8月11日，四季教育(FEDU)盘中上涨13.78%，截至23:30，报16.35美元/股，成交1.04万美元，总市值 3695.17万美元。 本文源自：金融界 作者：行情君 资料显示，四季教育(开曼)公司(NYSE:FEDU)是一家提供研学实践服务、教育信息化装备、优质教育资 源和师资培训以及数字出版业务,并持续在教育研究和教育信息化上拓展的综合性教育企业。 财务数据显示，截至2025年02月28日，四季教育收入总额2.51亿人民币，同比增长100.15%；归母净利 润80.1万人民币，同比减少83.85%。 ...

Group 1 - Four Seasons Education (Cayman) Inc. filed its annual report on Form 20-F for the fiscal year ended February 28, 2025, with the SEC on June 26, 2025 [1] - The annual report includes audited consolidated financial statements and is available on the Company's investor relations website and the SEC's website [1] - Shareholders and ADS holders can request a hard copy of the annual report free of charge [1] Group 2 - Four Seasons Education (Cayman) Inc. provides tourism and education-related services in China [2] - The Company's offerings include non-academic tutoring programs, school-based tutoring solutions, teacher training programs, study camps, learning trips, and travel agency services [2]

PART I [ITEM 3. KEY INFORMATION](index=8&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section details Four Seasons Education's corporate structure, including its VIE model, associated risks, and condensed consolidating financial data [Holding Company Structure and VIE Arrangements](index=8&type=section&id=Our%20Holding%20Company%20Structure%20and%20Contractual%20Arrangements%20with%20the%20VIEs) The company operates in the PRC through a VIE structure, controlling entities via contractual arrangements that enable financial consolidation but carry significant regulatory risks - The company operates in the PRC through a VIE structure because PRC laws restrict direct foreign ownership in the private education sector Investors hold shares in the Cayman holding company, not the PRC operating entities[30](index=30&type=chunk) VIE Revenue Contribution | Fiscal Year | Net Revenue Contribution from VIEs | | :--- | :--- | | 2023 | 97.6% | | 2024 | 99.3% | | 2025 | 99.8% | - Control over the VIEs is established through several key contractual agreements: Exclusive Service Agreement, Exclusive Call Option Agreement, Equity Pledge Agreement, and Shareholder Voting Rights Proxy Agreement These contracts allow the company to direct the VIEs' activities and receive their economic benefits[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - There are significant uncertainties regarding the interpretation of PRC laws If the government finds the VIE structure non-compliant, especially under the "Double Alleviating Opinions," the company could face severe penalties, including being prohibited from continuing operations[43](index=43&type=chunk) [Condensed Consolidating Financial Schedules](index=25&type=section&id=Condensed%20Consolidating%20Schedule) This section presents condensed consolidating financial schedules for fiscal years 2023-2025, detailing statements of operations, balance sheets, and cash flows for the parent, WFOE, other subsidiaries, and VIEs Condensed Consolidating Statement of Operations (FY 2025, RMB in millions) | Entity | Revenue | Operating (Loss) Income | Net Income (Loss) | | :--- | :--- | :--- | :--- | | **Four Seasons (Parent)** | — | (2.2) | 0.8 | | **WFOE** | 8.3 | 1.7 | 3.6 | | **Other Subsidiaries** | 11.6 | (3.6) | (3.0) | | **VIEs** | 250.5 | (12.2) | (13.7) | | **Consolidated** | **251.1** | **(15.7)** | **(0.6)** | Condensed Consolidating Balance Sheet (As of Feb 28, 2025, RMB in millions) | Entity | Total Assets | Total Liabilities | Total Equity (Deficit) | | :--- | :--- | :--- | :--- | | **Four Seasons (Parent)** | 493.3 | 38.7 | 454.6 | | **WFOE** | 141.2 | 30.7 | 110.5 | | **Other Subsidiaries** | 156.9 | 11.7 | 145.2 | | **VIEs** | 245.5 | 229.0 | 16.5 | | **Consolidated** | **731.1** | **226.0** | **505.2** | Condensed Consolidating Statement of Cash Flows (FY 2025, RMB in millions) | Entity | Net Cash from Operating | Net Cash from Investing | Net Cash from Financing | | :--- | :--- | :--- | :--- | | **Four Seasons (Parent)** | 9.0 | 54.1 | (30.1) | | **WFOE** | 1.8 | 20.2 | — | | **Other Subsidiaries** | (11.7) | — | (2.3) | | **VIEs** | 21.0 | (56.7) | 29.7 | | **Consolidated** | **20.0** | **2.5** | **12.4** | [Risk Factors](index=31&type=section&id=D.%20Risk%20Factors) The company faces significant business, corporate structure, and PRC regulatory risks, including potential VIE non-compliance, delisting under the HFCA Act, and adverse tax consequences for U.S. shareholders - **Business Risks:** The company's future success depends on its ability to develop new learning products and services following the cessation of K-9 Academic AST Services, facing significant competition and the need to retain qualified faculty[100](index=100&type=chunk)[114](index=114&type=chunk)[126](index=126&type=chunk) - **Corporate Structure Risks:** The VIE structure, which is essential for operations, may not be as effective as direct ownership and is subject to scrutiny by PRC authorities If deemed non-compliant, the company could face severe penalties, and investors may lose the ability to benefit from the VIEs' assets[144](index=144&type=chunk)[152](index=152&type=chunk)[159](index=159&type=chunk) - **PRC Regulatory Risks:** The company is subject to significant oversight from the PRC government, with evolving laws on data privacy, cybersecurity, and overseas listings (CSRC filing requirements) These uncertainties could materially impact operations and the value of ADSs[174](index=174&type=chunk)[176](index=176&type=chunk)[180](index=180&type=chunk) - **HFCA Act & Delisting Risk:** The company's auditor, Marcum Asia CPAs LLP, is headquartered in New York and subject to regular PCAOB inspection, so the company does not expect to be identified as a "Commission-Identified Issuer" However, changes in the PCAOB's ability to inspect could lead to delisting risk[59](index=59&type=chunk)[242](index=242&type=chunk) - **Tax & Investment Risks:** The company believes it was a Passive Foreign Investment Company (PFIC) for the fiscal year ended Feb 28, 2025, which could result in adverse U.S. federal income tax consequences for U.S. shareholders[254](index=254&type=chunk)[255](index=255&type=chunk) [ITEM 4. INFORMATION ON THE COMPANY](index=74&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) This section provides an overview of Four Seasons Education's history, strategic business realignment post-2021 regulatory changes, current service offerings, faculty, competitive landscape, and organizational structure [History and Development of the Company](index=74&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) The company, founded in 2007, established its Cayman holding structure in 2014, listed on the NYSE in 2017, and adjusted its ADS ratio in 2022 - The company was founded in 2007, incorporated its Cayman holding company in 2014, and listed on the NYSE on November 8, 2017[281](index=281&type=chunk)[282](index=282&type=chunk) - On June 21, 2022, the company changed its ADS ratio from two ADSs representing one ordinary share to one ADS representing ten ordinary shares[282](index=282&type=chunk) [Business Overview](index=74&type=section&id=B.%20Business%20Overview) Post-2021 regulatory changes, the company realigned its business to non-academic learning, tourism, and technology solutions, emphasizing faculty quality and navigating a competitive, highly regulated PRC market - The company ceased K-9 Academic AST Services in mainland China at the end of 2021 and has since realigned its business focus towards tourism services, non-academic tutoring, and learning technology solutions[284](index=284&type=chunk) Key Financial Performance (RMB in millions) | Fiscal Year | Revenue | Net (Loss)/Income | | :--- | :--- | :--- | | 2023 | 34.2 | (33.5) | | 2024 | 125.4 | 2.8 | | 2025 | 251.1 | (0.6) | - Current offerings are divided into three main categories: Learning Services (enrichment programs), Tourism Services (trip planning and study camps), and Learning Technology and Content Solutions (for other institutions)[287](index=287&type=chunk) - As of February 28, 2025, the company employed **128** teachers, with approximately **92%** holding bachelor's degrees or higher, recruited through a highly selective process[302](index=302&type=chunk)[304](index=304&type=chunk) [Organizational Structure](index=114&type=section&id=C.%20Organizational%20Structure) The company operates via a VIE structure, where the Cayman parent controls PRC entities through contractual arrangements with its WFOE, enabling financial consolidation but exposing it to significant regulatory risks - The company utilizes a VIE structure where the WFOE, Shanghai Fuxi, enters into contractual arrangements with the VIEs (Shanghai Luoliang and Four Seasons Investment) and their shareholders[473](index=473&type=chunk)[474](index=474&type=chunk) - The contractual arrangements are designed to give the company power to direct the VIEs' activities and the right to receive their economic benefits, making it the primary beneficiary for accounting purposes[476](index=476&type=chunk) - PRC counsel has opined that the ownership structure and contractual arrangements are currently valid and binding, but substantial uncertainties remain regarding the interpretation of PRC laws, particularly the "Double Alleviating Opinions"[480](index=480&type=chunk) [Property, Plants and Equipment](index=120&type=section&id=D.%20Property,%20Plants%20and%20Equipment) The company leases its headquarters and learning centers, and has acquired land use rights in Jiangxi for the development of fully operational study camps - The company leases its headquarters and all learning centers, with an aggregate area of approximately **6,585** square meters[488](index=488&type=chunk) - The company acquired land use rights in Wuyuan, Jiangxi, for approximately **15.5 million RMB** and invested approximately **135.4 million RMB** in the development of study camps, which are now fully operational[489](index=489&type=chunk) [ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS](index=121&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section analyzes the company's financial performance, highlighting revenue growth driven by business realignment, cost structures, liquidity, capital resources, and cash flow restrictions from PRC entities [Operating Results](index=121&type=section&id=A.