REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of Each Class |
Trading Symbol |
Name of Each Exchange On Which Registered | ||
(The Nasdaq Global Market) | ||||
(The Nasdaq Global Market) |
* |
|
Large accelerated filer |
☐ |
Accelerated filer |
☐ |
☒ | ||||||
Emerging growth company |
† |
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
International Financial Reporting Standards as issued |
Other ☐ | |||||||
by the International Accounting Standards Board |
☐ |
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• | “ADRs” refer to our American depositary receipts that evidence our ADSs; |
• | “ADSs” refer to our American depositary shares, each of which represents five ordinary shares; |
• | “Beijing P.X.” refers to Beijing Pengxiang Tianxia Education Technology Co., Ltd. (北京鹏翔天下教育科技有限公司), a company incorporated under the laws of the PRC; |
• | “Beijing Xinxiang” refers to Beijing Xinxiang Future Technology Development Co., Ltd. (北京心翔未来科技发展有限公司), a company incorporated under the laws of the PRC and a wholly-owned subsidiary of Lishui Mengxiang; |
• | “CAGR” refers to compound annual growth rate; |
• | “China”, “mainland China” or the “PRC” refers to the People’s Republic of China, excluding, for the purposes of this annual report on Form 20-F only, the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan; |
• | “Chuangmei Weiye” refers to Beijing Chuangmei Weiye Enterprise Management Co., Ltd. ( 北京创美伟业企业管理有限公司) , a company incorporated under the laws of the PRC and a wholly-owned subsidiary of Beijing P.X.; |
• | “Hainan Jiangcai” refers to Hainan Jiangcai Vocational Skills Training School Co., Ltd. (海南匠才职业技能培训学校有限公司), a company incorporated under the laws of the PRC and a wholly-owned subsidiary of Beijing P.X.; |
• | “Hangzhou Youxi” refers to Hangzhou Youxi Information Technology Co., Ltd., a company incorporated under the laws of the PRC and a wholly-owned subsidiary of Liandu WFOE; |
• | “Hong Kong” refers to Hong Kong Special Administrative Region of the People’s Republic of China; |
• | “Langfang School” refers to Langfang City Rail Transit Technical School (廊坊市城轨交通技工学校), a PRC school specialized in providing vocational education; |
• | “Lianwai School” refers to Liandu Foreign Language School, comprising of Baiyun Campus and Yijing Campus—Featured Division, which was historically controlled and consolidated by Liandu WFOE through a series of contractual arrangements but was deconsolidated on September 1, 2021; |
• | “Liandu WFOE” refers to Zhejiang Mengxiang Consultancy Services Co., Ltd. (浙江梦翔咨询服务有限公司), a wholly foreign-owned enterprise incorporated under the laws of the PRC; |
• | “Lishui Mengxiang” refers to Zhejiang Lishui Mengxiang Education Development Co., Ltd. (浙江丽水梦翔教育发展有限公司), a company incorporated under the laws of the PRC and the sponsor of Qingtian International School; |
• | “Lixiang,” “we,” “us,” “our company”, “the Company” and “our” refer to Lixiang Education Holding Co., Ltd. (formerly known as Lianwai Education Group Limited), an exempted company incorporated in the Cayman Islands with limited liability, and its subsidiaries, and, in the context of describing our operations and combined and consolidated financial information, also include its consolidated Variable Interest Entities; |
• | “Mengxiang Holdings” or “Controlling Shareholder” refers to, Mengxiang Holdings Limited, a British Virgin Islands company; |
• | “ordinary shares” refer to our ordinary shares of par value US$0.0001 per share; |
• | “Qingtian International School” refers to Qingtian Overseas Chinese International School (青田县华侨国际学校), a PRC private educational school specialized in providing high school education; |
• | “RMB” and “Renminbi” refer to the legal currency of China; |
• | “SEC” refers to the United States Securities and Exchange Commission; |
• | “school year” refers to the periods from September of each calendar year to July of the following calendar year which consists of two semesters. The first semester usually commences in September of each year and ends in January of the following year, while the second semester usually commences in March and ends in July of the following year; |
• | “US$,” “U.S. dollars,” “$” and “dollars” refer to the legal currency of the United States; |
• | “Variable Interest Entities” or “VIEs” refer to Lishui Mengxiang and our Qingtian International School, the PRC entities of which we have power to control the management, and financial and operating policies and have the right to recognize and receive substantially all the economic benefits and in which we have an exclusive option to purchase all or part of the equity interests and all or a portion of the assets at the minimum price possible to the extent permitted by PRC law as of the date of the annual report; |
• | “Vocational Training Institutions” refer to Langfang School, Chuangmei Weiye and Hainan Jiangcai; and |
• | “Xianke” refers to Zhejiang Lishui Xianke Agricultural Products Distribution Co., Ltd. (浙江丽水鲜客农产品配送有限公司), a company incorporated under the laws of the PRC and a wholly-owned subsidiary of Liandu WFOE. |
• | recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; or |
• | entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States. |
• | our goals and strategies; |
• | our future business development, financial condition and results of operations; |
• | the trends in, expected growth, market size and student enrollment in the private fundamental education industry, in China; |
• | expected changes in our revenue, costs or expenditures; |
• | competition in our industry; |
• | relevant government policies and regulations relating to our industry; |
• | general economic and business conditions in China; and |
• | the development of COVID-19 pandemic in the PRC and globally. |
Company/School |
License/Permission |
Issuing Authority |
Validity | |||
Liandu WFOE | Business License | Market Supervision Administration of Lishui City | Until October 9, 2068 | |||
Xianke | Business License | Market Supervision Administration of Jingning Shezu Autonomous County | Long-term | |||
Food Operation License | Market Supervision Administration of Jingning Shezu Autonomous County | Until August 24, 2025 | ||||
Hangzhou Youxi | Business License | Market Supervision Administration of Hangzhou City | Long-term | |||
Lishui Mengxiang | Business License | Market Supervision Administration of Lishui City | Until August 16, 2051 | |||
Qingtian School | Public Institution Legal Person Certificate | Registration Administration of Public Institutions of Qingtian County | Until August 1, 2024 | |||
Permit for Establishment of Privately-run Schools |
