INTRODUCTION This section defines terms, clarifies financial reporting currency and exchange rates, and outlines the company's corporate structure, including its reliance on Variable Interest Entities (VIEs) in mainland China - Financial results are presented in RMB, with U.S. dollar translations made at RMB7.2993 to US$1.00 as of December 31, 202416 - TCTM Kids IT Education Inc. is a Cayman Islands holding company, with primary operations conducted through mainland China subsidiaries and contractual arrangements with VIEs (Variable Interest Entities) in mainland China, which entails unique risks to investors17 - The company completed the divestiture of its professional education business at the end of March 2024, a strategic shift detailed further in the report17 FORWARD-LOOKING INFORMATION This section highlights forward-looking statements, their inherent risks and uncertainties, and cautions investors against relying on them as predictions of future events - Forward-looking statements are identified by words like 'may,' 'will,' 'expect,' 'anticipate,' and 'believe,' and are based on current expectations and projections21 - Key areas covered by forward-looking statements include growth strategies, market demand, student enrollments, learning center utilization, new course offerings, tuition fees, future financial condition, market trends in mainland China, and government policies24 - The company operates in an evolving environment, and new risk factors and uncertainties may emerge, making it impossible to predict all potential impacts on business and financial performance22 PART I. ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS This item states that information regarding the identity of directors, senior management, and advisers is not applicable - Information for this item is 'Not Applicable'26 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE This item indicates that information regarding offer statistics and expected timetable is not applicable - Information for this item is 'Not Applicable'27 ITEM 3. KEY INFORMATION This section provides crucial information on the company's holding company structure, VIE reliance, regulatory environment, cash flow mechanisms, and a comprehensive summary of significant business and ADS risks Our Holding Company Structure and Contractual Arrangements with the Variable Interest Entities TCTM, a Cayman Islands holding company, operates in mainland China via subsidiaries and VIEs, relying on contractual arrangements to control operations and consolidate financial results, which entails inherent enforcement and regulatory risks - TCTM is a Cayman Islands holding company, conducting operations in mainland China through subsidiaries and VIEs to comply with foreign investment restrictions in certain internet value-added businesses28 VIEs' Contribution to Net Revenues from Continuing Operations | Year | Percentage of Net Revenues | | :--- | :--- | | 2022 | 2.9% | | 2023 | 6.6% | | 2024 | 7.4% | - The professional education business, including the former VIE, was divested by the end of March 2024, reclassifying it as discontinued operations and shifting focus to continuing operations30 - Contractual arrangements with VIEs (exclusive business cooperation, power of attorney, equity pledges, exclusive options) enable TCTM to control their economic performance and consolidate financial results, but these arrangements are subject to enforcement risks and regulatory uncertainties in mainland China313237 - Mr. Shaoyun Han's 70% equity interest in Beijing Tongcheng (the current VIE) was frozen from September 19, 2024, to September 18, 2027, due to asset preservation measures related to a share transfer dispute35 Permissions Required from the PRC Government Authorities for Our Operations The company's mainland China operations require various licenses and permits, but future interpretations of laws and recent CSRC Filing Rules introduce uncertainties for additional approvals and future financing activities - The company believes its mainland China subsidiaries and VIEs have obtained all material requisite licenses and permits, including business, ICP, radio/television program production, and school operation permits40 - Uncertainties in interpretation and implementation of PRC laws may require additional licenses or approvals in the future, potentially leading to sanctions or business restrictions if not obtained40 - The CSRC's Filing Rules (effective March 31, 2023) require domestic companies, including those with VIE structures, to file with the CSRC for future overseas equity and equity-linked financing activities, though prior listings are exempt42 Cash and Asset Flows through Our Organization TCTM relies on dividends and service fees from mainland China subsidiaries and VIEs for cash, but PRC regulations restrict offshore transfers, including dividend payments and statutory reserve requirements, with no payments made from 2022-2024 - TCTM's ability to pay dividends and service debt depends on distributions from its mainland China subsidiaries and service fees from VIEs43 - Mainland China subsidiaries can only pay dividends from retained earnings and must appropriate at least 10% of after-tax profits to statutory reserve funds until they reach 50% of registered capital43 Restricted Net Assets of Subsidiaries and VIEs in Mainland China | As of December 31, | Amount (RMB in millions) | | :----------------- | :----------------------- | | 2022 | 1,558.9 | | 2023 | 1,228.2 | | 2024 | 1,236.9 | - No dividends or service fees were paid to TCTM by its subsidiaries or VIEs for the years ended December 31, 2022, 2023, and 202445 Financial Information Related to the Variable Interest Entities This section details the financial impact of the professional education business divestiture, reclassified as discontinued operations, and presents condensed consolidating financial schedules for the parent company, VIEs, and other subsidiaries from 2022-2024 - The professional education business was divested in December 2023 and consummated by March 2024, leading to its reclassification as discontinued operations52 Selected Condensed Consolidated Statements of Income (VIEs Consolidated) | Metric (RMB in thousands) | 2022 | 2023 | 2024 | | :------------------------ | :--- | :--- | :--- | | Net revenues from continuing operations | 