20-F 1 fedu-20230228.htm 20-F 20-F
FY0001709819false--02-2825,486http://fasb.org/us-gaap/2022#GoodwillAndIntangibleAssetImpairmenthttp://fasb.org/us-gaap/2022#GoodwillAndIntangibleAssetImpairmenthttp://fasb.org/us-gaap/2022#GoodwillAndIntangibleAssetImpairment0001709819fedu:HuangshanXingyueResearchTravelEducationCoLtdMember2023-02-280001709819us-gaap:RetainedEarningsMember2021-02-280001709819us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2023-02-280001709819fedu:ShexianSijiXingzhiCultureDevelopmentCoLtdMemberfedu:JiangxiMemberfedu:EducationServiceMemberfedu:SubsidiariesOfVariableInterestEntitiesMember2022-03-012023-02-280001709819us-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMemberfedu:CustomerAMember2022-03-012023-02-280001709819fedu:ShanghaiFuxiNetworkCoLtdMember2022-03-012023-02-280001709819fedu:FourSeasonsOnlineEducationIncMember2021-03-012022-02-280001709819us-gaap:RetainedEarningsMember2023-02-280001709819us-gaap:SellingAndMarketingExpenseMember2021-03-012022-02-280001709819us-gaap:RevenueFromContractWithCustomerMemberfedu:MajorCustomersMemberus-gaap:CustomerConcentrationRiskMember2022-03-012023-02-280001709819fedu:OfficeEquipmentAndFurnitureMembersrt:MaximumMember2022-03-012023-02-280001709819fedu:OthersMember2023-02-280001709819fedu:ShanghaiJingAnFourSeasonsBridgeClubMember2020-07-012020-07-010001709819us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberfedu:CustomerBMember2022-03-012023-02-280001709819fedu:ShanghaiEastNormalUniversityEducationDevelopmentFundMember2022-02-280001709819us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-012021-02-280001709819us-gaap:RetainedEarningsMember2020-03-012021-02-280001709819fedu:ShanghaiJiaheInternationalTravelServiceCoLtdMember2020-09-010001709819fedu:ShanghaiYanjinInformationTechnologyCoLtdMember2020-05-012020-05-310001709819us-gaap:ForeignCountryMemberfedu:ShanghaiFuxiMemberus-gaap:StateAdministrationOfTaxationChinaMember2022-03-012023-02-280001709819us-gaap:AdditionalPaidInCapitalMember2022-03-012023-02-280001709819fedu:BlackScholesOptionPricingModelMember2022-03-012023-02-280001709819fedu:StudyCampAndLearningTripMember2022-03-012023-02-280001709819fedu:EducationServiceMemberfedu:ShanghaiMemberfedu:ShanghaiTongfangTechnologyFurtherEducationSchoolMemberfedu:SubsidiariesOfVariableInterestEntitiesMember2022-03-012023-02-280001709819us-gaap:TreasuryStockCommonMember2021-03-012022-02-280001709819fedu:NanjingChengweiVentureCapitalPartnershipMember2021-01-122021-12-310001709819us-gaap:ParentMember2022-03-012023-02-280001709819fedu:EmployeesMember2021-02-052021-02-050001709819fedu:FourSeasonsOnlineEducationIncMember2021-05-010001709819fedu:OfficeEquipmentAndFurnitureMembersrt:MinimumMember2022-03-012023-02-280001709819fedu:COVID19Member2020-03-012021-02-280001709819fedu:LicenseIntangibleAssetMember2022-02-280001709819us-gaap:TreasuryStockCommonMember2022-03-012023-02-280001709819fedu:RevenueFromRelatedPartiesMember2020-03-012021-02-280001709819us-gaap:ParentMember2020-02-290001709819us-gaap:EmployeeStockOptionMember2022-03-012023-02-280001709819us-gaap:AdditionalPaidInCapitalMember2021-02-280001709819fedu:FourSeasonsOnlineEducationIncMember2022-03-012023-02-280001709819fedu:HuangshanCultureInvestmentGroupCoLtdMember2022-02-280001709819srt:MaximumMemberus-gaap:TradeNamesMember2022-03-012023-02-280001709819fedu:ShanghaiFuxiNetworkCoLtdMember2021-03-012022-02-280001709819fedu:HuangshanXingyueResearchTravelEducationCoLtdMember2022-01-012022-01-310001709819fedu:RevenueFromThirdPartiesMember2022-03-012023-02-280001709819us-gaap:NoncompeteAgreementsMember2022-02-280001709819fedu:FourSeasonsOnlineEducationIncMember2021-05-012021-05-010001709819srt:MinimumMemberus-gaap:ForeignCountryMemberus-gaap:StateAdministrationOfTaxationChinaMember2022-03-012023-02-280001709819us-gaap:CommonStockMember2020-02-290001709819fedu:RevenueFromThirdPartiesMember2020-03-012021-02-280001709819fedu:EastChinaNormalUniversityElectronicAndAudioVisualPublishingHouseMember2023-02-280001709819us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2020-03-012021-02-280001709819us-gaap:TreasuryStockCommonMember2022-02-280001709819us-gaap:GeneralAndAdministrativeExpenseMember2020-03-012021-02-280001709819fedu:HuangshanCultureInvestmentGroupCoLtdMember2021-03-012022-02-280001709819us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberfedu:CustomerCMember2023-02-280001709819us-gaap:RetainedEarningsMember2020-02-290001709819fedu:FourSeasonsOnlineEducationIncMember2022-03-012023-02-280001709819fedu:JiangxiMembersrt:SubsidiariesMemberfedu:WuyuanSijijiaozhongTourismInvMgtCoLtdMemberfedu:ConsultingServiceMember2022-02-280001709819fedu:NanjingChengweiVentureCapitalPartnershipMember2022-02-012022-02-280001709819us-gaap:ForeignCountryMemberus-gaap:StateAdministrationOfTaxationChinaMember2021-03-012022-02-280001709819fedu:EmployeesMember2019-06-302019-06-300001709819fedu:HuashiDongfangAndJiaheMember2020-03-012021-02-280001709819us-gaap:GoodwillMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-03-012022-02-280001709819srt:MinimumMemberus-gaap:ForeignCountryMemberfedu:ShanghaiFuxiMemberus-gaap:StateAdministrationOfTaxationChinaMember2020-03-012021-02-280001709819us-gaap:NoncontrollingInterestMember2021-02-280001709819fedu:LicenseIntangibleAssetMember2023-02-280001709819us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-02-290001709819fedu:ShanghaiJiaxinTravelAgencyMember2020-03-012021-02-280001709819fedu:IntangibleAssetNetMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-03-012022-02-280001709819us-gaap:TreasuryStockCommonMember2021-02-280001709819us-gaap:CommonStockMember2021-03-012022-02-280001709819fedu:RevenueFromThirdPartiesMember2021-03-012022-02-280001709819fedu:EducationServiceMemberfedu:ChongqingJingzhanTechnologyTrainingCenterCoLtdMemberfedu:SubsidiariesOfVariableInterestEntitiesMemberfedu:ChongqingMember2022-02-280001709819srt:MaximumMemberus-gaap:ForeignCountryMemberfedu:ShanghaiFuxiMemberus-gaap:StateAdministrationOfTaxationChinaMember2022-03-012023-02-280001709819srt:MaximumMemberfedu:ElectronicEquipmentMember2022-03-012023-02-280001709819srt:MinimumMemberus-gaap:ForeignCountryMemberfedu:ShanghaiFuxiMemberus-gaap:StateAdministrationOfTaxationChinaMember2021-03-012022-02-280001709819us-gaap:ForeignCountryMemberfedu:ShanghaiFuxiMemberus-gaap:StateAdministrationOfTaxationChinaMember2020-03-012021-02-2800017098192021-02-280001709819fedu:NanjingChengweiVentureCapitalPartnershipMember2022-03-012023-02-280001709819us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-02-280001709819us-gaap:ParentMember2021-02-280001709819fedu:FourSeasonsClassTrainingCompanyLimitedMemberfedu:EducationServiceMemberfedu:ShanghaiMemberfedu:SubsidiariesOfVariableInterestEntitiesMember2022-02-280001709819us-gaap:CommonStockMember2021-02-280001709819fedu:SchoolCooperationAgreementsMember2023-02-280001709819us-gaap:ParentMember2021-03-012022-02-2800017098192021-03-012022-02-280001709819fedu:ShanghaiFourSeasonsEducationInvestmentManagementCoLtdMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMemberfedu:ShanghaiMemberfedu:InvestmentHoldingMember2022-03-012023-02-280001709819fedu:ShanghaiHuashiDongfangDigitalPublishingCoLtdMember2020-04-222020-04-220001709819us-gaap:SellingAndMarketingExpenseMember2020-03-012021-02-280001709819fedu:ShanghaiMembersrt:SubsidiariesMemberfedu:ShanghaiFuxiInformationTechnologyServiceCoLtdMemberfedu:ConsultingServiceMember2022-03-012023-02-280001709819us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-012023-02-280001709819us-gaap:ComputerSoftwareIntangibleAssetMember2023-02-280001709819us-gaap:AdditionalPaidInCapitalMember2021-03-012022-02-280001709819fedu:HuangshanCultureInvestmentGroupCoLtdMember2023-02-280001709819us-gaap:AdditionalPaidInCapitalMember2022-02-280001709819fedu:ShanghaiYanjinInformationTechnologyCoLtdMember2020-05-310001709819fedu:JuYimingLiuWeiShenYalinYangHuiningMaLichaoYangHongguanAndSongPingMember2022-03-012023-02-280001709819us-gaap:ParentMember2020-03-012021-02-280001709819us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2022-02-2800017098192023-02-280001709819srt:MaximumMemberfedu:TwoThousandAndFifteenStockOptionPlanAndTwoThousandAndSeventeenStockOptionPlanMember2015-06-300001709819fedu:EducationServiceMemberfedu:ChongqingJingzhanTechnologyTrainingCenterCoLtdMemberfedu:SubsidiariesOfVariableInterestEntitiesMemberfedu:ChongqingMember2022-03-012023-02-280001709819us-gaap:SeriesBPreferredStockMemberfedu:FourSeasonsOnlineEducationIncMember2020-03-022020-03-310001709819fedu:JiangxiMemberfedu:EducationServiceMemberfedu:WuyuanSijiGongdaStudyCampTravelDevelopmentCoLtdMembersrt:SubsidiariesMember2022-03-012023-02-280001709819fedu:OthersMember2020-03-012021-02-280001709819fedu:SeriesBAndSeriesB2PreferredSharesMemberfedu:FourSeasonsOnlineEducationIncMember2020-03-012020-04-300001709819fedu:FourSeasonsClassTrainingCompanyLimitedMemberfedu:EducationServiceMemberfedu:ShanghaiMemberfedu:SubsidiariesOfVariableInterestEntitiesMember2022-03-012023-02-280001709819fedu:LearningServicesMember2020-03-012021-02-280001709819fedu:SeriesB2PreferredSharesMemberfedu:FourSeasonsOnlineEducationIncMember2020-04-012020-04-300001709819fedu:ShanghaiJinganFourSeasonsIntellectualSportsClubMemberfedu:EducationServiceMemberfedu:ShanghaiMemberfedu:SubsidiariesOfVariableInterestEntitiesMember2022-03-012023-02-280001709819srt:MinimumMemberus-gaap:TradeNamesMember2022-03-012023-02-280001709819us-gaap:TradeNamesMember2022-02-280001709819fedu:DangdaiMember2022-03-012023-02-280001709819us-gaap:InlandRevenueHongKongMemberus-gaap:ForeignCountryMember2023-02-280001709819fedu:LearningServicesMember2022-03-012023-02-280001709819srt:DirectorMember2021-02-052021-02-050001709819us-gaap:RetainedEarningsMember2022-03-012023-02-280001709819fedu:LearningTechnologyAndContentSolutionsMember2021-03-012022-02-280001709819fedu:NonControllingInterestShareholdersOfVariableInterestEntitySubsidiariesMember2023-02-280001709819fedu:LearningServicesMember2021-03-012022-02-280001709819srt:MaximumMember2023-02-280001709819fedu:LearningTechnologyAndContentSolutionsMember2020-03-012021-02-280001709819fedu:HuangshanXingyueResearchTravelEducationCoLtdMember2022-01-310001709819us-gaap:ForeignCountryMemberfedu:ShanghaiFuxiMemberus-gaap:StateAdministrationOfTaxationChinaMember2021-03-012022-02-280001709819us-gaap:NoncontrollingInterestMember2021-03-012022-02-280001709819fedu:ShanghaiYanjinInformationTechnologyCoLtdMember2021-03-012022-02-280001709819fedu:ShanghaiEastNormalUniversityEducationDevelopmentFundMember2023-02-280001709819fedu:HuangshanCultureInvestmentGroupCoLtdMember2020-03-012021-02-280001709819fedu:ShanghaiFuxiNetworkCoLtdMember2020-03-012021-02-280001709819us-gaap:VehiclesMembersrt:MinimumMember2022-03-012023-02-280001