Qingtian Education Bureau | Until August 27, 2024 | ||||
Food Operation License | Market Supervision Administration of Qingtian County | Until September 8, 2026 |
• | Significant uncertainties exist in relation to the interpretation and implementation of, or proposed changes to, the PRC laws, regulations and policies regarding the private education industry. See “Risk Factors—Risks relating to our business and industry—Significant uncertainties exist in relation to the interpretation and implementation of, or proposed changes to, the PRC laws, regulations and policies regarding the private education industry. In particular, our compliance with the 2021 Implementation Rules for Private Education Laws has materially and adversely affected and may materially and adversely affect our business, financial condition, results of operations and prospect.” |
• | We are in the process of filing the relevant application pursuant to the national and local regulations. “Risk Factors—We are in the process of filing the relevant application pursuant to the national and local regulations (including Zhejiang Province and Lishui City) of classification registration of private schools where loss of taxes and fees may incur” and “Risk Factors—Risks relating to our business and industry—We are subject to general conditions and the education industry of Qingtian County, Lishui City and/or Zhejiang Province as all of our operations are currently located in a single city.” |
• | We may not be able to successfully integrate businesses operated by Qingtian International School and Vocational Training Institutions that we acquired. See “Risk Factors—Risks relating to our business and industry—We may not be able to successfully integrate businesses operated by Qingtian International School and Vocational Training Institutions that we acquired, which may cause us to lose the anticipated benefits from such acquisitions and to incur significant additional expenses.” |
• | The newly enacted Holding Foreign Companies Accountable Act and the Accelerating Holding Foreign Companies Accountable Act passed by the U.S. Senate, all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors. As of the date of the annual report, our auditor, WWC, P.C., is not subject to the Determinations announced by the PCAOB and our listing is not affected by the Holding Foreign Companies Accountable Act and related regulations. However, we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit of our financial statements. See “Risk Factors—Risks relating to our business and industry—The newly enacted Holding Foreign Companies Accountable Act and the Accelerating Holding Foreign Companies Accountable Act passed by the U.S. Senate, all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our listing on the Nasdaq Capital Market, and Nasdaq may determine to delist our securities if the PCAOB determines that it cannot inspect or fully investigate our auditor.” |
• | We may be subject to severe penalties if the PRC government finds that the agreements that establish the structure for operating our business in China do not comply with applicable PRC laws and regulations. “Risk Factors—Risks relating to our corporate structure—Our private education service business is subject to extensive regulation in China. We may be subject to severe penalties if the PRC government finds that the agreements that establish the structure for operating our business in China do not comply with applicable PRC laws and regulations.” |
• | Our contractual arrangements may not be as effective in providing control over the VIEs as equity ownership. “ Risk Factors— Risks relating to our corporate structure—Our contractual arrangements may not be as effective in providing control over the VIEs as equity ownership ” “ Risk Factors—Risks relating to our corporate structure—If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIEs, and our ADSs or ordinary shares may decline in value or become worthless. ” |
• | We may have to incur additional costs and expend substantial resources to enforce our contractual arrangements. Our contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in China. In the event that we are unable to enforce these contractual arrangements, we may not be able to exert effective control over the VIEs for an extended period of time or we may be permanently unable to exert control over the VIEs. “Risk Factors—Risks relating to our corporate structure—We may have to incur additional costs and expend substantial resources to enforce our contractual arrangements, temporarily or permanently lose control over our primary operations or lose access to our primary sources of revenue, if the VIEs or their respective ultimate shareholders fail to perform their obligations under our contractual arrangements.” |
• | We rely on dividends and other payments from Liandu WFOE to pay dividends and other cash distributions to our shareholders. See “Risk Factors—Risks relating to our corporate structure—We rely on dividends and other payments from Liandu WFOE to pay dividends and other cash distributions to our shareholders.” |
• | Our Qingtian International School may be subject to limitations on their ability to operate private education or make payments to related parties. See “Risk Factors—Risks relating to our corporate structure—Our Qingtian International School may be subject to limitations on their ability to operate private education or make payments to related parties.” |
• | Investors in the ADSs and the business of us and the VIEs face potential uncertainty from the PRC government’s policy. Adverse changes in the PRC economic, political and social conditions as well as laws and government policies, may materially and adversely affect our business, financial condition, results of operations and growth prospects. See “Risk Factors—Risks relating to doing business in China—Adverse changes in the PRC economic, political and social conditions as well as laws and government policies, may materially and adversely affect our business, financial condition, results of operations and growth prospects.” |
• | PRC regulation of loans and direct investment by offshore holding companies to to PRC entities may delay or prevent us from using the proceeds of our initial public offering to make loans or additional capital contributions to our PRC subsidiaries or VIEs. See “Risk Factors—Risks relating to doing business in China—PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of our initial public offering to make loans or additional capital contributions to our PRC subsidiaries or VIEs, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” |