40,755 | 90,661 | 86,125 | | Net income (loss) | 1,255 | 3,606 | (43,457) | | Net cash provided by/(used in) operating activities | 7,722 | (17,817) | (80,322) | | Net cash provided by/(used in) investing activities | 19,975 | — | (8,200) | | Net cash provided by/(used in) financing activities | 5,762 | (7,192) | 86,483 | Selected Condensed Consolidated Balance Sheet (VIEs Consolidated) | Metric (RMB in thousands) | 2023 | 2024 | | :------------------------ | :--- | :--- | | Cash and cash equivalents | 2,520 | 2,519 | | Total Assets | 252,862 | 45,541 | | Total Liabilities | 281,289 | 201,055 | Summary of Risk Factors This section summarizes material risks related to the business, corporate structure, China operations, and ADSs, including divestiture uncertainties, reliance on IT-focused STEM education, regulatory compliance, and potential delisting - The divestiture of the professional education business introduces uncertainties and risks, as the company's future performance is now substantially dependent on IT-focused supplementary STEM education6272 - The company incurred a net loss of RMB578.1 million in 2024, and its historical financial results may not predict future performance, especially after the strategic shift73 - Significant risks include the potential delisting of ADSs under the HFCA Act if PCAOB inspections of auditors are not complete, and uncertainties in the interpretation and enforcement of rapidly evolving PRC laws and regulations69179 - The company's VIE structure and contractual arrangements may not be as effective as direct ownership, posing risks if VIEs or nominee shareholders fail to perform obligations or if PRC government regulations change64137 - The company faces risks related to cybersecurity, information security, privacy, and data protection due to complex and evolving Chinese laws, which could lead to increased compliance costs, penalties, or reputational harm6598101 ITEM 4. INFORMATION ON THE COMPANY This section details the company's history, business overview, corporate structure, and regulatory environment, highlighting the strategic shift to IT-focused supplementary STEM education and the extensive legal framework in China History and Development of the Company TCTM Kids IT Education Inc., incorporated in 2003, began Nasdaq trading in 2014, underwent a strategic shift to IT-focused STEM education in March 2024, changed ticker symbols, and acquired brain-computer interface algorithms in April 2025 - TCTM Kids IT Education Inc. (formerly Tarena International, Inc.) was incorporated in the Cayman Islands in October 2003, with operations commencing in Beijing in September 2002271 - The company's ADSs began trading on Nasdaq on April 3, 2014, initially under 'TEDU'272 - A major strategic shift involved the divestiture of the professional education business, consummated by the end of March 2024, to focus primarily on IT-focused supplementary STEM education276 - The company changed its ticker symbol from 'TEDU' to 'TCTM' on January 10, 2024, and then to 'VSA' on April 3, 2025276277 - On April 1, 2025, the company acquired core algorithms and related software/hardware systems for brain-computer interfaces, issuing 135,625,000 Class A ordinary shares as consideration276 Revenue and Asset Contribution by Entity Type (Continuing Operations) | Category | 2022 Net Revenues | 2023 Net Revenues | 2024 Net Revenues | 2024 Assets | | :------- | :---------------- | :---------------- | :---------------- | :---------- | | TCTM and its wholly owned subsidiaries | 97.1% | 93.4% | 92.6% | 56.9% | | VIEs | 2.9% | 6.6% | 7.4% | 43.1% | Business Overview TCTM primarily provides IT-focused supplementary STEM education for children aged three to eighteen in mainland China, utilizing a blended learning platform, offering ten programs, and operating in a competitive market with approximately 191,200 student enrollments in 2024 - The company's primary focus is on IT-focused supplementary STEM education services for children aged three to eighteen in mainland China, offering courses in ten STEM education programs280294 - The education platform integrates live distance instruction, classroom-based learning, and proprietary online learning modules via the TTS platform and 61it.cn286291293 - As of December 31, 2024, the company managed 218 learning centers in 53 cities for STEM education, with approximately 191,200 student enrollments in STEM education programs288289 - In 2024, childhood robotics programming and computer programming courses contributed 42.2% and 18.9% of net revenues from continuing operations, respectively74 - Standard tuition fees for STEM education programs range between RMB8,000 and RMB23,400, collected upfront313 - The company regularly updates its courses, typically every six months, to align with technology developments and market demand, with new courses pilot tested for 100% student satisfaction306308 - As of March 31, 2025, the company held 30 registered domain names, three software copyrights, and 116 trademarks related to its continuing operations319 Government Regulations This section outlines the extensive and evolving regulatory landscape in mainland China affecting TCTM's operations, particularly in private education, online tutoring, and internet services, with significant compliance requirements and risks from various laws - The Company Law (2023), effective July 1, 2024, governs corporate entities in China, requiring full payment of subscribed capital within five years326327 - The Private Education Law, amended in 2018 and 2021, allows for-profit and non-profit private schools but prohibits for-profit compulsory education, with the Amended Private Education Implementation Rules (effective Sept 1, 2021) prohibiting foreign control of compulsory education or non-profit preschools via VIEs and enhancing supervision over related-party transactions329333339 - The 'Alleviating Burden Opinions' (July 2021) classify IT education as a non-academic subject but impose strict operating requirements on after-school tutoring institutions, including prohibitions on online tutoring for preschoolers and capital market activities for academic AST institutions345347 - The Interim Measures for Administrative Penalties on After-school Tutoring (effective Oct 2023) define illegal tutoring activities and impose various administrative