\n \n\n \n\n(1,101\n\n)\n\n \n\n \n\n(0.9\n\n)\n\n \n\n \n\n(722\n\n)\n\n \n\n \n\n(0.2\n\n)\n\n \n\n \n\n(635\n\n)\n\n \n\n \n\n(93\n\n)\n\n \n\n \n\n(0.1\n\n)\n\nNet income (loss)\n\n \n\n \n\n2,775\n\n \n\n \n\n \n\n2.1\n\n \n\n \n\n \n\n(627\n\n)\n\n \n\n \n\n(0.2\n\n)\n\n \n\n \n\n29,091\n\n \n\n \n\n \n\n4,240\n\n \n\n \n\n \n\n11.6\n\n \n\n \n\nYear Ended February 28, 2026 Compared to Year Ended February 28, 2025\n\nRevenue\n\nOur total revenue increased by 1.3% to RMB254.4 million (US$37.1 million) in the 2026 fiscal year from RMB251.1 million in the 2025 fiscal year, mainly driven by the growth in our learning services due to our business expansion effort and partially offset by the decrease in tourism services.\n\n \n\n113\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nCost of Revenue\n\nOur total cost of revenue decreased by 7.4% from RMB203.9 million in the 2025 fiscal year to RMB188.8 million (US$27.5 million) in the 2026 fiscal year, primarily attributable to the decreases in costs related to our tourism services and partly offset by the increase in costs related to our learning services.\n\nGross Profit\n\nAs a result of the foregoing, our gross profit was RMB65.7 million (US$9.6 million) in the 2026 fiscal year, compared with RMB47.1 million in the 2025 fiscal year. Our gross margin was 18.8% and 25.8% in the 2025 and 2026 fiscal year, respectively. Our gross margin was 18.8% and 25.8% in the 2025 and 2026 fiscal year, respectively. The increase in gross profit was mainly driven by the growth in our learning services which had higher gross profit ratio.\n\nGeneral and Administrative Expenses\n\nOur general and administrative expenses decreased by 0.9% from RMB48.8 million in the 2025 fiscal year to RMB48.4 million (US$7.1 million) in the 2026 fiscal year.\n\nSales and Marketing Expenses\n\nOur sales and marketing expenses decreased by 25.2% from RMB14.0 million in the 2025 fiscal year to RMB10.5 million (US$1.5 million) in the 2026 fiscal year, mainly because of the decrease in labor costs and advertising expenses.\n\nNon-Operating Income (Expense)\n\nOur non-operating income (expense) was composed of gains from deregistration of subsidiaries, interest income, net, realized gain (loss) in investments, unrealized holding gain in investments, investment income, other (expense) income, net and subsidy income. Our non-operating income increased by 45.2% from RMB15.8 million in the 2025 fiscal year to RMB23.0 million (US$3.4 million) in the 2026 fiscal year, mainly attributable by gains from deregistration of subsidiaries and increase in realized gain in investments, partially offset by decrease in interest income, net.\n\nIncome Before Income Taxes\n\nAs a result of the foregoing, our income before income taxes was RMB29.7 million (US$4.3 million) in the 2026 fiscal year, compared to RMB0.1 million in the 2025 fiscal year.\n\nIncome tax expense\n\nOur income tax expense was RMB0.6 million (US$0.1 million) in the 2026 fiscal year, compared to RMB0.7 million in the 2025 fiscal year.\n\nNet Income (Loss)\n\nAs a result of the foregoing, we recorded net income of RMB29.1 million (US$4.2 million) in the 2026 fiscal year, compared to the net loss of RMB0.6 million in the 2025 fiscal year.\n\n \n\n \n\n114\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nYear Ended February 28, 2025 Compared to Year Ended February 29, 2024\n\nRevenue\n\nOur total revenue increased by 100.1% to RMB251.1 million in the 2025 fiscal year from RMB125.4 million in the 2024 fiscal year, mainly driven by the rapid growth in our tourism and learning services due to our business expansion effort.\n\nCost of Revenue\n\nOur total cost of revenue increased by 155.1% from RMB80.0 million in the 2024 fiscal year to RMB203.9 million in the 2025 fiscal year, primarily attributable to the increases in costs related to our tourism services, and in staff costs and learning centers operation costs of our learning services.