%20Operating%20Results) Operating results show significant revenue growth in FY2025, driven by tourism services, leading to a decreased gross margin and a net loss, with adjusted net income of **2.4 million RMB** Consolidated Results of Operations (RMB in thousands) | Metric | FY 2023 | FY 2024 | FY 2025 | | :--- | :--- | :--- | :--- | | **Total Revenue** | 34,216 | 125,445 | 251,076 | | **Gross Profit** | 14,294 | 45,494 | 47,135 | | **Operating Loss** | (35,665) | (9,270) | (15,739) | | **Net (Loss) Income** | (33,488) | 2,775 | (627) | Revenue by Segment (FY 2025, RMB in millions) | Segment | Revenue | Percentage of Total | | :--- | :--- | :--- | | Learning services | 108.0 | 43.0% | | Tourism services | 138.3 | 55.1% | | Learning Technology and content solutions | 5.2 | 2.1% | | **Total** | **251.1** | **100.0%** | - Gross profit margin decreased from **36.3%** in FY2024 to **18.8%** in FY2025, primarily due to the increased proportion of lower-margin tourism services in the revenue mix[537](index=537&type=chunk) Non-GAAP Adjusted Net (Loss) Income Reconciliation (RMB in millions) | | FY 2023 | FY 2024 | FY 2025 | | :--- | :--- | :--- | :--- | | **Net (loss) income** | (33.5) | 2.8 | (0.6) | | Add: share-based compensation | 3.2 | 3.1 | 5.0 | | Add: Unrealized holding loss (gain) | 3.8 | (3.9) | (2.0) | | Add: impairment loss on long-lived assets | — | 3.7 | — | | **Adjusted net (loss) income** | **(26.5)** | **5.7** | **2.4** | [Liquidity and Capital Resources](index=132&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by cash from operations and financing, with **210.8 million RMB** in cash, but faces material cash requirements and restrictions on transferring **133.2 million RMB** from PRC entities Summary of Cash Flows (RMB in millions) | | FY 2023 | FY 2024 | FY 2025 | | :--- | :--- | :--- | :--- | | **Net cash from operating activities** | (25.5) | 16.6 | 20.0 | | **Net cash from investing activities** | (96.7) | 71.5 | 2.5 | | **Net cash from financing activities** | (0.8) | 41.3 | 12.4 | | **Cash at end of year** | 177.1 | 302.2 | 339.3 | - As of February 28, 2025, the company had **210.8 million RMB** in cash and cash equivalents and **128.5 million RMB** in restricted cash[560](index=560&type=chunk)[800](index=800&type=chunk) - Capital expenditures were **57.3 million RMB** in fiscal year 2025, primarily for the construction and development of study camps[575](index=575&type=chunk) - As of February 28, 2025, the company had outstanding long-term borrowings of **82.1 million RMB** from China Merchants Bank, secured by restricted cash of **127.4 million RMB**[573](index=573&type=chunk)[577](index=577&type=chunk) - Due to PRC regulations, **133.2 million RMB** of the company's net assets were restricted from being transferred out of its PRC subsidiaries and VIEs as of February 28, 2025[563](index=563&type=chunk) [ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](index=137&type=section&id=ITEM%206.%20DIRECTORS,%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section details the company's board of directors, executive compensation, share incentive plans, employee headcount, and beneficial share ownership, with Chairman Peiqing Tian as the largest shareholder [Directors and Senior Management](index=137&type=section&id=A.%20Directors%20and%20Senior%20Management) The company is led by a five-member Board of Directors, including Chairman Peiqing Tian and CEO Yi Zuo, with members possessing extensive experience in education, finance, and investment Board of Directors and Executive Officers | Name | Position/Title | | :--- | :--- | | Peiqing Tian | Chairman | | Yi Zuo | Director and Chief Executive Officer | | Shaoqing Jiang | Director | | Zongwei Li | Independent Director | | Bing Yuan | Independent Director | [Compensation](index=140&type=section&id=B.%20Compensation) In FY2025, executive officers received **4.1 million RMB** in compensation, and the company utilized share incentive plans, including new grants and option repricing, resulting in **3.2 million RMB** in additional compensation cost - In FY2025, executive officers received a total of **4.1 million RMB** (**0.6 million USD**) in cash and benefits, while independent directors received **0.1 million USD**[602](index=602&type=chunk) - The company has two share incentive plans, the 2015 Plan and the 2017 Plan, with a maximum of **4,201,330** ordinary shares authorized for issuance[603](index=603&type=chunk) - On August 12, 2024, the company granted **650,000** new share options and repriced **1,901,790** existing options to **0.58 RMB** (**0.08 USD**), resulting in an additional compensation cost of **3.2 million RMB** recognized in FY2025[618](index=618&type=chunk) [Employees](index=145&type=section&id=D.%20Employees) As of February 28, 2025, the company had **339** employees, a significant increase from prior years, with teachers forming the largest functional group Employee Headcount by Function (as of Feb 28, 2025) | Function | Number of Employees | | :--- | :--- | | Teachers | 128 | | Campus operation | 69 | | Learning center student services | 26 | | General and administration | 75 | | Sales, marketing and business development | 41 | | **Total** | **339** | - Total employee count increased from **167** in FY2023 and **190** in FY2024 to **339** in FY2025, reflecting business expansion[639](index=639&type=chunk) [Share Ownership](index=145&type=section&id=E.%20Share%20Ownership) This section details beneficial share ownership as of May 31, 2025, with Chairman Peiqing Tian as the largest shareholder at **42.2%**, and all directors and executive officers collectively owning **48.7%** Principal Shareholders (as of May 31, 2025) | Shareholder | Beneficial Ownership (%) | | :--- | :--- | | Peiqing Tian (Chairman) | 42.2% | | Chengwei Capital HK Limited | 13.9% | | Theodore Walker Cheng-De King | 11.7% | | Jun Guo | 9.3% | | Yi Zuo (CEO) | 6.5% | - All directors and executive officers as a group beneficially own **11,267,343** ordinary shares, representing **48.7%** of the total outstanding shares[645](index=645&type=chunk) [ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](index=147&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section outlines major shareholders and details related party transactions, primarily the VIE contractual arrangements and significant service purchases from entities controlled by the chairman - The most significant related party transactions are the contractual arrangements with the VIEs, which are essential for the company's operations in China[650](index=650&type=chunk) - In FY2025, the company purchased services totaling approximately **6.6 million RMB** from Shanghai Four Season Online School (SHFSOS) and **4.3 million RMB** from Shanghai Jing'an Dangdai Art Training School (Dangdai), both entities controlled by the company's chairman[650](index=650&type=chunk)[652](index=652&type=chunk) - The company provided services to related parties, including course design and tourism services, though the revenue from these transactions decreased significantly in FY2025 compared to prior years[651](index=651&type=chunk) [ITEM 8. FINANCIAL INFORMATION](index=149&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section confirms the consolidated financial statements, absence of material legal proceedings, and details the company's dividend policy, including a **5.1 million USD** dividend declared in 2024, subject to PRC regulations - The company is not currently a party to any legal proceedings expected to have a material adverse effect on its business[656](index=656&type=chunk) - On August 14, 2024, the company declared a cash dividend of **0.23 USD** per ordinary share, totaling **5.1 million USD** This is the first dividend since a **20 million USD** distribution in 2018[657](index=657&type=chunk) - The company's ability to pay dividends is dependent on receiving dividends from its PRC subsidiaries, which is restricted by PRC laws[658](index=658&type=chunk) [ITEM 10. ADDITIONAL INFORMATION](index=150&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section details the company's corporate governance under Cayman Islands law and its tax status, including PRC withholding taxes and the belief that it was a Passive Foreign Investment Company (PFIC) for FY2025 - The company is an exempted company incorporated in the Cayman Islands, and its corporate governance is subject to Cayman law, which differs from U.S. standards regarding shareholder rights and meetings[667](index=667&type=chunk)[671](index=671&type=chunk) - The Cayman Islands does not levy taxes on profits, income, or gains PRC taxation includes a potential **10%** withholding tax on dividends from PRC subsidiaries to foreign parents, which may be reduced to **5%** under the Hong Kong tax treaty[695](index=695&type=chunk)[526](index=526&type=chunk) - The company believes it was a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes for its taxable year ended February 28, 2025 This status could lead to adverse tax consequences for U.S. holders of its ADSs or ordinary shares[715](index=715&type=chunk) [ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=164&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risks are foreign exchange volatility between RMB and USD, with a **1.4 million USD** impact from a 10% RMB depreciation, while interest rate and inflation risks are minimal - The company's main market risk is foreign exchange volatility between the Chinese Renminbi (RMB) and the U.S. dollar[736](index=736&type=chunk) - As of February 28, 2025, a hypothetical **10%** depreciation of the RMB against the U.S. dollar would result in a **1.4 million USD** decrease in the value of its RMB-denominated cash and restricted cash[739](index=739&type=chunk) - Interest rate risk is minimal, primarily affecting interest income on bank deposits Inflation has not materially impacted operations[740](index=740&type=chunk)[741](index=741&type=chunk) [ITEM 15. CONTROLS AND PROCEDURES](index=167&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls were ineffective as of February 28, 2025, due to a material weakness in financial reporting controls, for which remediation measures are being implemented - Management concluded that disclosure controls and procedures were not effective as of February 28, 2025[753](index=753&type=chunk) - A material weakness was identified in internal control over financial reporting: a lack of sufficient and appropriate review over financial reporting in accordance with U.S. GAAP[758](index=758&type=chunk) - The company is implementing remediation plans, including refining controls and adding supervision, to address the material weakness[759](index=759&type=chunk) [ITEM 16G. CORPORATE GOVERNANCE](index=171&type=section&id=ITEM%2016G.