709819fedu:StudentBaseAndCustomerRelationshipMember2022-02-280001709819us-gaap:TreasuryStockCommonMember2023-02-280001709819us-gaap:ForeignCountryMemberus-gaap:StateAdministrationOfTaxationChinaMember2022-02-280001709819fedu:ShanghaiFourSeasonOnlineSchoolMember2023-02-280001709819us-gaap:InlandRevenueHongKongMemberus-gaap:ForeignCountryMemberfedu:FourSeasonsEducationHongKongLimitedMember2022-03-012023-02-280001709819fedu:ShanghaiFourSeasonsEducationInvestmentManagementCoLtdMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMemberfedu:ShanghaiMemberfedu:InvestmentHoldingMember2022-02-280001709819fedu:HuangshanCultureInvestmentGroupCoLtdMember2022-03-012023-02-280001709819us-gaap:VehiclesMember2023-02-280001709819fedu:RevenueFromRelatedPartiesMember2021-03-012022-02-280001709819us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-012022-02-280001709819fedu:ShanghaiJingAnFourSeasonsBridgeClubMember2021-03-012021-03-010001709819us-gaap:SellingAndMarketingExpenseMember2022-03-012023-02-280001709819fedu:ShanghaiHuashiDongfangDigitalPublishingCoLtdMember2018-02-070001709819fedu:ShanghaiJingAnFourSeasonsBridgeClubMember2020-07-010001709819fedu:ShexianSijiXingzhiCultureDevelopmentCoLtdMemberfedu:JiangxiMemberfedu:EducationServiceMemberfedu:SubsidiariesOfVariableInterestEntitiesMember2022-02-280001709819fedu:EducationServiceMemberfedu:WufengSijiXuezhiEducationManagementCoLtdMemberfedu:SubsidiariesOfVariableInterestEntitiesMemberfedu:HubeiMember2022-03-012023-02-280001709819us-gaap:SubsequentEventMember2023-06-012023-06-010001709819us-gaap:ForeignCountryMemberus-gaap:StateAdministrationOfTaxationChinaMember2023-02-280001709819srt:MinimumMember2022-03-012023-02-280001709819fedu:AmountDueFromRelatedPartiesAndOtherNonCurrentAssetsMember2021-03-012022-02-2800017098192022-02-280001709819fedu:EducationServiceMemberfedu:ShanghaiMemberfedu:ShanghaiTongfangTechnologyFurtherEducationSchoolMemberfedu:SubsidiariesOfVariableInterestEntitiesMember2022-02-280001709819fedu:ShanghaiHuangpuFantasyFurtherEducationSchoolMemberfedu:EducationServiceMemberfedu:ShanghaiMemberfedu:SubsidiariesOfVariableInterestEntitiesMember2022-02-280001709819fedu:OfficeEquipmentAndFurnitureMember2022-02-280001709819fedu:MajorCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2023-02-280001709819us-gaap:NoncontrollingInterestMember2020-03-012021-02-2800017098192020-02-290001709819fedu:BlackScholesOptionPricingModelMember2020-03-012021-02-280001709819us-gaap:NoncontrollingInterestMember2023-02-280001709819us-gaap:GeneralAndAdministrativeExpenseMember2022-03-012023-02-280001709819fedu:StudentBaseAndCustomerRelationshipMember2023-02-280001709819us-gaap:InlandRevenueHongKongMemberus-gaap:ForeignCountryMemberfedu:FourSeasonsEducationHongKongLimitedMember2021-03-012022-02-280001709819fedu:DangdaiMember2023-02-280001709819fedu:StudyCampAndLearningTripMember2021-03-012022-02-280001709819fedu:ShanghaiJiaxinTravelAgencyMember2021-02-280001709819fedu:NanjingChengweiVentureCapitalPartnershipMember2023-02-280001709819us-gaap:EquityMethodInvestmentsMemberfedu:ShanghaiHuashiDongfangDigitalPublishingCoLtdMember2020-03-012021-02-280001709819us-gaap:EquityMethodInvestmentsMemberfedu:ShanghaiHuashiDongfangDigitalPublishingCoLtdMember2019-03-012020-02-290001709819fedu:ShanghaiMembersrt:SubsidiariesMemberfedu:ShanghaiFuxiInformationTechnologyServiceCoLtdMemberfedu:ConsultingServiceMember2022-02-280001709819fedu:SeriesBAndSeriesB2PreferredSharesMemberfedu:FourSeasonsOnlineEducationIncMember2020-04-300001709819us-gaap:AdditionalPaidInCapitalMember2023-02-280001709819fedu:ShanghaiJinganFourSeasonsIntellectualSportsClubMemberfedu:EducationServiceMemberfedu:ShanghaiMemberfedu:SubsidiariesOfVariableInterestEntitiesMember2022-02-280001709819fedu:OthersMember2022-02-280001709819fedu:LicenseIntangibleAssetMember2022-03-012023-02-280001709819fedu:ShanghaiYanjinInformationTechnologyCoLtdMember2020-03-012021-02-280001709819us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-02-2800017098192022-03-012023-02-280001709819country:HKfedu:FourSeasonsEducationHongKongLimitedMembersrt:SubsidiariesMemberfedu:InvestmentHoldingMember2022-03-012023-02-280001709819fedu:ElectronicEquipmentMember2022-02-280001709819us-gaap:VehiclesMember2022-02-280001709819fedu:ShanghaiLuoliangNetworkTechnologyCoLtdMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMemberfedu:EducationServiceMemberfedu:ShanghaiMember2022-03-012023-02-280001709819fedu:ShanghaiLuoliangNetworkTechnologyCoLtdMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMemberfedu:EducationServiceMemberfedu:ShanghaiMember2022-02-280001709819us-gaap:SubsequentEventMemberfedu:EmployeesMember2023-06-012023-06-010001709819fedu:JiangxiMembersrt:SubsidiariesMemberfedu:WuyuanSijijiaozhongTourismInvMgtCoLtdMemberfedu:ConsultingServiceMember2022-03-012023-02-280001709819us-gaap:ParentMember2023-02-280001709819us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-02-280001709819srt:MaximumMemberus-gaap:VehiclesMember2022-03-012023-02-280001709819us-gaap:AdditionalPaidInCapitalMember2020-03-012021-02-280001709819srt:MinimumMemberfedu:ElectronicEquipmentMember2022-03-012023-02-280001709819us-gaap:NoncontrollingInterestMember2022-03-012023-02-280001709819fedu:ShanghaiJingAnFourSeasonsBridgeClubMember2021-03-010001709819fedu:LearningTechnologyAndContentSolutionsMember2022-03-012023-02-2800017098192018-03-012019-02-280001709819us-gaap:ForeignCountryMemberus-gaap:StateAdministrationOfTaxationChinaMember2022-03-012023-02-280001709819us-gaap:GeneralAndAdministrativeExpenseMember2021-03-012022-02-280001709819fedu:SchoolCooperationAgreementsMember2022-03-012023-02-280001709819fedu:ShanghaiJiaheInternationalTravelServiceCoLtdMember2020-09-012020-09-010001709819us-gaap:ForeignCountryMemberus-gaap:StateAdministrationOfTaxationChinaMember2020-03-012021-02-280001709819us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2021-03-012022-02-280001709819fedu:ShanghaiJiaxinTravelAgencyMember2021-03-012022-02-280001709819us-gaap:NoncontrollingInterestMember2020-02-290001709819us-gaap:ParentMember2022-02-280001709819us-gaap:NoncontrollingInterestMember2022-02-280001709819us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2022-03-012023-02-280001709819us-gaap:RetainedEarningsMember2022-02-280001709819fedu:ShanghaiHuangpuFantasyFurtherEducationSchoolMemberfedu:EducationServiceMemberfedu:ShanghaiMemberfedu:SubsidiariesOfVariableInterestEntitiesMember2022-03-012023-02-280001709819us-gaap:CommonStockMember2022-02-280001709819fedu:ShanghaiJiaxinTravelAgencyMember2022-02-280001709819us-gaap:NoncompeteAgreementsMember2023-02-280001709819fedu:EmployeesMember2020-02-172020-02-170001709819us-gaap:TreasuryStockCommonMember2020-02-290001709819fedu:ElectronicEquipmentMember2023-02-280001709819fedu:OfficeEquipmentAndFurnitureMember2023-02-280001709819fedu:HuangshanXingyueResearchTravelEducationCoLtdMember2022-02-280001709819fedu:JiangxiMemberfedu:EducationServiceMemberfedu:WuyuanSijiGongdaStudyCampTravelDevelopmentCoLtdMembersrt:SubsidiariesMember2022-02-280001709819country:HKsrt:SubsidiariesMemberfedu:FourSeasonsEducationHongKongLimitedMemberfedu:InvestmentHoldingMember2022-02-2800017098192019-01-222019-01-220001709819us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberfedu:CustomerCMember2022-03-012023-02-280001709819fedu:ShanghaiHuashiDongfangDigitalPublishingCoLtdMember2018-02-072018-02-070001709819us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberfedu:CustomerBMember2023-02-280001709819fedu:EducationServiceMemberfedu:WufengSijiXuezhiEducationManagementCoLtdMemberfedu:SubsidiariesOfVariableInterestEntitiesMemberfedu:HubeiMember2022-02-280001709819us-gaap:RetainedEarningsMember2021-03-012022-02-280001709819fedu:ShanghaiJiaxinTravelAgencyMember2022-03-012023-02-280001709819us-gaap:ComputerSoftwareIntangibleAssetMember2022-02-280001709819srt:MinimumMemberus-gaap:ForeignCountryMemberfedu:ShanghaiFuxiMemberus-gaap:StateAdministrationOfTaxationChinaMember2022-03-012023-02-280001709819us-gaap:TradeNamesMember2023-02-280001709819us-gaap:CommonStockMember2023-02-280001709819fedu:MajorCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2022-03-012023-02-280001709819srt:MinimumMemberfedu:StudentBaseAndCustomerRelationshipMember2022-03-012023-02-280001709819fedu:ShanghaiJiaxinTravelAgencyMember2021-01-122021-12-3100017098192023-02-282023-02-280001709819fedu:EastChinaNormalUniversityElectronicAndAudioVisualPublishingHouseMember2022-03-012023-02-280001709819us-gaap:EmployeeStockOptionMember2020-03-012021-02-280001709819srt:MaximumMemberus-gaap:ForeignCountryMemberfedu:ShanghaiFuxiMemberus-gaap:StateAdministrationOfTaxationChinaMember2020-03-012021-02-280001709819fedu:ShanghaiYanjinInformationTechnologyCoLtdMember2022-03-012023-02-280001709819us-gaap:EmployeeStockOptionMember2021-03-012022-02-280001709819srt:MaximumMemberus-gaap:ForeignCountryMemberus-gaap:StateAdministrationOfTaxationChinaMember2022-03-012023-02-280001709819fedu:FourSeasonsOnlineEducationIncMember2020-03-012021-02-280001709819srt:MaximumMemberus-gaap:ForeignCountryMemberfedu:ShanghaiFuxiMemberus-gaap:StateAdministrationOfTaxationChinaMember2021-03-012022-02-280001709819us-gaap:NoncompeteAgreementsMember2022-03-012023-02-280001709819fedu:ShanghaiHuashiDongfangDigitalPublishingCoLtdMember2020-04-220001709819us-gaap:ComputerSoftwareIntangibleAssetMember2022-03-012023-02-280001709819srt:MaximumMemberfedu:StudentBaseAndCustomerRelationshipMember2022-03-012023-02-280001709819us-gaap:AdditionalPaidInCapitalMember2020-02-290001709819fedu:AmountDueFromRelatedPartiesAndOtherNonCurrentAssetsMember2022-03-012023-02-280001709819fedu:NanjingChengweiVentureCapitalPartnershipMember2022-02-280001709819srt:ExecutiveOfficerMember2021-02-052021-02-050001709819fedu:NanjingChengweiVentureCapitalPartnershipMember2022-08-012022-08-310001709819us-gaap:LeaseholdImprovementsMember2023-02-280001709819us-gaap:FairValueMeasurementsNonrecurringMemberfedu:PropertyAndEquipmentNetMember2021-03-012022-02-280001709819fedu:NonControllingInterestShareholdersOfVariableInterestEntitySubsidiariesMember2022-02-280001709819us-gaap:CommonStockMember2022-03-012023-02-280001709819fedu:SchoolCooperationAgreementsMember2022-02-280001709819us-gaap:LeaseholdImprovementsMember2022-02-2800017098192020-03-012021-02-280001709819fedu:RevenueFromRelatedPartiesMember2022-03-012023-02-280001709819fedu:ShanghaiYanjinInformationTechnologyCoLtdMember2022-03-012023-02-280001709819fedu:StudyCampAndLearningTripMember2020-03-012021-02-280001709819fedu:DangdaiMember2022-02-280001709819dei:BusinessContactMember2022-03-012023-02-280001709819fedu:ShanghaiFourSeasonOnlineSchoolMember2022-03-012023-02-28xbrli:pureiso4217:USDxbrli:sharesxbrli:sharesiso4217:HKDiso4217:CNYiso4217:CNYxbrli:sharesiso4217:USD