• | The Chinese government may intervene or influence the operations of our PRC subsidiaries or the VIE or exert more control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in our operations and/or the value of the securities we offered. See “Risk Factors—Risks relating to doing business in China—Any actions by the Chinese government, including any decision to intervene or influence the operations of our PRC subsidiaries or the VIE or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes to the operations of our PRC subsidiaries or the VIE, may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless. |
• | There is significant uncertainty about the application and interpretation of the Law on the Promotion of Private Education, the 2021 Implementation Rules and their detailed implementation rules and regulations. See “Risk Factors—Risks relating to doing business in China—Based on the recent development of PRC law, there is significant uncertainty about the application and interpretation of the Law on the Promotion of Private Education, the 2021 Implementation Rules and their detailed implementation rules and regulations. We may be subject to significant limitations on our ability to engage in the private education business, acquire private schools, or receive payments from the VIEs and may otherwise be materially and adversely affected by changes in PRC laws and regulations.” |
• | To the extent cash is generated in our PRC Subsidiaries, and may need to be used to fund operations outside of mainland China, such funds may not be available due to limitations placed by the PRC government. Furthermore, to the extent assets (other than cash) in our business are located in the PRC or held by a PRC entity, the assets may not be available to fund operations or for other use outside of the PRC due to interventions in or the imposition of restrictions and limitations on the ability of us and our subsidiaries to transfer assets by the PRC government. If certain PRC laws and regulations, including existing laws and regulations and those enacted or promulgated in the future were to become applicable to our Hong Kong subsidiary in the future, and to the extent cash is generated in our Hong Kong subsidiary, and to the extent assets (other than cash) in our business are located in Hong Kong or held by a Hong Kong entity and may need to be used to fund operations outside of Hong Kong, such funds or assets may not be available due to interventions in or the imposition of restrictions and limitations on the ability of us and our subsidiaries to transfer funds or assets by the PRC government. Furthermore, there can be no assurance that the PRC government will not intervene or impose restrictions or limitations on our ability to transfer or distribute cash within its organization, which could result in an inability or prohibition on making transfers or distributions to entities outside of mainland China and Hong Kong and adversely affect its business. See “ Risk Factors—Risks Related to Doing Business in China— Restrictions on currency exchange under PRC laws may limit our ability to convert cash derived from our operating activities into foreign currencies and may materially and adversely affect the value of your investment |
• | The trading price of our ADSs may be volatile and the voting rights of holders of our ADSs are limited by the terms of the deposit agreement. “Risk Factors—Risks relating to our ADSs—The trading price of our ADSs may be volatile, which could result in substantial losses to you,” “Risk Factors—Risks relating to our ADSs—The voting rights of holders of our ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to direct how the ordinary shares represented by your ADSs are voted,” “Risk Factors—Risks relating to our ADSs—The depositary shall deem you to have instructed the depositary to give us a discretionary proxy to vote the ordinary shares underlying your ADSs if you do not give timely voting instructions to the depositary to direct how the ordinary shares underlying your ADSs are voted, except in limited circumstances, which could adversely affect your interests.” |
As of December 31, 2021 |
||||||||||||||||||||||||
Condensed Consolidating Schedule of Financial Position |
Parent |
VIEs and their consolidated subsidiaries |
Liandu WFOE which is the primary beneficiary of the VIEs |
Other subsidiaries |
Elimination adjustments |
Total |
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|
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RMB |
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Assets |
||||||||||||||||||||||||
Cash and cash equivalents |
194,729,331 | 1,453,323 | 1,059,179 | 2,169,990 | — | 199,411,823 | ||||||||||||||||||
Inter-group balance due from VIEs and subsidiaries of continuing operations |
644,607 | 51,536,540 | 9,960,476 | 25,850,000 | (87,991,623 | ) | — | |||||||||||||||||
Prepayments and other current assets |
— | 100,990,604 | 265,219 | 212,101 | — | 101,467,924 | ||||||||||||||||||
Others |
— | — | 227,600 | — | — | 227,600 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total current assets |
195,373,938 | 153,980,467 | 11,512,474 | 28,232,091 | (87,991,623 | ) | 301,107,347 | |||||||||||||||||
|
|
|
|
|
|
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|
|
|||||||||||||
Property and equipment, net |
— | 164,037,622 | — | 1,021,241 | — | 165,058,863 | ||||||||||||||||||
Land use right |
— | 36,767,329 | — | — | — | 36,767,329 | ||||||||||||||||||
Goodwill |
— | 26,644,407 | — | — | — | 26,644,407 | ||||||||||||||||||
Other non-current assets |
— | 6,667 | — | 339,059 | 2,802,091 | 3,147,817 | ||||||||||||||||||
Investments in subsidiaries |
— | — | 4,373,753 | 1,501,165 | (5,874,918 | ) | — | |||||||||||||||||
|
|
|
|
|
|
|
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|
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|
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Total non-current assets |
— | 227,456,025 | 4,373,753 | 2,861,465 | (3,072,827 | ) | 231,618,416 | |||||||||||||||||
|
|
|
|
|
|
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|
|
|
|
|
|||||||||||||
Total assets |
195,373,938 | 381,436,492 | 15,886,227 | 31,093,556 | (91,064,450 | ) | 532,725,763 | |||||||||||||||||
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|
|
|||||||||||||
Short-term borrowings |
— | 77,000,000 | — | — | — | 77,000,000 | ||||||||||||||||||
Inter-group balance due to VIEs and subsidiaries of continuing operations |
40,296,870 | 16,754,595 | 28,805,002 | 644,607 | (86,501,074 | ) | — | |||||||||||||||||
Accrued liabilities and other current liabilities |
16,708,810 | 642,925 | 40,481 | — | 17,392,216 | |||||||||||||||||||