penalties for non-compliance with licensing and operational requirements353 - The PRC Cybersecurity Law (2017), Data Security Law (2021), Personal Information Protection Law (2021), and Network Data Regulations (2025) establish a comprehensive framework for data security, privacy, and cross-border data transfer, imposing significant compliance obligations and potential penalties103104107108110112390392393397398399400 - Foreign investment in value-added telecommunication services (excluding e-commerce) is restricted to 50% foreign equity ownership, necessitating the company's VIE structure for operating 61it.cn and Tongcheng Online App377379 - The CSRC's Overseas Listing Regulations (effective March 2023) require mainland China domestic companies, including those with VIE structures, to file with the CSRC for future overseas securities offerings418 Organizational Structure TCTM, a Cayman Islands holding company, operates in mainland China through subsidiaries and the VIE Beijing Tongcheng due to foreign ownership restrictions, using contractual arrangements for financial control and consolidation, which carry inherent enforcement risks - TCTM operates in mainland China through its subsidiaries and the current VIE, Beijing Tongcheng, due to foreign ownership restrictions in internet and value-added telecommunication services440 - Beijing Tongcheng is 70% owned by Mr. Shaoyun Han (founder and chairman) and 30% by Mr. Jin Li (management member), both PRC citizens440 - Contractual arrangements (Exclusive Business Cooperation Agreement, Power of Attorney, Share Pledge Agreements, Exclusive Option Agreements, Loan Agreements) grant TCTM effective financial control and economic benefits over Beijing Tongcheng, enabling consolidation of its financial results441444445446448449 - The equity interest of Mr. Shaoyun Han in Beijing Tongcheng was frozen from September 19, 2024, to September 18, 2027, due to asset preservation measures related to a share transfer dispute439 - PRC legal counsel opines that these contractual arrangements are valid and enforceable, but substantial uncertainties remain regarding interpretation and application of current or future PRC laws450 Property, Plants and Equipment The company's Beijing headquarters and facilities across 53 cities comprise 136,401.2 square meters of leased and owned space for operations, with management believing current and planned facilities are adequate for future expansion - As of December 31, 2024, the company's principal executive offices in Beijing occupy 3,710.9 square meters, and it leases 13,054.3 square meters of classroom space in Beijing451 - The company operates 119,636 square meters of offices, classrooms, and student dormitories across 53 cities in mainland China, with lease terms ranging from six months to ten years452 - Management believes current and planned facilities are sufficient for foreseeable future needs, with expansion primarily through leasing additional properties453 ITEM 4.A. UNRESOLVED STAFF COMMENTS This item indicates that there are no unresolved staff comments - This item is 'Not Applicable', indicating no unresolved staff comments454 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS This section analyzes the company's financial condition and operating results, focusing on the professional education business divestiture, continuing operations, liquidity, capital resources, R&D, market trends, and critical accounting estimates Operating Results The company's 2024 operating results were significantly impacted by the professional education business divestiture, leading to decreased net revenues and a net loss in continuing IT-focused STEM education due to reduced enrollments and increased impairment expenses - The professional education business was divested and reclassified as discontinued operations, significantly impacting the company's financial results456457 Financial Impact of Discontinued Operations | Metric (RMB in millions) | 2022 | 2023 | 2024 | | :----------------------- | :--- | :--- | :--- | | Net Revenues | 1,068.2 | 624.6 | 111.9 | | Gross Profit | 740.6 | 398.4 | 70.5 | | Total Assets (as of Dec 31) | N/A | 275.6 | 0 | Net Revenues from Continuing Operations | Year | Net Revenues (RMB in millions) | | :--- | :----------------------------- | | 2022 | 1,399.8 | | 2023 | 1,375.2 | | 2024 | 1,170.9 | Student Enrollments in STEM Education Programs | Year | Student Enrollments | | :--- | :------------------ | | 2022 | 209,400 | | 2023 | 210,600 | | 2024 | 191,200 | Consolidated Statements of Comprehensive (Loss) Income (Continuing Operations) | Metric (RMB in thousands) | 2022 | 2023 | 2024 | | :------------------------ | :--- | :--- | :--- | | Net revenues | 1,399,844 | 1,375,192 | 1,170,858 | | Gross profit | 671,428 | 624,352 | 423,702 | | Operating (loss) income | (26,353) | 13,451 | (506,372) | | Net (loss) income from continuing operations | (2,062) | 22,334 | (535,429) | | Net income (loss) | 85,233 | 10,354 | (587,102) | - Net revenues from continuing operations decreased by 14.9% in 2024, primarily due to a slowdown in course consumption and reduced student enrollments in STEM education475 - General and administrative expenses increased by 108.3% in 2024, mainly due to significant impairment of long-lived assets (right-of-use assets, intangible assets, goodwill, and fixed assets)485 Liquidity and Capital Resources The company's liquidity, primarily from operations and bank borrowings, totaled RMB46.5 million in cash and equivalents as of December 31, 2024, with net cash outflow from continuing operations and restrictions on cash transfers from PRC entities Cash, Cash Equivalents, Time Deposits, and Restricted Cash | As of December 31, | Amount (RMB in millions) | | :----------------- | :----------------------- | | 2024 | 46.5 | - The company believes its current cash, equivalents, time deposits, restricted cash, and anticipated cash flow from operations will be sufficient for the next 12 months501 Summary of Cash Flows (Continuing Operations) | Activity (RMB in thousands) | 2022 | 2023 | 2024 | | :-------------------------- | :--- | :--- | :--- | | Net cash provided by/(used in) operating activities | 1,046 | 21,468 | (104,941) | | Net cash used in investing activities | (28,818) | (34,544) | (89,208) | | Net cash (used in)/provided by financing activities | (24,105) | (33,781) | 18,632 | Capital Expenditures | Year | Amount (RMB in millions) | | :--- | :----------------------- | | 2022 | 29.4 | | 2023 | 34.7 | | 2024 | 65.6 | - PRC regulations restrict the ability of mainland China subsidiaries and VIEs to transfer cash or assets offshore, including requirements for statutory reserve funds and limitations on dividend payments515517518519 Research and Development, Patents and Licenses, etc. The company invests in R&D to maintain its education platform's technology infrastructure, protecting intellectual property through copyrights, trademarks, and domain names, with 30 domain names, three software copyrights, and 116 trademarks as of March 31, 2025 - R&D focuses on improving the technology infrastructure for live lectures, TTS, and 61it.cn, utilizing a mix of commercial and proprietary systems520 Research and Development Expenses | Year | Amount (RMB in millions) | | :--- | :----------------------- | | 2022 | 20.2 | | 2023 | 11.7 | | 2024 | 19.1 | - The company protects its intellectual property through copyright and trademark laws, trade secret protection, and confidentiality agreements522 - As of March 31, 2025, the company had registered 30 domain names, three software copyrights, and 116 trademarks related to its continuing operations523 Trend Information The company is not aware of any new material trends, uncertainties, demands, commitments, or events since January 1, 2025, that would materially affect its financial performance or condition beyond existing disclosures - No new material trends, uncertainties, demands, commitments, or events are identified for the period starting January 1, 2025, that would materially affect financial performance or condition, beyond what is already disclosed524 Critical Accounting Estimates Financial statement preparation under U.S. GAAP requires significant judgments and estimates, particularly for revenue recognition, operating leases, income taxes, and fair value measurements, with key critical estimates including asset impairment, credit loss allowances, and income tax provisions - Critical accounting policies and practices include revenue recognition, operating leases, income taxes, and fair value measurements, requiring significant judgment and estimates526 - In 2024, the company recorded goodwill impairment losses of RMB49.4 million and impairment of long-lived assets totaling RMB272.6 million (including RMB4.0 million for intangible assets, RMB60.9 million for property and equipment, and RMB207.7 million for right-of-use assets)528529 - Allowance for credit losses is estimated using the CECL Model, considering historical experience, creditworthiness, economic conditions, and payment patterns530 As of December 31, 2024, the allowance for prepaid expenses and other current assets was RMB49.7 million, and for other non-current assets was RMB23.1 million532 - Deferred tax assets and liabilities are recognized based on temporary differences, with a valuation allowance recorded when realization is not more likely than not534 As of December 31, 2024, the net deferred tax assets for continuing operations were nil, after a RMB170.9 million valuation allowance534 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES This section provides information on the company's executive officers, directors, compensation, share incentive plans, board practices, and employee structure, detailing key management roles, board committees, and workforce changes post-divestiture Directors and Senior Management The company's leadership team includes Shaoyun Han, Heng Wang (CEO), Jianguang Li, Mingjie Sun, Linjing Xu, Zhe Sun, He Huang (Independent Directors), Xiaolan Tang (CFO), and Robert L. Angell (CTO), with recent appointments in February and March 2025 Directors and Executive Officers | Name | Age | Position/Title | | :------------ | :-- | :----------------------- | | Shaoyun Han | 54 | Founder and Chairman | | Heng Wang | 57 | Director, Chief Executive Officer | | Jianguang Li | 60 | Independent Director | | Mingjie Sun | 61 | Independent Director | | Linjing Xu | 52 | Independent Director | | Zhe Sun | 59 | Independent Director | | He Huang | 52 | Independent Director | | Xiaolan Tang | 45 | Chief Financial Officer | | Robert L. Angell | 64 | Chief Technology Officer | - Heng Wang was appointed CEO in February 2025, bringing over 30 years of experience in financial technologies, IT strategy, and compliance538990 - Xiaolan Tang was re-designated as CFO in March 2025, with over 20 years of experience in education industry sales, marketing, and corporate management544990 - Robert L. Angell was appointed CTO in February 2025, with over 30 years of experience in systems engineering, data structures, algorithms, and data science545990 Compensation For FY2024, the company paid RMB5.5 million in cash to executive officers and RMB5.1 million to non-executive directors, provides statutory social security benefits, and has non-competition and indemnification agreements in place - In FY2024, executive officers received approximately RMB5.5 million in cash compensation, and non-executive directors received RMB5.1 million546 - The company contributes to various employee social security plans in mainland China (pension, unemployment, maternity, work-related injury, medical, and housing insurance) as required by law546 - Employment agreements include non-competition and non-solicitation restrictions for executive officers, typically for two years post-employment549 - Indemnification agreements are in place for directors and executive officers, covering liabilities and expenses incurred in their roles, excluding dishonesty, willful default, or fraud550 Share Incentive Plan The company operates under the 2024 Share Incentive Plan, adopted in February 2024, with an initial award pool of 3,500,000 shares, and as of February 28, 2025, 791,905 options and 59,920 restricted share units were outstanding - The 2024 Share Incentive Plan, adopted in February 2024, authorizes the issuance of options, restricted shares, and restricted share units to eligible participants551 - The maximum aggregate number of shares for awards under the 2024 Plan is 3,500,000, with an annual increase mechanism to maintain 2% of total outstanding shares551 Outstanding Share Options (as of Feb 28, 2025) | Name | Ordinary