{"url_path":"/sec/lxeh/10-k/2026/item-4","section_key":"item-4","section_title":"Item 4 INFORMATION ON THE COMPANY**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-12","source_url":"https://www.sec.gov/Archives/edgar/data/1814067/0001213900-26-055168-index.html","accession_number":"0001213900-26-055168","cik":"0001814067","ticker":"LXEH","issuer_name":"Lixiang Education Holding Co. Ltd.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1814067/0001213900-26-055168-index.html","primary_entity_key":"0001814067","primary_entity_name":"Lixiang Education Holding Co. Ltd."},"word_count":32082,"has_tables":true,"body_markdown":"**ITEM 4. INFORMATION ON THE COMPANY**\n\n** **\n\n**A. History and Development of the Company**\n\n \n\nLixiang Education Holding\nCo., Ltd. was incorporated as an exempted company under the laws of the Cayman Islands with limited liability in September 2018, to be\nour holding company. We conduct business through our PRC subsidiaries and the VIEs with which we have a series of contractual arrangements.\nOn October 1, 2020, our ADSs commenced trading on the Nasdaq Global Market under the symbol “LXEH.” We raised from our\ninitial public offering approximately US$26.2 million in net proceeds after deducting underwriting commission and related costs\nand expenses.\n\n \n\nPrior to August 31,\n2021, we and the VIEs primarily operated primary and secondary school in Baiyun campus and Yijing campus—Featured Division of Lianwai\nSchool through a series of contractual arrangements between us and the VIEs. Under the 2021 Implementation Rules which took effect on\nSeptember 1, 2021, social organizations and individuals are prohibited from controlling a private school that provides compulsory\neducation by means of, among others, merger, acquisition, and contractual arrangements, and a private school providing compulsory education\nis prohibited from conducting transactions with its related party. In particular, the prohibition over related party transactions has\nsignificantly affected the enforceability of the exclusive management services and business cooperation agreements among Liandu WFOE\nand Lianwai School providing compulsory education. Therefore, we re-assessed our control over Lianwai School. Based on the relevant accounting\nstandard in accordance with U.S. GAAP, we have concluded that we have lost control of Lianwai School since August 31, 2021, in view of\nthe significant uncertainties and restrictions the 2021 Implementation Rules impose on our ability to direct the range of ongoing activities\nthat would most significantly impact the returns of Lianwai School. In light of such regulatory developments, on April 20, 2022,\nwe entered into an acknowledgment agreement of contractual agreements with Lianwai School and respective directors, to confirm all the\nterms of rights and obligations relating to Lianwai School and the directors appointed by the sponsor under the contractual arrangements\nin relation to Lianwai School, and agree among the parties that such arrangements shall have been terminated on August 31, 2021.\nTo minimize disruptions to existing students enrolled in Lianwai School, we and the VIEs continued to offer essential services to the\nstudents. We deconsolidated Lianwai School commencing from September 1, 2021 and presented it as a discontinued operation in current\nand comparative period financial statements.\n\n \n\nOn August 18, 2021,\nLishui Mengxiang entered into a sponsorship interests transfer agreement with Qingtian Zhongyi Education Investment in respect of the\nacquisition of 100% of the sponsorship interests of Qingtian International School in Lishui City, Zhejiang Province, an educational institution\nspecialized in providing high school education to students from the families of overseas Chinese returnees, for a total consideration\nof RMB23 million. On August 24, 2021, the alteration registration of the sponsorship interests of Qingtian International School\nwas completed and Lishui Mengxiang started to hold 100% of the sponsorship interests of Qingtian International School. The transaction\nwas closed in November 2021. On April 20, 2022, Liandu WFOE entered into a series of contractual arrangements, or the VIE structure,\nwith Lishui Mengxiang, Qingtian International School, shareholders of Lishui Mengxiang and the Council Members of Qingtian International\nSchool with respect to the operation of Qingtian International School. Liandu WFOE later entered into an updated series of contractual\narrangements with respect to the operation of Qingtian International School on January 31, 2023, due to the change of shareholders of\nLishui Mengxiang, which took effect on December 16, 2022 and replaced the previous ones in their entirety. On January 15, 2024, Lishui\nMengxiang entered into a definitive agreement to transfer 100% of the sponsorship interests of Qingtian International School to Qiaoxiang\nEducation, an entity affiliated with Mr. Biao Wei, a director and the Chief Executive Officer of the Company, for a consideration of\nRMB23,161,000. The transfer of the sponsorship interests has been approved by the audit committee and the board of directors of the Company.\nThe completion of the transfer would be subject to the terms and conditions of the definitive agreement, including the registration of\nchange of sponsorship of the school with competent authorities of Qingtian county, Zhejiang province, China. As of the date of the annual\nreport on Form 20-F, we and the VIEs are still in the process to complete such registration. On April 2, 2024, Liandu WFOE, Lishui Mengxiang,\nQingtian International School, the shareholders of Lishui Mengxiang and the Council Members of Qingtian International School entered\ninto the Acknowledgment Agreement of Contractual Agreements of Qingtian Overseas Chinese Experimental High School, pursuant to which\nrights and obligations under contractual arrangements with respect to Qingtian International School were actually terminated on December\n31, 2023. We deconsolidated the results of Qingtian International School in our consolidated financial statements since December 31,\n2023.\n\n \n\n82\n\n \n\n \n\nIn order to fully utilize\nthe existing educational resources and meet the demand of society for high-quality high school education, Lishui International School\nwas established in June 2023. On April 2, 2024, Liandu WFOE entered into a series of contractual arrangements with respect to the operation\nof Lishui International School, pursuant to which the sponsorship of Lishui International School by Lishui Mengxiang was agreed to be\neffective on June 25, 2023. Lishui International School is a full-time boarding high school which provides education programs to students\nfrom the families of overseas Chinese returnees in preparation for relevant entrance exams to enter top universities in China. The school\nhas started to enroll students in the fall of 2023.\n\n \n\nWe have also explored and\nconsidered business opportunities beyond high school education, including expansion into online education and vocational education.\n\n \n\nIn February 2021, Liandu\nWFOE completed the acquisition of 100% equity stake in Hangzhou Youxi, developer of five software with computer software copyright, including\namong others live streaming supervision system, Android live streaming system, and Apple live streaming system, etc., to expand into\nthe business of online education. The total consideration of the acquisition was RMB300,000 in cash.\n\n \n\nIn January 2022, Lishui\nMengxiang formed Beijing Xinxiang with Beijing R.R.Z. to provide vocational education in the healthcare industry, offering students training\nin the fields of nursing, emergency rescue and rehabilitation care. Lishui Mengxiang has made an equity capital contribution of RMB4,300,000\nto Beijing Xinxiang in exchange for 43% equity interests in Beijing Xinxiang. Given that the board of directors of Beijing Xinxiang consists\nof five members, three of which shall be appointed by Lishui Mengxiang, we are regarded as the primary beneficiary of Beijing Xinxiang\nthrough Lishui Mengxiang under U.S. GAAP as Lishui Mengxiang holds more than half of the voting power of the board of directors of Beijing\nXinxiang. Therefore, the financial statements of Beijing Xinxiang have been consolidated in our annual report since the year ended December 31,\n2022. Given the relatively small scale and limited growth potential of Beijing Xinxiang, we deregistered Beijing Xinxiang in June 2024\nas a part of our plan on restructuring and resources reallocation. The deregistration procedures were completed on June 17, 2024.\n\n \n\nTo expand our and the VIEs’\nbusiness into vocational education, Lishui Mengxiang entered into definitive agreements to acquire 100% of the equity interests of Beijing\nP.X. on January 1, 2022, which was a wholly-owned subsidiary of Beijing S.K. at the time, so that after the transaction, Lishui Mengxiang\nthrough its shareholding of Beijing P.X. would in turn hold 100% of the equity interests of Chuangmei Weiye and Hainan Jiangcai, and\n100% of the sponsorship interests of Langfang School. The acquisition was completed in May 2022. As of the date of the annual report\non Form 20-F, the administrative procedures with the PRC governmental authorities to amend the registration reflecting the result of\nthe acquisition of Langfang School have not been completed due to the internal procedures of the competent authorities and we and the\nVIEs are still in the process of active communication with such local authorities. On November 5, 2023, Lishui Mengxiang elected to exercise\nthe right to sell 100% of the equity interests of Chuangmei Weiye back to Beijing S.K. and its affiliates pursuant to that certain supplementary\nagreement by and among Lishui Mengxiang, Beijing S.K., certain affiliates of Beijing S.K. and Beijing P.X. dated August 20, 2023, primarily\ndue to the substantial amount of Chuangmei Weiye’s historical debts. The equity interests of Chuangmei Weiye were transferred back\nto Beijing S.K. ’s affiliates at a price of RMB6.36 million and the transfer was completed on November 9, 2023. After the transaction,\nthe amount of RMB6.36 million has been added to the total debts owed by Beijing S.K. to Lishui Mengxiang. On January 6, 2023, Beijing\nP.X. established a wholly-owned subsidiary, Hebei Chuangxiang, a human resources services provider for internship and employment recommendations.\n\n \n\n83\n\n \n\n \n\n**B. Business Overview**\n\n \n\nOur and the VIEs’\nprivate education services primarily consist of high school education and vocational education. For the year ended December 31,\n2025, we and the VIEs have established an education services network consisting of a high school, two vocational education services\nproviders and a human resources and healthcare support services provider, covering Zhejiang Province, Hebei Province, and Hainan\nProvince in mainland China. The entities engaging in our main business include:\n\n \n\n●Lishui\nInternational School, an educational institution specialized in providing high school education\nto students from overseas Chinese families returning to China who are commonly known as the\noverseas Chinese returnees;\n\n \n\n●Langfang\nSchool and Hainan Jiangcai, vocational education services providers offering a variety of\nvocational education programs with the aim to help students to equip with practical vocational\nskill sets; and\n\n \n\n●Hebei Chuangxiang, a human\nresources service provider connecting enterprises and vocational school students, providing talents to enterprises and assisting\nvocational schools to provide internship opportunities to their students. It also cooperates\nwith healthcare and elderly care enterprises to deliver daily care, specialized nursing and companion services.\n\n** **\n\n**Deconsolidated Primary and Middle School**\n\n \n\nIn 2003, Lianwai School\nwas launched in Lishui City, Zhejiang Province with two campuses offering primary and middle school private education:\n\n \n\n●Baiyun\nCampus offering standard PRC curriculum programs; and\n\n \n\n●Yijing\nCampus—Featured Division offering featured PRC curriculum programs.\n\n \n\nUnder the 2021 Implementation\nRules which took effect on September 1, 2021, social organizations and individuals are prohibited from controlling a private school\nthat provides compulsory education by means of, among others, merger, acquisition, and contractual arrangements, and a private school\nproviding compulsory education is prohibited from conducting transactions with its related party. In particular, the prohibition over\nrelated party transactions has significantly affected the enforceability of the exclusive management services and business cooperation\nagreements among Liandu WFOE and Lianwai School providing compulsory education. Therefore, we re-assessed our control over Lianwai School.\nBased on the relevant accounting standard in accordance with U.S. GAAP, we have concluded that we have lost control of Lianwai School\nsince August 31, 2021, in view of the significant uncertainties and restrictions the 2021 Implementation Rules impose on our ability\nto direct the range of ongoing activities that would most significantly impact the returns of Lianwai School. In light of such regulatory\ndevelopments, on April 20, 2022, we entered into an acknowledgment agreement of contractual agreements with Lianwai School and respective\ndirectors, to confirm all the terms of rights and obligations relating to Lianwai School and the directors appointed by the sponsor under\nthe contractual arrangements in relation to Lianwai School, and agree among the parties that such arrangements shall have been terminated\non August 31, 2021. To minimize disruptions to existing students enrolled in Lianwai School, we and the VIEs continued to offer\nessential services to Lianwai School without recognizing any revenue. Meanwhile, we deconsolidated Lianwai School commencing from September 1,\n2021 and presented it as a discontinued operation in current and comparative period financial statements. See “*Item 5. Operating\nand Financial Review and Prospects—A. Operating Results*.”\n\n \n\n**Qingtian International School**\n\n \n\nThe high school curriculum\nprograms offered at Qingtian International School are designed for students from overseas Chinese families returning to China who are\ncommonly known as the overseas Chinese returnees.\n\n \n\nThe increasing population\nof overseas Chinese returnees and their immediate relatives in Zhejiang Province provides a growing opportunity in the private education\nindustry. According to the Frost & Sullivan report, the population of overseas Chinese returnees (including Chinese returnees\nfrom Hong Kong and Macau) and their relatives residing in Zhejiang Province has increased from 1.2 million in 2014 to 1.5 million\nin 2019, representing a CAGR of 4.5%. It is expected that this number would continue to grow steadily at a CAGR of 4.0% from 2019 to\n2024. Students as overseas Chinese returnees have the opportunity to attend the PRC Joint Recruitment Examination for overseas Chinese\nreturnees and students in Hong Kong, Macau and Taiwan as a parallel track to the college entrance exam taken by local students, and therefore\nwe believe our graduates who are overseas Chinese returnees have a better opportunity to attend China’s top universities, which\nin turn enhances our and the VIEs’ schools’ reputation in the industry and improves our prospects.\n\n \n\n84\n\n \n\n \n\nAs a boarding school specialized\nin providing high school education to overseas Chinese returnees, Qingtian International School provides high school education by small-class\nteaching method and semi-military management, enabling its students to gain admission to the most prestigious colleges and universities.\nQingtian International School offers ordinary PRC high school curriculum program combined with the courses designed for the PRC Joint\nRecruitment Examination for overseas Chinese returnees.\n\n \n\nAs of September 1, 2023,\nthere were 491 students in 14 classes enrolled in Qingtian International School with 100% of the students living on-campus. The school\nrecorded a utilization rate of 60.6% with the capacity of 810 as of September 1, 2023. The school has on-campus canteen and\nprovide dormitories for boarding students who live on-campus Sunday through Friday during school terms. The student dormitories\nimplement comprehensive boarding rules and are under the dual supervision of teachers and counselors. The school also cooperated with\nQingtian High School of Zhejiang Province (“Qingtian High School”) by allowing the medical staff and mental-health counselors\nof Qingtian High School to handle routine medical treatments and psychological counseling for its students, and the medical staff\nand mental-health counselors will promptly send the students to hospitals when necessary. Students usually wear school uniforms during\nschool year. The school arranges third-party suppliers to provide school uniform purchasing service for the convenience of parents.\n\n \n\nMajor decisions and policies\nconcerning our school, such as principal nomination and budget planning (including tuition levels, construction of material new facilities\nand use of significant funds), are determined by our directors. At the same time, our finance team monitors the financial activities\nof our school through periodic audits from time to time. The school principal reports to our directors on school developments and major\nissues at least annually.\n\n \n\nTo facilitate parent-school\ncommunication and to timely obtain feedback from the students’ parents, Qingtian International School sets up parents committee\ncomprising parent-representatives from each class; and maintain active social media groups on a class-wide, grade-wide and school-wide\nbasis. The parents committees and social media groups act as a liaison between the management of the school and parents, and encourage\nparents to voice their opinions about the school. The school also organizes a variety of events and activities for the students’\nparents. We believe these events and activities strengthened the relationship between the school and the students’ parents and\ncontributed to creating a harmonious learning environment. The school also from time to time conducts parent satisfaction survey to obtain\nfeedback on our teaching quality.\n\n \n\nWe believe teachers are\nthe key to the education programs and the reputation of the school. Qingtian International School employs a team of professional teachers,\nwhich enables the school to offer a variety of mandatory and elective courses and provide moral guidance to students. As of September\n1, 2023, Qingtian International School had 46 teachers, with a teacher-student ratio of 1:10.67.\n\n \n\nThe teachers are employed\nthrough different channels and methods, including campus recruitment, general public recruitment, candidate self-nominations and the\nuse of online recruiting websites. The school determines the recruitment demands before advertising for recruitment. The school screens\nresumés received and select appropriate candidates. The hiring decision is made based on the candidates’ professional qualifications,\nmoral qualities, professional skills, performance during trial lectures. The deliberation process involves our principals, teachers and\nadministrative staff.\n\n \n\nThe school typically enters\ninto one-year contracts with the newly hired teachers and will renew their contracts with longer terms only if they deliver\nsatisfactory performance on a selective basis based on the evaluation. To uphold the school’s reputation for providing high-quality\neducation and maintain the consistency of the teaching standards, Qingtian International School monitors teaching quality through a comprehensive\nevaluation system. The school performs the teacher evaluations annually. The evaluations assess attendance, classroom preparation, classroom\nperformance, teaching quality, continuing education coursework, publications and honors and awards. The school also regularly engages\nexternal consultants specializing in education to evaluate the in-class performance of the teachers as well as the curriculum taught\nat school. We believe the external consultants are able to provide the teachers with meaningful feedback that enable them to improve\ntheir teaching quality. All teachers in Qingtian International School have obtained the teacher’s qualification license in accordance\nwith relevant regulations.\n\n \n\n85\n\n \n\n \n\nOn January 15, 2024, Lishui\nMengxiang entered into a definitive agreement to transfer 100% of the sponsorship interests of Qingtian International School to Qiaoxiang\nEducation, an entity affiliated with Mr. Biao Wei, a director and the Chief Executive Officer of the Company, for a consideration of\nRMB23,161,000. The transfer of the sponsorship was approved by the audit committee and the board of directors of the Company. The completion\nof the transfer would be subject to the terms and conditions of the definitive agreement, including the registration of change of sponsorship\nof the school with competent authorities of Qingtian county, Zhejiang province, China. As of the date of the annual report on Form 20-F,\nwe and the VIEs are still in the process to complete such registration. On April 2, 2024, Liandu WFOE, Lishui Mengxiang, Qingtian International\nSchool, the shareholders of Lishui Mengxiang and the Council Members of Qingtian International School entered into the Acknowledgment\nAgreement of Contractual Agreements of Qingtian Overseas Chinese Experimental High School, pursuant to which rights and obligations under\nthe contractual arrangements with respect to Qingtian International School were actually terminated on December 31, 2023. We deconsolidated\nthe results of Qingtian International School in our consolidated financial statements since December 31, 2023.\n\n** **\n\n**Lishui International School**\n\n \n\nOur high school curriculum\nprograms offered at Lishui International School are designed for students from overseas Chinese families returning to China who are commonly\nknown as overseas Chinese returnees. The increasing population of overseas Chinese returnees and their immediate relatives in Zhejiang\nProvince provides a growing opportunity in the private education industry. Lishui International School was established in June 2023 with\nthe purpose to fully utilize the education resources of us and the VIEs and meet the growing demand for quality high school education\nof the society. As a full-time boarding high school approved by the Lishui City Education Bureau, Lishui International School provides\neducation programs for students as overseas Chinese returnees in preparation of relevant entrance exams to enter top universities in\nChina. The school has started to enroll students in the fall of 2023.\n\n \n\nStudents as overseas Chinese\nreturnees have the opportunity to attend the PRC Joint Recruitment Examination for overseas Chinese returnees and students in Hong Kong,\nMacau and Taiwan as a parallel track to the college entrance exam taken by local students and therefore we believe our graduates who\nare overseas Chinese returnees have a better opportunity to attend China’s top universities, which in turn enhances our and the\nVIEs’ schools’ reputation in the industry and improves our prospects. Through the cooperation with and under the guidance\nof Jinan University in China, the school provides scientific academic planning for overseas Chinese students, preparing them to attend\nPRC Joint Recruitment Examination for overseas Chinese returnees and students in Hong Kong, Macau and Taiwan to gain admission to top\nuniversities in China. Considering the specific situations of students as overseas Chinese returnees, Lishui International School provides\nspecifically designed education programs and offers three major categories of courses, namely standard exam-oriented courses, culture\nand history courses, and career planning courses. To offer flexibility and improve the teaching methods, Lishui International School\nalso provides an online teaching platform which is integrated into its courses to prepare students for the PRC Joint Recruitment Examination\nfor overseas Chinese returnees and students in Hong Kong, Macau and Taiwan.\n\n \n\nIn addition, students as\noverseas Chinese returnees at Lishui International School also have the opportunity to attend the Autonomous Admission Exam jointly held\nby Jinan University and Overseas Chinese University for students of Hong Kong, Macau, Taiwan, Overseas Chinese, and Other Foreign Students.\nEach student has the opportunities to take the exam twice and chooses to attend a preferred university if two admission offers are received.\n\n \n\nAs of September 1, 2025,\nthere were 97 students in four classes enrolled in Lishui International School with 100% of the students living on-campus. The school\nrecorded a utilization rate of 71.8% with the capacity of 135 students as of September 1, 2025. As of September 1, 2025, Lishui International\nSchool had five teachers, with a teacher-student ratio of 1:19.4.\n\n** **\n\n**Vocational Education Services Providers**\n\n \n\nWe and the VIEs offer vocational\neducation services at the Vocational Education Services Providers, namely Langfang School and Hainan Jiangcai. Langfang School and Hainan\nJiangcai were acquired by Lishui Mengxiang in January 2022.\n\n \n\n86\n\n \n\n \n\nWe and the VIEs take advantage\nof the school-operating experience and high-quality resources that the Vocational Education Services Providers accumulated in the vocational\neducation industry in the past to teach students career-focused skill sets. We and the VIEs are moving towards the goal of becoming a\nleading vocational training leader and offer high-quality vocational courses to enhance students’ professional skills and improve\ntheir abilities to use their knowledge in practice.\n\n** **\n\n**Langfang School**\n\n \n\nLangfang School is a provincial\nprivate vocational school approved by the Human Resources and Social Security Department of Hebei Province, integrating academic education\nand vocational education. Langfang School was acquired by Lishui Mengxiang in January 2022. As of the date of the annual report, the\nadministrative procedures with the PRC governmental authorities to amend the registration reflecting the result of the acquisition of\nLangfang School have not been completed due to the internal procedures of the competent authorities and we and the VIEs are still in\nthe process of active communication with such local authorities.\n\n \n\nLangfang School provides\ntwo parallel options for students to achieve their vocational goals or progression goals. Students can either choose the employment-oriented\ntrack to study in one of the vocational education programs and land on a job recommended by the school, or choose the progression-oriented\ntrack to study in the progression classes of the vocational education programs and attend the vocational college entrance exam.