Investment deficit in subsidiaries and VIEs |
35,769,964 | — | — | — | (35,769,964 | ) | — | |||||||||||||||||
Others |
244,166 | 4,904,517 | 681,412 | 4,657,539 | — | 10,487,634 | ||||||||||||||||||
Amounts due to Lianwai School, current |
— | 288,261,447 | — | 20,521,528 | — | 308,782,975 | ||||||||||||||||||
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|
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Total current liabilities |
76,311,000 | 403,629,369 | 30,129,339 | 25,864,155 | (122,271,038 | ) | 413,662,825 | |||||||||||||||||
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Total liabilities |
76,311,000 | 403,629,369 | 30,129,339 | 25,864,155 | (122,271,038 | ) | 413,662,825 | |||||||||||||||||
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Total shareholders’ equity/(deficit) |
119,062,938 | (22,192,877 | ) | (14,243,112 | ) | 5,229,401 | 31,206,588 | 119,062,938 | ||||||||||||||||
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As of December 31, 2020 |
||||||||||||||||||||||||
Condensed Consolidating Schedule of Financial Position |
Parent |
VIEs and their consolidated subsidiaries |
Liandu WFOE which is the primary beneficiary of the VIEs |
Other subsidiaries |
Elimination adjustments |
Total |
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RMB |
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Assets |
||||||||||||||||||||||||
Cash and cash equivalents |
200,108,273 | 398,952 | 2,880,261 | 169,399 | — | 203,556,885 | ||||||||||||||||||
Other current assets |
89,853 | 6,140 | 1,522,149 | 300 | — | 1,618,442 | ||||||||||||||||||
Inter-group balance due from VIEs and subsidiaries of continuing operations |
— | 62,261,945 | 4,755,881 | — | (67,017,826 | ) | — | |||||||||||||||||
Amounts due from Lianwai School, current |
— | — | 3,681,578 | 5,203,022 | — | 8,884,600 | ||||||||||||||||||
Current assets belong to discontinued operation |
— | 265,798,189 | — | — | — | 265,798,189 | ||||||||||||||||||
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|
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Total current assets |
200,198,126 | 328,465,226 | 12,839,869 | 5,372,721 | (67,017,826 | ) | 479,858,116 | |||||||||||||||||
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|
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— | ||||||||||||||||||||||||
Property and equipment, net |
— | 162,463,014 | 1,502,623 | 1,400 | — | 163,967,037 | ||||||||||||||||||
Land use right |
— | 37,720,475 | — | — | — | 37,720,475 | ||||||||||||||||||
Other non-current assets |
— | 11,667 | — | — | — | 11,667 | ||||||||||||||||||
Investments in subsidiaries |
208,398,302 | — | — | 469,147 | (208,867,449 | ) | — | |||||||||||||||||
Non-current assets belong to discontinued operation |
— | 41,482,375 | — | — | — | 41,482,375 | ||||||||||||||||||
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|
|
|
|
|
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Total non-current assets |
208,398,302 | 241,677,531 | 1,502,623 | 470,547 | (208,867,449 | ) | 243,181,554 | |||||||||||||||||
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— | ||||||||||||||||||||||||
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|
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Total assets |
408,596,428 | 570,142,757 | 14,342,492 | 5,843,268 | (275,885,275 | ) | 723,039,670 | |||||||||||||||||
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— | ||||||||||||||||||||||||
Short-term borrowings |
— | 24,895,606 | — | — | — | 24,895,606 | ||||||||||||||||||
Accrued liabilities and other current liabilities |
— | 3,710,356 | 1,959,205 | — | — | 5,669,561 | ||||||||||||||||||
Other current liabilities |
— | 1,830,105 | 1,996,646 | 3,815,421 | — | 7,642,172 | ||||||||||||||||||
Inter-group balance due to VIEs and subsidiaries of continuing operations |
41,127,502 | — | 23,580,408 | 2,309,916 | (67,017,826 | ) | — | |||||||||||||||||
Amounts due to Lianwai School, current |
— | 254,151,621 | — | — | — | 254,151,621 | ||||||||||||||||||
Current liabilities belong to discontinued operation |
— | 62,799,191 | — | — | — | 62,799,191 | ||||||||||||||||||
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|
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Total current liabilities |
41,127,502 | 347,386,879 | 27,536,259 | 6,125,337 | (67,017,826 | ) | 355,158,151 | |||||||||||||||||
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— | ||||||||||||||||||||||||
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|
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Total non-current liabilities |
— | 412,593 | — | — | — | 412,593 | ||||||||||||||||||
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— | ||||||||||||||||||||||||
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|
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Total liabilities |
41,127,502 | 347,799,472 | 27,536,259 | 6,125,337 | (67,017,826 | ) | 355,570,744 | |||||||||||||||||
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|
|||||||||||||
— | ||||||||||||||||||||||||
Total shareholders’ equity/(deficit) |
367,468,926 | 222,343,285 | (13,193,767 | ) | (282,069 | ) | (208,867,449 | ) | 367,468,926 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2021 |
||||||||||||||||||||||||
Condensed Consolidating Schedule of Results of Operations |
Parent |
VIEs and their consolidated subsidiaries |
Liandu WFOE which is the primary beneficiary of the VIEs |
Other subsidiaries |
Elimination adjustments |
Total |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
RMB |
||||||||||||||||||||||||
Continuing operations |
||||||||||||||||||||||||
Revenue |
— | 20,112,033 | 3,459,777 | 10,864,732 | 230 | 34,436,772 | ||||||||||||||||||
Cost of revenue |
— | (10,419,986 | ) | (2,210,487 | ) | (4,725,977 | ) | — | (17,356,450 | ) | ||||||||||||||
General and administrative expenses |
(1,059,294 | ) | (9,601,120 | ) | (6,327,602 | ) | (1,384,517 | ) | (230 | ) | (18,372,763 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(Loss)/Income from operations |
(1,059,294 | ) | 90,927 | (5,078,312 | ) | 4,754,238 | — | (1,292,441 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Other expense, net |
— | (558,309 | ) | (14,640 | ) | (38,445 | ) | 2,823,630 | 2,212,236 | |||||||||||||||
Equity in (loss)/profit of subsidiaries and VIEs, net |
(242,760,667 | ) | — | 4,045,103 | 1,047,849 | 237,667,715 | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(Loss)/Income before income tax expenses |
(243,819,961 | ) | (467,382 | ) | (1,047,849 | ) | 5,763,642 | 240,491,345 | 919,795 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income tax expense |