%20CORPORATE%20GOVERNANCE) As a foreign private issuer, the company follows Cayman Islands corporate governance practices, exempting it from certain NYSE standards regarding board independence, audit committee composition, and annual shareholder meetings - The company follows Cayman Islands home country practices, exempting it from certain NYSE corporate governance rules[769](index=769&type=chunk) - Key exemptions taken include not requiring a majority-independent board, not requiring an audit committee of at least three independent directors, and not being mandated to hold an annual meeting within one year of the fiscal year-end[770](index=770&type=chunk) [ITEM 16K. CYBERSECURITY](index=172&type=section&id=ITEM%2016K.%20CYBERSECURITY) The company maintains a comprehensive cybersecurity risk management program overseen by the board, with no material incidents reported to date impacting its business or financial condition - The company has a cybersecurity risk management process that is integrated into its enterprise-wide risk management system[774](index=774&type=chunk) - The board of directors provides oversight for cybersecurity risks, while the Vice President of Technology is responsible for assessment and management, reporting to the CEO[777](index=777&type=chunk) - To date, no material cybersecurity incidents have been identified that are reasonably likely to materially affect the company's financial condition or results of operations[776](index=776&type=chunk) PART III [ITEM 18. FINANCIAL STATEMENTS](index=173&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section presents the audited consolidated financial statements for fiscal years 2023-2025, prepared under U.S. GAAP, including the independent auditor's report and detailed financial notes Consolidated Balance Sheet Summary (As of Feb 28, 2025, in millions) | | RMB | USD | | :--- | :--- | :--- | | **Total Assets** | 731.1 | 100.4 | | **Total Liabilities** | 226.0 | 31.0 | | **Total Equity** | 505.2 | 69.4 | Consolidated Statement of Operations Summary (Year Ended Feb 28, 2025, in millions) | | RMB | USD | | :--- | :--- | :--- | | **Total Revenue** | 251.1 | 34.5 | | **Gross Profit** | 47.1 | 6.5 | | **Operating Loss** | (15.7) | (2.2) | | **Net Loss** | (0.6) | (0.085) | - The independent auditor's report, issued by Marcum Asia CPAs LLP, provides an unqualified opinion, stating that the financial statements present fairly, in all material respects, the financial position and results of operations of the company in conformity with U.S. GAAP[793](index=793&type=chunk) - The notes to the financial statements confirm the company's reliance on the VIE structure to conduct its business in the PRC and detail the contractual arrangements that allow for consolidation[820](index=820&type=chunk)[830](index=830&type=chunk)

Core Viewpoint - Four Seasons Education (Cayman) Inc. has received a notice from the NYSE indicating non-compliance with the minimum stockholder requirement for continued listing, necessitating a response within 45 days to demonstrate compliance within 18 months [1][2]. Company Summary - Four Seasons Education is a service provider in China, focusing on tourism and education-related services, including non-academic tutoring, school-based tutoring solutions, teacher training programs, study camps, learning trips, and travel agency services for various age groups [4]. Compliance and Listing Status - The company has 45 days from January 30, 2025, to respond with a business plan to regain compliance with NYSE listing standards [2]. - The notice does not immediately impact the listing of the company's American Depositary Shares (ADSs), which will continue to be traded on the NYSE as long as other listing requirements are met [3]. - The company remains compliant with all other NYSE continued listing standards and the notice does not affect its business operations or SEC reporting requirements [3].

Core Viewpoint - Four Seasons Education (Cayman) Inc. reported strong financial results for the first half of fiscal year 2025, with a significant revenue increase driven by growth in its tourism and non-academic tutoring businesses, despite experiencing an operating loss. Financial Performance - Revenue increased by 117.8% to RMB134.7 million (US$19.0 million) compared to RMB61.8 million in the same period last year [11][15] - Gross profit rose by 11.1% to RMB29.7 million (US$4.2 million) from RMB26.7 million [16] - Operating loss was RMB5.7 million (US$0.8 million), down from an operating income of RMB0.9 million in the same period last year [18] - Adjusted operating loss was RMB1.6 million (US$0.2 million), compared to an adjusted operating income of RMB2.7 million in the same period last year [18][20] - Net income was RMB3.0 million (US$0.4 million), down from RMB5.7 million in the same period last year [26] - Adjusted net income was RMB2.1 million (US$0.3 million), compared to RMB6.2 million in the same period last year [26] Business Segments - The non-academic tutoring business saw a revenue increase of 62% year over year, reflecting the company's commitment to diverse learning needs [2] - Domestic and outbound tourism business revenue increased by 230% year over year, supported by new offerings and the launch of a cruise service [13] Cost Structure - Cost of revenue was RMB105.0 million (US$14.8 million) in the first half of fiscal year 2025, up from RMB35.1 million in the same period last year, primarily due to increased costs in the tourism and non-academic tutoring businesses [3] - General and administrative expenses increased by 15.4% to RMB27.2 million (US$3.8 million) from RMB23.5 million, driven by staff costs and share-based compensation [17] Future Outlook - The company aims to enhance operating efficiency and pursue organic growth by expanding its range of premium services, focusing on higher profit margin products [41]

Group 1 - Four Seasons Education (Cayman) Inc. declared a cash dividend of US$0.23 per ordinary share, or US$2.30 per American Depositary Share (ADS) [1] - The dividend payment is expected on or about September 12, 2024, to holders of ADS and ordinary shares of record as of August 31, 2024 [1] - The company provides tourism and education-related services in China, including non-academic tutoring programs, school-based tutoring solutions, teacher training programs, study camps, learning trips, and travel agency services [2] Group 2 - The company operates in the education sector, focusing on enhancing students' learning experiences and academic performance [2]

Group 1 - Four Seasons Education (Cayman) Inc. has filed its annual report on Form 20-F for the fiscal year ended February 29, 2024, with the SEC [1] - The annual report includes audited consolidated financial statements and is available on the Company's investor relations website and the SEC's website [1] - Shareholders and ADS holders can request a hard copy of the annual report free of charge [1] Group 2 - Four Seasons Education is a service provider of tourism and education-related services in China [2] - The Company's offerings include non-academic tutoring programs, school-based tutoring solutions, teacher training programs, study camps, learning trips, and travel agency services [2] - The Company caters to all age groups with its diverse range of educational and tourism services [2]

VIEs and Revenue Structure - VIEs contributed 100%, 97.6%, and 99.3% of the company's net revenues for the fiscal years ended February 28, 2022, 2023, and February 29, 2024, respectively[18]. - In the 2024 fiscal year, Shanghai Fuxi received service fees of RMB3.6 million (US$0.5 million) from the VIEs and did not distribute any dividends[31]. - The company relies on service fees from the VIEs for its revenue, which are subject to PRC legal restrictions[31]. - The company’s ability to pay dividends is contingent upon the financial performance of its PRC subsidiaries and VIEs[56]. - The VIEs paid RMB 3.6 million to the WFOE as service fees and repaid RMB 25.2 million in working capital support[61]. - The company relies on dividends from its PRC subsidiaries, which can only be paid out of accumulated profits after statutory reserves are funded[52]. - The company has invested RMB 20.9 million in Other Subsidiaries for the year ended February 28, 2023[59]. - For the fiscal year ended February 29, 2024, the WFOE transferred RMB 2.0 million to Other Subsidiaries and RMB 23.5 million to VIEs as working capital support[61]. Regulatory Environment and Compliance - The company ceased offering K-9 Academic AST Services in mainland China at the end of 2021 due to regulatory changes[21]. - The PRC government has increased scrutiny over overseas listed PRC businesses, which may adversely affect operations and the ability to offer securities to overseas investors[34]. - The Overseas Listing Trial Measures, effective March 31, 2023, require PRC domestic companies to file with the CSRC for overseas offerings, with potential sanctions for non-compliance[37]. - The company must comply with evolving PRC laws and regulations regarding data privacy and cybersecurity, which could lead to penalties if not adhered to[35]. - The company is closely monitoring regulatory changes and is cooperating with government authorities to ensure compliance[39]. - The company is required to obtain various operating licenses and permits for its business operations in China, and failure to comply may adversely affect its results[85]. - The PRC government has lifted many COVID-19 restrictions since December 2022, but future impacts on operations remain uncertain[124]. - The company is not currently subject to cybersecurity review as it does not possess a large amount of personal information and its business does not impact national security[164]. Financial Performance and Risks - Revenue for the year ended February 28, 2023, was RMB 34,216 thousand, a significant increase from RMB 250,223 thousand for the year ended February 28, 2022[65]. - Operating loss for the year ended February 28, 2023, was RMB 35,665 