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 20-F

 

(Mark One)

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended February 28, 2023.

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

OR

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

Commission file number: 001-38264

Four Seasons Education (Cayman) Inc.

(Exact name of Registrant as specified in its charter)

 

 

N/A

(Translation of Registrant’s name into English)

 

Cayman Islands

(Jurisdiction of incorporation or organization)

 

Room 1301, Zi'an Building

309 Yuyuan Road, Jing'an District

Shanghai 200040

People’s Republic of China

(Address of principal executive offices)

 

Yi Zuo, Chief Executive Officer

Tel: +86 21 6205-0619
E-mail:
ir@fsesa.com

At the address of the Company set forth above

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

American Depositary Shares, each one representing

ten ordinary shares, par value US$0.0001 per share*

 

FEDU

 

New York Stock Exchange

 

*Not for trading, but only in connection with the listing on the New York Stock Exchange of American depositary shares

 

Securities registered or to be registered pursuant to Section 12(g) of the Act:

 

None

(Title of Class)

 

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

 

None

(Title of Class)

 

Indicate the number of outstanding shares of each of the Issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

21,189,215 ordinary shares, par value US$0.0001 per share, as of February 28, 2023

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

 

Large accelerated filer

 

Accelerated filer

 

Non-accelerated filer

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards † provided pursuant to Section 13(a) of the Exchange Act.☐

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☒ International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

 

1


TABLE OF CONTENTS

 

 

Page

 

INTRODUCTION

 

PART I

7

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

7

ITEM 2

OFFER STATISTICS AND EXPECTED TIMETABLE

7

ITEM 3

KEY INFORMATION

7

ITEM 4.

INFORMATION ON THE COMPANY

72

ITEM 4A.

UNRESOLVED STAFF COMMENTS

105

ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

106

ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

122

ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

131

ITEM 8.

FINANCIAL INFORMATION

132

ITEM 9.

THE OFFER AND LISTING

133

ITEM 10.

ADDITIONAL INFORMATION

134

ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

147

ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

147

PART II

149

ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

149

ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

149

ITEM 15.

CONTROLS AND PROCEDURES

149

ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT

151

ITEM 16B.

CODE OF ETHICS

151

ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

151

ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

151

ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

152

ITEM 16F.

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

152

ITEM 16G.

CORPORATE GOVERNANCE

153

ITEM 16H.

MINE SAFETY DISCLOSURE

153

ITEM 16I.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

153

ITEM 16J.

INSIDER TRADING POLICIES

153

PART III

154

ITEM 17

FINANCIAL STATEMENTS

154

ITEM 18

FINANCIAL STATEMENTS

154

ITEM 19.

EXHIBITS

154

 

2


 

3


 

 

INTRODUCTION

Unless otherwise indicated and except where the context otherwise requires:

“Four Seasons,” “we,” “us,” “our company,” “the Company,” and “our” refer to the Parent and its subsidiaries;
“parent” refers to Four Seasons Education (Cayman) Inc., a Cayman Islands holding company;
“shares” or “ordinary shares” refer to our ordinary shares, par value US$0.0001 per share;
“variable interest entities” or “VIEs” refers to Shanghai Luoliang Network Technology Co., Ltd. (formally known as Shanghai Four Seasons Education and Training Co., Ltd.) and Shanghai Four Seasons Education Investment Management Co., Ltd, and their subsidiaries, which are PRC companies in which we do not have equity interests but whose financial results have been consolidated into our consolidated financial statements in accordance with U.S. GAAP as we have effective control over, and are the primary beneficiary of these entities. Our reference to control over the VIEs and their subsidiaries and our position of being the primary beneficiary of the VIEs and their subsidiaries for the accounting purposes are strictly in the context of the conditions that we met for consolidation of the VIEs under U.S. GAAP. Such conditions include that (i) we have the power to govern the activities which most significantly impact the VIEs and their subsidiaries’ economic performance, (ii) we are contractually obligated to absorb losses of the VIEs and their subsidiaries that could potentially be significant to the VIEs and their subsidiaries, and (iii) we are entitled to receive benefits from the VIEs and their subsidiaries that could potentially be significant to the VIEs and their subsidiaries. Only if we meet the aforementioned conditions for consolidation of the VIEs and their subsidiaries under U.S. GAAP, we will be deemed as the primary beneficiary of the VIEs and their subsidiaries, and the VIEs and their subsidiaries will be consolidated in our consolidated financial statements for accounting purposes;
“gross billings” refer to the total amount of cash received for the sale of courses in a specific period, net of the total amount of refunds in such period but inclusive of sales tax and value-added tax, or VAT;
“K-12” refers to the three years before the first grade through the last year of high school;
“K9 Academic AST Services” refers to the offering of academic subjects to students from kindergarten through grade nine;
“learning center” refers to the physical establishment of a learning facility at a specific geographic location, directly owned and operated by one of the VIEs;
“study camp” refers to our planned physical establishment of a facility catering for certain immersive enrichment activities at a specific geographic location open to group or individual learners at all age;
“the 2021 fiscal year” refers to the fiscal year ended February 28, 2021, “the 2022 fiscal year” refers to the fiscal year ended February 28, 2022, and “the 2023 fiscal year” refers to the fiscal year ended February 28, 2023;
“ADSs” refer to our American depositary shares, each one representing ten ordinary shares;
“China” or “PRC” refers to the People’s Republic of China, including Hong Kong, Macau and Taiwan; the only instances in which Hong Kong, Macau and Taiwan are not included in the definition of “China” or “PRC” is when we reference specific laws and regulations that have been adopted by the People’s Republic of China and other legal and tax matters related to the People’s Republic of China;
“PRC government” or “State” refers to the central government of the PRC, including all political subdivisions (including provincial, municipal and other regional or local government entities) and its organs or, as the context requires, any of them;
“RMB” and “Renminbi” refers to the legal currency of China; and
“US$,” “U.S. dollars,” “$” and “dollars” refer to the legal currency of the United States.

All discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding.

This annual report on Form 20-F includes our audited consolidated balance sheets as of February 28, 2022 and 2023 and our audited consolidated statements of operations, statements of comprehensive loss, statements of cash flows and statements of changes in shareholders’ equity for the years ended February 28, 2021, 2022 and 2023.

 

4

 


 

 

Our reporting currency is the Renminbi (“RMB”). The functional currency of our Company and subsidiaries incorporated outside the mainland China is the United States dollar (“U.S. Dollar” or “US$”). The functional currency of all the other subsidiaries and the VIEs is RMB. This annual report contains translations of certain Renminbi amounts into U.S. Dollars for the convenience of the reader. Unless otherwise stated, all translations of Renminbi into U.S. Dollars have been made at the rate of RMB6.9325 to US$1.00, being the noon buying rate in The City of New York for cable transfers in Renminbi as certified for customs purposes by the Federal Reserve Bank of New York in effect as of February 28, 2023 set forth in the H.10 statistical release of the U.S. Federal Reserve Board for translation into U.S. Dollars. We make no representation that the Renminbi or U.S. Dollar amounts referred to in this annual report could have been or could be converted into U.S. Dollars or Renminbi, as the case may be, at any particular rate or at all.

We listed our ADSs on the NYSE under the symbol “FEDU” on November 8, 2017.