\n\n \n\nThe following table sets\nout the vocational education programs and the corresponding numbers of the enrolled students in Langfang School as of September 1, 2025:\n\n \n\nVocational Education Programs in Langfang School \nNumber of\nStudent\nEnrolled\n\nas of\nSeptember 1,\n2025 \n\n3D Printing Technology Operation \n 29 \n\nUrban Rail Transportation Management \n 12 \n\nNursing \n 53 \n\nComputer Operation, Maintenance and Repairment \n 147 \n\nCross-border E-commerce \n 21 \n\nGraphic Design \n 72 \n\nAutomobile Maintenance and Repairment \n 111 \n\nRailway Attendant Training \n 119 \n\nUnmanned Aerial Vehicle Operation \n 40 \n\nPreschool Teacher Training \n 56 \n\nTotal \n 660 \n\n \n\nLangfang School hires a\nnumber of qualified and dedicated teachers. As of September 1, 2025, Langfang School had 57 teachers, with a teacher-student ratio of\n1:11.58.\n\n \n\nAs of the date of this\nannual report, some of the teachers in Langfang School have not obtained the teacher’s qualification license (教师资格证)\nissued by the local administrative department of education, or the vocational school teacher’s license (教师上岗证)\nissued by the local administrative department of human resources and social security. As far as we know, the competent authorities no\nlonger compulsorily require vocational school teachers to hold the vocational school teacher’s license. We have not received any\nnotice of warning or been subject to any penalties or disciplinary action from government authorities due to the lack of the teacher’s\nqualification license or the vocational school teacher’s license.\n\n \n\n87\n\n \n\n \n\nIn 2025, Langfang school\nprovided intensive training for a total of 210 students who registered to sit for the vocational college entrance exam held in April,\nand 609 students graduated from Langfang School, with 399 graduates employed after graduation and 210 students pursuing college education.\n\n** **\n\n**Hainan Jiangcai**\n\n \n\nWe and the VIEs cooperate\nwith Hainan Technical School, a reputable vocational education school in Haikou City, Hainan Province, through Hainan Jiangcai, a subsidiary\nof Beijing P.X., to jointly design and develop curriculum programs based on the prevalent market trends and employer preferences.\n\n \n\nThe following table sets\nout the programs and the corresponding numbers of the students enrolled in the programs of Hainan Jiangcai (through its cooperator Hainan\nTechnical School) as of September 1, 2025:\n\n \n\nVocational Education Programs of Hainan Jiangcai \nNumber of\nStudent\nEnrolled\n\nas of\nSeptember 1,\n2025 \n\nUnmanned Aerial Vehicle (Computer Operation) \n 73 \n\nRailway Attendant Training \n 190 \n\nUrban Rail Transportation Management \n 247 \n\nTotal \n 510 \n\n \n\nHainan Jiangcai hires a\nnumber of qualified and dedicated teachers. As of September 1, 2025, Hainan Jiangcai had 24 teachers.\n\n \n\nIn 2025, the cooperative\nvocational education programs of Hainan Jiangcai have 193 graduates.\n\n** **\n\n**Human Resources Services Provider**\n\n** **\n\n**Chuangmei Weiye**\n\n \n\nChuangmei Weiye is a professional\ncomprehensive education and human resources service provider, covering human resources (including labor dispatch, human education, agency\nrecruitment), outsourcing vocational services, recruitment process outsourcing service, comprehensive services for flexible employment\n(including the services for the part-time employment, retirement re-employment, internships, and other short-term or temporary employment\nmethods) and vocational education. Through Chuangmei Weiye, we aim to assist talents with practical skills in obtaining internship opportunities\nand positions in well-known companies so as to bridge the supply and demand gap between the employers and talents.\n\n \n\nChuangmei Weiye has five\nbranches in Henan Province, Guangdong Province, Hainan Province, Gansu Province and Xinjiang Province, and reached strategic cooperation\nwith many reputable companies in the industries, and has a talent pool consisting of the graduates from its cooperative vocational schools.\nFor the fiscal year ended December 31, 2023, Chuangmei Weiye has provided human resources services to over 30 companies and over 6 schools,\nand assisted the vocational schools in providing internship and employment opportunities to over 1,000 students.\n\n \n\nOn November 5, 2023, Lishui\nMengxiang elected to exercise the right to sell 100% of the equity interests of Chuangmei Weiye back to Beijing S.K. and its affiliates\npursuant to that certain supplementary agreement by and among Lishui Mengxiang, Beijing S.K., certain affiliates of Beijing S.K. and\nBeijing P.X. dated August 20, 2023, primarily due to the substantial amount of Chuangmei Weiye’s historical debts. The equity interests\nof Chuangmei Weiye were transferred back to Beijing S.K. ’s affiliates at a price of RMB6.36 million and the transfer was completed\non November 9, 2023. After the transaction, the amount of RMB6.36 million has been added to the total debts owed by Beijing S.K. to Lishui\nMengxiang.\n\n** **\n\n88\n\n \n\n \n\n**Hebei Chuangxiang**\n\n \n\nOn January 6, 2023, Beijing\nP.X. established Hebei Chuangxiang as its wholly-owned subsidiary to expand into the human resources services business.\n\n \n\nHebei Chuangxiang is a human\nresources services provider for internship and employment recommendations. Hebei Chuangxiang has entered into cooperation agreements\nwith certain employers, allowing Hebei Chuangxiang to assign the students from Langfang School and Hainan Technical School as interns\nto these employers. In return, Hebei Chuangxiang charges labor dispatch fees from the employers based on the number of interns dispatched.\nFor the year ended December 31, 2025, Hebei Chuangxiang provided such human resources services to 24 companies, and provided internship\nand employment opportunities to 259 students.\n\n** **\n\nBeginning from the second\nhalf of 2024, Hebei Chuangxiang signed formal service cooperation contracts with a number of enterprises in the health and elderly care\nindustry, providing professional healthcare support services covering basic living care, special care, companion services, etc.. A daily\nservice fee will be charged to enterprises using such services provided by Hebei Chuangxiang based on the service period and volume.\n\n \n\n**Intellectual Property**\n\n \n\nAs of December 31,\n2025, we and the VIEs had 46 and two registered trademarks in the PRC and Hong Kong, respectively. As of December 31, 2025, we and\nthe VIEs had no trademarks pending registration in the PRC. We obtained five computer software copyrights through the acquisition of\nHangzhou Youxi by Liandu WFOE in February 2021. As our brand name is of material importance to our and the VIEs’ business, we and\nthe VIEs are working to increase, maintain and enforce our rights in our intellectual property portfolio.\n\n** **\n\n**Seasonality**\n\n \n\nOur financial performance\nis subject to seasonality as each of the school years includes a winter holiday between December and January and a summer holiday between\nJuly and August. Our net loss and results of operations normally fluctuate from quarter to quarter as a result of seasonal variations\nin our and the VIEs’ education operations. See “*Item 5. Operating and Financial Review and Prospects—A. Operating\nResults—Seasonality.*”\n\n** **\n\n**Marketing**\n\n \n\nWe and the VIEs rely\nprimarily on our reputation as one of the leading providers of education services in Lishui City to attract high-quality students to\napply for Lishui International School and do not engage in marketing and recruitment methods that require additional cost. We and\nthe VIEs also take advantage of the school-operating experience and high-quality resources of the newly-acquired Vocational\nEducation Services Providers in the vocational education industry to attract students. In addition, we and the VIEs enhance the\npublic awareness of our brand name and education service offerings through word-of-mouth advertising, award and campus\ntours which are useful channels for prospective students and their family to learn more about our and the VIEs’ capabilities\nand education service offerings. We and the VIEs also from time to time formulate and implement our marketing and student recruiting\nplans suitable for the market to promote our school, programs and us.\n\n** **\n\n**Competition**\n\n \n\nThe education sector in\nChina is growing, rapidly evolving, highly fragmented and competitive. We and the VIEs face competition for students in the geographic\nmarket in which we operate.\n\n \n\nAccording to the\nFrost & Sullivan report, Lianwai School was one of the top ten providers of private primary and secondary school education\nin Zhejiang Province and the largest private primary and middle school education in Lishui City as measured by students enrolled on\na monthly average basis for the 2019/2020 school year. As of the date of the annual report, we and the VIEs are still one of the\npioneers in the industry to provide education services in Zhejiang Province. With a successful track record of operation, Lishui\nInternational School has gained a strong reputation in Zhejiang Province, especially in Lishui City, which in turn attracts more\nhigh-quality students and teachers and helps forming a virtuous cycle. Besides, with the acquisition of the Vocational Education\nServices Providers and the establishment of Hebei Chuangxiang, we extended out business layout to the vocational education services\nin Hebei province and Hainan province and also to human resources and healthcare support services. We could take advantage of the\nschool-operating experience and high-quality resources that the Vocational Education Services Providers and Chuangmei Weiye\naccumulated in the vocational education industry and human resources services industry to attract students and help them achieve\ntheir progression and career goals.\n\n \n\nWe believe that the principal\ncompetitive factors in our relevant markets include academic performance of students, student placement and employer satisfaction with\nour graduates, brand and reputation, quality of educational programs, operating experience, types of educational programs, tuition, students\nand parent satisfaction rate, student progression rate and employment rate, and ability to attract and retain high quality teachers and\nstaff. *See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—We and the\nVIEs face intense competition in the education industry and we and the VIEs may fail to compete effectively.”*\n\n** **\n\n89\n\n \n\n \n\n**Regulation**\n\n \n\nThis section sets forth\na summary of the most significant rules and regulations that affect our and the VIEs’ business activities in China.\n\n** **\n\n**PRC Laws and Regulations Relating to Foreign\nInvestment in Education**\n\n \n\n**Regulations on Stock Incentive Plans**\n\n \n\nPursuant to the Notice on\nIssues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of an Overseas Publicly\nListed Company, or SAFE Circular 7, issued by SAFE in February 2012, directors, supervisors, senior managers and other employees participating\nin any stock incentive plan of an overseas listed company who are PRC citizens or who are non-PRC citizens residing in China for a continuous\nperiod of not less than one year, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent,\nwhich could be a PRC subsidiary of such overseas listed company, and complete certain other procedures. If we fail to complete the SAFE\nregistrations, such failure may subject us to fines and legal sanctions and may also limit our ability to contribute additional capital\ninto our wholly foreign-owned subsidiary in China and limit such subsidiary’s ability to distribute dividends to us.\n\n \n\nIn addition, the State Administration\nfor Taxation has issued certain circulars concerning employee share options or restricted shares. Under these circulars, the employees\nworking in the PRC who exercise share options or are granted restricted shares will be subject to PRC individual income tax. The PRC\nsubsidiaries of such overseas listed company have obligations to file documents related to employee share options or restricted shares\nwith relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options. If the employees\nfail to pay or the PRC subsidiaries fail to withhold their income taxes according to relevant laws and regulations, the PRC subsidiaries\nmay face sanctions imposed by the competent PRC government authorities.\n\n** **\n\n**The Negative List and the Encouraging Catalogue**\n\n \n\nOn December 27, 2021,\nthe NDRC and the MOFCOM jointly issued the Special Administrative Measures for the Access of Foreign Investment (Negative List) (the\n“2021 Negative List”) with effect from January 1, 2022. Pursuant to the 2021 Negative List, ordinary high school education\nare restricted industries for foreign investors, and foreign investments are only allowed to invest in ordinary high school education\nin cooperative ways and the domestic party shall play a dominant role in the cooperation, which means the principal or other chief executive\nofficer of the schools shall be a PRC national and the representative of the domestic party shall account for no less than half of the\ntotal members of the board of directors, the executive council or the joint administration committee of the Sino-foreign cooperative\neducational institution. In addition, foreign investors are prohibited from investing in compulsory education, namely primary school\nto middle school. Industries not listed in these two categories are generally deemed “permitted” for foreign investment unless\nspecifically restricted by other PRC laws. While it further provides that any domestic enterprise, which is engaged in the field of business\nthat foreign investment is prohibited from investing as set forth in the 2021 Negative List, shall be examined and approved by the relevant\nstate authorities before issuing shares and listing and trading abroad. Besides, any foreign investor shall not participate in the management\nof such domestic enterprise, and its shareholding ratio shall follow the relevant provisions regulating foreign investors’ investment\nin domestic securities.\n\n \n\nFurthermore, On September 6,\n2024, the NDRC and the MOFCOM jointly issued the Special Administrative Measures for the Access of Foreign Investment (Negative List)\n(the “2024 Negative List”) with effect from November 1, 2024 and replaced the 2021 Negative List. The 2024 Negative\nList sets out the areas where foreign investment is prohibited, and the areas where foreign investment is restricted. Prior to investing\nin the restricted fields in the 2024 Negative List, foreign investor shall obtain foreign investment access permit. Unless otherwise\nprovided in other laws, a foreign investment in areas not listed on the 2024 Negative List is unconditionally permitted and shall be\ntreated in the same manner as domestic investment. The 2024 Negative List remains unchanged.\n\n \n\n90\n\n \n\n \n\nOn June 30, 2019, MOFCOM\nand NDRC jointly issued the Catalogue of Industries for Encouraging Foreign Investment (Edition 2019), or the Encouraging Catalogue (Edition\n2019). On December 27, 2020, MOFCOM and NDRC jointly promulgated the Catalogue of Industries for Encouraging Foreign Investment (Edition\n2020), or the Encouraging Catalogue (Edition 2020), which replaced the Encouraging Catalogue (Edition 2019). The latest version of the\nEncouraging Catalogue (Edition 2022) was issued on October 26, 2022, which took effect on January 1, 2023 and superseded the previous\nlists. Pursuant to the Encouraging Catalogue (Edition 2022), vocational school (including technical training schools) are encouraged\nindustries for foreign investors.\n\n** **\n\n**Regulations on Foreign Investment**\n\n \n\nOn March 15, 2019,\nthe Foreign Investment Law of the People’s Republic of China, or the Foreign Investment Law, was formally passed by the 13th NPC\nand took effect as on January 1, 2020. The Foreign Investment Law has replaced the Chinese-Foreign Equity Joint Ventures Law, the\nChinese-Foreign Contractual Joint Ventures Law and the Wholly Foreign-owned Enterprise Law to become the legal foundation for foreign\ninvestment in the PRC. To implement the Foreign Investment Law, the State Council promulgated the Implementing Regulations of the Foreign\nInvestment Law, and Ministry of Commerce of the PRC, or the MOFCOM, and the State Administration for Market Regulation, or the SAMR further\npromulgated the Measures for Reporting of Information on Foreign Investment.\n\n \n\nThe Foreign Investment Law\nestablishes the administration systems for foreign investment, which mainly consists of pre-establishment national treatment\nplus negative list, foreign investment information report system and security review system. The aforesaid systems, together with other\nadministrative measures stipulated under the Foreign Investment Law, constitute the frame of foreign investment administration. The pre-establishment\nnational treatment refers to granting to foreign investors and their investments, in the stage of investment access, the treatment no\nless favorable than that granted to domestic investors and their investments. The negative list refers to special administrative measures\nfor access of foreign investment in specific fields as stipulated by the State and the State will give national treatment to foreign\ninvestments outside the negative list. The Foreign Investment Law further provides that foreign-invested enterprises established before\nthe Foreign Investment Law coming into effect may retain their original form of organizations within five years after the Foreign Investment\nLaw comes into effect.\n\n \n\nPursuant to the Foreign\nInvestment Law of the PRC which took effect as on January 1, 2020, foreign investors’ capital contribution, profits, capital\ngains, assets disposal income, intellectual property license fees, legally obtained damages or compensation, liquidation proceeds, etc.,\nmay be freely remitted into or out of China in RMB or foreign exchange according to PRC laws. Accordingly, the Company has the ability\nto repatriate revenues generated by the VIE businesses. However, there are restrictions under PRC laws for the payment of dividends to\nus by Liandu WFOE. See *“—Regulation—Regulations on Taxation in the PRC—Income Tax in relation to Dividend\nDistribution” and “—Regulation—PRC Laws and Regulations relating to Foreign Exchange*.”\n\n \n\nAs of the date of the annual\nreport, our and the VIEs’ high school education services fall within restricted industries for foreign investors, and the VIEs’\nvocational school education services fall within encouraged industries for foreign investors. Although foreign investment in high schools\nand vocational school is not prohibited, we or Liandu WFOE is not a foreign education institution or a foreign vocational skills training\ninstitution with relevant qualifications on education services and operating high-quality education. Therefore, we conduct business operations\nthrough the Variable Interest Entities. See “*Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate\nStructure*” and “*Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China*”\nfor details.\n\n** **\n\n**Regulations on Sino-Foreign Cooperation\nin operating school**\n\n \n\nPursuant to the 2024 Negative\nList, ordinary high school education are restricted industries for foreign investors, and foreign investments are only allowed to invest\nin ordinary high school education in cooperative ways and the domestic party shall play a dominant role in the cooperation, which means\nthe principal or other chief executive officer of the schools shall be a PRC national and the representative of the domestic party shall\naccount for no less than half of the total members of the board of directors, the executive council or the joint administration committee\nof the Sino-foreign cooperative educational institution.\n\n \n\n91\n\n \n\n \n\nSino-foreign cooperation\nin operating schools is specifically governed by the Regulation on Operating Sino-foreign Schools of the PRC, which was promulgated by\nthe State Council on March 1, 2003, took effect from September 1, 2003 and recently amended on March 2, 2019, and the\nImplementing Rules for the Regulations on Operating Sino-foreign Schools of the PRC, or the Implementing Rules, which were issued by\nthe Ministry of Education of the PRC, or the MOE on June 2, 2004 and became effective on July 1, 2004.\n\n \n\nThe Regulation on Operating\nSino-foreign Schools of the PRC and the Implementing Rules apply to the activities of educational institutes established in the PRC jointly\nby foreign educational institutes and Chinese educational institutes, the students of which are to be recruited primarily from PRC citizens\nand encourage substantial cooperation between overseas educational organizations with relevant qualifications and experience in providing\nhigh-quality education, and PRC educational organizations to jointly operate various types of schools in the PRC, with such cooperation\nin the areas of higher education and occupational education being encouraged. The overseas educational organization must be a foreign\neducational institution with relevant qualification and experience at the same level and in the same category of education. It is uncertain\nas to what type of information (including the length and type of experience) a foreign investor must provide to the competent PRC government\nauthority to demonstrate that it meets the qualification requirement. Sino-foreign cooperative schools are not permitted, however, to\nengage in compulsory education and military, police, political or other kinds of education that are of a special nature in the PRC. Any\nSino-foreign cooperative school and cooperation program shall be approved by the relevant education authorities of provinces, autonomous\nregions or municipalities directly under PRC central governmental where the institute locates and obtain an Operation Permit for Sino-foreign\nCooperation School, and a Sino-foreign cooperation school established without the above approval or permit may be prohibited by the relevant\nauthorities, be ordered to refund the fees collected from its students and be subject to a fine of no more than RMB100,000, while a Sino-foreign\ncooperation program established without such approval or permit may also be banned and be ordered to refund the fees collected from its\nstudents.\n\n \n\nThe Administrative Measures\nfor the Sino-foreign Cooperative Education on Vocational Skills Training was promulgated by the Ministry of Labor and Social Security\n(currently known as the MHRSS) on July 26, 2006 and came into effect on October 1, 2006 and then was amended on April 30, 2015 by the\nMHRSS. The Sino-foreign Vocational Skills Training Measures shall apply to the establishment, activities and management of vocational\nskills training institutions and educational projects initiated by Chinese educational institutions and foreign educational institutions\n(including vocational skills training institutions) by cooperation. Foreign educational institutions, other organizations or individuals\nmay not independently establish the vocational skills training institutions with Chinese citizens as the main enrollment targets in the\nPRC, and can only establish the vocational skills training institutions in cooperation with Chinese cooperators in the form of Sino-foreign\ncooperation, and the cooperators of the Sino-foreign vocational skills training institutions shall meet the requirements and conditions\nstipulated in the Sino-Foreign Cooperation Regulation. The establishment of a Sino-foreign vocational skills training institution shall\nbe examined and approved by the local MHRSS of the people’s government of the province, autonomous region or municipality directly\nunder the Central Government where the proposed institution is located.\n\n \n\nOn June 18, 2012, the\nMOE issued the Implementation Opinions of the MOE on Encouraging and Guiding the Entry of Private Capital in the Fields of Education\nand Promoting the Healthy Development of Private Education to encourage private investment and foreign investment in the field of education.\nAccording to these opinions, the proportion of foreign capital in a Sino-foreign education institute shall be less than 50%.\n\n \n\nAs of the date of the annual\nreport, no implementation measures or specific guidelines are promulgated in accordance with the Regulation on Operating Sino-foreign\nSchools of the PRC and Implementing Rules. Further, as far as we know, relevant authorities in Zhejiang Province or Hebei Province have\nnot approved any establishment of Sino-foreign cooperative high school or vocational school in at least past five years. Therefore, we\ncan only consolidate Lishui International School and Langfang School through the contractual arrangements in accordance with U.S. GAAP.\n\n** **\n\n92\n\n \n\n \n\n**Regulations on Private Education in the PRC**\n\n** **\n\n**Education Law of the PRC**\n\n \n\nOn March 18, 1995,\nthe National People’s Congress of PRC, or the NPC enacted the Education Law of the PRC, or the Education Law, which was amended\non August 27, 2009, December 27, 2015 and April 29, 2021, respectively. The Education Law sets forth provisions relating\nto the fundamental education systems of the PRC, including a school education system comprising pre-school education, primary\neducation, secondary education and higher education, a system of nine-year compulsory education, a national education examination system,\nand a system of education certificates. The Education Law stipulates that the government formulates plans for the development of education,\nestablishes and operates schools and other educational institution. Furthermore, it provides that in principle, enterprises, social organizations\nand individuals are encouraged to establish and operate schools and other types of educational institutes in accordance with PRC laws\nand regulations. Meanwhile, schools and other educational institutes sponsored by all or part of government financial funds and donated\nassets are forbidden to be established as for-profit organizations.\n\n** **\n\n**The Law for Promoting Private Education\nand the Implementation Rules for the Law for Promoting Private Education**\n\n \n\nThe Law for Promoting Private\nEducation of the PRC became effective on September 1, 2003 and was amended on November 7, 2016 by the Decision of the Standing\nCommittee of the National People’s Congress on Amending the Law for Promoting Private Education of the PRC, or the Decision and\namended on June 29, 2013 and December 29, 2018. The Implementation Rules for the Law for Promoting Private Education of the PRC,\nor the 2004 Implementation Rules became effective on April 1, 2004 and recently amended on April 7, 2021. The Law for Promoting\nPrivate Education of the PRC shall be applicable to activities conducted by public organizations or individuals, other than the organs\nof the state, to establish and operate schools and other institutions of education with non-governmental financial funds, which\nare geared to the need of society. The establishment of a private school shall meet the local need for educational development and the\nrequirements of the Education Law and the relevant laws and regulations. A duly approved private school will be granted a Permit for\nOperating a Private School, after which the private school can apply for registration as a legal person and the registration authority\nshall handle the matter in accordance with relevant laws and regulations.