— | — | — | (670,976 | ) | — | (670,976 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(Loss)/Income from continuing operations, net of tax |
(243,819,961 |
) |
(467,382 |
) |
(1,047,849 |
) |
5,092,666 |
240,491,345 |
248,819 |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Loss from discontinued operation, net of tax |
— | (244,068,780 | ) | — | — | (244,068,780 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net (loss)/income |
(243,819,961 | ) | (244,536,162 | ) | (1,047,849 | ) | 5,092,666 | 240,491,345 | (243,819,961 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Condensed Consolidating Schedule of Cash Flows |
||||||||||||||||||||||||
Net cash (used in)/provided by operating activities |
(2,290,367 | ) | 29,764,431 | (1,397,532 | ) | 3,040,518 | 1,490,550 | 30,607,600 | ||||||||||||||||
Net cash used in investing activities |
— | (153,593,942 | ) | (423,550 | ) | (1,153,024 | ) | 120,000 | (155,050,516 | ) | ||||||||||||||
Net cash provided by financing activities |
— | 115,671,061 | — | 120,000 | (120,000 | ) | 115,671,061 | |||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents |
(3,088,575 | ) | — | — | (6,903 | ) | (1,490,550 | ) | (4,586,028 | ) | ||||||||||||||
Net changes in cash and cash equivalents |
(5,378,942 | ) | (8,158,450 | ) | (1,821,082 | ) | 2,000,591 | — | (13,357,883 | ) | ||||||||||||||
Cash and cash equivalents at the beginning of year |
200,108,273 | 9,611,773 | 2,880,261 | 169,399 | — | 212,769,706 | ||||||||||||||||||
Cash and cash equivalents at the end of year |
194,729,331 | 1,453,323 | 1,059,179 | 2,169,990 | — | 199,411,823 |
For the year ended December 31, 2020 |
||||||||||||||||||||||||
Condensed Consolidating Schedule of Results of Operations |
Parent |
VIEs and its consolidated subsidiaries |
Liandu WFOE which is the primary beneficiary of the VIEs |
Other subsidiaries |
Elimination adjustment |
Total |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
RMB |
||||||||||||||||||||||||
Continuing operations |
||||||||||||||||||||||||
Revenue |
— | 17,070,602 | 4,926,295 | 5,341,720 | (1,633,663 | ) | 25,704,954 | |||||||||||||||||
Cost of revenue |
— | (4,839,390 | ) | (2,115,841 | ) | (3,796,721 | ) | — | (10,751,952 | ) | ||||||||||||||
General and administrative expenses |
(3,666,937 | ) | (3,460,323 | ) | (2,855,352 | ) | (1,775,479 | ) | 1,633,663 | (10,124,428 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(Loss)/Income from operations |
(3,666,937 | ) | 8,770,889 | (44,898 | ) | (230,480 | ) | — | 4,828,574 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Other expense, net |
— | (876,596 | ) | (4,331 | ) | (1,263 | ) | — | (882,190 | ) | ||||||||||||||
Equity in profit /(loss) of subsidiaries and VIEs, net |
37,252,021 | — | (141,350 | ) | (190,579 | ) | (36,920,092 | ) | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income/(loss) before income tax expenses |
33,585,084 | 7,894,293 | (190,579 | ) | (422,322 | ) | (36,920,092 | ) | 3,946,384 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income tax expense |
— | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income/(loss) from continuing operations, net of tax |
33,585,084 |
7,894,293 |
(190,579 |
) |
(422,322 |
) |
(36,920,092 |
) |
3,946,384 |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income from discontinued operation, net of tax |
— | 29,638,700 | — | — | — | 29,638,700 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income/(loss) |
33,585,084 | 37,532,993 | (190,579 | ) | (422,322 | ) | (36,920,092 | ) | 33,585,084 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Condensed Consolidating Schedule of Cash Flows |
||||||||||||||||||||||||
Net cash provided by operating activities |
— | 47,477,961 | 1,198,900 | 779,125 | — | 49,455,986 | ||||||||||||||||||
Net cash (used in)/provided by investing activities |
(653,250 | ) | 19,424,757 | 936,529 | (659,726 | ) | 709,326 | 19,757,636 | ||||||||||||||||
Net cash provided by/(used in) financing activities |
208,718,163 | (81,928,356 | ) | 659,326 | 50,000 | (709,326 | ) | 126,789,807 | ||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents |
(7,956,640 | ) | — | — | — | — | (7,956,640 | ) | ||||||||||||||||
Net changes in cash and cash equivalents |
200,108,273 | (15,025,638 | ) | 2,794,755 | 169,399 | — | 188,046,789 | |||||||||||||||||
Cash and cash equivalents at the beginning of year |
— | 24,637,411 | 85,506 | — | — | 24,722,917 | ||||||||||||||||||
Cash and cash equivalents at the end of year |
200,108,273 | 9,611,773 | 2,880,261 | 169,399 | — | 212,769,706 |
For the year ended December 31, 2019 |
||||||||||||||||||||||||
Condensed Consolidating Schedule of Results of Operations |
Parent |
VIEs and its consolidated subsidiaries |
Liandu WFOE which is the primary beneficiary of the VIEs |
Other subsidiaries |
Elimination adjustments |
Total |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
RMB |
||||||||||||||||||||||||
Continuing operations |
||||||||||||||||||||||||
Revenue |
— | 13,431,603 | — | — | — | 13,431,603 | ||||||||||||||||||
Cost of revenue |
— | (4,764,530 | ) | — | — | — | (4,764,530 | ) | ||||||||||||||||
General and administrative expenses |
— | (2,047,180 | ) | (73,382 | ) | — | — | (2,120,562 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income/(loss) from operations |
— | 6,619,893 | (73,382 | ) | — | — | 6,546,511 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Other expense, net |
— | (1,747,214 | ) | (438 | ) | — | — | (1,747,652 | ) | |||||||||||||||
Equity in loss of subsidiaries and VIEs, net |
(47,236,997 | ) | — | — | (73,820 | ) | 47,310,817 | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(Loss)/Income before income tax expenses |
(47,236,997 | ) | 4,872,679 | (73,820 | ) | (73,820 | ) | 47,310,817 | 4,798,859 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income tax expense |
— | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(Loss)/Income from continuing operations, net of tax |
(47,236,997 |
) |
4,872,679 |
(73,820 |
) |
(73,820 |
) |
47,310,817 |
4,798,859 |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income from discontinued operation, net of tax |
— | 42,438,138 | — | — | — | 42,438,138 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net (loss)/income |
(47,236,997 | ) | 47,310,817 | (73,820 | ) | (73,820 | ) | 47,310,817 | 47,236,997 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Condensed Consolidating Schedule of Cash Flows |
||||||||||||||||||||||||
Net cash provided by/(used in) operating activities |
— | 58,830,470 | (55,418 | ) | — | — | 58,775,052 | |||||||||||||||||
Net cash used in investing activities |
— | (34,739,000 | ) | — | — | — | (34,739,000 | ) | ||||||||||||||||
Net cash used in financing activities |