 

5

 


 

 

FORWARD LOOKING STATEMENTS

This annual report contains forward-looking statements that involve risks and uncertainties. All statements other than statements of current or historical facts are forward-looking statements. These forward-looking statements are made under the “safe harbor” provision under Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors, including those listed under “Item 3. Key Information — D. Risk Factors,” that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

In some cases, you can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “likely to” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements about:

government policies and regulations relating to our industry;
our goals and strategies;
our ability to maintain and increase our learner enrollment;
our ability to continue to offer new and attractive courses and increase our course fees;
our ability to retain our teachers, as well as our ability to engage and train new teachers;
our future business development, financial condition and results of operations;
expected changes in our revenues, costs or expenditures;
growth of and trends of competition in our industry;
our expectation regarding the use of proceeds from our initial public offering; and
general economic and business conditions in the PRC.

You should read this annual report and the documents that we refer to in this annual report with the understanding that our actual future results may be materially different from and worse than what we expect. Other sections of this annual report include additional factors which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made in this annual report. Except as required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

This annual report also contains statistical data and estimates that we obtained from industry publications and reports generated by government or third-party providers of market intelligence. Statistical data in these publications also include projections based on a number of assumptions. If one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

 

6

 


 

 

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

Our Holding Company Structure and Contractual Arrangements with the VIEs

Four Seasons Education (Cayman) Inc. is not an operating company in the People’s Republic of China (“China” or “PRC”), but a Cayman Islands holding company which does not conduct operations and has no equity ownership in the VIEs. PRC laws and regulations place certain restrictions on direct foreign investment ownership of China-based companies, and also places separate restrictions on foreign investment in the private education businesses. Accordingly, we conduct operations in the PRC principally through contractual arrangements among (i) our WFOE, namely Shanghai Fuxi Information Technology Service Co., Ltd., or Shanghai Fuxi, (ii) variable interest entities consolidated under U.S. GAAP, or the VIEs, namely Shanghai Luoliang Network Technology Co., Ltd. (formally known as Shanghai Four Seasons Education Training Co., Ltd.) and Shanghai Four Seasons Education Investment Management Co., Ltd., limited liability companies established under PRC law, and their subsidiaries, and (iii) the shareholders of the VIEs, which provides investors with exposure to foreign investment in the Chinese operating companies. Net revenues contributed by the VIEs accounted for 100%, 100% and 97.6% of our net revenues in the fiscal years ended February 28, 2021, 2022 and 2023, respectively. As used in this annual report, “we,” “us,” “our company,” and “our” refers to the Parent, a Cayman Islands company, and its subsidiaries. The VIEs are consolidated for accounting purposes when describing the consolidated financial information. Investors of our ADSs are not purchasing equity interest in the VIEs in China but instead are purchasing equity interest in the Parent, a holding company incorporated in the Cayman Islands, and may never hold equity interests in the VIEs.

Our reference to control over the VIEs and our position of being the primary beneficiary of the VIEs for the accounting purposes are strictly in the context of the conditions that we met for consolidation of the VIEs under U.S. GAAP. Such conditions include that (i) we have the power to govern the activities which most significantly impact the VIEs’ economic performance, (ii) we are contractually obligated to absorb losses of the VIEs that could potentially be significant to the VIEs, and (iii) we are entitled to receive benefits from the VIEs that could potentially be significant to the VIEs. Only if we meet the aforementioned conditions for consolidation of the VIEs under U.S. GAAP, we will be deemed as the primary beneficiary of the VIEs, and the VIEs will be consolidated in our consolidated financial statements for accounting purposes.

WFOE has entered into the following contractual arrangements with the VIEs and their shareholders, that enable the Company to (i) have power to direct the activities that most significantly affect the performance of the VIEs, and (ii) receive the benefits of the VIEs that could be significant to the VIEs. The Company is fully and exclusively responsible for the management of the VIEs, absorbs all risk of losses of the VIEs, and has the exclusive right to exercise all voting rights of the VIE shareholders. Therefore, the Company, through its WFOE, Shanghai Fuxi, has been determined to be the primary beneficiary of the VIEs and has consolidated the VIEs’ financial results of operations, assets and liabilities and cash flows in the Company’s consolidated financial statements.

In the opinion of Fangda Partners, our PRC counsel:

the ownership structure of Shanghai Fuxi and the VIEs do not violate applicable PRC laws and regulations currently in effect; and

 

7

 


 

 

the contractual arrangements between Shanghai Fuxi, the VIEs and their respective shareholders governed by PRC law currently are valid and binding. However, we have been advised by our PRC legal counsel that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules, and there can be no assurance that the PRC regulatory authorities will take a view that is consistent with the opinion of our PRC legal counsel. Especially, on July 24, 2021, the General Office of the CPC Central Committee and the General Office of the State Council issued the Double Alleviating Opinions, which prohibits foreign investors from investing into after-school tutoring institutions providing tutoring service related to academic subjects in compulsory education stage, including through variable interest entity structure. Despite that rules and regulations have been promulgated in connection with the scope of academic subjects in compulsory education stage, it remains unclear, and subject to relevant governmental authorities’ discretion, as to whether the products and services we offer fall into the scope of academic subjects of compulsory education stage. Based on our consultation with relevant governmental authorities, we ceased offering the K9 Academic AST Services in mainland China at the end of 2021, and believe that the remaining products and services we currently offer do not constitute “tutoring service related to academic subjects of compulsory education stage” and thus not subject to the above restrictions. However, there can be no assurance that we will not be subject to penalties for historical violation, or the interpretation and implementation of relevant governmental authorities will not change in the future. Additionally, on April 7, 2021, the State Council promulgated the Amended Implementation Rules for Private Education Law, which took effective on September 1, 2021. The Amended Implementation Rules for Private Education Law stipulates that related party transactions to which a private school is a party would be required to be concluded on a fair and just basis without impediment to the interests of the state, the school, the teachers and the students, which could potentially impact our contractual arrangements with the VIEs. Please see “—Risks Relating to Doing Business in China—Uncertainties with respect to the PRC legal system could have a material adverse effect on us.”

A series of contractual agreements, including exclusive business service agreements, exclusive call option agreement, equity pledge agreement, shareholder voting rights proxy agreement and irrevocable power of attorney, and spousal consent letter by and among our WFOE, the VIEs and their respective shareholders. These contractual agreements include:

Exclusive Service Agreement

Pursuant to the exclusive service agreement, Shanghai Fuxi has the exclusive right to provide or designate any third party to provide technical services and management and consulting services to the VIEs. In exchange, the VIEs pay annual service fees to Shanghai Fuxi in an amount at Shanghai Fuxi’s discretion. Without the prior written consent of Shanghai Fuxi, the VIEs cannot accept services provided by or establishing similar corporation relationship with any third party. Shanghai Fuxi owns the exclusive intellectual property rights created as a result of the performance of this agreement unless otherwise provided by PRC laws or regulations. The agreement will remain effective unless terminated upon the full exercise of call option in accordance with the exclusive call option agreement or unilaterally terminated by Shanghai Fuxi with a notice 30 days in advance. Unless otherwise required by applicable PRC laws, the VIEs do not have any right to terminate the exclusive service agreement.

Exclusive Call Option Agreement

Pursuant to the call option agreement, the shareholders of the VIEs unconditionally and irrevocably granted Shanghai Fuxi or its designated third party exclusive call options to purchase from the shareholder part or all of its equity interests in the VIEs, as the case may be, at the nominal price or for the minimum amount of consideration permitted by the applicable PRC laws and regulations. Such shareholder will not grant a similar right or transfer any of the equity interests in the VIEs to any party other than Shanghai Fuxi or its designee, nor will it pledge, create or permit any security interest or similar encumbrance to be created on any of the equity interests. Shanghai Fuxi has sole discretion to decide when to exercise the option, and whether to exercise the option in part or in full. The agreement will remain effective unless terminated upon the full exercise of call option or unilaterally terminated by Shanghai Fuxi with a notice 30 days in advance.

 

8

 


 

 

Equity Pledge Agreement

Pursuant to the equity pledge agreement, the shareholders of the VIEs unconditionally and irrevocably pledged all of its equity interests in the VIEs to Shanghai Fuxi, to respectively guarantee the performance of the VIEs of their obligations under the relevant contractual agreements. Should the VIEs or their shareholder breach or default under any of the contractual arrangements, Shanghai Fuxi has the right to require the transfer of the pledged equity interests to itself or its designee, to the extent permitted by PRC law, or require an auction or sale of the pledged equity interests and has priority in any proceeds from the auction or sale of such pledged interests. Moreover, Shanghai Fuxi has the right to collect any and all dividends in respect of the pledged equity interests during the term of the pledge. Without the prior written consent of Shanghai Fuxi, the shareholders of the VIEs shall not transfer or dispose the pledged equity interests or create or allow any encumbrance on the pledged equity interests that would prejudice Shanghai Fuxi’s interest. Unless the VIEs have fully performed all of their obligations in accordance with the contractual agreements, or the pledged equity interests have been fully transferred to Shanghai Fuxi or its respective designee in accordance with the exclusive call option agreement, or unilaterally terminated by Shanghai Fuxi with a 30-day prior notice, the equity interest pledge agreement will continue to remain in effect.

The shareholders of the VIEs have registered the equity pledge in favor of Shanghai Fuxi with the local counterpart of the State Administration for Industry and Commerce in accordance with PRC laws and regulations.

Shareholder Voting Rights Proxy Agreement and Irrevocable Power of Attorney

The shareholders of the VIEs have each executed a shareholder voting rights proxy agreement appointing Shanghai Fuxi, or any person designated by Shanghai Fuxi, as their proxy to act for all matters pertaining to such shareholding and to exercise all of their rights as shareholders, including but not limited to attending shareholders’ meetings and designating and appointing directors, supervisors, the chief executive officer and other senior management members, and selling, transferring, pledging or disposing the equity interests of the VIEs. Shanghai Fuxi may authorize or assign its rights to any other person or entity at its sole discretion without prior notice to or prior consent from the shareholders of the VIEs. The agreement will remain effective unless Shanghai Fuxi terminates the agreement by written notice or terminated upon the full exercise of call option in accordance with the exclusive call option agreement.

Spousal Consent Letter

Pursuant to the spousal consent letter executed by the spouse of the shareholders of our VIEs, each of such spouse unconditionally and irrevocably agreed to the execution of exclusive service agreement, exclusive call option agreement, shareholder voting rights proxy agreement and irrevocable power of attorney and equity pledge agreement described above by the applicable shareholder. They further undertakes not to make any assertions in connection with the equity interests of the VIEs held by the applicable shareholder, and confirm that the shareholder can perform the relevant transaction documents described above and further amend or terminate such transaction documents without the authorization or consent from such spouse. The spouse of each applicable shareholder agrees and undertakes that if he/she obtains any equity interests of the VIE held by the applicable shareholder for any reasons, he/she would be bound by the transaction documents described above and the amended and restated exclusive service agreement between Shanghai Fuxi and the VIE. The valid term of spousal consent letter is same as the term of the exclusive call option agreement.

Terms contained in each set of contractual arrangements with the VIEs and their respective shareholders are substantially similar. As a result of the contractual arrangements, we have effective control over and are considered the primary beneficiary of the VIEs for accounting purposes, and we have consolidated the financial results of the VIEs in our consolidated financial statements.