thousand, compared to an operating loss of RMB 66,214 thousand for the previous year[65]. - Net loss attributable to Four Seasons Education (Cayman) Inc. for the year ended February 28, 2023, was RMB 29,666 thousand, a decrease from RMB 113,462 thousand in the prior year[67]. - The company reported a net cash increase of RMB 125,188,000 in cash, cash equivalents, and restricted cash during the year[77]. - The company faces significant risks related to the inability to develop new learning products under recent regulatory policies in China, which could adversely affect its business and operations[44]. - The company's historical financial results may not be indicative of future performance, posing risks to investors[44]. - The trading price of the company's ADSs is likely to be volatile, potentially resulting in substantial losses for investors[55]. - The company may face unfavorable tax consequences if classified as a PRC "resident enterprise" for tax purposes[59]. Operational Challenges and Market Conditions - The company faces significant competition in the learning services and tourism services markets in China, which is rapidly evolving and highly fragmented[108]. - The company has limited experience in responding quickly to changes in the market and may face challenges in executing new initiatives[84]. - The company may not be able to improve its current business to meet the demands of learners and educational institutions, potentially leading to a decline in customer satisfaction and financial performance[44]. - The company may face difficulties in recruiting and retaining qualified faculty members due to regulatory restrictions and competition[95]. - The company’s ability to attract learners and customers with new products and services is critical for future revenue growth[93]. - The company may face challenges in integrating future acquisitions, which could adversely affect its business and operating results[112]. Legal and Taxation Risks - The PRC tax authorities may scrutinize the contractual arrangements with VIEs, potentially leading to increased tax liabilities and reduced net income[141]. - A transfer pricing adjustment could result in additional tax obligations for the VIEs, affecting the company's net income[142]. - If any VIE undergoes bankruptcy or liquidation, the company may lose access to critical assets, adversely impacting operations and financial condition[143]. - The SAT Circular 698 requires foreign investors to report indirect transfers of equity interests in PRC resident enterprises, with potential re-characterization of such transfers for tax purposes[185]. - The company faces potential taxation risks related to the disposition of ordinary shares or ADS, which may adversely affect its financial condition and operations[190]. Internal Control and Governance - The company identified a material weakness in internal control over financial reporting, which could impair its ability to comply with financial reporting requirements[127]. - The company has taken measures to improve internal controls but cannot assure full remediation of identified weaknesses[127]. - The largest shareholder, Mr. Peiqing Tian, may have potential conflicts of interest that could adversely affect the company[140]. - The company relies on Mr. Peiqing Tian to comply with contractual obligations regarding Variable Interest Entities (VIEs), which could impact control and economic benefits[140]. Currency and Exchange Risks - Revenue is primarily denominated in Renminbi, and currency exchange restrictions may limit the company's ability to utilize this revenue for business activities outside of China[191]. - Fluctuations in the Renminbi's value against the U.S. dollar could materially impact the company's financial results and the value of its ADS[196]. - Current PRC regulations allow dividends from subsidiaries to be paid only from accumulated profits, which may restrict the company's cash flow[195]. Future Outlook and Strategic Initiatives - Future outlook includes a focus on market expansion and new product development to enhance revenue streams[69]. - The company’s growth strategies include enhancing services, technology, and content solutions, but execution may be hindered by various factors[93]. - The company relies on innovative technology, such as its self-developed intelligent class content development system, to fuel growth[101].

[PART I](index=7&type=section&id=PART%20I) This section details the company's corporate structure, regulatory compliance, financial performance, and governance framework [Key Information](index=7&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section details the company's VIE structure, essential for its operations in China, and highlights associated legal and regulatory risks, including condensed consolidating financial schedules [Holding Company and VIE Structure](index=7&type=section&id=Holding%20Company%20and%20VIE%20Structure) Four Seasons Education (Cayman) Inc. is a Cayman Islands holding company operating in the PRC through contractual arrangements with Variable Interest Entities (VIEs) due to foreign investment restrictions - The company is a Cayman Islands holding company and does not directly operate in the PRC, controlling its PRC operations through a Variable Interest Entity (VIE) structure[14](index=14&type=chunk) - The VIE structure navigates PRC laws restricting foreign investment in private education, with investors purchasing equity in the Cayman holding company, not the PRC operating entities[14](index=14&type=chunk) VIE Revenue Contribution | Fiscal Year Ended | Net Revenue Contribution from VIEs | | :--- | :--- | | February 28, 2021 | 100% | | February 28, 2022 | 100% | | February 28, 2023 | 97.6% | - The contractual arrangements, including Exclusive Service, Call Option, Equity Pledge, and Voting Rights Proxy agreements, grant the company effective control over the VIEs, allowing for financial consolidation[18](index=18&type=chunk)[19](index=19&type=chunk)[22](index=22&type=chunk) [Permissions and Regulatory Approvals](index=12&type=section&id=Permissions%20and%20Regulatory%20Approvals) The company asserts its PRC subsidiaries and VIEs have obtained all necessary licenses for current operations, acknowledging uncertainties regarding evolving PRC regulations - The company ceased offering K9 Academic AST Services in the PRC at the end of 2021 to comply with regulations and stopped renewing related Permits for Operating Private School[35](index=35&type=chunk) - As of the report date, the company believes its PRC subsidiaries and VIEs have obtained all requisite licenses for their business operations, and the Cayman holding company does not require any PRC permits[35](index=35&type=chunk) - Under the new CSRC Overseas Listing Trial Measures effective March 31, 2023, the company, as an existing listed issuer, is not required to make an immediate filing but must comply with filing requirements for any future securities offerings[38](index=38&type=chunk) [The Holding Foreign Companies Accountable Act (HFCA Act)](index=15&type=section&id=The%20Holding%20Foreign%20Companies%20Accountable%20Act%20(HFCA%20Act)) The company addresses HFCA Act risks, which could lead to delisting if its auditor is not inspected by the PCAOB for two consecutive years, though its current auditor is subject to inspection - The HFCA Act, as amended, requires the SEC to prohibit trading of a company's securities if its auditor is not subject to PCAOB inspection for two consecutive years[42](index=42&type=chunk) - On December 15, 2022, the PCAOB determined it was able to inspect and investigate registered public accounting firms in mainland China and Hong Kong, vacating its previous negative determination, though future access remains subject to uncertainty[42](index=42&type=chunk) - The company's current auditor, Marcum Asia CPAs LLP, is headquartered in New York and subject to regular PCAOB inspection, so the company does not expect to be identified as a "Commission-Identified Issuer" for the fiscal year ended February 28, 2023[42](index=42&type=chunk) [Risk Factors](index=16&type=section&id=D.%20Risk%20Factors) This section outlines principal risks, including developing new products under PRC policies, COVID-19 impact, competition, VIE structure, evolving PRC regulations, and potential delisting - Business risks include the challenge of developing new learning products compliant with recent Chinese regulatory policies, failure to execute growth strategies, and the ongoing impact of the COVID-19 pandemic[46](index=46&type=chunk) - Corporate structure risks stem from reliance on contractual arrangements with VIEs, which may be less effective than direct ownership and could be challenged by PRC authorities, potentially leading to severe penalties[51](index=51&type=chunk) - Risks of doing business in the PRC include uncertainties in the legal system, significant government oversight and discretion, evolving data privacy and cybersecurity laws, and potential delisting under the HFCA Act if the PCAOB cannot inspect auditors[52](index=52&type=chunk)[54](index=54&type=chunk)[56](index=56&type=chunk) - Risks related to the ADSs include price volatility, potential dilution from future share sales, and limited voting rights for ADS holders[61](index=61&type=chunk) [Condensed Consolidating Schedule](index=22&type=section&id=Condensed%20Consolidating%20Schedule) This section provides detailed condensed consolidating financial schedules for fiscal years 2021, 2022, and 2023, breaking down statements for the parent, WFOE, other subsidiaries, and VIEs Condensed Consolidating Statement of Operations (FY 2023, RMB in thousands) | Entity | Revenue | Operating (Loss) Income | Net (Loss) Income | | :--- | :--- | :--- | :--- | | Four Seasons (Parent) | — | (11,768) | (29,668) | | WFOE | 502 | (7,652) | (5,463) | | Other Subsidiaries | 884 | (3,557) | (3,472) | | VIEs | 33,381 | (12,688) | (11,077) | | **Consolidated** | **34,216** | **(35,665)** | **(33,488)** | Condensed Consolidating Balance Sheet (As of Feb 28, 2023, RMB in thousands) | Entity | Total Assets | Total Liabilities | Total Equity (Deficit) | | :--- | :--- | :--- | :--- | | Four Seasons (Parent) | 494,735 | 37,003 | 457,732 | | WFOE | 123,700 | 15,928 | 107,772 | | Other Subsidiaries | 127,403 | 7,161 | 120,242 | | VIEs | 101,958 | 111,462 | (9,504) | | **Consolidated** | **601,040** | **89,150** | **511,890** | Condensed Consolidating Statement of Cash Flows (FY 2023, RMB in thousands) | Entity | Net Cash from Operating | Net Cash from Investing | Net Cash from Financing | | :--- | :--- | :--- | :--- | | Four Seasons (Parent) | 16,945 | (157,194) | (239) | | WFOE | 12,005 | (3,333) | — | | Other Subsidiaries | 19,484 | 13,745 | — | | VIEs | (73,927) | 4,841 | 44,640 | | **Consolidated** | **(25,493)** | **(96,702)** | **(838)** | [Information on the Company](index=72&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) This section provides a comprehensive overview of the company's business, history, organizational structure, and the complex PRC regulatory environment governing private education [History and Development of the Company](index=72&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) The company began operations in 2007, focusing on after-school math education in Shanghai, establishing its offshore holding company structure in 2014 for international investment - The company was founded in 2007 by Mr. Peiqing Tian, initially focusing on after-school math education for elementary students in Shanghai[289](index=289&type=chunk) - The current holding company structure was established in 2014 with the incorporation of Four Seasons Education (Cayman) Inc. and its subsidiaries in Hong Kong and the PRC[289](index=289&type=chunk) [Business Overview](index=72&type=section&id=B.