— | (1,961,532 | ) | — | — | — | (1,961,532 | ) | ||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents |
— | — | — | — | — | — | ||||||||||||||||||
Net changes in cash and cash equivalents |
— | 22,129,938 | (55,418 | ) | — | — | 22,074,520 | |||||||||||||||||
Cash and cash equivalents at the beginning of year |
— | 2,507,473 | 140,924 | — | — | 2,648,397 | ||||||||||||||||||
Cash and cash equivalents at the end of year |
— | 24,637,411 | 85,506 | — | — | 24,722,917 |
For the years ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
|
|
|
|
|
|
|||||||
RMB |
||||||||||||
Cash paid by Lianwai School to other subsidiaries for food procurement service |
— | 150,000 | 16,056,452 | |||||||||
Cash transfer from Liandu WFOE to VIEs and their consolidated subsidiaries |
— | 7,000,000 | 46,860,000 | |||||||||
Cash transfer from VIEs and their consolidated subsidiaries to Liandu WFOE |
200,000 | 15,900,000 | 33,601,578 | |||||||||
Cash transfer from other subsidiaries to Liandu WFOE |
— | — | 17,600,000 | |||||||||
Cash transfer from other subsidiaries to VIEs and their consolidated subsidiaries |
— | — | 9,900,000 | |||||||||
Cash transfer from VIEs and their consolidated subsidiaries to other subsidiaries |
— | — | 15,110,752 |
A. |
Selected Financial Data |
For the years ended December 31, |
||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Net revenues: |
||||||||||||||||
Revenue from related parties |
2,373,333 | 1,668,572 | 906,667 | 142,276 | ||||||||||||
Revenue from third party |
1,717,697 | 3,410,091 | 8,512,992 | 1,335,874 | ||||||||||||
Revenue from Affected Entity |
9,340,573 | 20,626,291 | 25,017,113 | 3,925,731 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total net revenue |
13,431,603 | 25,704,954 | 34,436,772 | 5,403,881 | ||||||||||||
Cost of revenues |
(4,764,530 | ) | (10,751,952 | ) | (17,356,450 | ) | (2,723,606 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
8,667,073 | 14,953,002 | 17,080,322 | 2,680,275 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating expenses: |
||||||||||||||||
General and administrative expenses |
(2,120,562 | ) | (10,124,428 | ) | (18,372,763 | ) | (2,883,087 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
(2,120,562 | ) | (10,124,428 | ) | (18,372,763 | ) | (2,883,087 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating income/(loss) |
6,546,511 | 4,828,574 | (1,292,441 | ) | (202,812 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Interest expense |
(1,738,301 | ) | (897,398 | ) | (2,393,178 | ) | (375,542 | ) | ||||||||
Interest income |
13,230 | 16,634 | 14,834 | 2,328 | ||||||||||||
Other (loss)/income, net |
(22,581 | ) | (1,426 | ) | 4,590,580 | 720,362 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income before income tax expense |
4,798,859 | 3,946,384 | 919,795 | 144,336 | ||||||||||||
Income tax expense |
— | — | (670,976 | ) | (105,291 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income from continuing operations, net of tax |
4,798,859 | 3,946,384 | 248,819 | 39,045 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income/(loss) from discontinued operation, net of tax |
42,438,138 | 29,638,700 | (244,068,780 | ) | (38,299,718 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income/(loss) |
47,236,997 | 33,585,084 | (243,819,961 | ) | (38,260,673 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income/(loss) attributable to the Company’s ordinary shareholders |
47,236,997 | 33,585,084 | (243,819,961 | ) | (38,260,673 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Other comprehensive loss |
||||||||||||||||
Foreign currency translation adjustment, net of nil tax |
— | (7,956,640 | ) | (4,586,027 | ) | (719,648 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Comprehensive income/(loss) |
47,236,997 | 25,628,444 | (248,405,988 | ) | (38,980,321 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total comprehensive income/(loss) attributable to the Company’s ordinary shareholders |
47,236,997 | 25,628,444 | (248,405,988 | ) | (38,980,321 | ) | ||||||||||
Earnings per share from continuing operations |
||||||||||||||||
—Basic and diluted |
0.10 | 0.07 | 0.00 | 0.00 | ||||||||||||
Earnings/(loss) per share from discontinued operation |
||||||||||||||||
—Basic and diluted |
0.85 | 0.55 | (3.66 | ) | (0.57 | ) | ||||||||||
Weighted average number of ordinary shares used in per share calculation |
||||||||||||||||
—Basic and diluted |
50,000,000 | 54,166,750 | 66,667,000 | 66,667,000 | ||||||||||||
|
|
|
|
|
|
|
|
As of December 31, |
||||||||||||
2020 |
2021 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Selected Consolidated Balance Sheet Data |
||||||||||||
Cash and cash equivalents |
203,556,885 | 199,411,823 | 31,292,067 | |||||||||
TOTAL ASSETS |
723,039,670 | 532,725,763 | 83,596,297 | |||||||||
TOTAL LIABILITIES |
355,570,744 | 413,662,825 | 64,912,723 | |||||||||
Ordinary shares (US$0.0001 par value; 500,000,000 and 500,000,000 shares authorized, 66,667,000 and 66,667,000 shares issued and outstanding as of December 31, 2020 and 2021, respectively) |
45,198 | 45,198 | 7,093 | |||||||||
TOTAL SHAREHOLDERS’ EQUITY |
367,468,926 | 119,062,938 | 18,683,574 |
B. |
Capitalization and Indebtedness |
C. |
Reasons for the Offer and Use of Proceeds |
D. |
Risk Factors |
• | Uncertainties with respect to liquidation |
• | Uncertainties with respect to school fees |
• | Uncertainties with respect to supporting measures |
• | Uncertainties with respect to transactions with related parties |
• | enhance existing programs to respond to market changes and the demands of students and parents; |
• | develop new programs or schools that appeal to students; |
• | maintain and improve our reputation for providing high quality private education; |
• | maintain and improve the academic and non-academic performance of our students; |
• | recruit and retain qualified teachers; |
• | manage our growth while maintaining the consistency of our teaching quality; |
• | expand our student capacity; |
• | effectively market our schools and programs to prospective students; and |
• | respond to the increasing competition in the market. |
• | retaining qualified teaching staff of any acquired school; |
• | consolidating the educational services offered by the acquired school; |
• | complying with the regulatory requirements; |
• | the acquired schools having a culture that may be adverse to change and may not be receptive to our educational values and methods; |
• | integrating educational and administrative systems; |
• | minimizing disruptions to existing students’ curricula and ensuring their ability to progress through the applicable education programs is not hindered as a result of the acquisition; |