The following diagram sets out details of our significant subsidiaries and VIEs as of February 28, 2023:

 

 

 

9

 


 

 

 

img227954916_0.jpg 

(1) Mr. Peiqing Tian holds 100% equity interest in Shanghai Luoliang Network Technology Co., Ltd.

(2) Mr. Peiqing Tian and Ms. Suhua Zhu, hold 70% and 30% equity interests in Shanghai Four Seasons Education Investment Management Co., Ltd., respectively.

(3) Wuyuan Sijijiaozhong Tourism Inv Mgt Co., Ltd. and Shanghai Four Seasons Education Investment Management Co., Ltd., hold 55.36% and 44.64% equity interests in Wuyuan Siji Gongda Study Camp Travel Development Co., Ltd., respectively.

(4) 26 companies that operate in the fields including educational tourism and planning, non-academic tutoring, faculty training, investment management, and management consulting.

(5) Nine companies that operate in the fields including educational technology, tourism, educational management, study trip development, culture development, corporate management, and publications.

However, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations, and there can be no assurance that the PRC government will take a view that is not contrary to or otherwise different from the opinion of our PRC counsel. Control through these contractual arrangements may be less effective than direct ownership, and we could face heightened risks and costs in enforcing these contractual arrangements due to these substantial uncertainties. These contractual arrangements have not been tested in a court of law. If the PRC government finds these contractual arrangements non-compliant with the restrictions on direct foreign investment in the relevant industries, or if the relevant PRC laws, regulations, and rules or the interpretation thereof change in the future, we could be subject to severe penalties, including being prohibited from continuing operations, which could materially and adversely affect us and the VIEs’ business, financial condition, and results of operations, and/or the value of our ADSs or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. In addition, if any of these events causes us unable to direct the activities of the VIEs or lose the right to receive their economic benefits, we may not be able to consolidate the VIEs into our consolidated financial statements in accordance with U.S. GAAP, which could cause the value of our ADSs to significantly decline or become worthless. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Corporate Structure — Our business is subject to extensive regulation in the PRC. If the PRC government finds that the contractual arrangement that establishes our corporate structure for operating our business does not comply with applicable PRC laws and regulations, we could be subject to severe penalties.” and “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Uncertainties with respect to the PRC legal system could have a material adverse effect on us.”

 

10

 


 

 

Furthermore, if the VIEs or their shareholders fail to perform their obligations under the contractual arrangements, we may be limited in our ability to enforce such contractual arrangements that give us effective control. If we are unable to maintain effective control over the VIEs, we would not be able to continue to consolidate their financial results in our consolidated financial statements. In the 2021, 2022 and 2023 fiscal years, substantially all of our revenue was derived from the operations of the VIEs. We rely on dividends and other distributions paid to us by our WFOE, Shanghai Fuxi, which in turn depends on the service fees paid to Shanghai Fuxi by the VIEs. There are significant PRC legal restrictions on the payment of dividends by PRC companies and restrictions on foreign exchange control and foreign investments, all of which may adversely affect our ability to access the revenue of Shanghai Fuxi and the VIEs. In the 2023 fiscal year, Shanghai Fuxi received service fees of RMB1.3 million (US$0.2 million) from the VIEs and did not distribute any dividends. Notwithstanding our business decisions to continue to invest and expand our PRC operations and launching new programs, our WFOE may receive service fees from the VIEs or make distributions to us in the future.

We face various risks and uncertainties related to doing business in China. Our business operations are primarily conducted in China, and we are subject to complex and evolving PRC laws and regulations. For example, we face risks associated with regulatory approvals on offshore offerings, anti-monopoly regulatory actions, regulations on the use of variable interest entities, and oversight on cybersecurity and data privacy, as well as the lack of inspection on our auditors by the Public Company Accounting Oversight Board, or the PCAOB, which may impact our ability to conduct certain businesses, accept foreign investments, or list and conduct offerings on a United States or other foreign exchange. These risks could subject us and the VIEs to severe penalties, including being prohibited from continuing operations, which could materially and adversely affect us and the VIEs’ business, financial condition, and results of operations, and/or the value of our ADSs, or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause the value of our ADSs to significantly decline or become worthless. For a detailed description of risks related to doing business in China, “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC.”

The PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations in this nature may cause the value of such securities to significantly decline or become worthless. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — The PRC government’s oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs.”

The PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations in this nature may cause the value of such securities to significantly decline. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — The PRC government’s oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs.”

Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ADSs. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Uncertainties with respect to the PRC legal system could have a material adverse effect on us.”

 

11

 


 

 

On June 30, 2020, the Standing Committee of the National People’s Congress of the PRC, or the SCNPC promulgated the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region, or the Law of PRC on Safeguarding National Security in Hong Kong, the interpretation of which involves a degree of uncertainty. The PRC government has also announced recently that it would step up supervision of overseas listed PRC businesses, and check sources of funding for securities investment and control leverage ratios. The PRC government has also opened a probe into several U.S.-listed technology companies focusing on anti-monopoly, financial technology regulation and more recently, with the passage of the PRC Data Security Law, how companies collect, store, process and transfer personal data. Currently these laws (other than the Law of the PRC on Safeguarding National Security in Hong Kong) are expected to apply to China domestic businesses, rather than businesses in Hong Kong which operate under a different set of laws from China. However, there can be no assurance that the government of Hong Kong will not enact similar laws and regulations applicable to companies operating in Hong Kong. For example, the PRC government may pressure the government of Hong Kong to enact similar laws and regulations to those in the PRC, which may seek to exert control over offerings conducted overseas by Hong Kong companies. If any or all of the foregoing were to occur, and if our Hong Kong subsidiary elects to carry out substantive business activities in the future, it could lead to a material adverse change in our operations and limit or hinder our ability to offer securities to overseas investors or remain listed in the United States, which could cause the value of our ADSs to significantly decline or become worthless. As of the date of this annual report, our Hong Kong subsidiary has not received any inquiry or notice or any objection from any PRC authority or Hong Kong authority. See “Risk Factors — Risks Related to Doing Business in China — Implementation of the Law of the PRC on Safeguarding National Security in Hong Kong involves uncertainty, and the recent policy pronouncements by the PRC government regarding business activities of U.S.-listed PRC businesses may negatively impact our existing and future operations in Hong Kong.”

Permissions Required from the PRC Authorities for Our Operations and those of the VIEs

Four Seasons Education (Cayman) Inc. is a holding company with no operations of its own. We conduct business primarily through our subsidiaries and the VIEs in China. Our operations and those of the VIEs in China are governed by PRC laws and regulations. As part of the efforts to fully comply with the Opinion and applicable rules, regulations and measures, we ceased offering the K9 Academic AST Services in PRC at the end of 2021, spun off some of the subsidiaries engaged in K9 Academic AST Services and stopped to renew our Permits for Operating Private School. As of the date of this annual report, all our PRC subsidiaries and the VIEs have obtained business license, both two learning centers, Shanghai Huangpu Fantasy Further Education School, and Chongqing Jingzhan Technology Training Center Co., Ltd., have obtained Permits for Operating Private School and fire safety permits, one subsidiary of a VIE, Shanghai Huashi Oriental Digital Publishing Co., Ltd., has obtained the permit for Operating Publications Business, Shanghai Jiahe International Travel Service Co. Ltd. has obtained the Travel Agency Business Operation License, and one of the VIEs, Shanghai Luoliang Network Technology Co., Ltd., has obtained the filing certificate of Information System Security Level Protection. As such, based on the advice of our PRC counsel, Fangda Partners, we believe our PRC subsidiaries and the VIEs have obtained all of the requisite licenses and permits from the PRC government authorities that are necessary for the business operations and our Cayman holding company does not need to obtain any licenses or permits from the PRC government authorities as it has no business operation in PRC.

Furthermore, in connection with our issuance of securities to foreign investors in the past, under current PRC laws, regulations, and rules, as of the date of this annual report, we, our PRC subsidiaries, and the VIEs (i) have not been required to obtain permissions from or complete filings with the China Securities Regulatory Commission, or the CSRC, (ii) have not been required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, and (iii) have not received or have not been denied such requisite permissions by the CSRC or the CAC. Our PRC counsel, Fangda Partners, has consulted the relevant government authorities, which acknowledged that, under the currently effective PRC laws and regulations, a company already listed in a foreign stock exchange before promulgation of the latest Cybersecurity Review Measures is not required to go through a cybersecurity review by the CAC to conduct a securities offering or maintain its listing status on the foreign stock exchange on which its securities have been listed. Therefore, we believe that under the currently effective PRC laws and regulations, our holding company, PRC subsidiaries and the VIEs are not required to go through a cybersecurity review by the CAC for conducting a securities offering or maintain our listing status on the NYSE. Since the Cyber Data Security Draft are still a draft for comments, the Cyber Data Security Draft (especially its operative provisions) and its anticipated adoption or effective date are subject to further changes with substantial uncertainty.

 

12

 


 

 

On February 17, 2023, the CSRC released the Overseas Listing Trial Measures and five supporting guidelines, which became effect on March 31, 2023. The Overseas Listing Trial Measures regulates both direct and indirect overseas offering and listing of PRC domestic companies’ securities by adopting a filing-based regulatory regime. Pursuant to the Overseas Listing Trial Measures, the principle of “substance over form” shall be followed when determining whether an offering and listing shall be deemed as an indirect overseas offering and listing by a PRC domestic company and if the issuer meets both the following criteria, the overseas securities offering and listing conducted by such issuer shall be deemed as indirect overseas offering by PRC domestic companies: (i) 50% or more of any of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in the PRC or its main place(s) of business are located in the PRC, or the majority of senior management staff in charge of its business operations and management are PRC citizens or have their habitual residence located in the PRC. Where an issuer submits an application for initial public offering to competent overseas regulators, such issuer must file with the CSRC within three business days after such application is submitted. The Overseas Listing Trial Measures also requires subsequent reports to be submitted to the CSRC on material events, such as change of control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings and listings. On the same day, the CSRC also published the Notice on the Administrative Arrangements for the Filing of Overseas Securities Offering and Listing by the Domestic Enterprises, or the Notice on Overseas Listing Measures. According to the Notice on Overseas Listing Measures, issuers that have already been listed in an overseas market by March 31, 2023, the date on which the Overseas Listing Measures will become effective, such as our company, are not required to make any immediate filing. However, such issuers will be required to comply with the filing requirements under Overseas Listing Measures if and when they pursue any future securities offerings and listings outside of mainland China, including but not limited to follow-on offerings, secondary listings and going private transactions. If we fail to obtain required approval or complete other review or filing procedures, under the Overseas Listing Measures or otherwise, for any future securities offerings and listings outside of mainland China, including but not limited to follow-on offerings, secondary listings and going private transactions, we may face sanctions by the CSRC or other PRC regulatory authorities, including administrative penalties, such as order to rectify, warnings, fines or other actions that may materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs. Given the substantial uncertainties surrounding the latest CSRC filing requirements and the CAC cybersecurity review requirements, and such regulations are subject to change, we cannot assure you that our holding company, PRC subsidiaries or the VIEs will be able to complete the filings and fully comply with the relevant new rules on a timely basis, if the CSRC, CAC or other government authorities later promulgate new rules or explanations requiring that we obtain their approvals for our future overseas offerings.