%20Business%20Overview) Following 2021 regulatory changes, the company ceased K9 Academic AST Services, realigning its focus to non-academic tutoring, study camps, and learning technology solutions - In compliance with 2021 regulatory policies, the company ceased offering K9 Academic AST Services in mainland China at the end of 2021 and has realigned its business focus[291](index=291&type=chunk) - Current business offerings are divided into three main categories: Non-Academic Tutoring Programs (e.g., calligraphy, art, sudoku), Study Camp and Learning Trips, and Learning Technology and Content Solutions for other educational institutions[293](index=293&type=chunk)[295](index=295&type=chunk)[296](index=296&type=chunk)[297](index=297&type=chunk) - As of February 28, 2023, the company operated two learning centers (Shanghai and Chongqing) and two study camps (Hubei and Anhui)[301](index=301&type=chunk) - The company had **76 teachers** as of February 28, 2023, with a highly selective recruitment process and a focus on continuous on-the-job training[302](index=302&type=chunk)[303](index=303&type=chunk)[304](index=304&type=chunk) [Organizational Structure](index=101&type=section&id=C.%20Organizational%20Structure) The company operates through a VIE structure due to PRC restrictions on foreign investment in education, controlling its PRC operating entities via contractual arrangements managed by its WFOE - The company's organizational structure is centered around a VIE model to comply with PRC foreign investment restrictions in the education sector[439](index=439&type=chunk) - Key entities include the Cayman parent, a Hong Kong subsidiary, a PRC WFOE (Shanghai Fuxi), and two main VIEs: Shanghai Luoliang Network Technology Co., Ltd. and Shanghai Four Seasons Education Investment Management Co., Ltd[438](index=438&type=chunk)[439](index=439&type=chunk) - A series of contractual arrangements grants the WFOE effective control over the VIEs, enabling the consolidation of their financial statements under U.S. GAAP[442](index=442&type=chunk)[445](index=445&type=chunk)[446](index=446&type=chunk) [Property, Plants and Equipment](index=105&type=section&id=D.%20Property,%20Plants%20and%20Equipment) The company leases its headquarters and all learning centers, and has acquired land use rights for study camp development, with construction in Wuyuan expected by June 2024 - The company leases its headquarters and all of its learning centers, with a total leased area of approximately **1,485 square meters**[454](index=454&type=chunk) - The company has acquired land use rights in Wuyuan, Jiangxi, for approximately **RMB 15.5 million** to construct study camps, with completion expected in June 2024[454](index=454&type=chunk) [Operating and Financial Review and Prospects](index=106&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section analyzes the company's financial performance, significantly reshaped by the cessation of K9 Academic AST Services, detailing revenue decline, narrower net loss, and liquidity [Operating Results](index=106&type=section&id=A.%20Operating%20Results) The company's operating results were dominated by the cessation of K9 Academic AST Services, leading to a sharp revenue decline in FY2023 but a narrower net loss due to cost-cutting and non-recurring impairment charges Key Financial Performance (RMB in millions) | Metric | FY 2021 | FY 2022 | FY 2023 | | :--- | :--- | :--- | :--- | | Total Revenue | 280.3 | 250.2 | 34.2 | | Gross Profit | 111.5 | 100.6 | 14.3 | | Operating Loss | (36.5) | (66.2) | (35.7) | | Net Loss | (27.9) | (118.7) | (33.5) | | Adjusted Net Loss (Non-GAAP) | (2.5) | (58.4) | (32.2) | - The primary driver for the **86.3% revenue decrease** in FY2023 was the cessation of K9 Academic AST Services, which accounted for a substantial majority of revenues prior to its discontinuation[469](index=469&type=chunk)[498](index=498&type=chunk) - Cost of revenue decreased by **86.7%** in FY2023 due to the closure of learning centers and a reduction in the number of teachers following the business restructuring[500](index=500&type=chunk) - The significant net loss in FY2022 included a **RMB 44.6 million impairment loss** on intangible assets and goodwill and a **RMB 7.9 million impairment loss** on other long-lived assets, which were not recurring in FY2023[510](index=510&type=chunk) [Liquidity and Capital Resources](index=116&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company's liquidity primarily stems from operations and IPO proceeds, with cash and cash equivalents declining in FY2023, and access to PRC cash subject to regulatory restrictions Cash and Cash Equivalents Trend (RMB in millions) | As of | Cash and Cash Equivalents | | :--- | :--- | | Feb 28, 2021 | 378.4 | | Feb 28, 2022 | 262.4 | | Feb 28, 2023 | 175.7 | Summary of Cash Flows (FY 2023, RMB in millions) | Cash Flow Category | Amount | | :--- | :--- | | Net cash used in operating activities | (25.5) | | Net cash used in investing activities | (96.7) | | Net cash used in financing activities | (0.8) | | Effect of foreign exchange rate changes | 27.4 | | **Net decrease in cash** | **(95.6)** | - As a holding company, its ability to pay dividends depends on distributions from its PRC subsidiaries, which are restricted by PRC laws; total restricted net assets were **RMB 111.5 million (US$16.1 million)** as of February 28, 2023[522](index=522&type=chunk) Contractual Obligations as of Feb 28, 2023 (RMB in thousands) | Obligation Type | Total | Less Than 1 Year | 1-3 Years | | :--- | :--- | :--- | :--- | | Lease Obligations | 5,685 | 4,386 | 1,299 | | Long-term investment obligations | 17,500 | 17,500 | — | | Capital commitments | 5,826 | 5,826 | — | | **Total** | **29,011** | **27,712** | **1,299** | [Critical Accounting Estimates](index=111&type=section&id=E.%20Critical%20Accounting%20Estimates) The company identifies key areas requiring significant management judgment and estimation in financial reporting, including income tax provisions and asset impairment assessments - Key critical accounting policies involve significant judgment in revenue recognition, fair value of investments, income taxes, and leases[488](index=488&type=chunk) - For income taxes, management makes significant estimates in determining the provision for tax expenses, including calculating tax credits and assessing the realizability of deferred tax assets; a valuation allowance of **RMB 30.8 million** was recorded against deferred tax assets as of Feb 28, 2023[489](index=489&type=chunk)[492](index=492&type=chunk) - The company evaluates long-lived assets for impairment when events indicate their carrying amount may not be recoverable, requiring assumptions about future undiscounted cash flows; in FY2022, the company recognized a **RMB 7.9 million impairment loss** on property and equipment and a **RMB 2.3 million impairment loss** on intangible assets[493](index=493&type=chunk) [Directors, Senior Management and Employees](index=122&type=section&id=ITEM%206.%20DIRECTORS,%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section provides information on the company's leadership, including board composition, executive compensation, share incentive plans, board committees, and a significant reduction in workforce [Directors and Senior Management](index=122&type=section&id=A.%20Directors%20and%20Senior%20Management) The company is led by a five-member Board of Directors, including Chairman Peiqing Tian and CEO Yi Zuo, with independent directors bringing diverse professional experience - The board consists of five directors: Peiqing Tian (Chairman), Yi Zuo (Director and CEO), Shaoqing Jiang (Director), Zongwei Li (Independent Director), and Bing Yuan (Independent Director)[548](index=548&type=chunk) - Mr. Peiqing Tian, the founder, has been Chairman since inception; Ms. Yi Zuo has served as CEO since November 2019 and previously served as CFO[548](index=548&type=chunk)[549](index=549&type=chunk) [Compensation](index=124&type=section&id=B.%20Compensation) For FY2023, the company paid RMB 2.5 million in cash and benefits to executive officers and US$0.1 million to independent directors, maintaining share incentive plans for equity awards - In FY2023, aggregate cash compensation for executive officers was **RMB 2.5 million (US$0.4 million)**, and for independent directors was **US$0.1 million**[558](index=558&type=chunk) - The company has two share incentive plans, the 2015 Plan and the 2017 Plan, which permit the grant of options, restricted shares, and restricted share units[559](index=559&type=chunk)[560](index=560&type=chunk)[565](index=565&type=chunk) [Board Practice](index=127&type=section&id=C.