\n\nGross Profit\n\nAs a result of the foregoing, our gross profit was RMB47.1 million in the 2025 fiscal year, compared with RMB45.5 million in the 2024 fiscal year. Our gross margin was 36.3% and 18.8% in the 2024 and 2025 fiscal year, respectively.\n\nGeneral and Administrative Expenses\n\nOur general and administrative expenses increased by 10.2% from RMB44.3 million in the 2024 fiscal year to RMB48.8 million in the 2025 fiscal year primarily due to increases in staff costs driven by the increased headcount of our administrative personnel to support our tourism services expansion and increased share-based compensation expenses as we newly granted share option and modified the exercise price of several previous share options.\n\nSales and Marketing Expenses\n\nOur sales and marketing expenses increased by 107.7% from RMB6.8 million in the 2024 fiscal year to RMB14.0 million in the 2025 fiscal year as we expanded headcounts of sales team to support our tourism service development and enhanced our marketing activities to expand our customer base of tourism services and enrichment learning services.\n\nNon-Operating Income (Expense)\n\nOur non-operating income (expense) was composed of interest income, net, realized gain (loss) in investments, unrealized holding gain in investments, impairment loss on long-term investments, subsidy income and other (expense) income, net. Our non-operating income (expense) increased by 20.4% from RMB13.1 million in the 2024 fiscal year to RMB15.8 million in the 2025 fiscal year, mainly attributable by increase in interest income and partially offset by increase in realized loss in investments.\n\nIncome Before Income Taxes\n\nAs a result of the foregoing, our income before income taxes was RMB0.1 million (US$0.01 million) in the 2025 fiscal year, compared to RMB3.9 million in the 2024 fiscal year.\n\nIncome tax expense\n\nOur income tax expense decreased by 34.4% from RMB1.1 million in the 2024 fiscal year to RMB0.7 million in the 2025 fiscal year.\n\n \n\n115\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nNet Income (Loss)\n\nAs a result of the foregoing, we recorded net loss of RMB0.6 million in the 2025 fiscal year, compared to the net income of RMB2.8 million in the 2024 fiscal year.\n\nNon-GAAP Measures\n\nWe use adjusted net income (loss), a non-GAAP financial measure, in the evaluation of our operating results and in our financial and operational decision-making.\n\nAdjusted net income (loss) represents net income (loss) before the impact of (i) share-based compensation expenses; (ii) unrealized holding (loss) gain in investments; and (iii) impairment loss on long-lived assets. We believe that adjusted net income (loss) helps us identify underlying trends in our business that could otherwise be distorted by the effect of certain expenses that we include in net income (loss).\n\nAdjusted net income (loss) should not be considered in isolation or construed as an alternative to net income (loss) or any other measure of performance or as an indicator of our operating performance. Investors are encouraged to compare the historical non-GAAP financial measures with the most directly comparable GAAP measures. Adjusted net income (loss) presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.\n\nThe table below sets forth a reconciliation of our net income (loss) to adjusted net income for the periods indicated:\n\n \n\n \n\nFor the Years Ended\n\n \n\n \n\n \n\nFebruary 29,\n\n \n\n \n\nFebruary 28,\n\n \n\n \n\nFebruary 28,\n\n \n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\n2026\n\n \n\n \n\n \n\nRMB\n\n \n\n \n\nRMB\n\n \n\n \n\nRMB\n\n \n\n \n\nUS$\n\n \n\n \n\n \n\n(in thousands)\n\n \n\nNet income (loss)\n\n \n\n \n\n2,775\n\n \n\n \n\n \n\n(627\n\n)\n\n \n\n \n\n29,091\n\n \n\n \n\n \n\n4,240\n\n \n\nAdd: share-based compensation expenses (net of tax effect of nil)\n\n \n\n \n\n3,122\n\n \n\n \n\n \n\n5,026\n\n \n\n \n\n \n\n1,651\n\n \n\n \n\n \n\n241\n\n \n\nAdd: Unrealized holding gain in investments (net of tax effect of nil)\n\n \n\n \n\n(3,910\n\n)\n\n \n\n \n\n(2,022\n\n)\n\n \n\n \n\n(2,438\n\n)\n\n \n\n \n\n(356\n\n)\n\nAdd: impairment loss on long-lived assets (net of tax effect of nil)\n\n \n\n \n\n3,674\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nAdjusted net income (non-GAAP)\n\n \n\n \n\n5,661\n\n \n\n \n\n \n\n2,377\n\n \n\n \n\n \n\n28,304\n\n \n\n \n\n \n\n4,125\n\n \n\n \n\nB. Liquidity and Capital Resources\n\nCash Flows and Working Capital\n\nOur principal sources of liquidity have been cash generated from operating activities, net proceeds we received from our initial public offering, and to a lesser extent, proceeds from the issuance of our convertible redeemable preferred shares.\n\n \n\n116\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nAs of February 28, 2025 and 2026, we had RMB210.8 million and RMB136.2 million (US$19.9 million), respectively, in cash and cash equivalents. Cash and cash equivalents consist of cash on hand, cash in bank, time deposits with original maturities of three months or less when purchased and floating rate financial instruments which are unrestricted as to withdrawal or use. Our cash and cash equivalents are primarily denominated in Renminbi. Historically, we have financed our operations through cash generated from operating activities and net proceeds we received from our initial public offering. We intend to finance our future working capital requirements and capital expenditures from cash generated from operating activities and from the funds raised from financing activities, including the net proceeds we received from our initial public offering and fixed assets loan with China Merchants Bank. We believe that our available cash and cash equivalents will be sufficient to meet our working capital requirements and capital expenditures in the ordinary course of business for the next twelve months.\n\nHowever, we may require additional cash resources due to changing business conditions or other future developments, including any investments or acquisitions we may decide to selectively pursue. If our existing cash resources are insufficient to meet our requirements, we may seek to sell equity or equity-linked securities, sell debt securities or borrow from banks. We cannot assure you that financing will be available in the amounts we need or on terms acceptable to us, if at all. The sale of additional equity securities, including convertible debt securities, would result in additional dilution to our shareholders. The incurrence of indebtedness and issuance of debt securities would result in debt service obligations and could result in operating and financial covenants that restrict our operations and our ability to pay dividends to our shareholders.\n\nAs a holding company with no material operations of our own, we are a corporation separate and apart from our subsidiaries and the VIEs and, therefore, must provide for our own liquidity. We conduct our operations in China primarily through our PRC subsidiaries and the VIEs. As a result, our ability to pay dividends and to finance any debt we may incur depends upon dividends paid by our subsidiaries. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our PRC subsidiaries are permitted to pay dividends to us only out of their respective retained earnings, if any, as determined in accordance with Chinese accounting standards and regulations.