\n\n \n\nThe Law for Promoting Private\nEducation of the PRC mainly stipulates as follows:\n\n \n\n \n(i)\nThe sponsors of privately-run\nschools may establish non-profit or for-profit privately-run schools at their own discretion. However, they shall not establish for-profit\nprivately-run schools providing compulsory education.\n\n \n\n \n(ii)\nThe sponsor of a non-profit\nprivately-run school shall not gain proceeds from school running, and the cash surplus of the school shall be used for school running,\nwhile the sponsor of a for-profit privately-run school may gain proceeds from school running, and the cash surplus of the school\nshall be disposed of in accordance with relevant PRC laws and regulations.\n\n \n\n \n(iii)\nThe measures for the collection\nof fees by non-profit privately-run schools shall be formulated by the people’s governments of various provinces, autonomous\nregions and centrally-administered municipalities.\n\n \n\nHowever, the charging criteria\nof for-profit privately-run schools are subject to market regulation and shall be determined by the schools themselves.\n\n \n\n \n(iv)\nPrivately-run schools may\nenjoy the preferential taxation policies, and non-profit privately-run schools may enjoy the same preferential taxation policies\nwith that for publicly-run schools.\n\n \n\n \n(v)\nAdditional supportive measures\nare provided for private schools. Non-profit private schools will enjoy additional supportive measures, such as government subsidies,\nfund awards and donations.\n\n \n\nFurthermore, if a private\nschool established before the promulgation of this Decision chooses to be registered as a non-profit privately-run school\nand when the privately-run school is terminated, if there are remains after its property is liquidated, appropriate compensation\nor rewards shall be given to capital contributors based on their applications and by taking into full account the factors such as the\ncapital contributed before the implementation of this Decision, reasonable return gained and benefits from school running, and the other\nproperty may continue to be used for the running of other non-profit schools.\n\n \n\n93\n\n \n\n \n\nThe 2021 Implementation\nRules was promulgated by the State Council on April 7, 2021, and came into effect on September 1, 2021. The 2021 Implementation\nRules contain stricter provisions than the Draft Revision of the Regulations on the Implementation of the Law for Promoting Private Education\nof the PRC (the Draft for Comments) issued by the Ministry of Education of the PRC in April 2018 and the Draft Revision of the Regulations\non the Implementation of the Law for Promoting Private Education of the PRC (the Draft for Examination and Approval) issued by the Ministry\nof Justice of the PRC on August 10, 2018. The 2021 Implementation Rules address the operation and management of private schools,\nespecially non-profit private primary and middle schools, including: (i) foreign-invested enterprises established in China and social\norganizations whose actual controllers are foreign parties shall not sponsor, participate in or actually control private schools that\nprovide compulsory education, (ii) social organizations or individuals shall not control any private school that provides compulsory\neducation or any non-profit private school that provides pre-school education by means of merger, acquisition, contractual arrangements,\netc., and (iii) private schools providing compulsory education shall not conduct any transaction with any interested related party.\n\n \n\nIn addition, the 2021 Implementation\nRules also stipulate the change of school’s sponsor. Where the sponsor of a privately-run school is altered, an agreement for alteration\nshall be concluded, but the agreement may not involve the property of the legal person of the school, affect the development of the school\nor damage the rights and interests of the teachers and students. The sponsor shall, according to the lawful rights and interests enjoyed\nby the sponsor according to law, conclude an agreement with the successor sponsor to agree on the benefits from the alteration. The alteration\nof the sponsor shall be subject to the consent of two-thirds or more of the members of the executive council, the board of directors\nor a decision-making institution of other forms for the privately-run school. Where the sponsor and actual controller of a privately-run\nschool or any of the members of the decision-making institution or supervision institution alters the sponsor without authorization,\nthey shall be subject to administrative punishment by the administrative department of education, the administrative department of human\nresources and social security or other relevant departments of the people’s government at or above the county level. For a privately-run\nschool, any unlawful earning shall be confiscated, and if the circumstances are serious, it shall be ordered to stop enrolling students\nand its business license shall be revoked.\n\n \n\nOn December 29, 2016, the\nState Council issued the Several Rules of the State Council on Encouraging the Operation of Education by Social Forces and Promoting\nthe Healthy Development of Private Education, which aims to ease the access to the operation of private schools and encourages social\nforces to enter the education industry. The rules also provide that each level of the PRC government shall increase their support for\nthe private schools in terms of financial investment, financial support, funding policy, preferential tax treatments, land policies,\nfee policies, autonomy operation, protection of the rights of teachers and students, etc.\n\n \n\nOn August 17, 2020,\nMOE, NDRC, the Ministry of Finance, and the State Administration for Industry and Commerce or the SAMR, and the General Administration\nof Press and Publication jointly released the Opinions on Further Strengthening and Regulating the Administration of Education Fees,\nor the Education Fees Opinions, effective as of the same date. The Education Fees Opinions mainly stipulate the basic principles of education\nfee charging, modification of the policies and the management systems of education fee charging, including the legal consequences of\ncharging in violation of the provisions. In particular, the part of provisions on improving the governance mechanism for education fee\ncharges stipulate that “efforts shall be made to explore the establishment of a special audit system for school fees, with the\nfocus on the audit of non-profit privately-run schools, and the sponsors of non-profit privately-run schools and non-profit privately-run\nsino-foreign cooperative educators shall be prohibited from obtaining proceeds from school-running such as tuition income, distributing\nschool balances (residual assets) or transferring proceeds from school running through related-party transactions or affiliated parties\nor other means.” The Education Fees Opinions have not specified whether the contractual arrangements fall within the activities\nof transferring the school-running proceeds through related-party transactions and affiliated parties, and the Education Fees Opinions\nhave not specified the relevant legal consequences of such activities.\n\n \n\nFor a detailed discussion\non how the above laws and regulations will affect our school, see “*Item 3. Key Information—D. Risk Factors*.”\n\n** **\n\n94\n\n \n\n \n\n**Implementing Rules on Classification Registration\nof Private Schools**\n\n \n\nAccording to the Implementation\nRules on Classification Registration of Private Schools (the “Classification Registration Rules”), which was issued jointly\nby the MOE, the Ministry of Human Resources and Social Security of the People’s Republic of China or the MOHRSS, the MCA, the State\nCommission Office of Public Sectors Reform and the SAMR, and became effective on December 30, 2016, if an existing private school\nchooses to register as a non-profit private school, it shall amend its articles of association in accordance with laws, continue\nits school operation, and complete the new registration formalities. If an existing private school chooses to register as a for-profit private\nschool, it shall make financial settlement, clarify the ownership of the schools’ lands, buildings and accumulations with the consent\nof the relevant departments of the people’s governments at or below the provincial level, pay relevant taxes and fees, obtain new\nschool permits, carry out their re-registration and continue their school operation. The provincial people’s government\nis responsible for formulating the detailed measures on the alteration registration of the private schools in accordance with national\nlaws and the local situation.\n\n \n\nOn December 26, 2017,\nthe People’s Government of Zhejiang Province promulgated the Implementation Opinions of the People’s Government of Zhejiang\nProvince on Encouraging Individual Persons or Entities to Conduct Education and Promote the Healthy Development of Private Education,\nor the Zhejiang Implementation Opinions, to establish a classification management system on private school. According to Zhejiang Implementation\nOpinions, existing private schools, which were established before November 7, 2016, shall finish the registration as non-profit or for-profit private\nschools by the end of 2022.\n\n \n\nOn April 4, 2018, eight\ndepartments of Zhejiang Province including the Department of Education of Zhejiang Province promulgated the Implementation Measures for\nExisting Private Schools to Change Registration Status, or the Zhejiang Implementation Measures, which took effect on June 1, 2018\nand applies to all private schools established before November 7, 2016. According to the Zhejiang Implementation Measures, (i) any\nexisting private school which chooses to register as a non-profit private school shall amend and file its articles of association\nand complete the corresponding registration accordingly, and (ii) any existing private school that chooses to register as a for-profit private\nschool, shall obtain a new Permit for Operating a Private School and be re-registered so as to continue its operation after\ncompleting its financial clearance and settlement, clarifying its ownership of assets, and paying relevant taxes and fees.\n\n \n\nOn June 16, 2021, Lishui\nMunicipal Education Bureau, Lishui Municipal Human Resources and Social Security Bureau, Office for Public Sector Reform Commission of\nLishui, Lishui Municipal Civil Affairs Bureau and Lishui Municipal Market Supervision Administration jointly promulgated the Administrative\nMeasures for Classification Registration of Private Schools in Lishui, which came effect on the same day.\n\n \n\nAccording to the Administrative\nMeasures, (i) the existing private schools shall continue running according to the status quo before completing the classified registration,\nand shall complete the classified registration according to laws and regulations by the end of 2022. Private schools providing non-diploma\neducation and training, private schools providing pre-school education and diploma education for full-time primary and secondary schools\nand secondary vocational education shall, in principle, submit a written application for selection of the legal person nature of schools\nto the approval authority by September 31, 2021. After the approval authority receives the written application of the school, the\nprivate school that meets the statutory conditions and relevant provisions shall complete the classified registration within one year;\n(ii) Where an existing private school opts to be registered as a non-profit private school, its articles of association shall be\namended in accordance with the law, the school may continue its running, obtain a new license for establishment of the school and complete\nnew registration formalities; (iii) An existing private school at the non-compulsory education stage and a training institution\nmay opt to be registered as a for-profit private school. Where a school running under the consistent system on the same campus applies\nfor registration as a for-profit private school in the non-compulsory education stage, the school assets shall be divided for registration\nand the corresponding conditions for independent school running shall be met. Otherwise, the school shall be registered as a non-profit\nprivate school; (iv) Where an existing private school opts to be registered as a for-profit private school, it shall make financial\nsettlement, and the ownership of the land, school buildings, school-running accumulation and other property shall be clarified by the\nrelevant departments of the government of the jurisdiction and the relevant agencies according to law. The school shall pay the relevant\ntaxes and fees, go through the formalities for a new permit for the establishment of the school and make a new registration. The school\nmay continue running during the process of the liquidation, re-handling of the permit for the establishment of the school and registration\nas a legal person; and (v) When an existing private school is terminated, if there is surplus property after repayment in accordance\nwith the Law of the People’s Republic of China on the Promotion of Private Schools, the Implementation Measures for Existing Private\nSchools to Change Registration Status, the Measures for the Financial Settlement of Private Schools in Zhejiang Province and other regulations,\ncertain compensation or reward (the proportion and standard shall be determined by local authorities according to relevant laws and regulations\nand in combination with local actual conditions) shall be given to the capital contributors according to the application of the capital\ncontributors and in comprehensive consideration of factors such as the capital contribution made before August 31, 2017, reasonable\nreturns obtained and school-running benefits; the remaining property shall continue to be used for running other non-profit schools.\n\n \n\n95\n\n \n\n \n\nOn November 22, 2021,\nLishui Education Bureau has promulgated the Work Plan for Classified Registration and Administration of Existing Private Schools (Kindergartens)\nof Lishui City, which stipulates that they shall adhere to the principles of voluntary selection, smooth classification, public welfare\norientation, and compliance with laws and regulations, and strive to complete the classified registration of existing private schools\nby December 30, 2022. The Plan also provides a schedule for arranging the classified registration tasks, from January to October\nin 2022, the classified registration of the existing private schools providing compulsory education, private kindergartens and private\nschools providing senior high school education shall be completed. The main registration procedures for non-profit private schools are\nselected as follows: (i) schools shall file an application for classified registration; (ii) the approval authority shall conduct\nverification and replacement of the certificate; (iii) the articles of association shall be ratified (filed for the record); and\n(iv) schools shall apply for registration as a legal person. In addition, the main registration procedures for for-profit private\nschools are selected as follows: (i) sponsors make a pre-application for classified registration; (ii) schools make financial\nsettlement; (iii) sponsors apply for the pre-registration of corporate names; (iv) sponsors make a formal application for classified\nregistration; (v) certificates are replaced upon the approval authorities; (vi) schools apply for the registration of legal\npersons; (vii) schools complete the amendment registration of assets; (viii) private non-enterprise entities apply for deregistration\nwith the original registration authorities.\n\n \n\nLishui International School\nhas already been registered as a non-profit private school at the time of its establishment and is in compliance with the Classification\nRegistration Rules, and therefore is not required to take extra steps of registration.\n\n \n\nOn January 9, 2018, five\ndepartments of Hebei Province including the Department of Education of Hebei Province issued the Implementation Measures for the Classification\nRegistration of Private Schools in Hebei Province, which came into effect on the same day. The measures provide that (i) private schools\ncan choose to be registered as non-private schools or for-profit schools, and those engaging in compulsory education shall not be registered\nas for-profit schools; (ii) if a private school has chosen to be classified and registered as a non-profit private school, it shall no\nlonger be converted to a for-profit private school; while if it has chosen to be classified and registered as a for-profit private school,\nit may be converted to a non-profit private school by application by its sponsor(s) and changing the registration of its legal entity;\n(iii) existing private schools shall complete the classification and registration within a five-year transition period ending on September\n1, 2022, and before the classification and registration, they shall be managed as their originally-registered legal entity; (iv) if an\nexisting private school chooses to be classified and registered as a non-profit private school, it shall amend its constitution in accordance\nwith the laws, continue its operation, and re-register with the appropriate authorities or civil affairs department; and (v) if an existing\nprivate school chooses to be classified and registered as a for-profit private school, it shall conduct financial liquidation, clarify\nthe property rights for land(s), school building(s), school accumulation and pay relevant taxes and fees, renew the Permit for Establishment\nof Privately-run Schools, re-register with the appropriate authorities, and continue its operation.\n\n \n\nAs of the date of the annual\nreport, Langfang City has not released any detailed rules on classification registration of private schools and we have not received\nany relevant notice from the competent authorities of Langfang City since January 1, 2022 when Beijing P.X. began to hold the whole sponsorship\ninterests of Langfang School.\n\n** **\n\n**Guidelines\nfor Further Easing the Burden of Excessive Homework and Off-campus Tutoring for Students\nat the Stage of Compulsory Education.**\n\n \n\nOn July 24, 2021, the\nGeneral Office of the Communist Party of China Central Committee and the General Office of the State Council jointly released the Guidelines\nfor Further Easing the Burden of Excessive Homework and Off-campus Tutoring for Students at the Stage of Compulsory Education. The guidelines\nstipulate a series of measures on education sector reforms designed to improve education quality, ease homework burdens for students,\nand restrict private investment in the industry. According to the guidelines, the reforms aim to promote the healthy development of students,\nimprove education quality, alleviate financial burdens on parents, and institute law-based governance of the education sector. They concentrate\non education in core subjects, or compulsory education, which refers to grades K-9, covering the ages of approximately 6-15 years.\n\n \n\n96\n\n \n\n \n\nPursuant to the guidelines,\nregional governments are no longer permitted to approve new off-campus tutoring centers providing core or compulsory education. Existing\noff-campus tutoring centers must be registered as non-profit institutions. Local governments must distinguish between training centers\nin sports, culture and art, and science and technology, and consult relevant departments to set standards for each category. The guidelines\nspecifically ban foreign investment in such firms via mergers and acquisitions, franchise development, and variable interest entities,\nwhich are investment vehicles frequently used by foreign investors to bypass restrictions in China’s education sector.\n\n \n\nAdditionally, the guidelines\nprohibit tutoring on weekends, public holidays, and winter and summer vacations, which are popular times for off-campus education. Tutoring\ncenters in core education cannot go public or be listed for financing. The guidelines call for the excessive capital in training centers\nto be controlled, and to ensure that financing is primarily used for operational costs. The hiring of foreign teachers and other staff\nmust be according to relevant regulations, and firms cannot hire staff based outside of the country to carry out tutoring activities.\n\n \n\nGiven that the guidelines\naim at the education service providers for students at the stage of compulsory education, none of Lishui International School and Vocational\nEducation Services Providers is involved.\n\n** **\n\n**Regulations on Non-state Public Institution**\n\n \n\nIn accordance with the provisions\nof the Tentative Regulations for the Registration of Public Institutions as revised by the State Council on June 27, 2004, for the\npurposes of these Regulations, “public institutions” refer to national social service organizations established by state\norgans or other organizations using state-owned assets for social welfare purposes, and engaged in education, science and technology,\nculture, health and other activities.\n\n \n\nAccording to the Notice\non Carrying out the Pilot Program for Unified Registration and Administration of Various Public Institutions issued by the Lishui People’s\nGovernment on December 31, 2015, (i) all non-profit public welfare institutions with state-owned assets that comply with the provisions\nof the Interim Regulations on the Administration of the Registration of Public Institutions, which are established with social forces\nand engaged in education, culture, sports, medical treatment, elderly care (health preservation) and other activities are allowed to\nbe registered as public institutions and shall be collectively referred to as non-state public institutions, and the registration and\nadministration of non-state public institutions shall be temporarily conducted in education and medical services; (ii) the registered\nnon-state public institutions shall enjoy the same treatment as the public institutions of the same category except for those in which\nthe funds are not guaranteed and the staff are not supported by the financial resources; and (iii) the founders of the non-state\npublic institutions shall have the property ownership of the actual capital contributions (including the amount of capital added during\nthe existence) and assume the corresponding liability for debts; during the existence of the non-state public institutions, the assets\ninvested in them shall not be transferred by any means; the surplus income of the non-state public institutions shall not be distributed,\nbut the corresponding investment incentive system may be established and the specific incentive standards shall be formulated by the\ncompetent departments of the industry.\n\n \n\nIn accordance with the Interim\nRules of Lishui Municipality on the Administration of Registration of Public Institutions by Non-Profit Schools Run by Social Capital\nissued by Lishui Municipal Education Bureau, Lishui Municipal Human Resources and Social Security Bureau and Office for Public Sector\nReform Commission of Lishui on December 29, 2015, (i) a private school that is registered as a public institution shall establish\na sound and effective financial supervision system and maintain normal teaching order; (ii) a public institution risk fund system\nshall be established for private schools, which is earmarked for the relevant expenses for returning fees, refunding fees and compensation\nat the time of termination (closure) of the private school; (iii) after the school reserves development fund and withdraws other\nrelevant expenses, the school may, on the premise that there is balance of non-fiscal funds in school running, withdraw a certain proportion\nof funds from the balance of non-fiscal funds to reward the contributors upon research and decision made by the decision-making body\nof the school and approval by the administrative department of education or the administrative department of human resources and social\nsecurity. The amount of annual reward shall be calculated at a rate of not more than three times of the benchmark one-year loan interest\nrate of banks with the accumulative capital contributions of the contributors as the base. The assessment of the accumulative capital\ncontributions of the contributors shall be based on the capital verification certificate issued by a statutory capital verification institution.\n\n** **\n\n97\n\n \n\n \n\n**Regulations on Vocational Education**\n\n \n\nAccording to the Vocational\nEducation Law of the PRC, which was promulgated by the SCNPC on May 15, 1996 and came into effect on September 1, 1996, the\nstate encourages institutional organizations, social organizations and other social groups and individuals to operate vocational schools\nand vocational training institutions according to relevant provisions of the state.\n\n \n\nVocational school education\nincludes primary, secondary and higher vocational school education. Primary and secondary vocational school education shall be conducted\nrespectively by primary and secondary vocational schools. Higher vocational school education shall be conducted by higher vocational\nschools or by common institutions of higher learning in accordance with the actual needs and conditions. Other schools may implement\nvocational school education at corresponding levels in accordance with the overall planning by the education administrative department.\nVocational training includes pre-employment training, training to facilitate change of occupations, apprenticeship training, on-the-job\ntraining, job-transfer training and other vocational training. All these categories of training may, in light of actual conditions, be\ndivided into three levels: primary, secondary and higher vocational training. Vocational training is carried out by the corresponding\nvocational training institutions and/or vocational schools. Other schools or educational institutions may, depending on their own capabilities,\ncarry out various forms of vocational training to meet social needs.\n\n \n\nThe MOE issued the Rules\non Management of Secondary Vocational Schools on May 13, 2010, according to which, the establishment of secondary vocational schools\nshall be based on the standards issued by the national and provincial education administrative departments and its establishment, change\nand termination shall be approved by or filled with the provincial education authorities. Secondary vocational schools provide a combination\nof academic education and vocational training, and offer full time and part time programs. The education administrative department, the\nlabor administrative department and other relevant departments of the State Council shall each be responsible for the work relating to\nvocational education within the scope of their functions and duties as specified by the State Council.