• | ensuring and illustrating to our students and their parents that the new acquisitions will not result in any adverse changes to our established brand image, reputation, service quality or standards; and |
• | minimizing the diversion of our management’s attention from its on-going business concerns |
• | we may lose government support in Lishui City or in cities to which we plan to expand our operation; |
• | we may not be able to admit all qualified students who would like to enroll in our schools due to the capacity constraints of our school facilities; |
• | we may fail to identify cities with sufficient growth potential in which to acquire or establish schools; |
• | we may have limited access to capital resources or may have to rely on the shareholders’ guarantee in obtaining bank facilities; |
• | we may fail to acquire or lease suitable land sites in the cities to which we plan to expand our operations; |
• | we may fail to effectively market our schools or brand in new markets or promote ourselves in existing markets; |
• | we may not be able to replicate our successful growth model in new markets; |
• | we may not be able to effectively integrate any future acquisitions into our operations; |
• | we may fail to obtain the requisite licenses and permits from the authorities necessary to acquire or establish schools at our desired locations; |
• | we may not be able to continue to enhance our course materials or adapt our course materials to changing student needs and teaching methods; |
• | we may fail to follow the expected timetable with respect to the development of our schools; and |
• | we may fail to achieve the benefits we expect from our expansion. |
• | our ability to increase student enrollment in our schools and raise tuitions fees; |
• | general economic conditions and regulations or government actions pertaining to the provision of private educational services in China; |
• | shifts in consumer attitude toward private secondary education and vocational education in China; |
• | our ability to control cost of revenues, in particular salary and welfare relating to teachers and other costs; and |
• | non-recurring charges incurred in connection with acquisitions or other extraordinary transactions or unexpected circumstances. |
• | revoking the business and operating licenses of our PRC subsidiaries or VIEs; |
• | discontinuing or restricting the operations of any related-party transactions among Liandu WFOE or VIEs; |
• | imposing fines or other requirements with which we or Liandu WFOE or VIEs may not be able to comply; |
• | requiring us to restructure our operations in such a way as to compel us to establish new entities, re-apply for the necessary licenses or relocate our businesses, staff and assets; |
• | imposing additional conditions or requirements with which we may not be able to comply; or |
• | restricting the use of proceeds from our additional public offering or financing to finance our business and operations in China. |
• | political instability or changes in social conditions of the PRC; |
• | changes in laws, regulations, and administrative directives or the interpretation thereof; |
• | measures which may be introduced to control inflation or deflation; and |
• | changes in the rate or method of taxation. |
• | regulatory developments affecting us or our industry; |
• | variations in our revenue, profit, and cash flow; |
• | changes in the economic performance or market valuations of other education service providers; |
• | actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; |
• | changes in financial estimates by securities research analysts; |
• | detrimental negative publicity about us, our services, our officers, directors, Controlling Shareholder, or our industry; |
• | announcements by us or our competitors of new service offerings, acquisitions, strategic relationships, joint ventures, capital raisings or capital commitments; |
• | additions to or departures of our senior management; |
• | potential litigation or regulatory proceedings involving us, our officers, directors, or controlling shareholder; |
• | negative publicity on our direct and indirect shareholders; |
• | release or expiry of lock-up or other transfer restrictions on our outstanding shares or our ADSs; and |
• | sales or perceived potential sales of additional ordinary shares or ADSs. |
• | we have instructed the depositary that we do not wish a discretionary proxy to be given; |
• | we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting; |
• | a matter to be voted on at the meeting would have a material adverse impact on shareholders; or |
• | the voting at the meeting is to be made on a show of hands. |
• | the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; |
• | the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; |
• | the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and |
• | the selective disclosure rules by issuers of material nonpublic information under Regulation FD. |
• | our memorandum and articles of association authorizes the board of directors to issue additional ordinary shares from time to time as the board of directors shall determine, to the extent of available authorized but unissued shares. Our memorandum and articles also authorizes the board of directors, subject to certain conditions, to establish from time to time one or more series of preferred shares and to determine, with respect to any series of preferred shares, the terms and rights of that series. The board of directors may issue preferred shares without action by our shareholders to the extent authorized but unissued; |
• | our memorandum and articles of association may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable; and |
• | the board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs, including among others (i) declaring dividends and distributions; (ii) exercising our borrowing powers and our mortgaging the property; and (iii) approving the transfer of shares in the Company, including the registration of such shares in our register of members. |
• | have a majority of the board be independent (although all of the members of the audit committee must be independent under the Exchange Act within one year of the initial public offering); |
• | have a compensation committee or a nominating and corporate governance committee consisting entirely of independent directors; or |
• | have regularly scheduled executive sessions with only independent directors each year. |
• | Baiyun Campus offering standard PRC curriculum programs; and |