\n\nUnder applicable PRC laws and regulations, our PRC subsidiaries are each required to set aside a portion of its after tax profits each year to fund certain statutory reserves, and funds from such reserves may not be distributed to us as cash dividends except in the event of liquidation of such subsidiaries. These statutory limitations affect, and future covenant debt limitations might affect, our PRC subsidiaries’ ability to pay dividends to us. As a result of the foregoing PRC laws and regulations, our PRC subsidiaries and the VIEs are restricted from transferring a portion of their net assets to us. The amounts restricted include paid-in capital and the statutory reserves of the VIEs without considering the effect of elimination upon consolidation during the relevant period. As of February 28, 2026, total restricted net assets were RMB89.5 million (US$13.0 million). We currently believe that such limitations will not impact our ability to meet our ongoing short-term cash obligations although we cannot assure you that such limitations will not affect our ability to meet our short-term cash obligations and to distribute dividends to our shareholders in the future.\n\nThe following table sets forth a summary of our cash flows for the periods indicated:\n\n \n\n \n\nFor the Years Ended\n\n \n\n \n\n \n\nFebruary 29,\n\n \n\n \n\nFebruary 28,\n\n \n\n \n\nFebruary 28,\n\n \n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\n2026\n\n \n\n \n\n \n\nRMB\n\n \n\n \n\nRMB\n\n \n\n \n\nRMB\n\n \n\n \n\nUS$\n\n \n\n \n\n \n\n(in thousands)\n\n \n\nNet cash provided by operating activities\n\n \n\n \n\n16,556\n\n \n\n \n\n \n\n20,005\n\n \n\n \n\n \n\n30,029\n\n \n\n \n\n \n\n4,378\n\n \n\nNet cash provided by (used in) investing activities\n\n \n\n \n\n71,481\n\n \n\n \n\n \n\n2,525\n\n \n\n \n\n \n\n(108,081\n\n)\n\n \n\n \n\n(15,761\n\n)\n\nNet cash provided by financing activities\n\n \n\n \n\n41,268\n\n \n\n \n\n \n\n12,367\n\n \n\n \n\n \n\n9,062\n\n \n\n \n\n \n\n1,321\n\n \n\nEffect of foreign exchange rate changes\n\n \n\n \n\n(4,117\n\n)\n\n \n\n \n\n2,152\n\n \n\n \n\n \n\n(3,761\n\n)\n\n \n\n \n\n(546\n\n)\n\nNet increase (decrease) in cash and cash equivalents and restricted cash\n\n \n\n \n\n125,188\n\n \n\n \n\n \n\n37,049\n\n \n\n \n\n \n\n(72,751\n\n)\n\n \n\n \n\n(10,608\n\n)\n\nCash and cash equivalents and restricted cash at beginning of the year\n\n \n\n \n\n177,058\n\n \n\n \n\n \n\n302,246\n\n \n\n \n\n \n\n339,295\n\n \n\n \n\n \n\n49,475\n\n \n\nCash and cash equivalents and restricted cash at end of the year\n\n \n\n \n\n302,246\n\n \n\n \n\n \n\n339,295\n\n \n\n \n\n \n\n266,544\n\n \n\n \n\n \n\n38,867\n\n \n\n \n\n \n\n117\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOperating Activities\n\nNet cash provided by operating activities amounted to RMB30.0 million (US$4.4 million) in the 2026 fiscal year. It reflected the net income of RMB29.1 million (US$4.2 million), primarily adjusted by: (i) amortization expense of right-of-use assets of RMB11.0 million (US$1.6 million), (ii) decrease in other receivables, deposits and other assets of RMB7.3 million (US$1.1 million), (iii) depreciation of property and equipment of RMB6.2 million (US$0.9 million), (iv) provision for credit losses of RMB 2.2 million (US$0.3 million), (v) increase in deferred revenue of RMB2.2 million (US$0.3 million), (vi) share-based compensation of RMB1.7 million (US$0.2 million) and (vii) decrease in amounts due from related parties of RMB0.6 million (US$0.1 million); partially offset by (i) decrease in accrued expenses and other current liabilities of RMB7.0 million (US$1.0 million), (ii) decrease in operating lease liabilities of RMB10.4 million (US$1.5 million), (iii) gains from deregistration of subsidiaries of RMB8.8 million (US$1.3 million), (iv) fair value changes of investments of RMB2.4 million (US$0.4 million), (v) increase in accounts receivable of RMB1.1 million (US$0.2 million) and (vi) increase in other non-current assets of RMB1.1 million (US$0.2 million).