\n\n \n\nAt a national conference\non vocational education held in April 2021, important instructions were delivered by Xi Jinping, general secretary of the Communist Party\nof China (CPC) Central Committee, Chinese President and chairman of the Central Military Commission, on the development of vocational\neducation that vocational education has a promising future and great potential as China journeys toward socialist modernization. It was\nemphasized that more efforts will be made to optimize the positioning of vocational education, to promote integration between industry\nand education and cooperation between schools and enterprises, to reform training and schooling modes as well as management and support\nmechanisms, to promote bachelor-level vocational education and bring about a number of quality vocational education institutions and\nprograms, to promote the integration of vocational education and regular education, to improve the adaptability of vocational education\nand speed up the development of the modern vocational education system so as to cultivate more high-quality technical professionals.\n\n \n\nIn April 2021, the State\nCouncil promulgated 2021 Implementation Rules, pursuant to which, various policies have been introduced to encourage the development\nvocational education, such as “public schools implementing vocational education can attract the capital, technology, management\nand other elements of enterprises to establish or participate in the establishment of for-profit private schools that implement vocational\neducation” and “enterprises are encouraged to establish or participate in the establishment of private schools that implement\nvocational education in various forms, such as sole proprietorship, joint venture and cooperation”.\n\n \n\n98\n\n \n\n \n\nIn October 2021, the General\nOffice of the Central Committee of CPC and the General Office of the State Council issued the Opinions on Promoting the High-Quality\nDevelopment of Modern Vocational Education (the “Vocational Education Opinions”). The Vocational Education Opinions has put\nforward that vocational education, an important part of the national education system and human resource development, shoulders the important\nresponsibility of training diversified talents, inheriting technical skills, and promoting employment and entrepreneurship. The Vocational\nEducation Opinions urged that a batch of excellent secondary vocational schools and high-quality majors shall be established by greatly\nimproving the quality of secondary vocational education, carrying out the projects of reaching the standards for secondary vocational\nschools, and taking such measures as consolidation, cooperation, trusteeship and group school-running. The Vocational Education Opinions\nalso encouraged various enterprises to participate in the vocational education in line with law, vocational schools to cooperate with\nsocial capitals in jointly constructing vocational education infrastructures and practical training bases, as well as jointly constructing\nand sharing public practical training bases. Vocational schools shall actively attract industrial leading enterprises to be deeply involved\nin the specialty planning, curriculum provision, teaching material development, teaching design and teaching implementation of vocational\neducation, to cooperate in jointly constructing new majors, developing new courses and carrying out order-to-order training.\n\n \n\nOn April 20, 2022,\nthe SCNPC issued the revised Vocational Education Law of the PRC, which came into effect on May 1, 2022 and further encourages the\ndevelopment of vocational education from four aspects. Firstly, it clarifies for the first time that vocational education is of equal\nimportance as general education; secondly, it focuses on improving the recognition of vocational education, including enhancing the social\nstatus and treatment of talents in technology and skills, and organizing vocational skills competitions and other activities; thirdly,\nit deepens industry-education integration and school-enterprise cooperation, including that the State encourages the development of vocational\neducation at all levels and in all forms, promotes the diversified schooling and supports the extensive and equal participation of social\nforces in the vocational education, the State promotes enterprises’ vital role in running vocational education, advances the in-depth\nparticipation of enterprises in vocational education, encourages enterprises to run high-quality vocational education, the implementation\nof enterprises’ vocational education shall be included in the corporate social responsibility report, an enterprise may, by making\nuse of its capital, technology, knowledge, facilities, equipment, place, management and other factors, sponsor or jointly sponsor vocational\nschools or vocational training agencies, the State encourages, guides and supports enterprises and other non-governmental sectors to\nsponsor vocational schools and vocational training agencies in accordance with law; and fourthly, it improves the vocational education\nguarantee system and measures, including that the State takes measures according to the industrial layout and the requirements of industry\ndevelopment, vigorously develops emerging majors required by industries such as advanced manufacturing, supports the construction of\nhigh-level vocational schools and majors, optimizes the structure of educational expenditures, adapts the vocational education expenditures\nto the requirements of vocational education development, and encourages fund-raising through various channels for the development of\nvocational education in accordance with the law.\n\n** **\n\n**Notices on Management of the Charge of\nSchools**\n\n \n\nAccording to the Notice\nregarding Cancelation of the Fee Charge Permit System and Strengthening the Supervision in process and afterwards, which was issued jointly\nby the NDRC and the Ministry of Finance on January 9, 2015, the fee charge permit system shall be canceled nationwide from January 1,\n2016. Furthermore, Zhejiang Provincial Price Bureau and Zhejiang Provincial Department of Finance issued Circular on Strengthen Supervision\nCancelation of the Fee Charge Permit System in Process and afterwards on February 26, 2015, which provided more detailed supervision\nrules in accordance with Notice regarding Cancelation of the Fee Charge Permit System and Strengthening the Supervision in process and\nafterwards.\n\n \n\nPursuant to the Notice on\nRegulations Applicable to Service Charges and Fees Collected-on-behalf in the Primary and Middle Schools jointly promulgated\nby the NDRC and the MOE on July 23, 2010, services charges and fees collected-on-behalf should be publicly disclosed and\npaid on a voluntary and non-profit basis.\n\n \n\nOn January 21, 2020,\nthe Zhejiang Provincial Development and Reform Commission, Zhejiang Provincial Department of Education, Zhejiang Provincial Department\nof Human Resources and Social Security and Zhejiang Provincial Market Supervision Administration promulgated the Administrative Measures\nfor Private Education Fees, which applies to non-profit private schools for academic education in Zhejiang province. The Administrative\nMeasures for Private Education Fees stipulate, among other provisions, that: (1) the fee policy for private primary and secondary\nschools is determined by governments in accordance with the direction of marketization; (2) for the convenience of students’\nstudy and life and under the precondition of students’ willingness, private schools can provide services and charge service fees,\nor collect and pay related services fees for the third service provider, who provide services. In addition, the service fee must be charged\naccording to the fact, be settled timely and be published regularly.\n\n \n\n99\n\n \n\n \n\nOn August 17, 2020,\nthe MOE and other four ministries and commissions promulgated the Opinions on Further Strengthening and Regulating the Administration\nof Education Fees, which stipulate, among other provisions, that:\n\n \n\n(i) The measures for the\ncollection of fees by non-profit private schools shall be formulated by the people’s governments of various provinces, autonomous\nregions and centrally-administered municipalities; the charging criteria of for-profit private schools are subject to market regulation\nand shall be determined by the schools themselves. The private schools established before November 7, 2016 which have not complete\ntheir registration procedures of their for-profit or non-profit statuses must be managed according to the non-profit private schools’\ncharging policy;\n\n \n\n(ii) In addition to completing\neducation and teaching tasks, private schools can provide related convenient services for students, and organize research trips, after-school\nservices, social practice and other activities, but the parts of service fees borne by the students or parents must be charged based\non voluntary and non-profit principles. If related services are provided by the third party outside the school, the school may collect\nand pay related services fees for the third service provider;\n\n \n\n(iii) Private schools must\npublicize the charging items and standards in a prominent location in the school and indicate the charging items and standards in the\nadmissions brochure and admission notice. If fees that should be publicized were actually not publicized, or the contents of the publicity\nare not in compliance with the related policies, students are entitled to refuse the payment of the fees;\n\n \n\n(iv) Strengthen the audit\nfor non-profit private schools, and strictly prohibit the sponsor of a non-profit private school from gaining proceeds from school running\nin any way.\n\n \n\nThe 2021 Implementation\nRules for Private Education Laws, stipulates that a private school or the founder thereof shall not, under sponsor fee or any other item,\ncollect or collect in disguised form any fees related to the enrollment from students or their parents. Private schools shall establish\na cost accounting system for running schools, and reasonably determine the charging items and standards on the basis of the school operational\ncosts, market demands and other factors, in compliance with the principles of fairness, lawfulness and good faith and in consideration\nof the economic benefits and social benefits. The people’s governments of provinces, autonomous regions and municipalities directly\nunder the Central Government may set a ceiling for the fees charged by non-profit private schools that the government-run schools participate\nin the establishment thereof, that use state-owned assets, or that receive government subsidies per student. Non-profit private schools\nshall use the account filed with the relevant competent authorities for the record when collecting fees or carrying out activities. The\nrelevant competent authorities shall supervise the account. All the income of for-profit private schools shall be incorporated into the\nbank settlement account opened by the schools, and the distribution of school operating balance shall be made after the annual financial\nsettlement. Moreover, it stipulates that a private school providing compulsory education shall not conduct any transaction with any related\nparty. Where any other private school conducts any transaction with any related party, it shall follow the principles of openness, fairness\nand impartiality, fix the price reasonably and regulate the decision-making, and shall not damage the state interests, the interests\nof the school or the rights and interests of the teachers and students. Private school shall establish an information disclosure system\nfor their transactions with interested related parties.\n\n \n\nOn December 5, 2022, the\nDevelopment and Reform Commission of Hebei Province, the Department of Education of Hebei Province, the Department of Human Resources\nand Social Security of Hebei Province and the Market Supervision Administration of Hebei Province promulgated the Administrative Measures\nfor Non-profit Private School Fees. The Measures further clarifies the service charges and in lieu of fees, standardizes the independent\npricing behavior of schools, improves the refund policy of schools, and formulates fee supervision measures.\n\n \n\nAs such, these rules and\nregulations will impact our operation and business model from the perspective of tuition and other education-related fees.\n\n** **\n\n**Regulations on Safety and Health Protection\nof Schools**\n\n \n\nPursuant to the Food Safety\nLaw of the People’s Republic of China, amended on September 12, 2025, collective canteens of schools shall obtain food business\nlicenses in accordance with the law and strictly abide by the relevant laws, regulations and food safety standards. Schools shall only\norder meals from off-site food providers that have obtained food production and business licenses and conduct inspections on the ordered\nfood in accordance with the relevant requirements.\n\n \n\n100\n\n \n\n \n\nPursuant to Measures for\nthe Administration of Food Trade Licensing and Recordation promulgated on June,15 2023 and took effect on December 1 2023, a food operation\nlicense shall be obtained in accordance with the law to engage in food selling and catering services within the territory of the PRC.\nWhile a food operation license is not required in the following circumstances: (a) sales of edible agricultural products; (b) sales of\nonly prepackaged food; (c)sales of specific total nutrient formula food within the scope of the food for special medical purposes by\nmedical institutions or drug retailers; (d) sales of food produced by food producers which have obtained food production licenses in\ntheir production and processing locations or through the Internet; or (e) other circumstances where a Food Operation License is not required\naccording to laws and regulations. A food trader that engages in food trade activities in different business premises shall obtain food\noperation licenses or undergo recordation respectively in accordance with the law.\n\n \n\nIn accordance with the Provisions\non Food Safety and Nutrition and Health Management in Schools, which was promulgated on February 20, 2019 and became effective on\nApril 1, 2019, schools shall, in accordance with the provisions of food safety laws and regulations and the requirements of the\nhealthy China strategy, establish and improve relevant systems, implement the campus food safety responsibility, and carry out publicity\nand education on food safety, nutrition and health. The principal (director) responsibility system shall be practiced in the work of\nschool food safety.\n\n \n\nAccording to the Circular\non Strengthening Hygiene and Epidemic Prevention and Food Hygiene and Safety of Private Schools, which was promulgated on April 29,\n2006, private schools should pay high attention to and strengthen the school hygiene and epidemic prevention and the food hygiene and\nsafety.\n\n \n\nAccording to the Administrative\nMeasures of Safety of Kindergartens, Primary and Middle School, which was promulgated on June 30, 2006 and became effective on September 1,\n2006, in order to ensure the hygiene and safety of food and drink of teachers and students, schools should (i) establish a system\nof procurement of canteen supplies from designated suppliers, (ii) establish a system of demanding for certificate and keeping record\nduring procurement, (iii) establish a system of retention of food for checkup and record, and (iv) examine the situation of\nhygiene and safety of drinking water.\n\n \n\nPursuant to the Circular\non Further Strengthening Food Safety of School Canteens issued on August 11, 2011, school canteens are comprehensively required\nto carry out food safety self-inspection. Local food and drug administration at all levels are required to comprehensively strengthen\nsupervision and inspection on food safety of school canteens before commencement of each term, and, before the commencement of every\nspring term and every autumn term, should consider school canteens as key point of supervision and strengthen the supervision and inspection.\nSchool food safety responsibility system should be comprehensively carried out.\n\n \n\nAccording to the Law on\nthe Protection of Minors of the PRC, of which the latest amendment took effective on April 26, 2024, schools shall establish safety system,\nimprove safety education among the minors and adopt measures to guarantee their personal safety.\n\n \n\nIn accordance with the Regulation\non Safety Management of Middle, Primary Schools and Kindergartens, which was promulgated on June 30, 2006 and became effective on\nSeptember 1, 2006, schools shall be responsible for safety management and education, establish and improve internal safety management\nsystem and safety emergency response mechanism, incorporate safety education into its teaching content and carry out safety education\namong students.\n\n \n\nAccording to the Regulation\non Sanitary Work of Schools, which was promulgated on June 4, 1990 and became effective on the same day, schools shall carry out\nsanitary work. The main tasks of the sanitary work include monitoring health conditions of students, carrying out health education among\nstudents, helping students develop good health habits, improving health environment and health conditions for teachers and enhancing\nprevention and treatment of infectious disease and common diseases among students.\n\n \n\nOn January 8, 2012,\nthe Department of Education of Zhejiang Province promulgated Opinions on Further Strengthening the Management of Primary, Middle and\nHigh School Canteens, and on May 30, 2024, the Department of Education of Zhejiang Province and five other provincial departments jointly\nissued Opinions on Further Strengthening the Management of Primary and Middle School Canteens (collectively the “School Canteens\nOpinions”). In accordance with the School Canteens Opinions, all primary schools, middle schools and high schools shall regulate\nthe school canteens management and guarantee the food quality, health and safety of school canteens.\n\n \n\n101\n\n \n\n \n\nPursuant to Regulations\non Administration of Security Services, which issued by State Council on October 13, 2009 and became effective on January 1,\n2010, which was amended on November 29, 2020 and March 29, 2022, enterprises hiring security personnel shall file with the local\npublic security administration.\n\n \n\nAs of the date of the annual\nreport, the schools’ canteens have acquired the applicable food operation licenses. In addition, we and the VIEs have submitted\nthe recruitment of security personnel with competent authority for record.\n\n** **\n\n**Regulations on the Operation of High Schools**\n\n \n\nThe MOE has promulgated\nseveral regulations on the operation of high schools, which mainly concern the choice of textbooks, the curriculum system and the graduation\nexam system. According to the Circular of the Central Office of the MOE on the Selection of the Trial Textbooks for the Curriculum of\nHigh Schools promulgated on April 26, 2005 and the Interim Measures for the Management of the Selection of the Primary and Middle\nSchool Textbooks promulgated and came into effect on September 30, 2014, the textbooks used by the primary and middle schools can\nonly be selected from the Catalog issued by the MOE; and the provincial education authority is in charge of textbook selection within\nits relevant administrative jurisdiction and has the power to approve the curriculum system applied in the primary and middle schools\nwithin the province.\n\n \n\nFurther, the MOE issued\nthe Notice on Developing Trial Curriculum System in High Schools, the Guidance on Strengthening Instruction on Developing Trial Curriculum\nSystem in High Schools, the Notice on Propelling 2006 Trial Curriculum System in High Schools and the Notice on Propelling 2007 Trial\nCurriculum System in High Schools from 2003 through 2007, pursuant to which the MOE developed a new curriculum system in high schools\nnationwide, and the implementation of such curriculum system is carried on mainly by the provincial educational authorities while the\nMOE mainly provides guidance to its local counterparts. Under the guidelines of the MOE and subject to approval by the respective provincial\neducational authorities, the high schools may adopt their own unique curriculum system.\n\n \n\nThe MOE issued the Regulations\non Disciplinary Measures for Primary and Secondary School Education (Trial) on December 23, 2020 and the regulations came into effect\non March 1, 2021. It stipulates the attributes, the scope of educational disciplinary measures, and corresponding rules, and requires\nschools and teachers to follow the legality and appropriateness when implementing educational disciplinary measures.\n\n** **\n\n**Regulations on Human Resources Services**\n\n \n\nOn June 29, 2018, the State\nCouncil promulgated the Interim Regulation on Human Resources Market, which became effective on October 1, 2018. The Interim Regulation\non Human Resources Market applies to job seeking, recruitment and provision of human resources services through the human resources market\nin the PRC, which provides that human resources service include public human resources service institutions established by the governments\nand for-profit human resources service institutions engaging in business activities of human resources services. A for-profit human resources\nservice organization engaging in employment agency activities shall apply to the human resources and social security administrative authorities\nfor administrative licensing pursuant to the law, and obtain a Human Resources Service License. For-profit human resources service institutions\nengaging in collection and dissemination of human resources supply and demand information, employment and entrepreneurship guidance,\nhuman resources management consulting, human resources evaluation, human resources training, undertaking outsourcing contracts of human\nresources services etc. shall complete filing formalities with the human resources and social security administrative authorities within\n15 days from commencement of business. Where a profit-making human resource service institution establishes a branch, it shall, within\n15 days from the date of completion of the industrial and commercial registration, report in writing to the administrative department\nof human resources and social security where the branch office locates. For-profit human resources service institutions engaging in labor\ndispatch business shall comply with the relevant labor dispatch provisions of the State.\n\n** **\n\n102\n\n \n\n \n\n**Regulations on Labor Dispatch Services**\n\n \n\nThe Measures for the Implementation\nof Administrative License for Labor Dispatch promulgated by the MHRSS on June 20, 2013 and became effective on July 1, 2013. Under the\nMeasures for the Implementation of Administrative License for Labor Dispatch, the labor dispatch service provider shall apply to the\nhuman resources and social security administrative department at its domicile (hereinafter referred to as the licensing authority) for\nan administrative license according to law. Where a labor dispatch service provider establishes a subsidiary to operate the labor dispatch\nservices, the subsidiary shall apply to the local licensing authority for an administrative license; if the labor dispatch service provider\nestablishes a branch to operate the labor dispatch services, it shall report the licensing authority in writing, and the branch shall\nfile with the local human resources and social security administrative department.\n\n \n\nThe Interim Provisions on\nLabor Dispatch promulgated by the MHRSS on January 24, 2014 and took effect on March 1, 2014. Under the Interim Provisions on Labor Dispatch,\nthe labor dispatch service provider shall:(i) truthfully inform the dispatched laborer of the provisions of Article 8 of the Labor Contract\nLaw, the rules and regulations to be observed, and the contents of the labor dispatch agreement; (ii) establish a training system to\nconduct onboarding knowledge and safety education training for dispatched workers; (iii) pay the labor remuneration and conduct the related\ntreatment of the dispatched laborers in accordance with the state regulations and the labor dispatch agreement; (iv) in accordance with\nthe provisions of the State and the labor dispatch agreement, pay social insurance premiums for the dispatched workers in accordance\nwith the law, and handle the relevant procedures for social insurance; (v) urge the institutions that accept employment in the form of\nlabor dispatch to provide labor protection and labor safety and sanitation conditions for the dispatched workers according to law; (vi)\nissue the relevant proof regarding dissolving or terminating the labor contract according to law; (vii) assist in handling disputes between\ndispatched laborers and the institutions that accept employment in the form of labor dispatch; (viii) conduct other matters as stipulated\nby laws, regulations and rules.\n\n** **\n\n**PRC Laws and Regulations Relating to Property\nin the PRC**\n\n \n\nOn May 28, 2020, the\nPRC Civil Code was approved by the NPC and became effective on January 1, 2021. The Civil Code provides that non-profit legal persons\nestablished for public welfare such as schools, kindergartens and medical institutions shall not mortgage their educational facilities,\nhealth care facilities and other public welfare facilities.\n\n \n\nAccording to the Civil Code,\ntransferable fund units and equity, property right in intellectual property rights of transferable exclusive trademark rights, patent\nrights, copyrights, etc., existing and future accounts receivable and other property rights that can be pledged as stipulated by any\nlaw or administrative regulation may be pledged.\n\n \n\nAs of the date of the annual\nreport, we and the VIEs have the land-use rights of eight (8) pieces of land and the property ownership of twenty-five\n(25) buildings legally.\n\n \n\n**Regulations on Lease of Property**\n\n \n\nPursuant to the Administrative\nMeasures for Commodity Housing Leasing promulgated on December 1, 2010 and effective as of February 1, 2011, the parties to\na real estate lease shall apply for lease registration with the competent construction (real estate) departments of the municipalities\ndirectly under the Central Government, cities and counties where the housing is located within 30 days after the lease contract is signed.\nThere will be a fine below RMB1,000 on individuals who fail to make corrections within the specified time limit, and a fine between RMB1,000\nand RMB10,000 on enterprises when fail to make corrections within the specified time limit.