Shares Underlying Options Awarded | | :---------- | :--------------------------------------- | | Shaoyun Han | * | | Xiaolan Tang | * | | Total | 849,660 | Outstanding Restricted Share Units (as of Feb 28, 2025) | Name | Number of Class A Ordinary Shares Underlying Restricted Share Units | | :---------- | :---------------------------------------------------------------- | | Jianguang Li | * | - As of February 28, 2025, 791,905 options and 59,920 restricted share units were outstanding under the 2024 Plan551559 The 2014 Plan, which terminated in February 2024, still had 1,702,335 options and 1,605 restricted share units outstanding551559 Board Practices The company's board of directors, comprising five members, operates with audit, compensation, and nominating committees, all with independent directors, and directors owe duties of loyalty and care under Cayman Islands law - The board of directors currently consists of five directors565 - The company has an audit committee (chaired by He Huang), a compensation committee (chaired by Linjing Xu), and a nominating and corporate governance committee (chaired by Zhe Sun), all composed of independent directors567568569571 - Directors have a duty of loyalty to act honestly in good faith and a duty to exercise skill and care, as per Cayman Islands law572 - Independent directors serve two-year terms, while other directors hold office until resignation or removal by shareholder resolution573 Board Diversity As of February 28, 2025, the company's board of directors comprises 7 directors, with 2 female and 5 male members, including one underrepresented individual in the home country jurisdiction Board Diversity Matrix (As of February 28, 2025) | Category | Count | | :------- | :---- | | Total Number of Directors | 7 | | Female | 2 | | Male | 5 | | Underrepresented Individual in Home Country Jurisdiction | 1 | Employees As of December 31, 2024, the company had 4,142 employees, with 3,854 in continuing operations, primarily in teaching and content development, and only 15 employees in continuing operations as of March 31, 2025, post-divestiture Total Employees by Year | Year | Number of Employees | | :--- | :------------------ | | 2022 | 7,955 | | 2023 | 7,024 | | 2024 | 4,142 | Employees by Function (as of December 31, 2024) | Functions | Number of Employees | | :------------------------ | :------------------ | | Teaching and content development | 2,218 | | Selling and marketing | 465 | | General and administration | 512 | | Others | 947 | | Total | 4,142 | - As of March 31, 2025, only 15 employees were associated with continuing operations following the divestiture of the professional education business578 - The company participates in various mandatory employee social security plans in mainland China, including pension, unemployment, maternity, work-related injury, medical insurance, and housing funds579 Share Ownership As of February 28, 2025, the company had 49,771,953 ordinary shares outstanding, with Class B shares (14.5% of total shares, 62.9% of voting power) held by Ms. Lijuan Han, indicating concentrated control - As of February 28, 2025, there were 49,771,953 ordinary shares outstanding, including 42,565,894 Class A and 7,206,059 Class B ordinary shares581 - Class A ordinary shares carry one vote per share, while Class B ordinary shares carry ten votes per share587 Beneficial Ownership of Ordinary Shares (as of Feb 28, 2025) | Shareholder | Class A Ordinary Shares | Class B Ordinary Shares | Total Ordinary Shares (as-converted) | % of Total Ordinary Shares | % of Aggregate Voting Power | | :---------- | :---------------------- | :---------------------- | :----------------------------------- | :------------------------- | :-------------------------- | | Shaoyun Han | 683,285 | — | 683,285 | 1.4% | 0.6% | | All directors and executive officers as a group | 1,572,042 | — | 1,572,042 | 3.2% | 1.4% | | Lijuan Han | 2,344,665 | 7,206,059 | 9,550,724 | 19.2% | 64.9% | | Theodore Walker Cheng-De King | 9,226,355 | — | 9,226,355 | 18.5% | 8.0% | | Connion Capital Limited | 6,746,618 | — | 6,746,618 | 13.6% | 5.9% | - Ms. Lijuan Han, through Learningon, holds 19.2% of total ordinary shares and 64.9% of aggregate voting power, indicating substantial influence583585 Disclosure of a Registrant's Action to Recover Erroneously Awarded Compensation This item states that there is no applicable information regarding the registrant's action to recover erroneously awarded compensation - This item is 'Not applicable'591 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS This section refers to major shareholder disclosures and details related party transactions, including the professional education business divestiture to a related party-led consortium and inter-company service agreements with Tarena Tech Major Shareholders Information regarding major shareholders is referenced to 'Item 6. Directors, Senior Management and Employees—E. Share Ownership' - Major shareholder information is provided in 'Item 6. Directors, Senior Management and Employees—E. Share Ownership'592 Related Party Transactions Key related party transactions include the professional education business divestiture to a consortium led by Ms. Lijuan Han in December 2023, ongoing service agreements with Tarena Tech, and new loans totaling RMB33,383 thousand to Tarena Tech and Tarena Hangzhou in 2024 - The professional education business was divested to a buyer consortium led by Ms. Lijuan Han, sister of the founder and chairman Mr. Shaoyun Han, in December 2023593 - In 2024, the company provided RMB3,338 in services to Tarena Tech and received RMB10,942 in services from Tarena Tech for HR and IT staff sharing594 - In 2024, the company provided RMB33,383 thousand in new loans to Tarena Tech and Tarena Hangzhou, with RMB21,591 thousand offset by a building purchase from Tarena Hangzhou946 Interests of Experts and Counsel This item states that there is no applicable information regarding the interests of experts and counsel - This item is 'Not applicable'595 ITEM 8. FINANCIAL INFORMATION This section confirms the inclusion of consolidated financial statements, details legal proceedings, dividend policy, and significant changes, highlighting a settled securities class action lawsuit and the company's earnings retention policy Consolidated Statements and Other