\n\nNet cash provided by operating activities amounted to RMB20.0 million in the 2025 fiscal year. It reflected the net loss of RMB0.6 million, primarily adjusted by: (i) increase in deferred revenue of RMB9.9 million, (ii) amortization expense of right-of-use assets of RMB8.0 million, (iii) share-based compensation of RMB5.0 million, (iv) decrease in amount due from related parties of RMB4.5 million; (v) increase in accounts payable of RMB3.7 million; (vi) depreciation of property and equipment of RMB3.6 million; (vii) increase in accrued expenses and other current liabilities of RMB2.9 million; (viii) increase in amounts due to related parties of RMB2.1 million and (ix) decrease in accounts receivable of RMB1.2 million, partially offset by (i) increase in other receivables, deposits and other assets of RMB10.5 million, (ii) decrease in operating lease liabilities of RMB7.1 million and (iii) fair value changes of investments of RMB2.0 million and (iv) increase in other non-current assets of RMB1.4 million.\n\nNet cash provided by operating activities amounted to RMB16.6 million in the 2024 fiscal year. It reflected the net income of RMB2.8 million, primarily adjusted by: (i) increase in deferred revenue of RMB10.4 million, (ii) amortization expense of right-of-use assets of RMB4.0 million, (iii) depreciation of property and equipment of RMB3.7 million, (iv) loss from property and equipment impairment of RMB3.7 million, (v) share-based compensation of RMB3.1 million, (vi) decrease in amount due from related parties of RMB2.9 million, (vii) increase in amount due to related parties of RMB1.1 million and (viii) increase in income tax payable of RMB1.0 million; partially offset by (i) increase in other receivables, deposits and other assets of RMB7.1 million, (ii) fair value changes of investments of RMB3.9 million, (iii) decrease in operating lease liabilities of RMB3.2 million and (iv) loss from deregistration of subsidiaries of RMB2.2 million.\n\nInvesting Activities\n\nNet cash used in investing activities amounted to RMB108.1 million (US$15.8 million) in the 2026 fiscal year. This was primarily attributable to: (i) purchases of short-term investments under fair value of RMB553.5 million (US$80.7 million), (ii) purchases of long-term investments under fair value of RMB140.2 million (US$20.5 million), (iii) payments of long-term investments of RMB9 million (US$1.3 million) and (iv) purchase of property and equipment of RMB6.3 million (US$0.9 million); partially offset by proceeds from maturity of investments of RMB602.4 million (US$87.8 million).\n\nNet cash provided by investing activities amounted to RMB2.5 million in the 2025 fiscal year. This was primarily attributable to proceeds from maturity of investments of RMB207.0 million, and offset by (i) purchases of long-term investments under fair value of RMB85.6 million, (ii) purchase of property and equipment of RMB57.3 million, (iii) purchases of short-term investments under fair value of RMB34.3 million, and (iv) purchase of short-term investments of RMB27.7 million.\n\n \n\n118\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nNet cash provided by investing activities amounted to RMB71.5 million in the 2024 fiscal year. This was primarily attributable to (i) proceeds from maturity of investments of RMB351.8 million and (ii) collection of loans to related parties of RMB5.3 million, and offset by (i) purchases of short-term investments under fair value of RMB103.1 million, (ii) purchases of long-term investments under fair value of RMB93.3 million, (iii)purchase of property and equipment of RMB56.6 million, (iv) purchase of short-term investments of RMB18.9 million, (v) payments to long-term investments of RMB9.0 million, and (vi) loans to related parties of RMB4.8 million.\n\nFinancing Activities\n\nNet cash provided by financing activities amounted to RMB9.1 million (US$1.3 million) in the 2026 fiscal year. This was primarily attributable to (i) proceeds from long-term borrowings of RMB7.9 million (US$1.1 million) and (ii) capital contribution from non-controlling shareholders of RMB1.3 million (US$ 0.2 million).\n\nNet cash provided by financing activities amounted to RMB12.4 million in the 2025 fiscal year. This was primarily attributable to (i) proceeds from bank loan of RMB42.1 million; net proceeds from option exercised of RMB4.8 million, and offset by dividends payments of RMB34.9 million.