\n\n** **\n\n**Laws and Regulations Related to the Protection\nof Cyber Security, Data and Privacy**\n\n \n\nThe Cyber Security Law of\nthe PRC promulgated on November 7, 2016 and came into effect on June 1, 2017, and was last amended on October 28, 2025, requires\nthat when constructing and operating a network, or providing services through a network, technical measures and other necessary measures\nshall be taken in accordance with laws, administrative regulations and the compulsory requirements set forth in national standards to\nensure the secure and stable operation of the network, to effectively cope with cyber security events, to prevent criminal activities\ncommitted on the network, and to protect the integrity, confidentiality and availability of network data. The Cyber Security Law emphasizes\nthat any individuals and organizations that use networks must not endanger network security or use networks to engage in unlawful activities\nsuch as those endangering national security, economic order and social order or infringing the reputation, privacy, intellectual property\nrights and other lawful rights and interests of others. The Cyber Security Law has also reaffirmed certain basic principles and requirements\non personal information protection previously specified in other existing laws and regulations. Any violation of the provisions and requirements\nunder the Cyber Security Law may subject an internet service provider to rectifications, warnings, fines, confiscation of illegal gains,\nrevocation of licenses, cancellation of qualifications, closedown of websites or even criminal liabilities.\n\n \n\n103\n\n \n\n \n\nThe Data Security Law of\nthe PRC was passed by the Standing Committee of the 13th NPC at the 29th Session on June 10, 2021 and came into effect\non September 1, 2021. The Data Security Law requires the data processor to establish and improve a whole-process data security management\nsystem, organize data security education and training, and take corresponding technical measures and other necessary measures to safeguard\ndata security. In conducting data processing activities by using the Internet or any other information network, the data processor shall\nperform the above data security protection obligations on the basis of the hierarchical cybersecurity protection system. Any violation\nof the provisions and requirements under the Data Security Law may subject a data processor to rectifications, warnings, fines, suspension\nof the related business, revocation of licenses or even criminal liabilities.\n\n \n\nThe Personal Information\nProtection Law of the PRC was passed by the Standing Committee of the 13th NPC at the 30th Session on August 20, 2021 and has come\ninto effect on November 1, 2021. The Personal Information Protection Law reiterates the circumstances under which a personal information\nprocessor could process personal information and the requirements for such circumstances, such as when (i) the individual’s\nconsent has been obtained; (ii) the processing is necessary for the conclusion or performance of a contract to which the individual\nis a party; (iii) the processing is necessary to fulfill statutory duties and statutory obligations; (iv) the processing is\nnecessary to respond to public health emergencies or protect natural persons’ life, health and property safety under emergency\ncircumstances; (v) the personal information that has been made public is processed within a reasonable scope in accordance with\nthis Law; (vi) personal information is processed within a reasonable scope to conduct news reporting, public opinion-based supervision,\nand other activities in the public interest; or (vii) under any other circumstance as provided by any law or regulation. It also\nstipulates the obligations of a personal information processor. Any violation of the provisions and requirements under the Personal Information\nProtection Law may subject a personal information processor to rectifications, warnings, fines, suspension of the related business, revocation\nof licenses, being entered into the relevant credit record or even criminal liabilities.\n\n \n\nOn December 28, 2021,\nthirteen PRC governmental and regulatory agencies, including the CAC, promulgated the Measures for Cyber Security Review, which came\ninto effect on February 15, 2022. The Measures for Cyber Security Review specifies that the procurement of network products and\nservices by operator of critical information infrastructure and the activities of data process carried out by Internet platform operator\nthat raise or may raise “national security” concerns are subject to strict cyber security review by Cybersecurity Review\nOffice of CAC. Before critical information infrastructure operator purchases internet products and services, it should assess the potential\nrisk of national security that may be caused by the use of such products and services. If such use of products and services may give\nraise to national security concerns, it should apply for a cyber security review by the Cyber Security Review Office and a report of\nanalysis of the potential effect on national security shall be submitted when the application is made. In addition, Internet platform\noperators that possess the personal data of over one million users must apply for a review by the Cyber Security Review Office, if they\nplan listing of companies in foreign countries. The CAC may voluntarily conduct cyber security review if any network products and services\nand activities of data process affects or may affect national security. The cyber security review focuses on the assessment of risk factors\ninclude (i) the risk of critical information infrastructure being illegally controlled, interfered or destroyed as a result of the\nuse of the products or services; (ii) the continuous harm to the business of critical information infrastructure by the interruption\nof provision of products or services; (iii) the security, openness, transparency, diversity of sources, reliability of supply and\npotential supply interruptions of products and services due to political, diplomatic or international trade issues; (iv) whether\nthe products and services provider comply with PRC laws and regulations; (v) the risk of core data, important data or a large amount\nof personal information being stolen, leaked, destroyed, illegally utilized or exited the country; (vi) regarding to listing, there\nare risks of critical information infrastructure, core data, important data or a large amount of personal information being influenced,\ncontrolled or maliciously used by foreign governments, as well as network information security risks; and (vii) other factors that\nmay endanger the security of critical information infrastructure, cyber security and data security. It may take approximately 70 business\ndays in maximum for the general cybersecurity review upon the delivery of their applications, which may be subject to extensions for\na special review.\n\n** **\n\n104\n\n \n\n \n\n**Legal Regulations over Intellectual Property\nin the PRC**\n\n** **\n\n**Copyright**\n\n \n\nPursuant to the Copyright\nLaw of the PRC, or the Copyright Law which last amended on November 11, 2020 with the effective date of June 1, 2021. Copyrights\ninclude personal rights such as the right of publication and that of attribution as well as property rights such as the right of production\nand that of distribution. Reproducing, distributing, performing, projecting, broadcasting or compiling a work or communicating the same\nto the public via an information network without permission from the owner of the copyright therein, unless otherwise provided in the\nCopyright Law, shall constitute infringements of copyrights. The infringer shall, according to the circumstances of the case, undertake\nto cease the infringement, take remedial action, and offer an apology, pay damages, etc.\n\n \n\nFurthermore, the Implementation\nRegulations for the Copyright Law, which was last amended on January 30, 2013 by State Council, provides more detailed implementation\nguidance for copyright legal regime.\n\n \n\nAs of the date of the annual\nreport, we have five software with computer software copyright which are relevant to our future business through the ownership of Hangzhou\nYouxi by our wholly-owned subsidiary Liandu WFOE, including among others live streaming supervision system, Android live streaming system,\nand Apple live streaming system, etc.\n\n** **\n\n**Trademark**\n\n \n\nPursuant to the Trademark\nLaw of the PRC, or the Trademark Law, which was revised on April 23, 2019 and with effect from November 1, 2019, the right\nto exclusive use of a registered trademark shall be limited to trademarks which have been approved for registration and to goods for\nwhich the use of trademark has been approved. The period of validity of a registered trademark shall be ten years, counted from the day\nthe registration is approved. According to the Trademark Law, usage of a trademark that is identical with or similar to a registered\ntrademark in connection with the same or similar goods without authorization of the owner of the registered trademark constitutes an\ninfringement of the exclusive right to use a registered trademark. The infringer shall, in accordance with the regulations, undertake\nto cease the infringement, take remedial action, and pay damages, etc.\n\n \n\nOn August 3, 2002,\nthe State Council promulgated the Implementation Regulations for the Trademark Law of the PRC, which was lately amended on April 29,\n2014 and was issued to providing practical implementation rules of trademarks.\n\n \n\nAs of the date of the annual\nreport, we and the VIEs lawfully hold 46 registered trademarks in the PRC.\n\n** **\n\n**Patent**\n\n \n\nPursuant to the Patent Law\nof the PRC, or the Patent Law, which was last revised on October 17, 2020 with the effective date of June 1, 2021, after the\ngrant of the patent right for an invention or utility model, except where otherwise provided for in the Patent Law, no entity or individual\nmay, without the authorization of the patent owner, exploit the patent, that is, make, use, offer to sell, sell or import the patented\nproduct, or use the patented process, or use, offer to sell, sell or import any product which is a direct result of the use of the patented\nprocess, for production or business purposes. And after a patent right is granted for a design, no entity or individual shall, without\nthe permission of the patent owner, exploit the patent, that is, for production or business purposes, manufacture, offer to sell, sell,\nor import any product containing the patented design. Where the infringement of patent is decided, the infringer shall, in accordance\nwith the regulations, undertake to cease the infringement, take remedial action, and pay damages, etc.\n\n** **\n\n**Domain Name**\n\n \n\nPursuant to the Administrative\nMeasures for Internet Domain Names, which was promulgated by the Ministry of Industry and Information Technology of the PRC on August 24,\n2017 and with effect from November 1, 2017, “domain name” shall refer to the character mark of hierarchical structure,\nwhich identifies and locates a computer on the internet and corresponds to the Internet protocol (IP) address of that computer and the\nprinciple of “first come, first serve” is followed for the domain name registration service. Domain name registrations are\nhandled through domain name service agencies established under the relevant regulations, and the applicants become domain name holders\nupon successful registration.\n\n** **\n\n105\n\n \n\n \n\n**PRC Laws and Regulations Relating to Labor\nProtection**\n\n** **\n\n**Employment**\n\n \n\nAccording to the Labor Law\nof the PRC, or the Labor Law, which was promulgated by the Standing Committee of the NPC on July 5, 1994 and became effective on\nJanuary 1, 1995 and was amended on December 29, 2018, an employer shall establish a comprehensive management system to safeguard\nthe rights of its employees, including developing and improving its labor safety and health system, stringently implementing national\nprotocols and standards on labor safety and health, conducting labor safety and health education for workers, guarding against labor\naccidents and reducing occupational hazards.\n\n \n\nThe Labor Contract Law,\nwhich was promulgated by the Standing Committee of the NPC on June 29, 2007 and became effective on January 1, 2008, and was\namended on December 28, 2012, and the Implementation Regulations on Labor Contract Law, which was promulgated and became effective\non September 18, 2008, regulate employer and employee relations and contain specific provisions on the terms of the labor contract.\nLabor contracts must be made in writing. An employer and an employee may enter into a fixed-term labor contract, an un-fixed term\nlabor contract, or a labor contract that concludes upon the completion of certain work assignments, after reaching due negotiations.\nAn employer may legally terminate a labor contract and dismiss its employees after reaching agreement upon due negotiations with the\nemployee or by fulfilling the statutory conditions. Labor contracts concluded prior to the enactment of the Labor Law and subsisting\nwithin the validity period thereof shall continue to be honored.\n\n \n\nAs of the date of the annual\nreport, we and the VIEs have executed labor contracts with all of our employees in accordance with applicable PRC laws.\n\n** **\n\n**Social Insurance**\n\n \n\nThe Social Insurance Law,\nwhich was promulgated on October 28, 2010 and became effective on July 1, 2011, and was amended on December 29, 2018,\nhas included pertinent provisions for basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and\nbasic medical insurance, and has elaborated in detail the legal obligations and liabilities of employers who do not comply with the relevant\nlaws and regulations on social insurance.\n\n \n\nOn July 20, 2018, the\nGeneral Offices of the CPC Central Committee and the General Office of the State Council issued the Plan for Reforming the State and\nLocal Tax Collection and Administration Systems, which stipulated that the State Administration of Taxation of the PRC, or the SAT will\nbecome solely responsible for collecting social insurance premiums.\n\n \n\nAccording to the Interim\nMeasures for Participation in the Social Insurance System by Foreigners Working within the Territory of China (2024 Revised), which was\npromulgated and became effective on December 23, 2024 by the MOHRSS, employers who employ foreigners shall participate in the basic\npension insurance, unemployment insurance, basic medical insurance, occupational injury insurance, and maternity leave insurance in accordance\nwith the law, with the social insurance premiums to be contributed respectively by the employers and foreigner employees as required.\nIn accordance with such Interim Measures, the social insurance administrative agencies shall supervise and examine the legal compliance\nof foreign employees and employers and the employers who do not pay social insurance premium in conformity with the laws shall be subject\nto the administrative provisions provided in the Social Insurance Law and the relevant regulations and rules mentioned above.\n\n \n\nAs of December 31,\n2025, we and the VIEs had made social insurance contribution for the PRC-based employees based on the relevant PRC laws and regulations\nand practical measures.\n\n** **\n\n106\n\n \n\n \n\n**Housing Fund**\n\n \n\nAccording to the Regulations\non the Administration of Housing Provident Fund, which was promulgated and became effective on April 3, 1999, and was amended on\nMarch 24, 2019, employers are required to contribute, on behalf of their employees, to housing provident funds. The employer shall\nprocess housing provident fund payment and deposit registrations with the housing provident fund administration center. The employer\nshall timely pay up and deposit housing provident fund contributions in full amount, any employer who violates the above regulations\nshall be fined and ordered to make good the deficit within a designed period. Those who fail to process their registrations within the\ndesignated period shall be subject to a fine ranging from RMB10,000 to RMB50,000. When companies breach these regulations and fail to\npay up housing provident fund contributions in full amount as due, the housing provident fund administration center shall order such\ncompanies to pay up within a designated period, and may further apply to the People’s Court for mandatory enforcement against those\nwho still fail to comply with such order after the expiry of such period.\n\n \n\nAs of December 31,\n2025, we and the VIEs had made housing fund contribution for the PRC-based employees based on the relevant PRC laws and regulations and\npractical measures.\n\n** **\n\n**Regulations on Taxation in the PRC**\n\n** **\n\n**Income Tax**\n\n \n\nIn accordance with the PRC\nEnterprise Income Tax Law (the “EIT Law”), which was promulgated on March 16, 2007 and amended and became effective\non December 29, 2018, and the Regulation on the Implementation of Enterprise Income Tax Law of the PRC, which was promulgated on\nDecember 6, 2007 and last amended on December 6, 2024 by the State Council of PRC, enterprises are classified as either “resident\nenterprises” or “non-resident enterprises”. A resident enterprise shall pay enterprise income tax on its income\nderiving from both inside and outside China at the rate of enterprise income tax of 25%. A non-resident enterprise that has\nan establishment or place of business in the PRC shall pay enterprise income tax on its income deriving from inside China and obtained\nby such establishment or place of business, and on its income which derives from outside China but has actual relationship with such\nestablishment or place of business, at the rate of enterprise income tax of 25%. A non-resident enterprise that does not have\nan establishment or place of business in China, or has an establishment or place of business in China but the income has no actual relationship\nwith such establishment or place of business, shall pay enterprise income tax on its income deriving from inside China at the reduced\nrate of enterprise income tax of 10%.\n\n \n\nAccording to Notice of the\nMinistry of Finance and the State Administration of Taxation on Tax Policies Relating to Education, or the Circular 39, promulgated in\nFebruary 2004, and Notice of the Ministry of Finance and the State Administration of Taxation on Issues Concerning Strengthening the\nAdministration over the Collection of Business Tax on Educational Services, or the Circular 3, issued in January 2006, schools shall\nbe exempt from enterprise income tax on fees they have collected upon approval and have incorporated under the fiscal budget management\nor the special account management of the funds outside the fiscal budget. Schools shall be exempt from enterprise income tax on the financial\nallocations they have received and special subsidies they have obtained from their administrative departments or institutions at higher\nlevels.\n\n \n\nAccording to the Law for\nPromoting Private Education and the 2021 Implementation Rules, private schools enjoy the state preferential tax policies, while non-profit private\nschools enjoy the same preferential tax treatment as public schools. In February 2015, the SAT issued the Bulletin on Issues of Enterprise\nIncome Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or the SAT Bulletin 7 as amended in 2017. Pursuant\nto this bulletin, an “indirect transfer” of assets, including equity interests in a PRC resident enterprise, by non-PRC resident\nenterprises may be re-characterized and treated as a direct transfer of PRC taxable assets, if such arrangement does not have a reasonable\ncommercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from\nsuch indirect transfer may be subject to PRC enterprise income tax. According to the SAT Bulletin 7, “PRC taxable assets”\ninclude assets attributed to an establishment in China, immovable properties located in China, and equity investments in PRC resident\nenterprises, in respect of which gains from their transfer by a direct holder, being a non-PRC resident enterprise, would be\nsubject to PRC enterprise income taxes.\n\n** **\n\n107\n\n \n\n \n\n**Income Tax in Relation to Dividend Distribution**\n\n \n\nThe PRC and the government\nof Hong Kong entered into the Arrangement between the Mainland of the PRC and Hong Kong for the Avoidance of Double Taxation and the\nPrevention of Fiscal Evasion with respect to Taxes on Income, or the Double Tax Avoidance Arrangement on August 21, 2006. According\nto the Double Tax Avoidance Arrangement, if the beneficiary of the dividends is a Hong Kong resident enterprise, which directly holds\nno less than 25% equity interests in the aforesaid enterprise, the tax levied shall be 5% of the distributed dividends. The 10% withholding\ntax rate applies to dividends paid by a PRC company to a Hong Kong resident if such Hong Kong resident holds less than 25% of the equity\ninterests in such PRC company. Pursuant to the Circular of the State Administration of Taxation on Relevant Issues relating to the Implementation\nof Dividend Clauses in Tax Agreements promulgated by the SAT and became effective on February 20, 2009, recipients of dividends\npaid by PRC resident enterprises must satisfy certain requirements in order to obtain a preferential income tax rate pursuant to a tax\ntreaty. One such requirement is that the taxpayer must be the “beneficiary owner” of relevant dividends. In order for a corporate\nrecipient of dividends paid by a PRC enterprise to enjoy preferential tax treatment pursuant to a tax treaty, such recipient must be\nthe direct owner of a certain proportion of the share capital of the PRC enterprise at all times during the 12 months preceding its receipt\nof the dividends. Pursuant to the Announcement of State Taxation Administration on Promulgation of the Administrative Measures on Non-resident Taxpayers\nEnjoying Treaty Benefits, which was promulgated on October 14, 2019 and became effective on January 1, 2020, non-resident taxpayers\nmaking their own declaration shall self-assess whether they are entitled to treaty benefits and need to claim such benefits, and shall\nsubmit an “Information Report on Non-resident Taxpayers Claiming Treaty Benefits” at the time of declaration, gather\nand retain the relevant materials pursuant to the provisions of Article 7 of these Measures for future inspection. Furthermore, all levels\nof tax authorities shall, through strengthening follow-up administration for non-resident taxpayers enjoying treaty\nbenefits, implement treaties accurately, and prevent abuse of tax treaties and tax avoidance risks.\n\n** **\n\n**Value-added Tax, or the VAT**\n\n \n\nAccording to the Temporary\nRegulations on Value-added Tax, which was amended on November 10, 2008, February 6, 2016 and November 19, 2017 and the\nDetailed Implementing Rules of the Temporary Regulations on Value-added Tax, which was amended on October 28, 2011 and became effective\non November 11, 2011, or collectively, the VAT Law, all taxpayers selling goods or labor services of processing, repairing and replacement,\nselling services, intangible assets, immovable and importation of goods within the PRC shall pay value-added tax. For general VAT taxpayer\nselling or importing goods other than those specifically listed in the VAT Law, the value-added tax rate is 17%. On April 4, 2018,\nthe MOF and the SAT promulgated the Notice on Adjusting Value-added Tax Rates, which reduced the tax rates for sale, import, and export\nof goods.\n\n \n\nThe Value-Added Tax Law\nof the PRC was adopted on December 25, 2024, and became effective on January 1, 2026. At the same time, the Temporary Regulations on\nValue-added Tax will be repealed. This law clarifies aspects such as taxpayers, tax rates, and the calculation of the tax payable, and\nstipulates matters related to tax preferences and collection management to improve the value-added tax system, standardize the levy and\npayment process, and protect the rights and interests of taxpayers.\n\n \n\nFurthermore, according to\nthe Trial Scheme for the Conversion of Business Tax to Value-added Tax, which was promulgated by the MOF and the SAT, the State began\nto launch taxation reforms in a gradual manner with effect from January 1, 2012, whereby the collection of VAT in lieu of business\ntax items was implemented on a trial basis in regions showing significant radiating effects in economic development and providing outstanding\nreform examples, beginning with production service industries such as transportation and certain modern service industries.\n\n \n\nIn accordance with Circular\non Comprehensively Promoting the Pilot Program of the Collection of Value-added Tax in Lieu of Business Tax, which was promulgated on\nMarch 23, 2016 and came into effect on May 1, 2016 and amended on March 20, 2019, upon approval of the State Council,\nthe pilot program of the collection of VAT in lieu of business tax shall be promoted nationwide in a comprehensive manner starting from\nMay 1, 2016, and all business tax payers engaged in the building industry, the real estate industry, the financial industry and\nthe life service industry shall be included in the scope of the pilot program with regard to payment of value added tax instead of business\ntax. For general service income, the applicable VAT rate is 6%. Schools engaged in academic education are exempted from VAT on their\neducation service.\n\n** **\n\n**Other Tax Exemptions**\n\n \n\nAccording to Circular 39\nand Circular 3, the real properties and land used by schools established by enterprises shall be exempt from house property tax and urban\nland use tax. Schools which expropriate arable land upon approval shall be exempt from arable land use tax.\n\n** **\n\n108\n\n \n\n \n\n**PRC Laws and Regulations Relating to Companies**\n\n \n\nThe establishment, operation\nand management of corporate entities in the PRC are governed by the Company Law of the PRC, or the Company Law, which was promulgated\non December 29, 1993 and amended on December 25, 1999, August 28, 2004, October 27, 2005, December 28, 2013, October 26, 2018 and December\n29, 2023, respectively. Under the Company Law, companies are generally classified into two categories: limited liability companies and\nlimited companies by shares. According to the Company Law as amended in 2023, the registered capital of a limited liability company shall\nbe the amount of capital contributions subscribed for by all its shareholders as registered with the company registration authority.\nThe capital contributions subscribed for by all shareholders shall be fully paid within five years of formation of the company in accordance\nwith the company’s bylaw.\n\n \n\nOn July 1, 2024, the State\nCouncil promulgated the Provisions about Implementing the Registered Capital Registration Administration System in the Company Law of\nthe People’s Republic of China. According to the provisions, if the period of capital contribution of a company established before\nthe enforcement of the Company Law exceeds the period stipulated in the Company Law, it shall be adjusted within the transitional period\n(July 1, 2024 to June 30, 2027).\n\n** **\n\n**PRC Laws and Regulations Relating to Securities**\n\n \n\nThe revised Securities Law\nof the PRC, or the Securities law was passed by the 13th NPC on December 28, 2019 and took effect from March 1, 2020. The Securities\nLaw further improves the investor protection and the information disclosure measures. According to the Securities law, the securities\nregulatory authority of the State Council, namely the China Securities Regulatory Commission, or the CSRC, may establish a regulatory\ncooperation mechanism with the securities regulatory authorities of another country or region, to implement cross-border supervision\nand administration. Moreover, the Securities law also provides that the offering and trading of securities outside the People’s\nRepublic of China which disrupt the domestic market order of the People’s Republic of China and harm the legitimate rights and\ninterests of domestic investors shall be dealt with pursuant to the relevant provisions of this Law, and legal liability shall be pursued.