Financial Information The consolidated financial statements are appended as part of this annual report - Consolidated financial statements are included as part of this annual report596 Legal Proceedings The company was a defendant in a securities class action lawsuit, Yili Qiu v. Tarena International, Inc. et al., filed in 2021, which was settled and received final court approval on September 9, 2024, closing the case - The company was a defendant in a securities class action lawsuit (Yili Qiu v. Tarena International, Inc. et al.) filed in June 2021, alleging false or misleading statements in SEC filings598 - A settlement agreement for the class action lawsuit received preliminary approval on September 5, 2023, and final approval on September 9, 2024, closing the case598 - The company is not currently a party to any other material legal, arbitration, or administrative proceedings599 Dividend Policy The company has not declared or paid cash dividends since 2019, planning to retain earnings for business expansion, with declarations subject to board discretion, Cayman Islands law, and PRC regulations - The company has not declared or paid any cash dividends since the beginning of 2019 and intends to retain available funds and future earnings for business expansion600 - Dividend declarations are at the discretion of the board of directors, subject to Cayman Islands law (dividends from profit or share premium, provided debts can be paid) and PRC regulations on dividend distribution from mainland China subsidiaries601603 Significant Changes No significant changes have occurred since the date of the audited consolidated financial statements, other than those already disclosed in this annual report - No significant changes have occurred since the date of the audited consolidated financial statements, other than those already disclosed in the annual report603 ITEM 9. THE OFFER AND LISTING This section details the company's ADSs listing history, including market transfers and ticker symbol changes, and states that information on offer details, distribution plan, selling shareholders, dilution, and issue expenses is not applicable Offer and Listing Details Information regarding offer and listing details is referenced to 'Item 9. The Offer and Listing—C. Markets' - Information for this item is referenced to 'Item 9. The Offer and Listing—C. Markets'605 Plan of Distribution This item states that information regarding the plan of distribution is not applicable - Information for this item is 'Not applicable'605 Markets The company's ADSs, listed on Nasdaq Global Select Market since April 3, 2014, transferred to Nasdaq Capital Market on November 17, 2023, with ticker symbol changes to 'TCTM' in January 2024 and 'VSA' in April 2025 - ADSs were listed on Nasdaq Global Select Market since April 3, 2014, and transferred to Nasdaq Capital Market on November 17, 2023606 - Ticker symbol changed from 'TEDU' to 'TCTM' on January 10, 2024, and then to 'VSA' on April 7, 2025606 Selling Shareholders This item states that information regarding selling shareholders is not applicable - Information for this item is 'Not applicable'607 Dilution This item states that information regarding dilution is not applicable - Information for this item is 'Not applicable'608 Expenses of the Issue This item states that information regarding the expenses of the issue is not applicable - Information for this item is 'Not applicable'609 ITEM 10. ADDITIONAL INFORMATION This section provides supplementary information on the company's share capital, memorandum and articles of association, material contracts, exchange controls, and taxation in various jurisdictions Share Capital This item states that information regarding share capital is not applicable - Information for this item is 'Not applicable'610 Memorandum and Articles of Association This section summarizes the company's memorandum and articles of association and Cayman Islands Companies Act, detailing Class A and Class B shareholder rights, board powers, liquidation, and corporate law differences compared to Delaware - The company's registered office is in the Cayman Islands, and its objects are unrestricted611 - Holders of Class A and Class B ordinary shares have equal dividend rights613 Class A shares have one vote, while Class B shares have ten votes per share614 - Class B ordinary shares are convertible into Class A shares on a one-for-one basis, but Class A shares are not convertible into Class B shares617 - The Companies Act of the Cayman Islands permits mergers and consolidations, with specific procedures for shareholder and board approval, and dissenters' rights for fair value payment634638 - Cayman Islands law allows for indemnification of officers and directors, similar to Delaware law, but U.S. federal securities laws deem indemnification for Securities Act liabilities against public policy645646 - Directors owe fiduciary duties to the company, including acting bona fide in its best interests and exercising skill and care649 Material Contracts No material contracts have been entered into during the past two years, other than those already disclosed in 'Item 4. Information on the Company' or elsewhere in this annual report - No material contracts have been entered into during the past two years, other than those already disclosed662 Exchange Controls This section refers to 'Item 4. Information on the Company—B. Business Overview—Government Regulations' for information on foreign exchange registration, foreign currency exchange, and dividend distribution controls - Information on exchange controls is detailed in 'Item 4. Information on the Company—B. Business Overview—Government Regulations' sections on Foreign Exchange Registration, Foreign Currency Exchange, and Dividend Distribution664 Taxation This section summarizes tax considerations for ADSs and ordinary shares under Cayman Islands, mainland China, and U.S. federal income tax laws, highlighting Cayman Islands tax exemption, potential mainland China 'resident enterprise' classification, and adverse U.S. PFIC consequences - The company is exempt from income or capital gains tax in the Cayman Islands, and dividend payments are not subject to withholding tax there665 - If classified as a mainland China 'resident enterprise' under the EIT Law, the company would be subject to