 

13

 


 

 

In addition, implementation of industry-wide regulations directly targeting our operations could cause the value of our securities to significantly decline. Therefore, investors of our company and our business face potential uncertainty from actions taken by the PRC government affecting our business. The regulatory environment with respect to the industry that we have been operating in China is changing rapidly for the past years and therefore is subject to substantial uncertainties, according to the Double Alleviating Opinions, for non-academic tutoring, local authorities shall identify corresponding competent authorities for different tutoring categories, set forth standards and approve relevant non-academic tutoring institutions, however, as the date of this annual report, there has no research and academic study travel, learning technology and content solutions related implement rules or standards. As PRC laws and regulations with respect to certain licenses and permissions are unclear and are subject to interpretations and enforcement of local governmental authorities, it is uncertain whether our research and academic study travel, learning technology and content solutions related business fall within the scope of business operations that require additional licenses or other licenses or permits, including without limitation the licenses and permits mentioned above and whether our subsidiaries and VIEs would be able to obtain and renew such approvals on a timely basis or at all. We have been closely monitoring the evolving regulatory environment and are making efforts to seek guidance from and cooperate with the government authorities to comply with relevant laws and regulation. As of the date of this annual report, we have no outstanding written notice of warning from, or been subject to penalties imposed by, the relevant government authorities for alleged failure by us to obtain relevant licenses or other licenses or permits related to our research and academic study travel, learning technology and content solutions related business. If our holding company, PRC subsidiaries and the VIEs had inadvertently concluded that such approvals were not required, or if applicable laws, regulations or interpretations change in a way that requires us to obtain such approval in the future, our holding company, PRC subsidiaries and the VIEs may be unable to obtain such necessary approvals in a timely manner, or at all, and such approvals may be rescinded even if obtained. Any such circumstance could subject us to penalties, including fines, suspension of business and revocation of required licenses, significantly limit or completely hinder our ability to continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. For more detailed information, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — The PRC government’s oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs.”

 

14

 


 

 

The Holding Foreign Companies Accountable Act

The Holding Foreign Companies Accountable Act, or the HFCA Act, was signed into law on December 18, 2020. The HFCA Act states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection for the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.

On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, or the AHFCA Act, which was signed into law on December 29, 2022, amending the HFCA Act and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.

On December 2, 2021, the SEC adopted final amendments implementing the disclosure and submission requirements under the HFCA Act, pursuant to which the SEC will identify a “Commission-Identified Issuer” if an issuer has filed an annual report containing an audit report issued by a registered public accounting firm that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction.

On December 16, 2021, the PCAOB issued a report ("PCAOB Determination Report") to notify the SEC of its determination that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong.

On August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol (the “Protocol”) with the CSRC and the Ministry of Finance (“MOF”) of the People's Republic of China, governing inspections and investigations of audit firms based in mainland China and Hong Kong. The Protocol remains unpublished and is subject to further explanation and implementation. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and the unfettered ability to transfer information to the SEC.

On December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous PCAOB Determination Report to the contrary. However, whether the PCAOB will continue to conduct inspections and investigations completely to its satisfaction of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditor’s, control, including positions taken by authorities of the PRC. The PCAOB is expected to continue to demand complete access to inspections and investigations against accounting firms headquartered in mainland China and Hong Kong in the future and states that it has already made plans to resume regular inspections in early 2023 and beyond. The PCAOB is required under the HFCA Act to make its determination on an annual basis with regards to its ability to inspect and investigate completely accounting firms based in the mainland China and Hong Kong. Should the PCAOB again encounter impediments to inspections and investigations in mainland China or Hong Kong as a result of positions taken by any authority in either jurisdiction, the PCAOB will make determinations under the HFCA Act as and when appropriate.

Our former auditor, Deloitte Touche Tohmatsu Certified Public Accountants LLP (“Deloitte”), is an independent public accounting firm registered with the Public Company Accounting Oversight Board (United States), or the PCAOB. Deloitte issued the audit report for the fiscal year ended February 28, 2021, which is included elsewhere in this annual report. Our former auditor is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.

Our current auditor, Marcum Asia CPAs LLP (formerly Marcum Bernstein & Pinchuk LLP), or MarcumAsia, the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United States), or the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. MarcumAisa, whose audit report is included in this annual report on Form 20-F, is headquartered in New York, New York, and is subject to inspection by the PCAOB on a regular basis. As a result, we do not expect to be identified as a “Commission-Identified Issuer” under the HFCA Act for the fiscal year ended February 28, 2023 after we file our annual report on Form 20-F for such fiscal year.

 

15

 


 

 

However, recent developments with respect to audits of China-based companies create uncertainty about the ability of MarcumAsia to fully cooperate with a PCAOB request for audit working papers without the approval of the Chinese authorities, as MarcumAsia’s audit working papers related to us are located in China. We can offer no assurance that we will be able to retain an auditor that would allow us to avoid a trading prohibition for our securities under the HFCA Act.

Furthermore, these recent developments could also add uncertainties and we cannot assure you that the New York Stock Exchange (“NYSE”) or regulatory authorities would not apply additional or more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. If our shares and ADSs are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. Such a prohibition would substantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our ADSs. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.

For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — The PCAOB may be unable to inspect or fully investigate our auditors as required under the Holding Foreign Companies Accountable Act, or the HFCA Act. If the PCAOB is unable to conduct such inspections for two consecutive years beginning in 2021, the SEC will prohibit the trading of our ADSs. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections of our auditors would deprive our investors of the benefits of such inspections.”

Summary of Risk Factors

Set forth below is only a summary of the principal risks associated with an investment in our shares. See below under this “Item 3. Key Information — D. Risk Factors” for a detailed discussion of the numerous risks and uncertainties to which the Company is subject.

Risks Related to Our Business

If we are not able to develop new types of learning products, services or activities under the recent regulatory policies in China to successfully attract prospective learners and customers in a timely or cost-effective manner or to continue to attract learners and customers to purchase our existing products or services, our business, results of operations and prospects will continue to be materially and adversely affected.
Failure to successfully design and execute our growth strategies may materially and adversely affect our business and prospects.
The global COVID-19 outbreak has had a significant impact on our business, which may materially and adversely affect our operating results and financial condition.
We may not be able to improve our current business to meet the demand of learners, customers and educational institutions on a timely basis and in a cost-effective manner. If the level of satisfaction of our learners, customers and educational institutions with our services declines, they may decide to withdraw from our programs and request refunds and our business, financial condition, results of operations and reputation would be adversely affected.
Any damage to our brand or the reputation of any of our learning centers or study camps may adversely affect our overall business, prospects, results of operations and financial condition.
Our business could be disrupted if we lose the services of members of our senior management team.
We face significant competition, and if we fail to compete effectively, we may lose our market share and our profitability may be adversely affected.

 

16

 


 

 

We may not be able to continue to recruit, train and retain qualified faculty members, who are critical to the success of our business and effective delivery of our services and products.
Our historical financial and operating results, growth rates and profitability may not be indicative of future performance.
If we fail to integrate or negotiate successfully any future acquisitions, our business and operating results could be materially and adversely affected.
If we fail to obtain and maintain the licenses and permits required under uncertain regulatory environment in China, our business operations may be materially and affect.

 

17

 


 

 

Some of our schools are restricted in their ability to distribute profits to their sponsors. The service arrangements between Shanghai Fuxi and our private schools may be regarded as circumventing this restriction.

Risks Related to Our Corporate Structure

Our business is subject to extensive regulation in the PRC. If the PRC government finds that the contractual arrangement that establishes our corporate structure for operating our business does not comply with applicable PRC laws and regulations, we could be subject to severe penalties.
Substantial uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure and business operations.
We rely on contractual arrangements with the VIEs and their respective shareholders in the form of private non-enterprise institutions for our operations in the PRC, which may not be as effective in providing control as direct ownership.
Contractual arrangements between the VIEs and us may be subject to scrutiny by the PRC tax authorities and a finding that we or the VIEs owe additional taxes could materially reduce our net income and the value of your investment.
If any of the VIEs becomes the subject of a bankruptcy or liquidation proceeding, we may lose the ability to use and enjoy assets held by such entity, which could materially and adversely affect our business, financial condition and results of operations.

Risks Related to Doing Business in the PRC

Changes in PRC economy, or economic and political conditions or government policies in China, could have a material adverse effect on our business, financial conditions and results of operations. Substantially all of our business operations are conducted in China. Accordingly, our business, financial condition, results of operations and prospects are influenced by economic, political and legal developments in China. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Changes in PRC economy, or economic and political conditions or government policies in China, could have a material adverse effect on our business, financial conditions and results of operations.”
Uncertainties with respect to the PRC legal system could have a material adverse effect on us. The PRC administrative and judicial authorities have significant discretion in interpreting, implementing or enforcing statutory rules and contractual terms, and it may be more difficult to predict the outcome of administrative and judicial proceedings and the level of legal protection we may enjoy in the PRC than under some more developed legal systems. Changes in the policies, regulations, rules, and the enforcement of laws of the PRC government may be made quickly with little advance notice. These uncertainties may affect our decisions on the policies and actions to be taken to comply with PRC laws and regulations, and may affect our ability to enforce our contractual or tort rights. In addition, the regulatory uncertainties may be exploited through unmerited legal actions or threats in an attempt to extract payments or benefits from us. Such uncertainties may therefore increase our operating expenses and costs, and materially and adversely affect our business and results of operations. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Uncertainties with respect to the PRC legal system could have a material adverse effect on us.”

 

18

 


 

 

The PRC government’s oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs. The PRC government has significant oversight and discretion over the operation of our business, and it may intervene or influence our operations, which could result in a material adverse change in our operation and the value of our ADSs. The PRC government has recently indicated an intent to exert more oversight over overseas offerings by and foreign investment in China-based issuers like us. It remains uncertain how PRC government authorities will regulate overseas listing in general and whether we are required to complete filing or obtain any specific regulatory approvals from the CSRC, CAC or any other PRC government authorities for our overseas offerings. If the CSRC, CAC or other government authorities later promulgate new rules or explanations requiring that we obtain their approvals for our future overseas offerings, we may be unable to obtain such approvals in a timely manner, or at all, and such approvals may be rescinded even if obtained. Any such circumstance could significantly limit or completely hinder our ability to continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. In addition, implementation of industry-wide regulations directly targeting our operations could cause the value of our securities to significantly decline. Therefore, investors of our company and our business face potential uncertainty from actions taken by the PRC government affecting our business. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — The PRC government’s oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs.”
Our business is subject to various evolving PRC laws and regulations regarding data privacy and cybersecurity. Failure of cybersecurity and data privacy concerns could subject us to penalties, damage our reputation and brand, and harm our business and results of operations. We routinely collect, store and use personal information and other data during the ordinary course of our business. If we are unable to protect the personal information and other data we collect, store and use from unauthorized access, use, disclosure, disruption, modification, or destruction, such problems or security breaches could cause a loss, give rise to our liabilities to the owners or subject of the information, or subject us to fines and other penalties. In addition, complying with various laws and regulations could cause us to incur substantial costs or require us to change our business practices, including our data practices, in a manner adverse to our business. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Our business is subject to various evolving PRC laws and regulations regarding data privacy and cybersecurity. Failure of cybersecurity and data privacy concerns could subject us to penalties, damage our reputation and brand, and harm our business and results of operations.”