\n\n** **\n\n**PRC Laws and Regulations Relating to Foreign\nExchange**\n\n \n\nThe principal regulation\ngoverning foreign currency exchange in China is the Foreign Exchange Administration Rules of the PRC, or the Foreign Exchange Administration\nRules. The Foreign Exchange Administration Rules were promulgated by the State Council of the PRC on January 29, 1996 and with effect\nfrom April 1, 1996 and were amended on January 14, 1997 and August 5, 2008. Under these rules, Renminbi is generally freely\nconvertible for payments of current account items, such as trade and service-related foreign exchange transactions and dividend payments,\nbut not freely convertible for capital account items, such as direct investment, loan or investment in securities outside China, unless\nthe prior approval of the State Administration of Foreign Exchange of the PRC, or the SAFE or its local counterparts is obtained.\n\n \n\nUnder the Foreign Exchange\nAdministration Rules, foreign-invested enterprises in the PRC may, without the approval of the SAFE, make a payment from their foreign\nexchange accounts at designated foreign exchange banks for paying dividends with certain evidencing documents (board resolutions, tax\ncertificates, etc.), or for trade and services-related foreign exchange transactions by providing commercial documents evidencing such\ntransactions. They are also allowed to retain foreign currency (subject to a cap approval by the SAFE) to satisfy foreign exchange liabilities.\nIn addition, foreign exchange transactions involving overseas direct investment or investment and trading in securities, derivative products\nabroad are subject to registration with the SAFE or its local counterparts and approval form or filling with the relevant PRC government\nauthorities (if necessary).\n\n \n\nAccording to the Circular\non the Management of Offshore Investment and Financing and Round Trip Investment By Domestic Residents through Special Purpose Vehicles,\nor Circular 37, which was promulgated on July 4, 2014 and with effect from the same day, the domestic resident shall be required\nto register with the local branch of the SAFE for foreign exchange registration of overseas investments before contributing the domestic\nand overseas lawful assets or interests to a SPV, and to update such registration in the event of any change of basic information of\nthe registered SPV or major change in the SPV’s capital, including increases and decreases of capital, share transfers, share swaps,\nmergers or divisions. The SPV is defined as an “offshore enterprise directly established or indirectly controlled by the domestic\nresident (including domestic institution and individual resident) with their legally owned assets and equity of the domestic enterprise,\nor legally owned offshore assets or equity, for the purpose of investment and financing;” “Round Trip Investments”\nrefer to “the direct investment activities carried out by a domestic resident directly or indirectly via an SPV, i.e. establishing\na foreign-invested enterprise or project within the PRC through a new entity, merger or acquisition and other ways, while obtaining ownership,\ncontrol, operation and management and other rights and interests.” In addition, according to the procedural guidelines as attached\nto Circular 37, the principle of review has been changed to “the domestic individual resident is only required to register the\nSPV directly established or controlled (first level).”\n\n \n\n109\n\n \n\n \n\nPursuant to Circular of\nthe State Administration of Foreign Exchange on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration\nPolicies, or Circular 13, which was promulgated on February 13, 2015, implemented on June 1, 2015 and amended on December 30,\n2019, the initial foreign exchange registration for establishing or taking control of a SPV by domestic residents can be conducted with\na qualified bank, instead of the local foreign exchange bureau, and Circular 13 also simplifies some procedures relating to foreign exchange\nfor direct investments.\n\n \n\nOn March 30, 2015,\nthe SAFE promulgated the Circular on Reforming the Management Approach regarding the Settlement of Foreign Exchange Capital of Foreign-invested\nEnterprises, or Circular 19, which came into effect from June 1, 2015 and was amended on March 23, 2023. According to Circular 19,\nthe foreign exchange capital of foreign-invested enterprises shall be subject to the Discretional Foreign Exchange Settlement. The Discretional\nForeign Exchange Settlement refers to the foreign exchange capital in the capital account of a foreign-invested enterprise for which\nthe rights and interests of monetary contribution has been confirmed by the local foreign exchange bureau (or the book-entry registration\nof monetary contribution by the banks) can be settled at the banks based on the actual operational needs of the foreign-invested enterprise.\nThe proportion of Discretional Foreign Exchange Settlement of the foreign exchange capital of a foreign-invested enterprise is temporarily\ndetermined to be 100%. The Renminbi converted from the foreign exchange capital will be kept in a designated account and if a foreign-invested\nenterprise needs to make further payment from such account, it still needs to provide supporting documents and go through the review\nprocess with the banks.\n\n \n\nThe SAFE issued the Circular\non Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or Circular 16 on June 9, 2016,\nwhich became effective simultaneously and was amended on December 4, 2023. Pursuant to Circular 16, enterprises registered in the PRC\nmay also convert their foreign debts from foreign currency to Renminbi on self-discretionary basis. Circular 16 provides an integrated\nstandard for conversion of foreign exchange under capital account items (including but not limited to foreign currency capital and foreign\ndebts) on self-discretionary basis which applies to all enterprises registered in the PRC. Circular 16 reiterates the principle that\nRenminbi converted from foreign currency-denominated capital of a company may not be directly or indirectly used for purposes beyond\nits business scope or prohibited by PRC laws or regulations, while such converted Renminbi shall not be provided as loans to its nonaffiliated\nentities.\n\n \n\nAs of the date of the annual\nreport, Ms. Fen Ye, Ms. Hong Ye and Ms. Fang Ye have completed the initial foreign exchange registrations as required by SAFE Circular\n37 and Circular 13. The formalities for updating the registration to reflect the share transfer from Ms. Fang Ye to Ms. Fen Ye has been\nsubmitted to the qualified bank, and the amendment registration has been completed as of the date of this annual report.\n\n \n\n**Regulations on Loans to and Direct Investment\nin the PRC Entities by Offshore Holding Companies**\n\n \n\nAccording to the Interim\nProvisions on the Management of Foreign Debts promulgated by the SAFE, the NDRC and the MOF which became effective from March 1, 2003\nand was amended on July 26, 2022, loans by foreign companies to their subsidiaries in China, which accordingly are foreign-invested enterprises,\nare considered foreign debt, and such loans must be registered with the local branches of the SAFE. Under the provisions, the total amount\nof accumulated medium-term and long-term foreign debt and the balance of short-term debt borrowed by a foreign-invested enterprise is\nlimited to the difference between the total investment and the registered capital of the foreign-invested enterprise.\n\n \n\nOn January 12, 2017,\nPeople’s Bank of China (the “PBOC”) issued and implemented Notice of People’s Bank of China on Matters Concerning\nMacro-Prudential Management on All-round Cross-border Financing, or the Circular 9. A one-year transitional period was set for foreign-invested\nenterprises and foreign financial institutions from the date of issuance, within which the foreign-invested enterprises may choose a\nmode between the existing cross-border financing management mode and that prescribed in the Circular 9, and no specific new notification\nor rules has been issued yet regarding the selection of the two modes. According to Circular 9, the calculation of the upper limit of\nthe risk-weighted balance for cross-border financing =the capital or the net assets × the leverage rate of cross-border financing\n× the macro-prudential adjustment parameters, among which, enterprises are calculated at their net assets based on the latest audited\nfinancial statements, the leverage rate for cross-border financing for enterprises is 2, and the macro-prudential adjustment parameter\nis 1.\n\n \n\n110\n\n \n\n \n\nOn October 25, 2022, the\nPBOC and the SAFE issued Notice of People’s Bank of China and State Administration of Foreign Exchange on the Adjustment of Macro-Prudential\nAdjustment Parameters for Cross-border Financing of Enterprises, and decided to raise the macro-prudential adjustment parameter for cross-border\nfinancing of enterprises from 1 to 1.25. On July 20, 2023, the PBOC and the SAFE have decided to raise the macro-prudential adjustment\nparameter for cross-border financings for enterprises and financial institutions from 1.25 to 1.5, which came into effective on the same\ndate. On January 13, 2025, the PBOC and the SAFE have decided to raise the macro-prudential adjustment parameter for cross-border financings\nfor enterprises and financial institutions from 1.5 to 1.75, which came into effect on the same date. As for Liandu WFOE and Lishui Mengxiang,\nthe upper limit of the risk-weighted balance for cross-border financing = the net assets based on the latest audited financial statements\n×2×1.75.\n\n \n\nAccording to Circular 9,\nan enterprise shall file the information of its cross-border financing in the capital project information system with the SAFE after\nsigning the contract and no later than three working days before the withdrawal. The enterprise, after conducting the contract filing\nfor the cross-border financing, and the financial institution, after conducting information reporting for the cross-border financing,\nmay carry out relevant capital settlement for the borrowers according to the withdrawal and repayment arrangement, report the relevant\nclearing information to the relevant systems of the PBOC and the SAFE, and complete the cross-border financing information updating.\nThe enterprise shall also update cross-border financing and equity-related information.\n\n \n\nPursuant to the Administrative\nMeasures for the Examination and Registration of Medium and Long-term Foreign Debts of Enterprises promulgated by the NDRC on January\n5, 2023, which came into effect on February 10, 2023, an enterprise shall, before borrowing a foreign debt, obtain the Certificate of\nExamination and Registration of Foreign Debts Borrowed by Enterprises and complete examination and registration formalities. Without\nexamination and registration, no foreign debt may be borrowed. Medium and long-term foreign debts of enterprises referred to in this\nmeasures shall mean debt instruments with a maturity of more than one year that are borrowed from overseas by enterprises within the\nterritory of the People’s Republic of China and by overseas enterprises or branches controlled by them, denominated in local or\nforeign currency, and of which principal is repaid with payment of interest as agreed.\n\n \n\nAccording to the Notice\nof the State Administration of Foreign Exchange on Further Deepening Reform to Promote the Facilitation of Cross-border Trade and Investment\npromulgated on December 3, 2023 by the SAFE, or Circular 28, non-investment foreign-funded enterprises are allowed to make\ndomestic equity investments with their capital funds in accordance with the law on the premise that the existing special administrative\nmeasures (negative list) for foreign investment access are not violated and the projects invested thereby in China are true and compliant.\n\n \n\nPursuant to the Measures\non Reporting of Foreign Investment Information issued by the MOFCOM and SAIC (the renamed SAMR) on December 30, 2019, which became\neffective on January 1, 2020, where there is a change in information in the initial report which involves enterprise change registration\nor filing, the foreign investment enterprise shall submit a change report through the Enterprise Registration System at the time of completion\nof enterprise change registration.\n\n** **\n\n**Provisions on the Merger and Acquisition of\nDomestic Enterprises by Foreign Investors (Revised in 2009)**\n\n \n\nUnder the Provisions on\nthe Merger and Acquisition of Domestic Enterprises by Foreign Investors (Revised in 2009), or the M&A Rules, a foreign investor is\nrequired to obtain necessary approvals when (i) a foreign investor acquires equity in a domestic non-foreign invested enterprise\nthereby converting it into a foreign-invested enterprise, or subscribes for new equity in a domestic enterprise via an increase of registered\ncapital thereby converting it into a foreign Invested enterprise; or (ii) a foreign investor establishes a foreign-invested enterprise\nwhich purchases and operates the assets of a domestic enterprise, or which purchases the assets of a domestic enterprise and injects\nthose assets to establish a foreign-invested enterprise. According to Article 11 of the M&A Rules, where a domestic company or enterprise,\nor a domestic natural person, through an overseas company established or controlled by it/him/her, acquires a domestic company which\nis related to or connected with it/him/her, approval from the MOFCOM is required.\n\n \n\n111\n\n \n\n \n\nPursuant to the Measures\non Reporting of Foreign Investment Information, or the Measures on Reporting came into effect from January 1, 2020, for the investment\nactivities directly or indirectly conducted by foreign investors within the territory of China, the foreign investors or foreign-invested\nenterprises shall submit the investment information to the competent commercial department. Foreign investors or foreign-invested enterprises\nshall submit the investment information by presenting the initial report, the change report, the cancelation report and the annual report\nin accordance with the Measures on Reporting. Where a foreign investor establishes a foreign-invested enterprise within the territory\nof China, it shall submit an initial report through the enterprise registration system while applying for business establishment registration.\nIf a foreign investor merges and acquires a domestic non-foreign-invested enterprise through the acquisition of equity in the\ndomestic non-foreign-invested enterprise, it shall submit the initial report through the enterprise registration system while\napplying for change of registration of the merged enterprise.\n\n** **\n\n**Regulatory Approval from the China Securities\nRegulatory Commission**\n\n \n\nOn February 17, 2023, the\nCSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises, or the Trial Measures,\nwhich became effective on March 31, 2023. Subsequently, the CSRC circulated a series of supporting guidance rules, the Notes on the Trial\nMeasures, the Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Enterprises and the relevant CSRC\nAnswers to Reporter Questions on the official website of CSRC, or collectively, the Guidance Rules and Notice. These new regulations\npropose to establish a new filing-based regime to regulate overseas offerings and listings by Chinese domestic companies.\n\n \n\nUnder the Trial Measures\nand the Guidance Rules and Notice, domestic companies conducting overseas securities offering and listing activities, either in direct\nor indirect form, shall complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures within three working\ndays following its submission of initial public offerings or listing application. Since the date of effectiveness of the Trial Measures,\nthe domestic enterprises falling within the scope of filing that have been listed overseas or met the following circumstances are existing\nenterprises: before the effectiveness of the Trial Measures, the application for indirect overseas issuance and listing has been agreed\nby the overseas regulators or overseas stock exchanges (such as having passed the hearing on the Hong Kong market or registration become\neffective as agreed on the U.S. market, etc.), and it is not required to perform issuance and listing supervision procedures of the overseas\nregulators or overseas stock exchanges (such as rehearing on the Hong Kong market, etc.), and the overseas issuance and listing will\nbe completed by September 30, 2023. Existing enterprises are not required to file immediately, and filing should be made as required\nif they involve refinancing and other filing matters. In such cases, where a existing enterprise issues securities in the same overseas\nmarket after its initial public offering and listing overseas, it shall file with the CSRC within three working days of completion of\nissuance; where a existing enterprise issues securities in other overseas markets after its initial public offering and listing overseas,\nit shall file with the CSRC within three working days of submission of application documents for initial public offering and listing\noverseas.\n\n** **\n\n112\n\n \n\n \n\n**C. Organizational Structure**\n\n \n\nThe following diagram illustrates\nour corporate structure, including our subsidiaries and consolidated affiliated entities as of the date of the annual report:\n\n \n\n \n\n113\n\n \n\n \n\n*Notes:*\n\n \n\n(1)Lishui\nMengxiang holds 100% of the sponsorship interests of Lishui International School. On April\n2, 2024, Liandu WFOE entered into a series of contractual arrangements with respect to the\noperation of Lishui International School, pursuant to which Lishui Mengxiang’s sponsorship\ninterests of Lishui International School became effective on June 25, 2023. As of the date\nof the annual report on form 20-F, Lishui International School had four classes and five\nteachers.\n\n \n\n(2)Beijing P.X. holds 100% of\nthe sponsorship interests of Langfang School. Liandu WFOE entered into a series of contractual arrangements with respect to the\noperation of Langfang School on March 28, 2023. The contractual arrangements took effect on January 1, 2022. As of the date of the\nannual report, Langfang City has not released any detailed rules on classification registration of private schools and we have not\nreceived any relevant notice from the competent authorities of Langfang City since January 1, 2022 when Beijing P.X. began to hold\nthe whole sponsorship interests of Langfang School. On January 6, 2023, Beijing P.X. established a wholly-owned subsidiary, Hebei\nChuangxiang, a human resources services provider for internship and employment recommendations. Hebei Chuangxiang also cooperates\nwith healthcare and elderly care enterprises to deliver daily care, specialized nursing and companion services.\n\n \n\n(3)According\nto PRC laws and regulations, entities and individuals who establish private schools are commonly\nreferred to as “sponsors” instead of “owners” or “shareholders.”\nThe economic substance of “sponsorship” with respect to private schools is substantially\nsimilar to that of ownership with regard to legal, regulatory and tax matters. However, the\ndifferences between sponsorship and equity ownership can be found in the specific provisions\nof the laws and regulations applicable to sponsors and owners, such as provisions regarding\nthe right to receive returns on investment and the right to the distribution of residual\nproperties upon termination and liquidation\n\n \n\nInvestors are purchasing\nequity interests in Lixiang, the Cayman Islands holding company, and are not purchasing, and may never directly hold, equity interests\nin the VIEs. We do not have any equity interests in the VIEs. However, because of the contractual arrangements, we control the VIEs through\nour PRC subsidiary, Liandu WFOE, and are regarded as the primary beneficiary of the VIEs for accounting purposes under U.S. GAAP. We\nhave consolidated the results of the VIEs in our consolidated financial statements included elsewhere in this annual report on Form 20-F\nin accordance with U.S. GAAP. For a more detailed discussion of the basis of presentation of our consolidated financial statements, see\n“*Item 5. Operating and Financial Review and Prospects—A. Operating Results—Critical Accounting Policies*.”\n\n \n\nThese contractual arrangements\nmay not be as effective in providing us with control over the VIEs as equity ownership. If we had equity ownership of the VIEs, we would\nbe able to exercise our rights as a direct or indirect shareholder to effect changes in the board of directors of the VIEs, which in\nturn could effect changes, subject to any applicable fiduciary obligations, at the management level. However, as these contractual arrangements\nstand now, if the VIEs or their shareholders fail to perform their respective obligations under these contractual arrangements, we cannot\nexercise shareholders’ rights to direct corporate actions as direct ownership would otherwise entail. If the parties under such\ncontractual arrangements refuse to carry out our directions in relation to everyday business operations, we will be unable to maintain\neffective control over the operations of the VIEs in China under U.S. GAAP. Losing effective control over the VIEs may impair our access\nto their cash flow from operations, which may reduce our liquidity. If the VIEs or their respective ultimate shareholders fail to perform\ntheir obligations under our contractual arrangements, we may have to incur additional costs and expend substantial resources to enforce\nour contractual arrangements, temporarily or permanently lose control over our primary operations or lose access to our primary sources\nof revenue.\n\n \n\n114\n\n \n\n \n\nThere are substantial uncertainties\nregarding the interpretation and application of current and future PRC laws, regulations, and rules relating to the contractual arrangements\nand the VIE structure. If the PRC government finds these contractual arrangements or the VIE structure non-compliant with the restrictions\non direct foreign investment in the relevant industries, or if the relevant PRC laws, regulations, and rules or the interpretation thereof\nchange in the future, we could be subject to severe penalties or be forced to relinquish our interests in the VIEs or forfeit our rights\nunder the contractual arrangements. Lixiang and investors in the ADSs face uncertainty about potential future actions by the PRC government,\nwhich could affect the enforceability of our contractual arrangements, consequently, significantly affect the financial condition and\nresults of operations. If we are unable to claim our right to control the assets of the VIEs, the ADSs may decline in value or become\nworthless. The PRC government could even disallow the VIE structure completely, which would likely result in a material adverse change\nin our operations and the ADSs may significantly decline in value or become worthless.\n\n** **\n\n**Contractual Arrangements**\n\n \n\nForeign ownership in the\neducational industry is subject to significant regulations in China, including strict licensing requirements. Specifically, foreign ownership\nis prohibited in compulsory education at the primary and middle school levels, and is restricted at the high school level. As we are\na company incorporated in the Cayman Islands, our wholly-owned subsidiary in the PRC, Liandu WFOE, is viewed as a foreign-owned enterprise\nthus is ineligible to apply for and hold licenses to operate, or otherwise own equity interests in, primary and middle school campuses\nand to independently or jointly invest and operate high school and vocational school pursuant to the relevant laws and regulations.\n\n \n\nPrior to August 31,\n2021, we and the VIEs primarily operated primary and secondary school in Baiyun campus and Yijing campus—Featured Division of Lianwai\nSchool through a series of contractual arrangements with Lishui Mengxiang, which enabled us to (i) exercise the power over our Lishui\nMengxiang and Lianwai School, (ii) have the exposure or rights to variable returns from our involvement with Lishui Mengxiang and\nLianwai School, and (iii) exercise the ability to affect those returns through use of its power over Lishui Mengxiang and Lianwai\nSchool.\n\n \n\nUnder the 2021 Implementation\nRules which took effect on September 1, 2021, social organizations and individuals are prohibited from controlling a private school\nthat provides compulsory education by means of, among others, merger, acquisition, and contractual arrangements, and a private school\nproviding compulsory education is prohibited from conducting transactions with its related party. In particular, the prohibition over\nrelated party transactions has significantly affected the enforceability of the exclusive management services and business cooperation\nagreements among Liandu WFOE and Lianwai School providing compulsory education. Therefore, we re-assessed our control over Lianwai School.\nBased on the relevant accounting standard in accordance with U.S. GAAP, we have concluded that we have lost control of Lianwai School\nsince August 31, 2021, in view of the significant uncertainties and restrictions the 2021 Implementation Rules impose on our ability\nto direct the range of ongoing activities that would most significantly impact the returns of Lianwai School. In light of such regulatory\ndevelopments, on April 20, 2022, we entered into an acknowledgment agreement of contractual agreements with Lianwai School and respective\ndirectors, to confirm all the terms of rights and obligations relating to Lianwai School and the directors appointed by the sponsor under\nthe contractual arrangements among them, and agree among the parties that such arrangements shall have been terminated on August 31,\n2021. To minimize disruptions to existing students enrolled in Lianwai School, we continued to offer essential services to the students.\nWe deconsolidated Lianwai School commencing from September 1, 2021 and presented it as a discontinued operation in current and comparative\nperiod financial statements. See “*Item 5. Operating and Financial Review and Prospects—A. Operating Results*.”\n\n \n\nOn April 20, 2022,\nLiandu WFOE entered into a series of contractual arrangements, or the VIE structure, with Lishui Mengxiang, Qingtian International School,\nshareholders of Lishui Mengxiang and the Council Members of Qingtian International School. On January 31, 2023, due to the change of\nshareholders of Lishui Mengxiang, Liandu WFOE entered into an updated series of contractual arrangements with respect to the operation\nof Qingtian International School. The updated series of contractual arrangements replaced the previous ones and took effect on December\n16, 2022, the same date when the shareholders of Lishui Mengxiang signed an equity transfer agreement. On January 15, 2024, Lishui Mengxiang\nentered into a definitive agreement to transfer 100% of the sponsorship interests of Qingtian International School to Qiaoxiang Education,\nan entity affiliated with Mr. Biao Wei, a director and the Chief Executive Officer of the Company, for a consideration of RMB23,161,000.