%20Board%20Practice) The board consists of five directors and has established three committees: Audit, Compensation, and Nominating and Corporate Governance, all composed of independent directors - The Board of Directors has three committees: Audit, Compensation, and Nominating and Corporate Governance[577](index=577&type=chunk) - The Audit Committee consists of two independent directors, Zongwei Li (Chair) and Bing Yuan; Mr. Li is designated as the "audit committee financial expert"[578](index=578&type=chunk) - Directors' duties are governed by Cayman Islands law, which includes duties of loyalty, honesty, and acting in the company's best interests[582](index=582&type=chunk) [Employees](index=129&type=section&id=D.%20Employees) As of February 28, 2023, the company had a total of 167 employees, a significant decrease from previous years, primarily composed of teachers and general administration staff Employee Headcount by Function (as of Feb 28, 2023) | Function | Number of Employees | | :--- | :--- | | Teachers | 76 | | Learning center student services | 12 | | General and administration | 61 | | Sales, marketing and business development | 18 | | **Total** | **167** | - Total employee count has decreased significantly, from **716 in FY2021** and **286 in FY2022** to **167 in FY2023**[587](index=587&type=chunk) [Share Ownership](index=129&type=section&id=E.%20Share%20Ownership) As of May 31, 2023, directors and executive officers collectively owned 51.5% of outstanding shares, with Chairman Peiqing Tian being the largest shareholder at 44.4% beneficial ownership Principal Shareholders (as of May 31, 2023) | Shareholder | Beneficial Ownership (%) | | :--- | :--- | | Peiqing Tian | 44.4% | | Chengwei Capital HK Limited | 14.8% | | Theodore Walker Cheng-De King | 10.5% | | Jun Guo | 9.9% | | Yi Zuo | 5.9% | - All directors and executive officers as a group beneficially own **51.5%** of the company's ordinary shares[591](index=591&type=chunk) [Major Shareholders and Related Party Transactions](index=131&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details the company's major shareholders and outlines significant transactions with related parties, including services provided to an entity controlled by the Chairman's brother - The company's major shareholders are detailed under Item 6.E[595](index=595&type=chunk) - In FY2023, the company provided course design, digital learning system, and other services to Shanghai Four Season Online School (SHFSOS), an entity controlled by the Chairman's brother, for a total of **RMB 7.4 million**[598](index=598&type=chunk) - In FY2022, due to the cessation of K9 Academic AST services, the company disposed of related deferred revenue and a subsidiary (Shanghai Jing'an Dangdai Art Training School) to Jiaxin Travel, another related party, recognizing a total gain of **RMB 4.0 million**[601](index=601&type=chunk) [Financial Information](index=132&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section confirms the inclusion of consolidated financial statements, states no material legal proceedings, and outlines the company's dividend policy of retaining earnings for growth - The company's consolidated financial statements are included at the end of the annual report[603](index=603&type=chunk) - The company is not currently a party to any legal proceedings expected to have a material adverse effect on its business[604](index=604&type=chunk) - The company has no current plans to declare or pay dividends, intending to retain earnings for business operations and expansion; a dividend of **US$20 million** was paid in 2018[605](index=605&type=chunk) [Additional Information](index=134&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section provides supplementary corporate and legal information, detailing the company's memorandum and articles of association, and summarizing tax implications across jurisdictions, including its PFIC status for U.S. federal income tax purposes [Memorandum and Articles of Association](index=134&type=section&id=B.%20Memorandum%20and%20Articles%20of%20Association) The company is an exempted company incorporated in the Cayman Islands, governed by its articles and the Companies Act, with provisions for shareholder rights, dividends, and meeting protocols - The company is an exempted company incorporated under the laws of the Cayman Islands[613](index=613&type=chunk)[616](index=616&type=chunk) - Holders of ordinary shares are entitled to receive dividends as declared by the board and have the right to vote at general meetings; a special resolution requires a **two-thirds affirmative vote**[619](index=619&type=chunk)[623](index=623&type=chunk) - Shareholders holding at least **one-third of voting shares** can requisition an extraordinary general meeting[625](index=625&type=chunk) [Taxation](index=139&type=section&id=E.%20Taxation) This subsection details the tax environment in the Cayman Islands (no corporate tax), the PRC (25% enterprise income tax), and the U.S., where the company believes it was a Passive Foreign Investment Company (PFIC) for FY2023 - The company is not subject to profits, income, gains, or appreciation taxes in the Cayman Islands[642](index=642&type=chunk) - PRC subsidiaries are subject to a **25% enterprise income tax**; dividends paid to its Hong Kong subsidiary may be subject to a **5% or 10% withholding tax**[424](index=424&type=chunk)[425](index=425&type=chunk) - The company believes it was a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes for the fiscal year ended February 28, 2023; this status can lead to adverse tax consequences for U.S. holders, including punitive tax rates on "excess distributions" and gains[262](index=262&type=chunk)[666](index=666&type=chunk) - The company does not intend to provide the information necessary for U.S. holders to make a Qualified Electing Fund (QEF) election, which could otherwise mitigate the adverse PFIC tax effects[677](index=677&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=147&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risks are foreign exchange, interest rate, and inflation, with foreign exchange risk significant due to RMB-denominated operations and U.S. dollar holdings - The company's main market risks are foreign exchange, interest rate, and inflation risk[688](index=688&type=chunk)[691](index=691&type=chunk)[692](index=692&type=chunk) - Foreign exchange risk is significant as most revenue is in RMB, while the company holds U.S. dollars from its IPO; as of February 28, 2023, the company held **RMB 70.6 million** in RMB-denominated cash and equivalents[688](index=688&type=chunk)[690](index=690&type=chunk) - A hypothetical **10% depreciation of the RMB** against the U.S. dollar would result in a **US$1.0 million decrease** in the value of its cash, cash equivalents, and restricted cash[690](index=690&type=chunk) [Controls and Procedures](index=149&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were not effective as of February 28, 2023, due to a material weakness in internal control over financial reporting, with remediation efforts underway - Management concluded that disclosure controls and procedures were not effective as of February 28, 2023[701](index=701&type=chunk) - A material weakness was identified in internal control over financial reporting, specifically a lack of sufficient and appropriate review over financial reporting in accordance with U.S. GAAP[701](index=701&type=chunk)[706](index=706&type=chunk) - Remediation plans include refining controls, enhancing communication and documentation procedures, and implementing additional supervision and review activities[707](index=707&type=chunk) [Corporate Governance and Other Matters](index=151&type=section&id=ITEM%2016.%20Corporate%20Governance%20and%20Other%20Matters) This section covers corporate governance, including the audit committee financial expert, code of ethics, auditor fees, a share repurchase program, and the change of certifying accountant - The board has determined that Mr. Zongwei Li, an independent director, qualifies as an "audit committee financial expert"[711](index=711&type=chunk) Principal Accountant Fees (USD in thousands) | Fiscal Year | Audit Fees | | :--- | :--- | | 2021 | 830 | | 2022 | 653 | | 2023 | 480 | - In November 2022, the Board authorized a share repurchase program of up to **US$5 million**; as of February 2023, **US$4.96 million** remained available under the plan[717](index=717&type=chunk)[719](index=719&type=chunk) - On December 3, 2021, the company changed its independent registered public accounting firm from Deloitte Touche Tohmatsu Certified Public Accountants LLP to Marcum Asia CPAs LLP[720](index=720&type=chunk) [PART III](index=154&type=section&id=PART%20III) This section presents the company's audited consolidated financial statements and related notes [Financial Statements](index=154&type=section&id=ITEM%2018%20FINANCIAL%20STATEMENTS) This section contains the company's audited consolidated financial statements for fiscal years 2021, 2022, and 2023, prepared under U.S. GAAP, including reports from independent accounting firms and detailed notes Consolidated Balance Sheet Data (RMB in thousands) | As of Feb 28 | 2022 | 2023 | | :--- | :--- | :--- | | **Total Assets** | **602,533** | **601,040** | | Cash and cash equivalents | 262,429 | 175,696 | | **Total Liabilities** | **100,039** | **89,150** | | **Total Equity** | **502,494** | **511,890** | Consolidated Statement of Operations Data (RMB in thousands) | For Year Ended Feb 28 | 2021 | 2022 | 2023 | | :--- | :--- | :--- | :--- | | Total Revenue | 280,282 | 250,223 | 34,216 | | Gross Profit | 111,450 | 100,608 | 14,294 | | Operating Loss | (36,475) | (66,214) | (35,665) | | Net Loss | (27,886) | (118,732) | (33,488) | | Net Loss per Share (Basic) | (1.22) | (5.04) | (1.40) | Consolidated Statement of Cash Flows Data (RMB in thousands) | For Year Ended Feb 28 | 2021 | 2022 | 2023 | | :--- | :--- | :--- | :--- | | Net cash from operating activities | 31,124 | (91,321) | (25,493) | | Net cash from investing activities | (68,004) | 4,297 | (96,702) | | Net cash from financing activities | 198 | (25,555) | (838) | | **Net decrease in cash** | **(53,142)** | **(116,511)** | **(95,644)** |