 

19

 


 

 

If we fail to obtain and maintain the licenses and permits required under uncertain regulatory environment in China, our business operations may be materially and adversely affected. If the government authorities determine that our quality education and tutoring, non-academic tutoring, research and academic study travel, learning technology and content solutions related business fall within the scope of business operations that require additional licenses or other licenses or permits, including without limitation the licenses and permits mentioned above, we may not be able to obtain such licenses or permits on reasonable terms or in a timely manner or at all. Moreover, we may fail to maintain, renew or update any of our existing licenses, permits, approvals, registrations or filings in a timely manner and on commercially reasonable terms, or at all, which could materially and adversely affect our business, results of operations and financial condition. Besides, we may develop new business lines or make changes to the operations of certain of the current business of our PRC subsidiaries or the VIEs, which may require us to obtain additional licenses, approvals, permits, registrations and filings. However, there can be no assurance that we are, or will be, able to successfully obtain such licenses, approvals, permits, registrations and filings in a timely manner, or at all. Government authorities may also from time to time issue new laws, rules and regulations or enhance enforcement of existing laws, rules and regulations, which could also require us to obtain new and additional licenses, permits, approvals, registrations or filings. If we fail to obtain and maintain such required licenses and permit, as well as required registrations and filings, we may be subject to fines, legal sanctions or an order to suspend our online education services and our business, financial condition and operational results may be materially and adversely affected. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — If we fail to obtain and maintain the licenses and permits required under uncertain regulatory environment in China, our business operations may be materially and affect.”
The PCAOB may be unable to inspect or fully investigate our auditors as required under the Holding Foreign Companies Accountable Act, or the HFCA Act. If the PCAOB is unable to conduct such inspections for two consecutive years beginning in 2021, the SEC will prohibit the trading of our ADSs. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections of our auditors would deprive our investors of the benefits of such inspections. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — The PCAOB may be unable to inspect or fully investigate our auditors as required under the Holding Foreign Companies Accountable Act, or the HFCA Act. If the PCAOB is unable to conduct such inspections for two consecutive years beginning in 2021, the SEC will prohibit the trading of our ADSs. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections of our auditors would deprive our investors of the benefits of such inspections.”

 

20

 


 

 

Our subsidiaries and the VIEs in the PRC are subject to restrictions on making dividends and other payments to us. We are a holding company and rely principally on dividends paid by our subsidiaries in the PRC. Current PRC regulations permit our subsidiaries in the PRC to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Under the applicable requirements of PRC law, our PRC subsidiaries may only distribute dividends after they have made allowances to fund certain statutory reserves. These reserves are not distributable as cash dividends. In addition, at the end of each fiscal year, each of our learning centers that are private schools in the PRC is required to allocate a certain amount to its development fund for the construction or maintenance of the school properties or purchase or upgrade of school facilities. Furthermore, if our subsidiaries or the VIEs in the PRC incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. In addition, to the extent cash or assets in our business is in the PRC or Hong Kong or a PRC or Hong Kong entity, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in, or the imposition of restrictions and limitations on, the ability of our holding company, our PRC subsidiaries, or the VIEs by the PRC government to transfer cash or assets. Cash may be transferred within our organization in the following manners: Under PRC laws, Four Seasons may, through its intermediary holding companies, provide funding to our PRC subsidiaries only through capital contributions or loans, and to the VIEs only through loans, subject to satisfaction of applicable government registration and approval requirements. Any such restrictions or requirements may materially affect such entities’ ability to make dividends or make payments, in service fees or otherwise, to us, which may materially and adversely affect our business, financial condition and results of operations. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Our subsidiaries and the VIEs in the PRC are subject to restrictions on making dividends and other payments to us.”
Restrictions on currency exchange may limit our ability to receive and use our revenues effectively. Substantially all of our revenue is denominated in Renminbi. As a result, restrictions on currency exchange may limit our ability to use revenue generated in Renminbi to fund any business activities we may have outside the PRC in the future or to make dividend payments to our shareholders and ADS holders in U.S. dollars. Under current PRC laws and regulations, Renminbi is freely convertible for current account items, such as trade and service-related foreign exchange transactions and dividend distributions. However, Renminbi is not freely convertible for direct investment or loans or investments in securities outside the PRC, unless such use is approved by SAFE. These limitations could affect our ability to obtain foreign exchange for capital expenditures. To the extent we need to convert and use any Renminbi-denominated revenue generated by the VIEs not paid to our PRC subsidiaries and revenue generated by our PRC subsidiaries not declared and paid as dividends, the limitations discussed above will restrict the convertibility of, and our ability to directly receive and use such revenue. As a result, our business and financial condition may be adversely affected. In addition, we cannot assure you that the PRC regulatory authorities will not impose more stringent restrictions on the convertibility of Renminbi in the future, especially with respect to foreign exchange transactions. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.”

 

21

 


 

 

Our subsidiaries and the VIEs in the PRC are subject to restrictions on making dividends and other payments to us. We are a holding company and rely principally on dividends paid by our subsidiaries in the PRC. Current PRC regulations permit our subsidiaries in the PRC to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Under the applicable requirements of PRC law, our PRC subsidiaries may only distribute dividends after they have made allowances to fund certain statutory reserves. These reserves are not distributable as cash dividends. In addition, at the end of each fiscal year, each of our learning centers that are private schools in the PRC is required to allocate a certain amount to its development fund for the construction or maintenance of the school properties or purchase or upgrade of school facilities. Furthermore, if our subsidiaries or the VIEs in the PRC incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. In addition, to the extent cash or assets in our business is in the PRC or Hong Kong or a PRC or Hong Kong entity, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in, or the imposition of restrictions and limitations on, the ability of our holding company, our PRC subsidiaries, or the VIEs by the PRC government to transfer cash or assets. Cash may be transferred within our organization in the following manners: Under PRC laws, Four Seasons may, through its intermediary holding companies, provide funding to our PRC subsidiaries only through capital contributions or loans, and to the VIEs only through loans, subject to satisfaction of applicable government registration and approval requirements. Any such restrictions or requirements may materially affect such entities’ ability to make dividends or make payments, in service fees or otherwise, to us, which may materially and adversely affect our business, financial condition and results of operations. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Our subsidiaries and the VIEs in the PRC are subject to restrictions on making dividends and other payments to us.”

Risks Related to our Ordinary Shares and ADSs

The trading price of our ADSs is likely to be volatile, which could result in substantial losses to investors.
Substantial future sales or perceived potential sales of our ADSs in the public market could cause the price of our ADSs to decline.

Cash and Asset Flows through Our Organization

Four Seasons Education (Cayman) Inc. is a holding company with no operations of its own. We conduct operations in China primarily through our subsidiaries and the VIEs and their subsidiaries in China. As a result, although other means are available for us to obtain financing at the holding company level, the Parent’s ability to pay dividends to the shareholders and to service any debt it may incur depends upon dividends paid by our PRC subsidiaries and license and service fees paid by the VIEs to the WFOE in accordance with the VIE agreement. The Parent, our subsidiaries, WFOE and the VIEs may also transfer cash to each other. If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to the Parent. In addition, to the extent cash or assets in our business is in the PRC or Hong Kong or a PRC or Hong Kong entity, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in, or the imposition of restrictions and limitations on, the ability of our holding company, our PRC subsidiaries, or the VIEs by the PRC government to transfer cash or assets. Cash may be transferred within our organization in the following manners:

Under PRC laws, the Parent may, through its intermediary holding companies, provide funding to our PRC subsidiaries only through capital contributions or loans, and to the VIEs only through loans, subject to satisfaction of applicable government registration and approval requirements. The VIEs may transfer cash to our WFOE and other subsidiaries (“Other Subsidiaries”) as working capital support, or through service fees in accordance with the VIE agreement, and to the Parent through repayment of loans. The WFOE and Other Subsidiaries may also transfer cash to VIEs or other entities within our organization as working capital support.

For the details of the financial position, cash flows and results of operation of the VIEs, please refer to the “Item 3. Key information-Condensed Consolidating Schedule. ”

 

22

 


 

 

Our PRC subsidiaries and the VIEs are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies. The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders. For more details, see “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Holding Company Structure”, “Item 3. Key Information — D. Risk Factors — Summary of Risk Factors — Risks Related to Doing Business in the PRC”, “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Our subsidiaries and the VIEs in the PRC are subject to restrictions on making dividends and other payments to us, and “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.”

As of the date of this annual report, none of our WFOE, Other Subsidiaries, or the VIEs has made any dividends or other distributions to the Parent. On January 16, 2018, we declared dividends of US$20 million to holders of our company’s ordinary shares of record as of February 1, 2018. The dividend was paid out of the proceeds from our initial public offering. Except for the foregoing, we have not previously declared or paid cash dividends and we have no plan to declare or pay any dividends in the foreseeable future on our shares or ADSs.

Subject to the passive foreign investment company rules discussed in detail under “Item 10. Additional Information — E. Taxation — Passive Foreign Investment Company”, the gross amount of any distribution that we make to investors with respect to our ADSs or Class A ordinary shares (including any amounts withheld to reflect PRC or other withholding taxes) will be taxable as a dividend, to the extent paid out of our current or accumulated earnings and profits, as determined under United States federal income tax principles. The portion of such cash dividend, if any, in excess of such earnings and profits will be applied against and reduce (but not below zero) the U.S. holder’s adjusted tax basis in the ADSs or Class A ordinary shares. Any remaining excess generally will be treated as gain from the sale or other taxable disposition of such ADSs or Class A ordinary shares. As of the date of this annual report, Four Seasons Education (Cayman) Inc. is not a PRC resident enterprise for PRC tax purposes, and the payments of dividends in respect of our ordinary shares are not paid out of our current or accumulated earnings and profits, therefore the payments of dividend in respect of our ordinary share are not subject to PRC withholding tax. However, if we are considered a PRC tax resident enterprise for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in China — Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise,” which could result in unfavorable tax consequences to us and our non-PRC shareholders.” For further discussion on PRC and United States federal income tax considerations of an investment in the ADSs, see “Item 10 — Additional Information — E. Taxation.”

For the years ended February 28, 2022, and 2023 the WFOE invested RMB2.0 million and nil to Other Subsidiaries as capital injection, respectively. For the year ended February 28, 2023, Parent invested RMB20.9 million to Other Subsidiaries.