\nOn April 2, 2024, Liandu WFOE, Lishui Mengxiang, Qingtian International School, the shareholders of Lishui Mengxiang and the Council\nMembers of Qingtian International School entered into the Acknowledgment Agreement of Contractual Agreements of Qingtian Overseas Chinese\nExperimental High School, pursuant to which rights and obligations under the Business Cooperation Agreement, the Exclusive Technical\nService and Business Consulting Agreement, the Exclusive Call Option Agreement, the Proxy Agreement for School’s Sponsor and Council\nMembers and the Loan Agreement relating to Qingtian International School and the Council Members thereunder were actually terminated\non December 31, 2023. We deconsolidated the results of Qingtian International School in our consolidated financial statements since December\n31, 2023.\n\n \n\n115\n\n \n\n \n\nOn March 28, 2023, Liandu\nWFOE entered into a series of contractual arrangements, or the VIE structure, with Beijing P.X. and Langfang School, shareholders of\nBeijing P.X. and the Council Members of Langfang School. The series of contractual arrangements became effective on January 1, 2022.\n\n \n\nOn April 2, 2024, Liandu\nWFOE entered into a series of contractual arrangements, or the VIE structure, with Lishui Mengxiang, Lishui International School, shareholders\nof Lishui Mengxiang and the Council Members of Lishui International School. The series of contractual arrangements became effective on\nJune 25, 2023.\n\n \n\nThese contractual arrangements\nhave enabled us to (i) exercise the power over Lishui Mengxiang, Qingtian International School, Lishui International School and\nLangfang School, (ii) have the exposure or rights to variable returns from our involvement with the VIEs, and (iii) exercise\nthe ability to affect those returns through use of its power over the VIEs.\n\n \n\nWe do not have any equity\ninterest in the VIEs. However, because of these contractual arrangements, we control the VIEs through our PRC subsidiary, Liandu WFOE.\nWe have consolidated the results of the VIEs in our consolidated financial statements included elsewhere in this annual report on Form\n20-F in accordance with U.S. GAAP. For a more detailed discussion of the basis of presentation of our consolidated financial statements,\nsee “*Item 5. Operating and Financial Review and Prospects—A. Operating Results—Critical Accounting Policies*.”\nFor a detailed description of the risks associated with our corporate structure, see “*Item 3. Key Information—D. Risk\nFactors—Risks Relating to Our Corporate Structure” and “Item 3. Key Information—D. Risk Factors—Risks Relating\nto Doing Business in China.*”\n\n** **\n\n**Contractual Arrangements with respect to\nQingtian International School**\n\n \n\nBelow is a summary of the\nmaterial provisions of these contractual arrangements with Liandu WFOE and the shareholders of Lishui Mengxiang with respect of Qingtian\nInternational School. For more complete information you should read these agreements in their entirety.\n\n** **\n\n**Exclusive Call Option\nAgreement.** Under the Exclusive Call Option Agreement dated January 31, 2023, Ms. Fen Ye and Ms. Hong Ye, or the\nshareholders of Lishui Mengxiang have irrevocably granted Liandu WFOE or its designated purchaser the exclusive right to purchase all\nor part of the direct and/or indirect equity interests of Lishui Mengxiang, or the Equity Call Option. The purchase price payable by\nLiandu WFOE or its designated purchaser in respect of the transfer of Lishui Mengxiang’s direct and/or indirect equity interest\nor equity interests shall be at the lowest price permitted under the PRC laws and regulations. Liandu WFOE or its designated purchaser\nshall have the right to purchase such proportion of Lishui Mengxiang’s interest in Qingtian International School and/or other equity\ninterest of Lishui Mengxiang as it decides at any time. Qingtian International School provides high school education services, in which\ncase the foreign investors are restricted to hold equity interests of Lishui Mengxiang, Qingtian International School’s sponsor,\nin accordance with the current PRC laws and regulations. If and when the PRC laws and regulations allow Liandu WFOE or us to directly\nhold all or part of the school sponsor interests in Qingtian International School and/or all or part of other equity interests of Lishui\nMengxiang and operate competent education business in the PRC, Liandu WFOE shall issue the notice of exercise of such equity call option\nas soon as practicable, and the percentage of interests to be purchased upon exercise of such Equity Call Option shall be no less than\nthe maximum percentage allowed to be held by Liandu WFOE or its designated purchaser under the PRC laws and regulations. Such equity\ntransfer price is not expressly provided for in the current PRC laws and regulations and it is uncertain whether it may be further regulated\nby future PRC laws and regulations. Pursuant to the Exclusive Call Option Agreement, all taxes and fees associated with the equity transfer\nshall be paid by Lishui Mengxiang’s shareholders and/or the direct equity holders of the VIEs upon the transfer. In the absence\nof written consent from Liandu WFOE, except as otherwise described in the Exclusive Call Option Agreement, Lishui Mengxiang and its shareholders\nshall not sell, transfer, assign or otherwise dispose of or create any encumbrance on any of Lishui Mengxiang’s assets, businesses\nor equity interests or procure separation or merge with any other entities. Furthermore, without written consent from Liandu WFOE, Lishui\nMengxiang may not terminate any material contracts or enter into any other contracts which may contradict such material contracts, incur\nany indebtedness or provide any loan or guarantee to a third party, except as disclosed to Liandu WFOE, or alter the nature or scope\nof its business. The Exclusive Call Option Agreement will remain in force during the operation term of VIEs and any periods that are\nrenewable pursuant to the PRC laws, and will terminate automatically when Liandu WFOE and/or its designated entities fully exercised\ntheir options to purchase all the equities of VIEs in accordance with this agreement. In addition, unless otherwise stipulated by laws,\nthis agreement may not be terminated by Lishui Mengxiang or its shareholders unilaterally, but may only be terminated by Liandu WFOE\nafter notice in advance.\n\n** **\n\n116\n\n \n\n \n\n**Proxy Agreement for\nSchool’s Sponsors and Council Members.** Pursuant to the Proxy Agreement for School’s Sponsors and Council Members\ndated January 31, 2023, Lishui Mengxiang has irrevocably authorized and entrusted Liandu WFOE to exercise all its rights as school sponsor\nof Qingtian International School to the extent permitted by the PRC laws. These rights include, but are not limited to: (a) the\nright to appoint and/or elect of council members of Qingtian International School; (b) the right to appoint and/or elect the supervisors\nof Qingtian International School; the right to put forward the School’s mission and scope of operation;(c)the right to examine\nor approve the articles of association of Qingtian International School, development planning, major projects and budget for revenues\nand expenditures;(d) the right to supervise the performance of Qingtian International School and the achievement of the objectives set\nout in the bylaw;(e) the right to establish the executive school council in accordance with the authority and procedures prescribed in\nthe bylaw of Qingtian International School and to participate in the running and management of the School;(f) the right to access the\ninformation about the operation conditions and financial conditions of Qingtian International School;(g) the right to consult the resolutions,\nrecords, financial and accounting statements and reports of the school council meetings in accordance with the PRC laws;(h) the right\nto obtain reasonable returns from Qingtian International School’s Sponsor in accordance with the PRC laws;(i) the right to obtain\nthe remaining property of Qingtian International School after the liquidation in accordance with the PRC laws;(j) the right to transfer\nthe interests of Qingtian International School’s Sponsor in accordance with the PRC laws;(k) the right to select the profitability\nand non-profitability of the characteristic of Qingtian International School in accordance with the PRC laws, regulations or regulatory\ndocuments; and(l) any other rights of Qingtian International School’s Sponsor provided by other applicable laws and regulations\nof the PRC and the articles of association of Qingtian International School (as amended from time to time).\n\n \n\nThe appointed Council Members\nof Qingtian International School from Lishui Mengxiang has irrevocably authorized and entrusted Liandu WFOE to exercise all its rights\nas school sponsor of Qingtian International School to the extent permitted by the PRC laws. These rights include, but are not limited\nto: (a) acting as the agent of Qingtian International School’s Sponsor to attend the council meeting of Qingtian International;\nenjoying the right to speak, propose, vote, elect and stand for election, and the right to know, propose and supervise council meeting\nand business activities carried out by Qingtian International School; (b) exercising the voting rights on behalf of Qingtian International\nSchool’s Sponsor for all matters requiring discussion and resolution of the council; (c) proposing to convene a council meeting\nof Qingtian International School; (d) signing the council meeting minutes, council meeting resolutions or other legal documents\nthat the Appointed Council Members has the right to sign as the council member of Qingtian International School; (e) instructing\nthe legal representative, the financial, business and administrative chiefs, etc. of Qingtian International School to act in accordance\nwith the Trustee’s intention; (f) exercising other rights of the council member and council members’ voting rights under\nthe articles of association (including any other council members’ voting rights as stipulated in the amended articles of association)\nof Qingtian International School; (g) handling legal procedures containing registration, examination and approval and license of\nschools at the competent departments of government; and (h) any other rights of the Council Member as pursuant to the applicable\nPRC laws, regulations and the articles of association (as amended from time to time) of Qingtian International School. In addition, each\nof Lishui Mengxiang and the Council Members of Qingtian International School have irrevocably agreed that (i) Liandu WFOE may delegate\nits rights under the Proxy Agreement for School’s Sponsors and Council Members to the directors of Liandu WFOE or its designated\nperson, without prior notice to or approval by Lishui Mengxiang and the Council Members of Qingtian International School; and (ii) any\nperson as successor of civil rights of Liandu WFOE or liquidator by reason of subdivision, merger, liquidation of Liandu WFOE or other\ncircumstances shall have authority to replace Liandu WFOE to exercise all rights under the Proxy Agreement for School’s Sponsors\nand Council Members.\n\n** **\n\n**Proxy Agreement for\nShareholders.** Pursuant to the Proxy Agreement for Shareholders dated January 31, 2023, each shareholder of Lishui Mengxiang\nhas irrevocably authorized and entrusted Liandu WFOE to exercise all its rights as the shareholder to the extent permitted by the PRC\nlaws. These rights include, but are not limited to: (a) the right to attend the shareholders’ meeting of our school acting\nas WFOE’s nominee; (b) the right to vote on behalf of the sponsors for all matters requiring discussion and resolution of\nthe shareholders’ meeting; (c) the right to sign the shareholders’ minutes, resolutions or other legal documents; (d) the\nright to indicate the directors, the legal representative, etc. to act in accordance with WFOE’s intention; (e) the right\nto handle legal procedures containing registration, examination and approval and license of schools at the competent departments of governments;\n(f) the right to decide to transfer or otherwise dispose of the equity of our school; (g) any other shareholder rights as pursuant\nto the applicable PRC laws, regulations and our school’s articles of association as amended from time to time.\n\n** **\n\n117\n\n \n\n \n\n**Business Cooperation\nAgreement.** Pursuant to the Business Cooperation Agreement dated January 31, 2023, Liandu WFOE shall provide technical services,\nmanagement support and consulting services necessary for the private education business, and in return, the VIEs shall make payments\naccordingly. In particular, such services include but not limited to developing curriculum, conducting market research and offering management\nand marketing advice, providing technology services, providing public relations services, providing support for teacher hiring and training\nand providing other services that the VIEs may need from time to time. Without the prior consent of Liandu WFOE, none of the VIEs\nmay accept such services provided by any third party. As part of the business cooperative agreement, VIEs and the shareholders of Lishui\nMengxiang agree that they will not take any actions except as otherwise described in the Business Cooperation Agreement, such as incurring\nindebtedness, disposing of material assets, materially changing the scope or nature of the business of the VIEs, disposing of their equity\ninterests in the VIEs, or paying dividends or other similar payments to the sponsors or the shareholders VIEs in the absence of written\nconsent from Liandu WFOE. The aforementioned agreements will terminate automatically when Liandu WFOE and/or its designated entities\nfully exercised their options to purchase all the equities held by Nominee Shareholders in accordance with the Exclusive Call Option\nAgreement. In addition, unless otherwise stipulated by laws, this agreement may not be terminated by VIEs or the shareholders, but may\nonly be terminated by Liandu WFOE after notice in advance.\n\n** **\n\n**Exclusive Technical\nService and Business Consulting Agreement.** Pursuant to the Exclusive Technical Service and Business Consulting Agreement\ndated January 31, 2023, Liandu WFOE agreed to provide exclusive technical services to Qingtian International School and Qingtian International\nSchool’s sponsor, Lishui Mengxiang. Furthermore, Liandu WFOE agreed to provide exclusive business consultancy services to Qingtian\nInternational School and Qingtian International School’s sponsor. In consideration of the technical and business consultancy services\nprovided by Liandu WFOE, Qingtian International School and Qingtian International School’s sponsor agreed to pay Liandu WFOE a\nservice fee withdrawn from their respective amount of surplus from operations after deducting all costs, expenses, taxes, losses (if\nrequired by the law) and the legally development fund of the respective school (if required by the law) and other costs and funds that\nshall be retained at Qingtian International School in accordance with applicable PRC laws. Liandu WFOE has the right (but not the obligation)\nto adjust the amount of such service fee by reference to the actual services provided and the actual business operations and needs of\nQingtian International School and Qingtian International School’s sponsor, provided that any adjusted amount shall not exceed the\namount mentioned above. Qingtian International School and Qingtian International School’s sponsor do not have any right to make\nany such adjustment. Unless otherwise prescribed under the PRC laws and regulations, Liandu WFOE shall have exclusive proprietary rights\nto any technology and intellectual property developed and materials prepared in the course of the provision of research and development,\ntechnical support and services by Liandu WFOE to Qingtian International School and Qingtian International School’s sponsor, and\nany intellectual property in the products developed, including any other rights derived thereunder, in the course of performance of obligations\nunder the Exclusive Technical Service and Business Consulting Agreement and/or any other agreements entered into between Liandu WFOE\nand the VIEs.\n\n** **\n\n**Equity Pledge Agreement**.\nPursuant to the Equity Pledge Agreement dated January 31, 2023, the shareholders unconditionally and irrevocably pledged all of their\nequity interests in Lishui Mengxiang to Liandu WFOE to guarantee performance of the obligations of the VIEs under the Exclusive Call\nOption Agreement, Business Cooperation Agreement, Exclusive Technical Service and Business Consulting Agreement, Proxy Agreement for\nShareholders, Proxy Agreement for School’s Sponsors and Council Members and Loan Agreement, each as described above the shareholders\nof Lishui Mengxiang agreed that without prior written consent of the PRC WFOE, they shall not transfer or dispose of the pledged equity\ninterests, or create or allow any encumbrance on the pledged equity interests. Unless otherwise stipulated by laws, this agreement may\nnot be terminated by Lishui Mengxiang or the shareholders of Lishui Mengxiang unilaterally, but may only be terminated by the Liandu\nWFOE after notice in advance. The equity pledge agreement remains in full force and effect until all of the obligations under the contractual\narrangements have been duly performed or the guaranteed debts are duly paid. The pledge of equity interests in Lishui Mengxiang\nhas been duly registered with the local branch of SAIC and is effective upon such registration.\n\n** **\n\n118\n\n \n\n \n\n**Acknowledge Agreement.**Pursuant to the Acknowledgment Agreement of Contractual Agreements of Qingtian Overseas Chinese Experimental High School dated\nApril 2, 2024, the rights and obligations under the Business Cooperation Agreement, the Exclusive Technical Service and Business Consulting\nAgreement, the Exclusive Call Option Agreement, the Proxy Agreement for School’s Sponsor and Council Members and the Loan Agreement\nrelating to Qingtian International School and the Council Members thereunder were actually terminated on December 31, 2023.\n\n** **\n\n**Contractual Arrangements with respect to\nLangfang School**\n\n \n\nBelow is a summary of the\nmaterial provisions of these contractual arrangements with Liandu WFOE and the shareholders of Beijing P.X. with respect to Langfang\nSchool. For more complete information you should read these agreements in their entirety.\n\n** **\n\n**Exclusive Call Option\nAgreement.** Under the Exclusive Call Option Agreement dated March 28, 2023, Ms. Fen Ye, Ms. Hong Ye, and Lishui\nMengxiang, or the shareholders of Beijing P.X. have irrevocably granted Liandu WFOE or its designated purchaser the exclusive right to\npurchase all or part of the direct and/or indirect equity interests of Beijing P.X. and Langfang School, or the Equity Call Option. The\npurchase price payable by Liandu WFOE or its designated purchaser in respect of the transfer of above equity interests shall be at the\nlowest price permitted under the PRC laws and regulations. Liandu WFOE or its designated purchaser shall have the right to purchase such\nproportion of Beijing P.X.’s interest in Langfang School and/or other equity interest of Beijing P.X. as it decides at any time.\nLangfang School provides vocational school education services, in which case the foreign investors shall be a foreign education institution\nor a foreign vocational skills training institution with relevant qualifications on education services and operating high-quality educations\nin accordance with the current PRC laws and regulations. If and when the PRC laws and regulations allow Liandu WFOE or us to directly\nhold all or part of the school sponsor interests in Langfang School and/or all or part of other equity interests of Beijing P.X. and\noperate competent education business in the PRC, Liandu WFOE shall issue the notice of exercise of such equity call option as soon as\npracticable, and the percentage of interests to be purchased upon exercise of such Equity Call Option shall be no less than the maximum\npercentage allowed to be held by Liandu WFOE or its designated purchaser under the PRC laws and regulations. Such equity transfer price\nis not expressly provided for in the current PRC laws and regulations and it is uncertain whether it may be further regulated by future\nPRC laws and regulations. Pursuant to the Exclusive Call Option Agreement, all taxes and fees associated with the equity transfer shall\nbe paid by Beijing P.X.’s shareholders upon the transfer. In the absence of written consent from Liandu WFOE, except as otherwise\ndescribed in the Exclusive Call Option Agreement, Beijing P.X. and its shareholders shall not sell, transfer, assign or otherwise dispose\nof or create any encumbrance on any of Langfang School’s assets, businesses or equity interests or procure separation or merge\nwith any other entities. Furthermore, without written consent from Liandu WFOE, Langfang School may not terminate any material contracts\nor enter into any other contracts which may contradict such material contracts, incur any indebtedness or provide any loan or guarantee\nto a third party, except as disclosed to Liandu WFOE, or alter the nature or scope of its business. The Exclusive Call Option Agreement\nwill remain in force during the operation term of Beijing P.X. and Langfang School and any periods that are renewable pursuant to the\nPRC laws, and will terminate automatically when Liandu WFOE and/or its designated entities fully exercised their options to purchase\nall the equities of Beijing P.X. and Langfang School in accordance with this agreement. In addition, unless otherwise stipulated by laws,\nthis agreement may not be terminated by Langfang School, Beijing P.X. or its shareholders unilaterally, but may only be terminated by\nLiandu WFOE after notice in advance.\n\n** **\n\n**Proxy Agreement for\nSchool’s Sponsors and Council Members.** Pursuant to the Proxy Agreement for School’s Sponsors and Council Members\ndated March 28, 2023, Beijing P.X. has irrevocably authorized and entrusted Liandu WFOE to exercise all its rights as school sponsor\nof Langfang School to the extent permitted by the PRC laws. These rights include, but are not limited to: (a) the right to appoint\nand/or elect of council members of Langfang School; (b) the right to appoint and/or elect the supervisors of Langfang School; the\nright to put forward the School’s mission and scope of operation;(c)the right to examine or approve the articles of association\nof Langfang School, development planning, major projects and budget for revenues and expenditures;(d) the right to supervise the performance\nof Langfang School and the achievement of the objectives set out in the bylaw;(e) the right to establish the executive school council\nin accordance with the authority and procedures prescribed in the bylaw of Langfang School and to participate in the running and management\nof the School;(f) the right to access the information about the operation conditions and financial conditions of Langfang School;(g)\nthe right to consult the resolutions, records, financial and accounting statements and reports of the school council meetings in accordance\nwith the PRC laws;(h) the right to obtain reasonable returns from Langfang School’s Sponsor in accordance with the PRC laws;(i)\nthe right to obtain the remaining property of Langfang School after the liquidation in accordance with the PRC laws;(j) the right to\ntransfer the interests of Langfang School’s Sponsor in accordance with the PRC laws;(k) the right to select the profitability and\nnon-profitability of the characteristic of Langfang School in accordance with the PRC laws, regulations or regulatory documents; and(l)\nany other rights of Langfang School’s Sponsor provided by other applicable laws and regulations of the PRC and the articles of\nassociation of Langfang School (as amended from time to time).\n\n \n\n119\n\n \n\n \n\nThe appointed Council Members\nof Langfang School from Beijing P.X. has irrevocably authorized and entrusted Liandu WFOE to exercise all its rights as school sponsor\nof Langfang School to the extent permitted by the PRC laws. These rights include, but are not limited to: (a) acting as the agent\nof Langfang School’s Sponsor to attend the council meeting of Langfang School; enjoying the right to speak, propose, vote, elect\nand stand for election, and the right to know, propose and supervise council meeting and business activities carried out by Langfang\nSchool; (b) exercising the voting rights on behalf of Langfang School’s Sponsor for all matters requiring discussion and resolution\nof the council; (c) proposing to convene a council meeting of Langfang School; (d) signing the council meeting minutes, council\nmeeting resolutions or other legal documents that the Appointed Council Members has the right to sign as the council member of Langfang\nSchool; (e) exercising other rights of the council member and council members’ voting rights under the articles of association\n(including any other council members’ voting rights as stipulated in the amended articles of association) of Langfang School; (f) handling\nlegal procedures containing registration, examination and approval and license of school at the competent departments of government;\nand (g) any other rights of the Council Member as pursuant to the applicable PRC laws, regulations and the articles of association\n(as amended from time to time) of Langfang School. In addition, each of Beijing P.X. and the Council Members of Langfang School have\nirrevocably agreed that (i) Liandu WFOE may delegate its rights under the Proxy Agreement for School’s Sponsors and Council\nMembers to the directors of Liandu WFOE or its designated person, without prior notice to or approval by Beijing P.X. and the Council\nMembers of Langfang School; and (ii) any person as successor of civil rights of Liandu WFOE or liquidator by reason of subdivision,\nmerger, liquidation of Liandu WFOE or other circumstances shall have authority to replace Liandu WFOE to exercise all rights under the\nProxy Agreement for School’s Sponsors and Council Members.\n\n** **\n\n**Proxy Agreement for\nShareholders.** Pursuant to the Proxy Agreement for Shareholders dated March 28, 2023, Lishui Mengxiang, the shareholder of\nBeijing P.X. has irrevocably authorized and entrusted Liandu WFOE to exercise all its rights as the shareholder to the extent permitted\nby the PRC laws. These rights include, but are not limited to: (a) the right to attend the shareholders’ meeting of Beijing\nP.X. acting as WFOE’s nominee; (b) the right to vote on behalf of Lishui Mengxiang for all matters requiring discussion and\nresolution of the shareholders’ meeting; (c) the right to sign the shareholders’ minutes, resolutions or other legal\ndocuments; (d) the right to indicate the directors, the legal representative, etc. to act in accordance with WFOE’s intention;\n(e) the right to handle legal procedures containing registration, examination and approval and license of Beijing P.X. at the competent\ndepartments of governments; (f) the right to decide to transfer or otherwise dispose of the equity of Beijing P.X.; (g) any\nother shareholder’s rights as pursuant to the applicable PRC laws, regulations and articles of association of Beijing P.X. as amended\nfrom time to time.