a 25% enterprise income tax on its worldwide income, and dividends to non-mainland China enterprise shareholders could face a 10% withholding tax667669 - The company does not believe it is a mainland China resident enterprise, but uncertainties exist regarding the interpretation and application of relevant tax laws667 - The company does not believe it was a PFIC for the taxable year ended December 31, 2024, but PFIC status is a factual determination made annually and can be affected by market price fluctuations and asset composition254255683684 - If classified as a PFIC, U.S. Holders would be subject to special adverse tax rules on excess distributions and gains from disposition, unless a mark-to-market election is made for marketable stock694696 Dividends and Paying Agents This item states that information regarding dividends and paying agents is not applicable - Information for this item is 'Not Applicable'702 Statement by Experts This item states that information regarding statements by experts is not applicable - Information for this item is 'Not Applicable'703 Documents on Display The company is subject to SEC reporting requirements, filing annual reports on Form 20-F as a foreign private issuer, with all information available on www.sec.gov and its website - The company is subject to SEC reporting requirements, filing annual reports on Form 20-F704 - As a foreign private issuer, the company is exempt from certain U.S. domestic issuer rules, including quarterly reports and proxy statements704 - All SEC filings and annual reports are available on www.sec.gov and the company's website, http://ir.tctm.cn[704](index=704&type=chunk)706 Subsidiary Information This item states that information regarding subsidiary information is not applicable - Information for this item is 'Not applicable'707 Annual Report to Security Holders This item states that information regarding the annual report to security holders is not applicable - Information for this item is 'Not applicable'708 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section discusses the company's exposure to market risks, primarily foreign exchange risk due to RMB/USD fluctuations and interest rate risk from cash and time deposits, without significant derivative hedging Foreign Exchange Risk The company's primary foreign exchange risk arises from U.S. dollar-denominated equity offering proceeds, with RMB/USD fluctuations adversely affecting earnings and dividends, resulting in a net foreign exchange loss of RMB0.3 million in 2024 - Substantially all net revenues, costs, and expenses are denominated in Renminbi, while foreign exchange risk primarily relates to U.S. dollar proceeds from equity offerings709 - The company had a net foreign exchange loss of RMB0.3 million (US$0.05 million) in 2024709 - A hypothetical 10% decrease or increase in the U.S. dollar against the RMB would result in an increase or decrease of RMB60.4 million in the value of U.S. dollar-denominated financial assets as of December 31, 2024713 Interest Rate Risk The company's interest rate risk primarily relates to interest income from excess cash in demand deposits, with no significant derivative use and no anticipated material risks from interest rate changes - Interest rate risk primarily relates to interest income from excess cash invested in demand deposits714 - The company has not used significant derivative financial instruments to manage interest rate risk and does not anticipate material risks from changes in interest rates714 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES This section details fees and charges associated with holding the company's ADSs, including issuance, cancellation, distribution, and depositary service fees, and states that information on debt securities, warrants, and other securities is not applicable Debt Securities This item states that information regarding debt securities is not applicable - Information for this item is 'Not applicable'715 Warrants and Rights This item states that information regarding warrants and rights is not applicable - Information for this item is 'Not applicable'716 Other Securities This item states that information regarding other securities is not applicable - Information for this item is 'Not applicable'717 American Depositary Shares Holders of the company's ADSs are subject to various service fees from the depositary bank for issuance, cancellation, cash distributions, and depositary services, with the depositary reimbursing the company US$150 thousand in 2024 Fees Payable by ADS Holders | Service | Fees | | :------------------------------------------ | :---------------------------------------- | | Issuance of ADSs | Up to U.S. 5¢ per ADS issued | | Cancellation of ADSs | Up to U.S. 5¢ per ADS canceled | | Distribution of cash dividends or other cash distributions | Up to U.S. 5¢ per ADS held | | Depositary Services | Up to U.S. 5¢ per ADS held on applicable record date(s) established by the Depositary bank | - In 2024, the company received US$150 thousand from the depositary for expenses related to the establishment and maintenance of the ADS program723 PART II. ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES This item states that there are no defaults, dividend arrearages, or delinquencies to report - There are no defaults, dividend arrearages, or delinquencies725 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS This item states that there have been no material modifications to the rights of security holders - There have been no material modifications to the rights of security holders726 ITEM 15. CONTROLS AND PROCEDURES This section details the company's evaluation of disclosure controls and procedures and management's annual report on internal control over financial reporting, concluding effectiveness as of December 31, 2024, with no material changes during the year Evaluation of Disclosure Controls and Procedures As of December 31, 2024, the company's management, including the CEO and CFO, evaluated and concluded the effectiveness of its disclosure controls and procedures, ensuring timely and appropriate information reporting - As of December 31, 2024, the company's disclosure controls and procedures were evaluated and deemed effective728 - These controls ensure that information required for SEC reports is recorded, processed, summarized, and