 

23

 


 

 

For the year ended February 28, 2023, (i) our WFOE transferred RMB 0.3 million to Other Subsidiaries as working capital support, and RMB6.9 million to VIEs also as working capital support; (ii) the VIEs paid RMB1.3 million to our WFOE as service fee in accordance with VIE agreements, repaid working capital support of RMB10.5 million to WFOE and RMB0.6 million to our other subsidiaries; (iii) our Other Subsidiaries transferred RMB 0.3 million to the VIEs as working capital support, (iv) Parent transferred RMB 13.9 million to Other Subsidiaries as working capital support; (v) Other Subsidiaries transferred RMB 1.1 million to WFOE as working capital support, and repaid working capital support of RMB 48.0 million. For the year ended February 28, 2022, (i) our WFOE transferred RMB 0.2 million to Other Subsidiaries as working capital support, and RMB 16.6 million to VIEs also as working capital support; (ii) the VIEs paid RMB 20.8 million to our WFOE as service fee in accordance with VIE agreements; (iii) our Other Subsidiaries transferred RMB 1.2 million to the VIEs as working capital support. For the year ended February 28, 2021, the VIEs paid RMB 27.3 million to our WFOE as service fee in accordance with VIE agreements. Please see the condensed consolidating schedules set forth above and our consolidated financial statements within this annual report. We do not, at this time, intend to distribute earnings or settle amounts owed under the VIE Agreements. We currently do not have cash management policies in place that dictate how funds are transferred between the Parent, our subsidiaries and the VIEs. Rather, the funds can be transferred in accordance with the applicable PRC laws and regulations.

For purposes of illustration, the following discussion reflects the hypothetical taxes that might be required to be paid within mainland China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay a dividend in the future:

 

 

Calculation(1)

 

Hypothetical pre-tax earnings(2)

 

 

100.0

%

Tax on earnings at statutory rate of 25%(3)

 

 

-25.0

%

Net earnings available for distribution

 

 

75.0

%

Withholding tax at standard rate of 10%(4)

 

 

7.5

%

Net distribution to Parent/Shareholders

 

 

67.5

%

Note:

(1)
For purposes of this example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount, not considering timing differences, is assumed to equal taxable income in China.
(2)
Under the terms of the VIE agreements, our PRC subsidiaries may charge the VIEs for services provided to VIEs. These service fees shall be recognized as cost and expenses of the VIEs, with a corresponding amount as service income by our PRC subsidiaries and eliminate in consolidation. For income tax purposes, our PRC subsidiaries and VIEs file income tax returns on a separate company basis. The service fees paid are recognized as a tax deduction by the VIEs and as income by our PRC subsidiaries and are tax neutral.
(3)
Certain of our subsidiaries and VIEs qualify for a preferential income tax rate which is lower than the statutory rate of 25% in China. However, such rate is subject to qualification, is temporary in nature, and may not be available in a future period when distributions are paid. For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective.
(4)
The PRC Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise, or FIE, to its immediate holding company outside of China. A lower withholding income tax rate of 5% is applied if the FIE’s immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with China, subject to a qualification review at the time of the distribution. For purposes of this hypothetical example, the table above assumes a maximum tax scenario under which the full withholding tax would be applied.

Condensed Consolidating Schedule

The following table presents the condensed consolidating schedule of financial position, results of operations and cash flows for the VIEs and other entities as of the dates presented.

 

24

 


 

 

In these tables, “Four Seasons” refers to Four Seasons Education (Cayman) Inc. (“Four Seasons”), the New York Stock Exchange listed company which is a Cayman exempted company. “WFOE” refers to Four Seasons’ wholly-owned Chinese subsidiary, Shanghai Fuxi. “Subsidiaries” refers to subsidiaries of Four Seasons other than the WFOE. “VIEs” refers to Shanghai Luoliang Network Technology Co., Ltd. (“Shanghai Luoliang”) and Shanghai Four Seasons Education Investment Management Co., Ltd. (“Four Seasons Investment”) and their subsidiaries.

 

 

For the Year Ended February 28, 2021

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

Four Seasons

 

 

WFOE

 

 

Subsidiaries

 

 

VIEs

 

 

Eliminations

 

 

Consolidated

 

 

(RMB in thousands)

 

Revenue(1)

 

 

 

 

 

18,353

 

 

 

 

 

 

280,282

 

 

 

(18,353

)

 

 

280,282

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

(168,832

)

 

 

 

 

 

(168,832

)

Operating expenses(1)

 

 

(5,676

)

 

 

(14,706

)

 

 

(2,441

)

 

 

(143,455

)

 

 

18,353

 

 

 

(147,925

)

Operating (loss) income

 

 

(5,676

)

 

 

3,647

 

 

 

(2,441

)

 

 

(32,005

)

 

 

 

 

 

(36,475

)

Subsidy income

 

 

 

 

 

78

 

 

 

95

 

 

 

11,725

 

 

 

 

 

 

11,898

 

Interest income, net

 

 

109

 

 

 

1,399

 

 

 

456

 

 

 

1,439

 

 

 

 

 

 

3,403

 

Other (expenses) income, net

 

 

2,546

 

 

 

(2,237

)

 

 

3

 

 

 

1,588

 

 

 

 

 

 

1,900

 

(Loss) Income before income taxes and loss from equity method investments

 

 

(3,021

)

 

 

2,887

 

 

 

(1,887

)

 

 

(17,253

)

 

 

 

 

 

(19,274

)

Income tax (expense) benefit

 

 

 

 

 

873

 

 

 

 

 

 

(5,633

)

 

 

 

 

 

(4,760

)

Loss from investments in subsidiaries, VIEs and VIEs’ subsidiaries(2)

 

 

(22,319

)

 

 

 

 

 

 

 

 

 

 

 

22,319

 

 

 

 

Loss from equity method investment

 

 

(2,856

)

 

 

 

 

 

 

 

 

(996

)

 

 

 

 

 

(3,852

)

Net (loss) income

 

 

(28,196

)

 

 

3,760

 

 

 

(1,887

)

 

 

(23,882

)

 

 

22,319

 

 

 

(27,886

)

Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

310

 

 

 

 

 

 

310

 

Net (loss) income attributable to Four Seasons Education (Cayman) Inc.

 

 

(28,196

)

 

 

3,760

 

 

 

(1,887

)

 

 

(24,192

)

 

 

22,319

 

 

 

(28,196

)

 

25

 


 

 

 

 

For the Year Ended February 28, 2022

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

Four Seasons

 

 

WFOE

 

 

Subsidiaries

 

 

VIEs

 

 

Eliminations

 

 

Consolidated

 

 

(RMB in thousands)

 

Revenue(1)

 

 

 

 

 

17,171

 

 

 

 

 

 

250,223

 

 

 

(17,171

)

 

 

250,223

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

(149,615

)

 

 

 

 

 

(149,615

)

Operating expenses(1)

 

 

(4,373

)

 

 

(13,289

)

 

 

(2,104

)

 

 

(164,227

)

 

 

17,171

 

 

 

(166,822

)

Operating (loss) income

 

 

(4,373

)

 

 

3,882

 

 

 

(2,104

)

 

 

(63,619

)

 

 

 

 

 

(66,214

)

Subsidy income

 

 

 

 

 

63

 

 

 

 

 

 

2,235

 

 

 

 

 

 

2,298

 

Interest income, net

 

 

 

 

 

1,743

 

 

 

191

 

 

 

1,296

 

 

 

 

 

 

3,230

 

Other (expenses) income, net

 

 

(730

)

 

 

(1,138

)

 

 

4

 

 

 

(1,637

)

 

 

 

 

 

(3,501

)

Gain from disposal of liabilities and a subsidiary

 

 

 

 

 

 

 

 

 

 

 

4,048

 

 

 

 

 

 

4,048

 

(Loss) Income before income taxes and loss from equity method investments

 

 

(5,103

)

 

 

4,550

 

 

 

(1,909

)

 

 

(57,677

)

 

 

 

 

 

(60,139

)

Income tax (expense) benefit

 

 

 

 

 

(422

)

 

 

 

 

 

(21,421

)

 

 

 

 

 

(21,843

)

Loss from investments in subsidiaries, VIEs and VIEs’ subsidiaries(2)

 

 

(73,487

)

 

 

 

 

 

 

 

 

 

 

 

73,487

 

 

 

 

Loss from equity method investment

 

 

(34,872

)

 

 

 

 

 

 

 

 

(1,878

)

 

 

 

 

 

(36,750

)

Net (loss) income

 

 

(113,462

)

 

 

4,128

 

 

 

(1,909

)

 

 

(80,976

)

 

 

73,487

 

 

 

(118,732

)

Net loss attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

(5,270

)

 

 

 

 

 

(5,270

)

Net (loss) income attributable to Four
 Seasons Education (Cayman) Inc.

 

 

(113,462

)

 

 

4,128

 

 

 

(1,909

)

 

 

(75,706

)

 

 

73,487

 

 

 

(113,462

)

 

 

 

26

 


 

 

 

 

 

For the Year Ended February 28, 2023

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

Four Seasons

 

 

WFOE

 

 

Subsidiaries

 

 

VIEs

 

 

Eliminations

 

 

Consolidated

 

 

(RMB in thousands)

 

Revenue(1)

 

 

 

 

 

502

 

 

 

884

 

 

 

33,381

 

 

 

(551

)

 

 

34,216

 

Cost of revenue(1)

 

 

 

 

 

 

 

 

(1,309

)

 

 

(19,164

)

 

 

551

 

 

 

(19,922

)

Operating expenses

 

 

(11,768

)

 

 

(8,154

)

 

 

(3,132

)

 

 

(26,905

)

 

 

 

 

 

(49,959

)

Operating (loss) income

 

 

(11,768

)

 

 

(7,652

)

 

 

(3,557

)

 

 

(12,688

)

 

 

 

 

 

(35,665

)

Subsidy income

 

 

 

 

 

16

 

 

 

7

 

 

 

1,389

 

 

 

 

 

 

1,412

 

Interest income, net

 

 

837

 

 

 

575

 

 

 

60

 

 

 

812

 

 

 

 

 

 

2,284

 

Other (expenses) income, net

 

 

(2,545

)

 

 

2,246

 

 

 

19

 

 

 

(246

)

 

 

 

 

 

(526

)

Disposal loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income before income taxes and loss from equity method investments

 

 

(13,476

)

 

 

(4,815

)

 

 

(3,471

)

 

 

(10,733

)

 

 

 

 

 

(32,495

)

Loss from investments in subsidiaries, VIEs and VIEs’ subsidiaries(2)

 

 

(16,192

)

 

 

 

 

 

 

 

 

 

 

 

16,192

 

 

 

 

Income tax expense

 

 

 

 

 

(648

)

 

 

(1

)

 

 

(344

)

 

 

 

 

 

(993

)

Loss from equity method investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

 

(29,668

)

 

 

(5,463

)

 

 

(3,472

)

 

 

(11,077

)

 

 

16,192

 

 

 

(33,488

)

Net loss attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

(3,822

)

 

 

 

 

 

(3,822

)

Net (loss) income attributable to Four Seasons Education (Cayman) Inc.

 

 

(29,668

)

 

 

(5,463

)

 

 

(3,472

)

 

 

(7,255

)

 

 

16,192

 

 

 

(29,666

)

 

 

(1)
The eliminations are mainly related to the service fees charged by our WFOE to the VIEs.
(2)
The eliminations are mainly related to the investment loss picked up from our subsidiaries and the VIEs.

The following tables present the summary balance sheet data for the VIEs and other entities as of the dates presented.

 

 

 

As of February 28, 2022

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

Four Seasons

 

 

WFOE

 

 

Subsidiaries

 

 

VIEs

 

 

Eliminations

 

 

Consolidated

 

 

(RMB in thousands)

 

Cash and cash equivalents

 

 

179,086

 

 

 

19,466

 

 

 

8,441

 

 

 

55,436