\n\n** **\n\n**Business Cooperation\nAgreement.** Pursuant to the Business Cooperation Agreement dated March 28, 2023, Liandu WFOE shall provide technical services,\nmanagement support and consulting services necessary for the private education business, and in return, Beijing P.X. and Langfang School\nshall make payments accordingly. In particular, such services include but not limited to developing curriculum, conducting market research\nand offering management and marketing advice, providing technology services, providing public relations services, providing support for\nteacher hiring and training and providing other services that Beijing P.X. and Langfang School may need from time to time. Without\nthe prior consent of Liandu WFOE, none of Beijing P.X. and Langfang School may accept such services provided by any third party. As part\nof the business cooperative agreement, Beijing P.X., Langfang School and the shareholders of Beijing P.X. agree that they will not take\nany actions except as otherwise described in the Business Cooperation Agreement, such as incurring indebtedness, disposing of material\nassets, materially changing the scope or nature of the business of Langfang School, disposing of their equity interests in the Langfang\nSchool, or paying dividends or other similar payments to Beijing P.X. or the shareholders of Beijing P.X. in the absence of written consent\nfrom Liandu WFOE. The aforementioned agreements will terminate automatically when Liandu WFOE and/or its designated entities fully exercised\ntheir options to purchase all the equities held by Nominee Shareholders in accordance with the Exclusive Call Option Agreement. In addition,\nunless otherwise stipulated by laws, this agreement may not be terminated by Beijing P.X., Langfang School or the shareholders of Beijing\nP.X., but may only be terminated by Liandu WFOE after notice in advance.\n\n** **\n\n**Exclusive Technical\nService and Business Consulting Agreement.** Pursuant to the Exclusive Technical Service and Business Consulting Agreement\ndated March 28, 2023, Liandu WFOE agreed to provide exclusive technical services to Langfang School and Beijing P.X. Furthermore, Liandu\nWFOE agreed to provide exclusive business consultancy services to Langfang School and Beijing P.X.. In consideration of the technical\nand business consultancy services provided by Liandu WFOE, Langfang School and Beijing P.X. agreed to pay Liandu WFOE a service fee withdrawn\nfrom their respective amount of surplus from operations after deducting all costs, expenses, taxes, losses (if required by the law) and\nthe legally development fund (if required by the law) and other costs and funds that shall be retained at Langfang School in accordance\nwith applicable PRC laws. Liandu WFOE has the right (but not the obligation) to adjust the amount of such service fee by reference to\nthe actual services provided and the actual business operations and needs of Langfang School and Beijing P.X., provided that any adjusted\namount shall not exceed the amount mentioned above. Langfang School and Beijing P.X. do not have any right to make any such adjustment.\nUnless otherwise prescribed under the PRC laws and regulations, Liandu WFOE shall have exclusive proprietary rights to any technology\nand intellectual property developed and materials prepared in the course of the provision of research and development, technical support\nand services by Liandu WFOE to Langfang School and Beijing P.X., and any intellectual property in the products developed, including any\nother rights derived thereunder, in the course of performance of obligations under the Exclusive Technical Service and Business Consulting\nAgreement and/or any other agreements entered into between Liandu WFOE, Langfang School and Beijing P.X..\n\n** **\n\n120\n\n \n\n \n\n**Equity Pledge Agreement**.\nPursuant to the Equity Pledge Agreement dated March 28, 2023, the shareholders unconditionally and irrevocably pledged all of their equity\ninterests in Beijing P.X. to Liandu WFOE to guarantee performance of the obligations of Langfang School and Beijing P.X. under the Exclusive\nCall Option Agreement, Business Cooperation Agreement, Exclusive Technical Service and Business Consulting Agreement, Proxy Agreement\nfor Shareholders, Proxy Agreement for School’s Sponsors and Council Members and Loan Agreement, each as described above the shareholders\nof Beijing P.X. agreed that without prior written consent of the WFOE, they shall not transfer or dispose of the pledged equity interests,\nor create or allow any encumbrance on the pledged equity interests. Unless otherwise stipulated by laws, this agreement may not be terminated\nby Beijing P.X. or the shareholders of Beijing P.X. unilaterally, but may only be terminated by the Liandu WFOE after notice in advance.\nThe equity pledge agreement remains in full force and effect until all of the obligations under the contractual arrangements have\nbeen duly performed or the guaranteed debts are duly paid. The pledge of equity interests in Beijing P.X. has been duly registered with\nthe local branch of SAMR and is effective upon such registration.\n\n** **\n\n**Contractual Arrangements with respect to\nLishui International School**\n\n \n\nBelow is a summary of the\nmaterial provisions of these contractual arrangements with Liandu WFOE and the shareholders of Lishui Mengxiang with respect to Lishui\nInternational School. For more complete information you should read these agreements in their entirety.\n\n** **\n\n**Exclusive Call Option\nAgreement.** Under the Exclusive Call Option Agreement dated April 2, 2024, Ms. Fen Ye and Ms. Hong Ye, or the shareholders\nof Lishui Mengxiang have irrevocably granted Liandu WFOE or its designated purchaser the exclusive right to purchase all or part of the\ndirect and/or indirect equity interests of Lishui Mengxiang, or the Equity Call Option. The purchase price payable by Liandu WFOE or\nits designated purchaser in respect of the transfer of Lishui Mengxiang’s direct and/or indirect equity interest or equity interests\nshall be at the lowest price permitted under the PRC laws and regulations. Liandu WFOE or its designated purchaser shall have the right\nto purchase such proportion of Lishui Mengxiang’s interest in Lishui International School and/or other equity interest of Lishui\nMengxiang as it decides at any time. Lishui International School provides high school education services, in which case the foreign investors\nare restricted to hold equity interests of Lishui Mengxiang, Lishui International School’s sponsor, in accordance with the current\nPRC laws and regulations. If and when the PRC laws and regulations allow Liandu WFOE or us to directly hold all or part of the school\nsponsor interests in Lishui International School and/or all or part of other equity interests of Lishui Mengxiang and operate competent\neducation business in the PRC, Liandu WFOE shall issue the notice of exercise of such equity call option as soon as practicable, and\nthe percentage of interests to be purchased upon exercise of such Equity Call Option shall be no less than the maximum percentage allowed\nto be held by Liandu WFOE or its designated purchaser under the PRC laws and regulations. Such equity transfer price is not expressly\nprovided for in the current PRC laws and regulations and it is uncertain whether it may be further regulated by future PRC laws and regulations.\nPursuant to the Exclusive Call Option Agreement, all taxes and fees associated with the equity transfer shall be paid by Lishui Mengxiang’s\nshareholders and/or the direct equity holders of the VIEs upon the transfer. In the absence of written consent from Liandu WFOE, except\nas otherwise described in the Exclusive Call Option Agreement, Lishui Mengxiang and its shareholders shall not sell, transfer, assign\nor otherwise dispose of or create any encumbrance on any of Lishui Mengxiang’s assets, businesses or equity interests or procure\nseparation or merge with any other entities. Furthermore, without written consent from Liandu WFOE, Lishui Mengxiang may not terminate\nany material contracts or enter into any other contracts which may contradict such material contracts, incur any indebtedness or provide\nany loan or guarantee to a third party, except as disclosed to Liandu WFOE, or alter the nature or scope of its business. The Exclusive\nCall Option Agreement will remain in force during the operation term of VIEs and any periods that are renewable pursuant to the PRC laws,\nand will terminate automatically when Liandu WFOE and/or its designated entities fully exercised their options to purchase all the equities\nof VIEs in accordance with this agreement. In addition, unless otherwise stipulated by laws, this agreement may not be terminated by\nLishui Mengxiang or its shareholders unilaterally, but may only be terminated by Liandu WFOE after notice in advance.\n\n** **\n\n**Proxy Agreement for\nSchool’s Sponsors and Council Members.** Pursuant to the Proxy Agreement for School’s Sponsors and Council Members\ndated April 2, 2024, Lishui Mengxiang has irrevocably authorized and entrusted Liandu WFOE to exercise all its rights as school sponsor\nof Lishui International School to the extent permitted by the PRC laws. These rights include, but are not limited to: (a) the right\nto appoint and/or elect of council members of Lishui International School; (b) the right to appoint and/or elect the supervisors\nof Lishui International School; the right to put forward the School’s mission and scope of operation;(c)the right to examine or\napprove the articles of association of Lishui International School, development planning, major projects and budget for revenues and\nexpenditures;(d) the right to supervise the performance of Lishui International School and the achievement of the objectives set out\nin the bylaw;(e) the right to establish the executive school council in accordance with the authority and procedures prescribed in the\nbylaw of Lishui International School and to participate in the running and management of the School;(f) the right to access the information\nabout the operation conditions and financial conditions of Lishui International School;(g) the right to consult the resolutions, records,\nfinancial and accounting statements and reports of the school council meetings in accordance with the PRC laws;(h) the right to use the\nremaining property of the school after the liquidation for running other non-profit schools continuously in accordance with the PRC laws;(i)\nthe right to transfer the interests of Lishui International School’s sponsor in accordance with the PRC laws; and (j) any other\nrights of Lishui International School’s Sponsor provided by other applicable laws and regulations of the PRC and the articles of\nassociation of Lishui International School (as amended from time to time).\n\n \n\n121\n\n \n\n \n\nThe appointed Council Members\nof Lishui International School from Lishui Mengxiang has irrevocably authorized and entrusted Liandu WFOE to exercise all its rights\nas school sponsor of Lishui International School to the extent permitted by the PRC laws. These rights include, but are not limited to:\n(a) acting as the agent of Lishui International School’s Sponsor to attend the council meeting of Lishui International School;\nenjoying the right to speak, propose, vote, elect and stand for election, and the right to know, propose and supervise council meeting\nand business activities carried out by Lishui International School; (b) exercising the voting rights on behalf of Lishui International\nSchool’s Sponsor for all matters requiring discussion and resolution of the council; (c) proposing to convene a council meeting\nof Lishui International School; (d) signing the council meeting minutes, council meeting resolutions or other legal documents that\nthe Appointed Council Members has the right to sign as the council member of Lishui International School; (e) instructing the legal\nrepresentative, the financial, business and administrative chiefs, etc. of Lishui International School to act in accordance with the\nTrustee’s intention; (f) exercising other rights of the council member and council members’ voting rights under the\narticles of association (including any other council members’ voting rights as stipulated in the amended articles of association)\nof Lishui International School; (g) handling legal procedures containing registration, examination and approval and license of schools\nat the competent departments of government; and (h) any other rights of the Council Member as pursuant to the applicable PRC laws,\nregulations and the articles of association (as amended from time to time) of Lishui International School. In addition, each of Lishui\nMengxiang and the Council Members of Lishui International School have irrevocably agreed that (i) Liandu WFOE may delegate its rights\nunder the Proxy Agreement for School’s Sponsors and Council Members to the directors of Liandu WFOE or its designated person, without\nprior notice to or approval by Lishui Mengxiang and the Council Members of Lishui International School; and (ii) any person as successor\nof civil rights of Liandu WFOE or liquidator by reason of subdivision, merger, liquidation of Liandu WFOE or other circumstances shall\nhave authority to replace Liandu WFOE to exercise all rights under the Proxy Agreement for School’s Sponsors and Council Members.\n\n** **\n\n**Proxy Agreement for\nShareholders.** Pursuant to the Proxy Agreement for Shareholders dated April 2, 2024, each shareholder of Lishui Mengxiang\nhas irrevocably authorized and entrusted Liandu WFOE to exercise all its rights as the shareholder to the extent permitted by the PRC\nlaws. These rights include, but are not limited to: (a) the right to attend the shareholders’ meeting of our school acting\nas WFOE’s nominee; (b) the right to vote on behalf of the sponsors for all matters requiring discussion and resolution of\nthe shareholders’ meeting; (c) the right to sign the shareholders’ minutes, resolutions or other legal documents; (d) the\nright to indicate the directors, the legal representative, etc. to act in accordance with WFOE’s intention; (e) the right\nto handle legal procedures containing registration, examination and approval and license of schools at the competent departments of governments;\n(f) the right to decide to transfer or otherwise dispose of the equity of our school; (g) any other shareholder rights as pursuant\nto the applicable PRC laws, regulations and our school’s articles of association as amended from time to time.\n\n** **\n\n**Business Cooperation\nAgreement.** Pursuant to the Business Cooperation Agreement dated April 2, 2024, Liandu WFOE shall provide technical services,\nmanagement support and consulting services necessary for the private education business, and in return, the VIEs shall make payments\naccordingly. In particular, such services include but not limited to developing curriculum, conducting market research and offering management\nand marketing advice, providing technology services, providing public relations services, providing support for teacher hiring and training\nand providing other services that the VIEs may need from time to time. Without the prior consent of Liandu WFOE, none of the VIEs\nmay accept such services provided by any third party. As part of the business cooperative agreement, VIEs and the shareholders of Lishui\nMengxiang agree that they will not take any actions except as otherwise described in the Business Cooperation Agreement, such as incurring\nindebtedness, disposing of material assets, materially changing the scope or nature of the business of the VIEs, disposing of their equity\ninterests in the VIEs, or paying dividends or other similar payments to the sponsors or the shareholders VIEs in the absence of written\nconsent from Liandu WFOE. The aforementioned agreements will terminate automatically when Liandu WFOE and/or its designated entities\nfully exercised their options to purchase all the equities held by Nominee Shareholders in accordance with the Exclusive Call Option\nAgreement. In addition, unless otherwise stipulated by laws, this agreement may not be terminated by VIEs or the shareholders, but may\nonly be terminated by Liandu WFOE after notice in advance.\n\n** **\n\n122\n\n \n\n \n\n**Exclusive Technical\nService and Business Consulting Agreement.** Pursuant to the Exclusive Technical Service and Business Consulting Agreement\ndated April 2, 2024, Liandu WFOE agreed to provide exclusive technical services to Lishui International School and Lishui International\nSchool’s sponsor, Lishui Mengxiang. Furthermore, Liandu WFOE agreed to provide exclusive business consultancy services to Lishui\nInternational School and Lishui International School’s sponsor. In consideration of the technical and business consultancy services\nprovided by Liandu WFOE, Lishui International School and Lishui International School’s sponsor agreed to pay Liandu WFOE a service\nfee withdrawn from their respective amount of surplus from operations after deducting all costs, expenses, taxes, losses (if required\nby the law) and the legally development fund of the respective school (if required by the law) and other costs and funds that shall be\nretained at Lishui International School in accordance with applicable PRC laws. Liandu WFOE has the right (but not the obligation) to\nadjust the amount of such service fee by reference to the actual services provided and the actual business operations and needs of Lishui\nInternational School and Lishui International School’s sponsor, provided that any adjusted amount shall not exceed the amount mentioned\nabove. Lishui International School and Lishui International School’s sponsor do not have any right to make any such adjustment.\nUnless otherwise prescribed under the PRC laws and regulations, Liandu WFOE shall have exclusive proprietary rights to any technology\nand intellectual property developed and materials prepared in the course of the provision of research and development, technical support\nand services by Liandu WFOE to Lishui International School and Lishui International School’s sponsor, and any intellectual property\nin the products developed, including any other rights derived thereunder, in the course of performance of obligations under the Exclusive\nTechnical Service and Business Consulting Agreement and/or any other agreements entered into between Liandu WFOE and the VIEs.\n\n** **\n\n**Equity Pledge Agreement**.\nPursuant to the Equity Pledge Agreement dated April 2, 2024, the shareholders unconditionally and irrevocably pledged all of their equity\ninterests in Lishui Mengxiang to Liandu WFOE to guarantee performance of the obligations of the VIEs under the Exclusive Call Option\nAgreement, Business Cooperation Agreement, Exclusive Technical Service and Business Consulting Agreement, Proxy Agreement for Shareholders,\nProxy Agreement for School’s Sponsors and Council Members and Loan Agreement, each as described above the shareholders of Lishui\nMengxiang agreed that without prior written consent of the PRC WFOE, they shall not transfer or dispose of the pledged equity interests,\nor create or allow any encumbrance on the pledged equity interests. Unless otherwise stipulated by laws, this agreement may not be terminated\nby Lishui Mengxiang or the shareholders of Lishui Mengxiang unilaterally, but may only be terminated by the Liandu WFOE after notice\nin advance. The equity pledge agreement remains in full force and effect until all of the obligations under the contractual arrangements have\nbeen duly performed or the guaranteed debts are duly paid. The pledge of equity interests in Lishui Mengxiang has been duly registered\nwith the local branch of SAIC and is effective upon such registration.\n\n \n\nAfter consulting with our\nPRC legal counsel Beijing DeHeng Law offices, we are of the view that:\n\n \n\n●the\nownership structures of Liandu WFOE and the VIEs currently will not violate any applicable\nPRC law, regulation, or rule currently in effect; and\n\n \n\n●the\ncontractual arrangements (a) among Liandu WFOE, Lishui Mengxiang, Qingtian International\nSchool, shareholders of Lishui Mengxiang and the Council Members of Qingtian International\nSchool; (b) among Liandu WFOE, Beijing P.X., Langfang School, shareholders of Beijing P.X.\nand the Council Members of Langfang School; and (c) among Liandu WFOE, Lishui Mengxiang,\nLishui International School, shareholders of Lishui Mengxiang and the Council Members of\nLishui International School, governed by PRC laws are valid, binding and enforceable in accordance\nwith their terms and applicable PRC laws, rules, and regulations currently in effect.\n\n \n\nHowever, there are substantial\nuncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules. Accordingly, the PRC\nregulatory authorities may take a view that is contrary to us. It is uncertain whether any new PRC laws or regulations relating to variable\ninterest entity structures will be adopted or if adopted, what they would provide. If we or the VIE is found to be in violation of any\nexisting or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC\nregulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “*Item 3.\nKey Information—D. Risk Factors—Risks Relating to Our Corporate Structure*.”\n\n \n\n123\n\n \n\n \n\n**D. Property, Plants and Equipment**\n\n \n\nOur headquarters are located\nin Lishui City, Zhejiang Province, the People’s Republic of China. As of December 31, 2025, we and the VIEs owned the land\nuse rights for eight parcels of land in the PRC with a total site area of approximately 104,739 sq.m. We and the VIEs also owned 25 buildings\nwith a total gross floor area of approximately 86,518 sq.m. On December 29, 2021, Lishui Mengxiang as the landlord entered into a lease\nagreement with Lianwai School. The lease covers three parcels of land in Liandu District and the term of this lease is for three years\nfrom January 1, 2022 to December 31, 2024. The lease agreement was a part of the essential services we provided to Lianwai School in\norder to keep Lianwai School in operation and minimize the disruptions to its existing students. We have not recognized any revenue from\nthis lease pursuant to the 2021 Complementation Rules. The lease expired on December 31, 2024 and was not extended.\n\n \n\nOn September 1, 2019, Langfang\nSchool as the tenant entered into a lease agreement with a third party. The agreement covers the campus facilities and properties located\nat No.2 Yongxing road, Anci District in Langfang City, Hebei Province, which is provided to Langfang School for its daily operation.\nThe term of this agreement is for five years from September 1, 2019 to August 31, 2024. Langfang School agreed to pay RMB330,000 (including\ntax) each month for using the campus facilities. This lease agreement was not renewed after expiration.\n\n \n\nOn December 13, 2022, Langfang\nSchool as the tenant entered into a cooperation agreement about the facilities use with a third party. The agreement covers the facilities\nlocated at No.63 Aiminxi road, Anci District in Langfang City, Hebei Province, and its term is from December 2022 to December 2024. Langfang\nSchool agreed to pay the rent based on the numbers of apartments used in the school years, and the annual rent for an apartment accommodating\n4 students ranges from RMB30,600 to RMB31,800. This lease agreement was not renewed after expiration.\n\n \n\nOn June 30, 2024, Lishui\nMengxiang as the landlord, entered into a lease agreement with a third party. The agreement covers the facilities located at No. 227,\nDayang North Road, Liandu District, Lishui City, and its term is from July 1, 2024 to June 30, 2027. Lishui Mengxiang will receive an\nannual rental income of RMB1 million. We have completed the lease registration for this lease agreement.\n\n \n\nOn July 31, 2024,\nLangfang School entered into a cooperation agreement with Hebei Technical College of Petroleum Profession\n(河北石油职业技术学院) (“Hebei Petroleum College”) for\noperating vocational education at the southern campus of Hebei Petroleum College, located at No.38 Yongxing road, Anci District in\nLangfang City, Hebei Province. Langfang School is allowed to use the facilities of the southern campus of Hebei Petroleum College\nfor six years from July 31, 2024 to July 30, 2030, for operating vocational education, and agrees to pay RMB11,000,000 each year to\nHebei Petroleum College, subject to certain fees adjustment arrangements. In January 2026, Langfang School and Hebei Petroleum\nCollege mutually agreed to terminate the cooperation agreement and Langfang School vacated the facilities it occupied at the\nsouthern campus of Hebei Petroleum College on January 15, 2026.\n\n \n\nIn November 2024, Beijing\nP.X. as the tenant entered into a lease agreement with a third party. The agreement covers office spaces located at Room 2101, Tower\nA, Genertime International Center, Chaoyang District, Beijing. The term of this agreement is for five years from November 1, 2024 to\nMarch 8, 2026. Beijing P.X. agreed to pay RMB45,000 (including tax) each month for using the facilities.\n\n \n\nOn December 1, 2025, Langfang\nSchool as the tenant entered into a lease agreement about the facilities use with a third party. The agreement covers the facilities\nlocated at No. 4, Chunming Road, Development Zone, Langfang City, Hebei Province, and its term is from March 31, 2026 to March 31, 2031.\nLangfang School agreed to pay an annual rent of RMB2,600,000 each year.\n\n \n\nOn December 15, 2024, Lishui\nMengxiang as the landlord, entered into a lease agreement with Liandu Foreign Language School Kindergarten. The agreement covers the facilities located at No. 705,\nShouerfu Road, Liandu District, Lishui City, and its term is from January 1, 2025 to December 31, 2025. Lishui Mengxiang will receive\nan annual rental income of RMB396,000. We have completed the lease registration for this lease agreement.\n\n \n\nPursuant to the applicable\nPRC laws and regulations, parties to a lease agreement are required to file the lease agreements for registration and obtain property\nleasing filing certificates for their leases. As of the date of the annual report, unless indicated otherwise above, we and the VIEs\nhad not completed lease registration of the properties we and the VIEs leased in China. Although failure to register or file a lease\ndoes not in itself invalidate the leases, we and the VIEs may be required by relevant government authorities to file the lease agreements\nto complete the registration formalities and may be subject to a fine for non-registration within the prescribed time limit, which may\nrange from RMB1,000 to RMB10,000 per lease agreement. See “*Item 3. Key Information—D. Risk Factors—Risks Relating\nto Our Business and Industry*.”\n\n \n\n124"}