PART I [ITEM 3. KEY INFORMATION](index=5&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section details the company's VIE corporate structure, essential for its operations in China due to foreign investment restrictions in the education sector, including condensed financial schedules, selected historical financial data, and a comprehensive breakdown of risk factors [Holding Company Structure and Contractual Arrangements](index=5&type=section&id=Holding%20Company%20Structure%20and%20Contractual%20Arrangements) Four Seasons Education (Cayman) Inc. operates in the PRC through Variable Interest Entities (VIEs) due to foreign ownership restrictions, controlling them via contractual arrangements and consolidating their financial results - The company is a Cayman Islands holding company with no equity ownership in its Chinese operating entities (VIEs), relying on contractual arrangements for control and consolidation[15](index=15&type=chunk) - Net revenues from the VIEs accounted for **100% of the company's total net revenues** in fiscal years 2020, 2021, and 2022[15](index=15&type=chunk)[29](index=29&type=chunk) - The company ceased offering K9 Academic AST Services in mainland China at the end of 2021 to comply with the "Double Alleviating Opinions," which prohibit foreign investment in this sector, including through VIE structures[18](index=18&type=chunk) - In fiscal year 2022, the PRC subsidiary (Shanghai Fuxi) received **RMB 20.8 million** in service fees from the VIEs and did not distribute any dividends to the parent company[29](index=29&type=chunk)[31](index=31&type=chunk) [Selected Financial Data](index=16&type=section&id=Selected%20Financial%20Data) The company's revenue declined from RMB 389.0 million in FY2020 to RMB 250.2 million in FY2022, with net losses widening significantly to RMB 118.7 million in FY2022 Selected Consolidated Financial Performance (RMB in millions) | Indicator | FY 2020 | FY 2021 | FY 2022 | | :--- | :--- | :--- | :--- | | **Revenue** | 389.0 | 280.3 | 250.2 | | **Gross Profit** | 188.1 | 111.5 | 100.6 | | **Operating Loss** | (131.0) | (36.5) | (66.2) | | **Net Loss** | (109.6) | (27.9) | (118.7) | | **Net Loss per Share (Basic)** | (4.63) | (1.22) | (5.04) | Selected Consolidated Balance Sheet Data (RMB in millions) | Indicator | As of Feb 29, 2020 | As of Feb 28, 2021 | As of Feb 28, 2022 | | :--- | :--- | :--- | :--- | | **Total Assets** | 1,037.6 | 967.2 | 602.5 | | **Total Liabilities** | 362.7 | 320.8 | 100.0 | | **Total Equity** | 675.0 | 646.4 | 502.5 | Reconciliation of Net Loss to Adjusted Net Loss (Non-GAAP) (RMB in millions) | Line Item | FY 2020 | FY 2021 | FY 2022 | | :--- | :--- | :--- | :--- | | **Net loss** | **(109.6)** | **(27.9)** | **(118.7)** | | Add: Share-based compensation | 30.9 | 27.5 | 9.0 | | Add: Fair value change of investments | (11.1) | (2.1) | (1.1) | | Add: Impairment loss on intangible assets and goodwill | 137.7 | — | 44.6 | | Add: Impairment loss on long-lived assets | 0.8 | — | 7.9 | | **Adjusted net income (loss) (non-GAAP)** | **48.6** | **(2.5)** | **(58.4)** | [Risk Factors](index=20&type=section&id=Risk%20Factors) This section outlines significant risks facing the company, including business, corporate structure, PRC operations, and ADS-related risks, such as regulatory changes, VIE enforceability, and potential delisting - The company's compliance with the "Double Alleviating Opinions," which led to the cessation of K9 Academic AST Services in late 2021, has had and is expected to continue having a **material adverse effect** on its business and financial results[74](index=74&type=chunk)[96](index=96&type=chunk)[98](index=98&type=chunk) - There are substantial uncertainties regarding the PRC government's interpretation of the VIE structure, potentially leading to severe penalties if contractual arrangements are found to be non-compliant with PRC laws[77](index=77&type=chunk)[135](index=135&type=chunk)[139](index=139&type=chunk) - The PCAOB's inability to inspect the company's auditors in China could lead to the trading of its ADSs being prohibited in the U.S. under the Holding Foreign Companies Accountable Act (HFCA Act), potentially as early as 2023 if proposed changes are enacted[78](index=78&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk) - The company believes it was a **Passive Foreign Investment Company (PFIC)** for the fiscal year ended February 28, 2022, which could result in adverse U.S. federal income tax consequences for U.S. shareholders[249](index=249&type=chunk) [ITEM 4. INFORMATION ON THE COMPANY](index=59&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) This section provides a detailed overview of the company's business, history, and organizational structure, describing the strategic shift from K-12 academic tutoring to diversified smart learning solutions and reiterating the critical role of the VIE structure [History and Development of the Company](index=59&type=section&id=History%20and%20Development%20of%20the%20Company) The company began operations in March 2007, focusing on after-school math education, and established its current offshore holding company structure in 2014 to facilitate international investment - The company was founded in **2007**, initially focusing on after-school math education in Shanghai[276](index=276&type=chunk) - The current holding company structure, with a Cayman parent, was established in **2014** to facilitate international capital investment[276](index=276&type=chunk) [Business Overview](index=59&type=section&id=Business%20Overview) Following 2021 regulatory changes, the company ceased K9 Academic AST Services and realigned its focus to diversified learning services and technology solutions, operating three learning centers and employing 150 teachers as of February 28, 2022 - In compliance with 2021 regulations, the company ceased offering K9 Academic AST Services in mainland China at the end of 2021 and shifted its focus to enrichment learning and technology solutions[278](index=278&type=chunk)[282](index=282&type=chunk) - Current offerings are categorized into Enrichment Learning Programs (calligraphy, art, bridge, go), Immersive Learning Programs (workshops, study camps), and Learning Technology and Content Solutions for other institutions[280](index=280&type=chunk)[283](index=283&type=chunk)[285](index=285&type=chunk)[286](index=286&type=chunk) - As of February 28, 2022, the company operated **three learning centers** in China and employed **150 teachers**[277](index=277&type=chunk)[290](index=290&type=chunk)[291](index=291&type=chunk) - The company's Intellectual Math Lab, a proprietary technology and content solution, has been adopted by **111 K-12 schools** in Shanghai and integrates AI-driven features like speech recognition for mathematical formulas[286](index=286&type=chunk) [Organizational Structure](index=88&type=section&id=Organizational%20Structure) The company operates through a VIE structure in the PRC due to foreign investment restrictions, controlling its PRC operating entities via contractual agreements that grant effective control and economic benefits, allowing for financial consolidation - The company's operations in the PRC are conducted through VIEs due to legal restrictions on foreign ownership in the private education sector[438](index=438&type=chunk) - A series of contractual arrangements (Exclusive Service, Call Option, Equity Pledge, and Voting Rights Proxy agreements) provide the company with effective control over the VIEs[440](index=440&type=chunk)[443](index=443&type=chunk) [Property, Plants and Equipment](index=92&type=section&id=Property%20Plants%20and%20Equipment) The company's headquarters are in Shanghai, China, and it leases all its properties, including its headquarters and three learning centers, with plans to continue leasing for future expansion - The company leases all of its facilities, including its headquarters and learning centers, with a total leased area of approximately **2,341 square meters**[452](index=452&type=chunk) [ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS](index=93&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section analyzes the company's financial performance and condition, highlighting a revenue decrease to RMB 250.2 million in FY2022 and a significant net loss of RMB 118.7 million due to business restructuring and impairment charges [Operating Results](index=93&type=section&id=Operating%20Results) The company's revenue declined by 10.7% YoY to RMB 250.2 million in FY2022 due to the cessation of K9 Academic AST services, leading to a significant net loss of RMB 118.7 million driven by increased operating expenses and impairment losses Fiscal Year 2022 vs 2021 Performance (RMB in millions) | Metric | FY 2022 | FY 2021 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | 250.2 | 280.3 | -10.7% | | **Cost of Revenue** | 149.6 | 168.8 | -11.4% | | **Gross Profit** | 100.6 | 111.5 | -9.8% | | **Operating Loss** | (66.2) | (36.5) | +81.4% | | **Net Loss** | (118.7) | (27.9) | +325.4% | - The decrease in revenue in FY2022 was primarily due to the cessation of K9 Academic AST Services in mainland China by the end of 2021[499](index=499&type=chunk) - The company recorded significant impairment losses in FY2022, including **RMB 44.6 million** on intangible assets and goodwill and **RMB 7.9 million** on other long-lived assets, due to the business restructuring[505](index=505&type=chunk)[506](index=506&type=chunk) [Liquidity and Capital Resources](index=103&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity primarily stems from cash from operations and IPO proceeds, with cash and cash equivalents at RMB 262.4 million as of February 28, 2022, and significant cash requirements for working capital and lease obligations Cash and Cash Equivalents (RMB in millions) | Date | Amount | | :--- | :--- | | Feb 29, 2020 | 404.7 | | Feb 28, 2021 | 378.4 | | Feb 28, 2022 | 262.4 | Summary of Cash Flows (RMB in millions) | Activity | FY 2021 | FY 2022 | | :--- | :--- | :--- | | Net cash from/(used in) operating activities | 31.1 | (91.3) | | Net cash from/(used in) investing activities | (68.0) | 4.3 | | Net cash from/(used in) financing activities | 0.2 | (25.6) | - As of February 28, 2022, the company had contractual obligations of **RMB 56.4 million**, primarily consisting of **RMB 45.0 million** in funding commitments and **RMB 11.4 million** in lease obligations[539](index=539&type=chunk) - Due to PRC laws, the company's PRC subsidiaries and VIEs have restricted net assets of **RMB 116.4 million** as of February 28, 2022, which are not available for transfer to the parent company as dividends[528](index=528&type=chunk)[939](index=939&type=chunk) [ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](index=108&type=section&id=ITEM%206.