reported timely728 Management's Annual Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, concluding its effectiveness as of December 31, 2024, based on the COSO 2013 Framework - Management is responsible for establishing and maintaining adequate internal control over financial reporting730 - As of December 31, 2024, management concluded that internal control over financial reporting was effective, based on the COSO 2013 Framework731732 Changes in Internal Control over Financial Reporting No material changes in the company's internal control over financial reporting occurred during the year ended December 31, 2024 - No material changes in internal control over financial reporting occurred during the year ended December 31, 2024734 ITEM 16. [RESERVED] This item is reserved and contains no information ITEM 16.A. AUDIT COMMITTEE FINANCIAL EXPERT The board of directors has determined that Mr. He Huang, an independent director and audit committee chairman, qualifies as an audit committee financial expert - Mr. He Huang, an independent director and chairman of the audit committee, is designated as an audit committee financial expert735 ITEM 16.B. CODE OF ETHICS The board of directors has adopted a code of ethics applicable to all directors, officers, and employees, with specific provisions for senior finance officers, available on the company's website - A code of ethics has been adopted for all directors, officers, and employees, with specific provisions for senior finance officers736 - A copy of the code of business conduct and ethics is available on the company's website at http://ir.tctm.cn/[736](index=736&type=chunk) ITEM 16.C. PRINCIPAL ACCOUNTANT FEES AND SERVICES This section details audit fees paid to independent registered public accounting firms, with Marcum Asia CPAs LLP receiving RMB5,997 thousand in 2023 and Assentsure PAC receiving RMB3,285 thousand in 2024 Principal Accountant Fees | Year | Auditor | Audit Fees (RMB in thousands) | | :--- | :---------------- | :---------------------------- | | 2023 | Marcum Asia CPAs LLP | 5,997 | | 2024 | Assentsure PAC | 3,285 | - The audit committee pre-approves all audit and non-audit services provided by the independent registered public accounting firms738 ITEM 16.D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES This item states that there are no exemptions from the listing standards for audit committees - This item is 'Not Applicable'739 ITEM 16.E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS In January 2024, the company repurchased 5,119,698 Class A ordinary shares from Talent Fortune Investment Limited, an KKR affiliate, at $0.2 per share - In January 2024, the company repurchased 5,119,698 Class A ordinary shares from Talent Fortune Investment Limited (an KKR affiliate) at $0.2 per share740 ITEM 16.F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT The company dismissed Marcum Asia CPAs LLP on March 14, 2025, appointed and dismissed Guangdong Prouden CPAs GP, and then appointed Assentsure PAC as the new independent registered public accounting firm on April 14, 2025 - Marcum Asia CPAs LLP was dismissed as the independent registered public accounting firm on March 14, 2025741 - Guangdong Prouden CPAs GP was appointed on March 14, 2025, but dismissed on April 14, 2025746748 - Assentsure PAC was appointed as the new independent registered public accounting firm on April 14, 2025748 - No adverse opinions, disclaimers, qualifications, or modifications were in Marcum Asia's reports, and no disagreements or reportable events occurred during the changes in accountants742743749 ITEM 16.G. CORPORATE GOVERNANCE As a Cayman Islands company listed on NASDAQ, the company follows home country corporate governance practices, which may differ from NASDAQ standards, potentially offering shareholders less protection than U.S. domestic issuers - As a foreign private issuer listed on NASDAQ, the company follows Cayman Islands corporate governance practices, which may differ from NASDAQ standards753 - The company relied on an exemption for not holding an annual general meeting in 2024 and followed home country practices for adopting the 2024 Share Incentive Plan754 ITEM 16.H. MINE SAFETY DISCLOSURE This item states that information regarding mine safety disclosure is not applicable - This item is 'Not applicable'755 ITEM 16.I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS This item states that information regarding foreign jurisdictions that prevent inspections is not applicable - This item is 'Not applicable'756 ITEM 16.J. INSIDER TRADING POLICIES The company has adopted an insider trading policy for directors, senior management, and employees to ensure compliance with insider trading laws, filed as Exhibit 11.2 to the Annual Report - An insider trading policy has been adopted for directors, senior management, and employees to ensure compliance with insider trading laws757 - The policy is filed as Exhibit 11.2 to the Annual Report757 ITEM 16.K. CYBERSECURITY The company has implemented a robust cybersecurity defense system and integrated cybersecurity risk management, with board oversight and management responsibility for threats, and no material incidents reported as of the report date - The company has a robust cybersecurity defense system and integrates cybersecurity risk management into its enterprise risk management759760 - The board's cybersecurity committee oversees risk management, and management-level officers (CEO, CFO, Cybersecurity Officer) are responsible for assessing, identifying, and managing cybersecurity threats and incidents762763 - As of the report date, no material cybersecurity incidents or threats have affected the company's business strategy, results of operations, or financial condition761 PART III. ITEM 17. FINANCIAL STATEMENTS The company has elected to provide its financial statements pursuant to Item 18 - Financial statements are provided under Item 18766 ITEM 18. FINANCIAL STATEMENTS This section includes the consolidated financial statements of TCTM Kids IT Education Inc., its subsidiaries, and VIEs, prepared under U.S. GAAP, featuring auditor reports, balance sheets, income statements, changes in deficit, cash flows, and detailed notes [Notes to the Consolidated Financial Statements](index=252&type=secti
Tarena(TEDU) - 2024 Q4 - Annual Report