\n\nNet cash provided by financing activities amounted to RMB41.3 million in the 2024 fiscal year. This was primarily attributable to proceeds from bank loan of RMB40.0 million and proceeds from related parties loans of RMB1.6 million.\n\nIn December, 2023, we entered into a fixed asset loan agreement with China Merchants Bank in the amount of RMB90 million. As of February 28, 2026, we had withdrawn RMB90.0 million (US$13.1 million) from the loan in China Merchants Bank Co., Ltd. Shanghai Branch with maturity date in December, 2030, including RMB1.3 million (US$0.2 million) with an effective interest rate of 3.60%, RMB61.3 million (US$8.9 million) with an effective interest rate of 3.40% and RMB19.5 million (US$2.8 million) with an effective interest rate of 3.35% and RMB 7.9 million (US$1.1 million) with an effective interest rate of 3.25%. Loan is uncommitted fully cash backed, with restricted cash amount of RMB129.5 (US$18.9) as of February 28, 2026.\n\nMaterial Cash Requirements\n\nOur material cash requirements as of February 28, 2026 primarily include our working capital needs, capital expenditures, long-term borrowing repayments, and lease obligations.\n\nOur capital expenditures amounted to RMB56.6 million, RMB57.3 million and RMB2.2 million (US$0.3 million) in the 2024, 2025, 2026 fiscal year, respectively. Our capital expenditures were primarily related to construction and development of study camps and leasehold improvements.\n\nThe following table sets forth our contractual obligations as of February 28, 2026:\n\n \n\n \n\nPayment Due by Period\n\n \n\n \n\n \n\nLess Than\n\n \n\n \n\nMore than\n\n \n\n \n\n \n\nTotal\n\n \n\n \n\n1 Year\n\n \n\n \n\n1-3 Years\n\n \n\n \n\n3-5 years\n\n \n\n \n\n5 years\n\n \n\n \n\n \n\nRMB\n\n \n\n \n\nUS$\n\n \n\n \n\nRMB\n\n \n\n \n\nRMB\n\n \n\n \n\nRMB\n\n \n\n \n\nRMB\n\n \n\n \n\n \n\n(in thousands)\n\n \n\nLease Obligations(1)\n\n \n\n \n\n17,789\n\n \n\n \n\n \n\n2,594\n\n \n\n \n\n \n\n10,195\n\n \n\n \n\n \n\n6,908\n\n \n\n \n\n \n\n686\n\n \n\n \n\n \n\n—\n\n \n\nLong-term borrowing(2)\n\n \n\n \n\n90,000\n\n \n\n \n\n \n\n13,123\n\n \n\n \n\n \n\n9,000\n\n \n\n \n\n \n\n18,000\n\n \n\n \n\n \n\n63,000\n\n \n\n \n\n \n\n—\n\n \n\nTotal\n\n \n\n \n\n107,789\n\n \n\n \n\n \n\n15,717\n\n \n\n \n\n \n\n19,195\n\n \n\n \n\n \n\n24,908\n\n \n\n \n\n \n\n63,686\n\n \n\n \n\n \n\n—\n\n \n\n(1) Represents obligations under lease agreements for our office premises.\n\n(2) As of February 28, 2026, we had long-term borrowings amounted to RMB90 million (US$13.1 million) and are expected to be paid from June 25, 2026 to December 15, 2030.\n\n \n\n119\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nWe intend to fund our existing and future material cash requirements primarily with anticipated cash flows from our existing cash balance and other financing alternatives. We will continue to make cash commitments, including capital expenditures, to support the growth of our business.\n\nWe have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity, or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.\n\nOther than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of February 28, 2026.\n\nOff-balance Sheet Arrangements\n\nWe have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any unconsolidated third parties. In addition, we have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity, or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.\n\nHolding Company Structure\n\nWe are a holding company with no material operations of our own. We conduct our operations primarily through our subsidiaries and the VIEs. As a result, our ability to pay dividends depends upon dividends paid by our subsidiaries, which in turn depends on the service fees paid to Shanghai Fuxi by the VIEs. In the 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. Although we plan to continue to invest in and expand our PRC operations indefinitely, our WFOE may receive service fees from the VIEs and we may rely on dividends from our WFOE and other PRC subsidiaries for our cash needs in the future. Furthermore, if our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us.