%20DIRECTORS%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section details the company's leadership, compensation practices, board structure, and employee base, noting a significant decrease in employee count to 286 as of February 28, 2022, reflecting business restructuring [Directors and Senior Management](index=108&type=section&id=Directors%20and%20Senior%20Management) The company is led by Chairman Peiqing Tian and CEO Yi Zuo, with a five-member board of directors including two independent directors and a management team experienced in education, finance, and investment banking - The key leadership includes **Peiqing Tian** (Chairman) and **Yi Zuo** (Director and CEO)[552](index=552&type=chunk) [Compensation](index=110&type=section&id=Compensation) For FY2022, aggregate cash compensation for executive officers was RMB 2.3 million, and the company utilizes 2015 and 2017 Share Incentive Plans to grant equity awards to management and employees - In FY2022, aggregate cash compensation for executive officers was **RMB 2.3 million** (US$0.4 million)[562](index=562&type=chunk) - The company has two active share incentive plans, the **2015 Plan** and the **2017 Plan**, to grant equity awards to employees and directors[565](index=565&type=chunk)[566](index=566&type=chunk)[570](index=570&type=chunk) [Board Practice](index=113&type=section&id=Board%20Practice) The board of directors consists of five members and has established an audit, compensation, and nominating and corporate governance committee, with Mr. Zongwei Li serving as the audit committee financial expert - The board has three committees: Audit, Compensation, and Nominating and Corporate Governance[580](index=580&type=chunk) - Mr. Zongwei Li is the designated "audit committee financial expert"[580](index=580&type=chunk)[582](index=582&type=chunk) [Employees](index=115&type=section&id=Employees) As of February 28, 2022, the company had 286 employees, a sharp decline from 716 in the previous year, with teachers comprising the largest group Employee Headcount by Year | As of | Total Employees | | :--- | :--- | | Feb 29, 2020 | 910 | | Feb 28, 2021 | 716 | | Feb 28, 2022 | 286 | [Share Ownership](index=116&type=section&id=Share%20Ownership) As of the report date, Chairman Peiqing Tian was the largest beneficial owner with 44.1% of ordinary shares, and executive officers and directors as a group beneficially owned 50.6% of the company's shares Principal Shareholders | Shareholder | Beneficial Ownership (%) | | :--- | :--- | | Peiqing Tian (Chairman) | 44.1% | | Chengwei Capital HK Limited | 14.8% | | Jun Guo | 9.9% | | Theodore Walker Cheng-De King | 8.9% | | Yi Zuo (CEO) | 5.5% | [ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](index=117&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details transactions with related parties, including the disposal of deferred revenue liabilities and a subsidiary to an entity controlled by the Chairman's brother, resulting in a gain of RMB 4.0 million in FY2022 - The company disposed of deferred revenue liabilities and its subsidiary, Dangdai, to Jiaxin Travel, an entity related to the Chairman, resulting in a recognized gain of **RMB 4.0 million** in FY2022[605](index=605&type=chunk) - In FY2022, the company provided services worth **RMB 0.9 million** to Shanghai Fuxi Network Co., Ltd., an equity method investee controlled by the Chairman[603](index=603&type=chunk) [ITEM 8. FINANCIAL INFORMATION](index=118&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section confirms the inclusion of consolidated financial statements, states the company is not party to any material legal proceedings, and outlines its dividend policy to retain earnings for business expansion - The company has no plans to declare or pay dividends in the foreseeable future, intending to retain earnings for business operations and expansion[609](index=609&type=chunk) - The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business[608](index=608&type=chunk) [ITEM 9. THE OFFER AND LISTING](index=119&type=section&id=ITEM%209.%20THE%20OFFER%20AND%20LISTING) The company's American Depositary Shares (ADSs) have been listed on the New York Stock Exchange under the symbol "FEDU" since November 8, 2017, with a change in ADS ratio to 1 ADS representing ten ordinary shares in June 2022 - The company's ADSs are listed on the NYSE under the ticker "**FEDU**"[612](index=612&type=chunk) - In June 2022, the ADS to ordinary share ratio was changed from 2:1 to 1:10, effectively a **1-for-20 reverse ADS split**[612](index=612&type=chunk) [ITEM 10. ADDITIONAL INFORMATION](index=120&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section details the company's corporate governance under Cayman Islands law, exchange controls, and taxation summary, noting the company's belief that it was a Passive Foreign Investment Company (PFIC) for U.S. tax purposes in FY2022 - The company is an exempted company incorporated in the Cayman Islands, and its corporate affairs are governed by its memorandum and articles of association and the Companies Act of the Cayman Islands[616](index=616&type=chunk)[619](index=619&type=chunk) - The company believes it was a **Passive Foreign Investment Company (PFIC)** for U.S. federal income tax purposes for its taxable year ended February 28, 2022, which could have adverse tax consequences for U.S. holders of its ADSs or shares[672](index=672&type=chunk) [ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=132&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company identifies foreign exchange risk as its primary market exposure, with a 10% RMB depreciation against the USD resulting in a US$1.2 million decrease in cash value as of February 28, 2022, while interest rate and inflation risks have not been material - The primary market risk is foreign exchange risk due to operations being denominated in RMB; a **10% depreciation of the RMB** would have resulted in a **US$1.2 million decrease** in the value of its cash, cash equivalents, and restricted cash as of February 28, 2022[694](index=694&type=chunk)[697](index=697&type=chunk) - Interest rate risk is mainly tied to interest income from bank deposits, and inflation risk has not materially impacted results of operations so far[698](index=698&type=chunk)[699](index=699&type=chunk) [ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES](index=133&type=section&id=ITEM%2012.%20DESCRIPTION%20OF%20SECURITIES%20OTHER%20THAN%20EQUITY%20SECURITIES) This section details the fees and charges that holders of the company's American Depositary Shares (ADSs) may incur, including issuance, cancellation, and cash dividend distribution fees of up to US$0.05 per ADS ADS Holder Fees | Service | Fee | | :--- | :--- | | Issuance of ADSs | Up to US$0.05 per ADS | | Cancellation of ADSs | Up to US$0.05 per ADS | | Distribution of cash dividends | Up to US$0.05 per ADS held | | Depositary services (annual) | Up to US$0.05 per ADS held | PART II [ITEM 15. CONTROLS AND PROCEDURES](index=135&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls were effective as of February 28, 2022, but identified a material weakness in internal control over financial reporting due to insufficient review over U.S. GAAP financial reporting - Management concluded that disclosure controls and procedures were **effective** as of February 28, 2022[708](index=708&type=chunk) - Management identified a **material weakness** in its internal control over financial reporting, concluding it was ineffective as of February 28, 2022, relating to insufficient review over financial reporting in accordance with U.S. GAAP[711](index=711&type=chunk)[713](index=713&type=chunk) [ITEM 16. OTHER INFORMATION](index=137&type=section&id=ITEM%2016.%20OTHER%20INFORMATION) This section covers governance and compliance, including the audit committee's financial expert, a US$15 million share repurchase program, a change in certifying accountant, and the company's use of Cayman Islands home country corporate governance practices - On December 3, 2021, the company changed its independent registered public accounting firm from Deloitte Touche Tohmatsu Certified Public Accountants LLP to **Marcum Bernstein & Pinchuk LLP**[726](index=726&type=chunk) - A share repurchase program of up to **US$15 million** was authorized in September 2021; as of January 2022, the company had repurchased **3,784,777 ADSs**, leaving approximately **US$10.7 million** available under the plan[721](index=721&type=chunk)[725](index=725&type=chunk) - The company follows certain Cayman Islands home country corporate governance practices, which exempt it from NYSE requirements such as having a majority-independent board and an audit committee of at least three independent directors[731](index=731&type=chunk) PART III [ITEM 18. FINANCIAL STATEMENTS](index=140&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section contains the company's audited consolidated financial statements for the fiscal year ended February 28, 2022, prepared in accordance with U.S. GAAP, including independent auditors' reports and notes on significant events like business restructuring due to regulatory changes - The financial statements were audited by **Marcum Bernstein & Pinchuk LLP** for the fiscal year ended February 28, 2022[745](index=745&type=chunk)[746](index=746&type=chunk) - The financial statements for the two years ended February 28, 2021, were audited by the previous auditor, **Deloitte Touche Tohmatsu Certified Public Accountants LLP**[751](index=751&type=chunk)[752](index=752&type=chunk) - A significant event noted is the business restructuring in response to the July 2021 "Opinion" from PRC authorities, which led the company to cease offering K9 Academic AST Services by the end of 2021[780](index=780&type=chunk)[781](index=781&type=chunk) - On June 21, 2022, after the fiscal year-end, the company changed its ADS ratio from 2 ADSs per ordinary share to 1 ADS per 10 ordinary shares, equivalent to a **1-for-20 reverse ADS split**[940](index=940&type=chunk) [ITEM 19. EXHIBITS](index=140&type=section&id=ITEM%2019.%20EXHIBITS) This section lists all exhibits filed as part of the annual report, including the company's articles of association, descriptions of securities, material contracts like VIE agreements, share incentive plans, and certifications from CEO, CFO, and auditors