\n\nEven though we currently do not require any such dividends, loans or advances from our entities for working capital and other funding purposes, we may in the future require additional cash resources from them due to changes in business conditions, to fund future acquisitions and development, or merely to declare and pay dividends or distributions to our shareholders.\n\nWe operate and generate all of our revenue in the PRC. The VIEs in the PRC contributed 99.3%, 99.8% and 99.9% of our consolidated revenue for the years ended February 29, 2024, February 28, 2025 and 2026, respectively.\n\n \n\n120\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOur assets are located in the Cayman Islands, the PRC and Hong Kong. As of February 28, 2026, 49.7% of our total assets were located in the PRC, 49.8% of our total assets were located in the Cayman Islands and 0.5% of our total assets were located in Hong Kong. The table below sets forth the respective asset contributions of (i) our company and our subsidiaries and (ii) the VIEs in the PRC for the periods indicated as a percentage of total assets:\n\n \n\n \n\nAssets\n\n \n\n \n\n \n\nFor the Years Ended\n\n \n\n \n\n \n\nFebruary 28,\n\n \n\n \n\nFebruary 28,\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2026\n\n \n\nOur Company and our subsidiaries\n\n \n\n \n\n \n\n \n\n \n\n \n\nFour Seasons Education Cayman\n\n \n\n \n\n51.2\n\n%\n\n \n\n \n\n49.8\n\n%\n\nFour Seasons Education HK and other subsidiaries\n\n \n\n \n\n1.2\n\n%\n\n \n\n \n\n1.5\n\n%\n\nShanghai Fuxi\n\n \n\n \n\n14.0\n\n%\n\n \n\n \n\n12.0\n\n%\n\nOur variable interest entities\n\n \n\n \n\n33.6\n\n%\n\n \n\n \n\n36.7\n\n%\n\nTotal assets\n\n \n\n \n\n100.0\n\n%\n\n \n\n \n\n100.0\n\n%\n\n \n\n* The percentages given exclude inter-company transactions among Four Season Education (Cayman) Inc., its subsidiaries and its variable interest entities.\n\nC. Research and Development, Patents and Licenses, etc.\n\nResearch and Development\n\nAll costs that are incurred in connection with the planning and implementation phases of the development of software for internal use are expensed. Costs incurred in the development phase are capitalized and amortized over the estimated useful life. No costs were capitalized for any of the periods presented.\n\nCosts incurred internally in researching and developing a software product to be sold, leased or marketed are charged to expense as research and development costs prior to technological feasibility being established for the product. Once technological feasibility is established, all software costs are capitalized until the product is available for general release to customers. Technological feasibility is established upon completion of all the activities that are necessary to substantiate that the software product can be produced in accordance with its design specifications, including functions, features, and technical performance requirements. No costs were capitalized for any of periods presented.\n\nIntellectual Property\n\nSee “Item 4. Information on the Company — B. Business Overview — Intellectual Property.”\n\nD. Trend Information\n\nOther than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the fiscal year ended February 28, 2026 that are reasonably likely to have a material adverse effect on our net revenue, income, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial conditions.\n\nE. Critical Accounting Estimates\n\nFor our critical accounting estimates, see “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Critical Accounting Estimates.”\n\n \n\n \n\n121\n\n \n\n[Table of Contents](#toc_page)"}