• | Yijing Campus—Featured Division offering featured PRC curriculum programs. |
(i) | The sponsors of privately-run schools may establish non-profit or for-profit privately-run schools at their own discretion. However, they shall not establish for-profit privately-run schools providing compulsory education. |
(ii) | The sponsor of a non-profit privately-run school shall not gain proceeds from school running, and the cash surplus of the school shall be used for school running, while the sponsor of a for-profit privately-run school may gain proceeds from school running, and the cash surplus of the school shall be disposed of in accordance with relevant PRC laws and regulations. |
(iii) | The measures for the collection of fees by non-profit privately-run schools shall be formulated by the people’s governments of various provinces, autonomous regions and centrally-administered municipalities. |
(iv) | Privately-run schools may enjoy the preferential taxation policies, and non-profit privately-run schools may enjoy the same preferential taxation policies with that for publicly-run schools. |
(v) | Additional supportive measures are provided for private schools. Non-profit private schools will enjoy additional supportive measures, such as government subsidies, fund awards and donations. |
(1) | The sponsorship registration of Qingtian International School was changed to Lishui Mengxiang in August 2021. We are in the process of filing the relevant application pursuant to the PRC national and local regulations (including Zhejiang Province and Lishui City) of classification registration of private schools. As of the date of the annual report, we have not received notice from the competent authorities of Qingtian County on the classified registration of private schools. We entered into a series of contractual arrangements with respect to our operation of Qingtian International School in April 2022, which arrangements took effect on August 31, 2021. |
(2) | Lishui Mengxiang holds 43% equity interests of Beijing Xinxiang. Beijing R.R.Z. holds 42% equity interests of Beijing Xinxiang. The management team of Beijing Xinxiang formed Beijing Chuang’ao Technology Center (L.P.) (“Beijing C.A.”), holding 15% equity interests of Beijing Xinxiang. Given that the board of directors of Beijing Xinxiang consists of five members, three of which shall be appointed by Lishui Mengxiang, we are able to control Beijing Xinxiang by holding more than half of the voting power in the board of directors. Therefore, the financial statements of Beijing Xinxiang will be consolidated in our annual report on Form 20-F for the year ending December 31, 2022. |
(3) | According to PRC laws and regulations, entities and individuals who establish private schools are commonly referred to as “sponsors” instead of “owners” or “shareholders.” The economic substance of “sponsorship” with respect to private schools is substantially similar to that of ownership with regard to legal, regulatory and tax matters. However, the differences between sponsorship and equity ownership can be found in the specific provisions of the laws and regulations applicable to sponsors and owners, such as provisions regarding the right to receive returns on investment and the right to the distribution of residual properties upon termination and liquidation. |
• | the ownership structures of Liandu WFOE and the VIEs currently will not violate any applicable PRC law, regulation, or rule currently in effect; and |
• | the contractual arrangements among Liandu WFOE, the VIEs, Ms. Fen Ye, Ms. Hong Ye and Ms. Fang Ye, Qingtian International School and Qingtian International School’s Council Members governed by PRC laws are valid, binding and enforceable in accordance with their terms and applicable PRC laws, rules, and regulations currently in effect. |
A. |
Operating Results |
For the years ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
RMB |
||||||||||||
Revenue from Affected Entity: |
||||||||||||
Rental revenue |
9,340,573 | 15,284,572 | 14,152,381 | |||||||||
Food procurement services |
— | 5,314,719 | 10,864,732 | |||||||||
|
|
|
|
|
|
|||||||
Subtotal |
9,340,573 | 20,626,291 | 25,017,113 | |||||||||
Revenue from related party: |
||||||||||||
Rental revenue |
2,373,333 | 1,668,572 | 906,667 | |||||||||
Revenue from third parties: |
||||||||||||
Tuition fees |
— | — | 4,146,247 | |||||||||
Accommodation |
— | — | 228,526 | |||||||||
Uniform |
— | 1,932,094 | 1,334,416 | |||||||||
Rental revenue |
952,381 | 104,761 | 76,191 | |||||||||
Meals |
— | — | 591,304 | |||||||||
Others |
765,316 | 1,373,236 | 2,136,308 | |||||||||
|
|
|
|
|
|
|||||||
Subtotal |
1,717,697 | 3,410,091 | 8,512,992 | |||||||||
|
|
|
|
|
|
|||||||
Total revenue |
13,431,603 | 25,704,954 | 34,436,772 | |||||||||
|
|
|
|
|
|
As of September 1, |
||||||||
2021 |
||||||||
Number |
% |
|||||||
Qingtian International School |
||||||||
Boarding |
447 | 85.0 | % | |||||
Non-boarding |
80 | 15.0 | % | |||||
|
|
|
|
|||||
Total |
527 |
100.0 |
% | |||||
|
|
|
|
For the year ended December 31, |
||||||||||||||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||||||||||||||
RMB |
% of net revenue |
RMB |
% of net revenue |
RMB |
US$ |
% of net revenue |
||||||||||||||||||||||
(in thousands, except for percentage, share and per share data) |
||||||||||||||||||||||||||||
Net revenues: |
||||||||||||||||||||||||||||
Revenue from related parties |
2,373 | 17.7 | % | 1,669 | 6.5 | % | 907 | 142 | 2.6 | % | ||||||||||||||||||
Revenue from third party |
1,718 | 12.8 | % | 3,410 | 13.3 | % | 8,513 | 1,336 | 25.7 | % | ||||||||||||||||||
Revenue from Affected Entity |
9,341 | 69.5 | % | 20,626 | 80.2 | % | 25,017 | 3,926 | 72.6 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total net revenue |
13,432 | 100.0 | % | 25,705 | 100.0 | % | 34,437 | 5,404 | 100.9 | % | ||||||||||||||||||
Cost of revenues |
(4,765 | ) | (35.5 | %) | (10,752 | ) | (41.8 | %) | (17,356 | ) | (2,724 | ) | (50.4 | %) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Gross profit |
8,667 | 64.5 | % | 14,953 | 58.2 | % | 17,080 | 2,680 | 50.5 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating expenses: |
||||||||||||||||||||||||||||
General and administrative expenses |
(2,121 | ) | (15.8 | %) | (10,124 | ) | (39.4 | %) | (18,373 | ) | (2,883 | ) | (53.4 | %) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total operating expenses |
(2,121 | ) | (15.8 | %) | (10,124 | ) | (39.4 | %) | (18,373 | ) | (2,883 | ) | (53.4 | %) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating income/(loss) |
6,547 | 48.7 | % | 4,829 | 18.8 | % | (1,292 | ) | (203 | ) | (3.8 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest expense |
(1,738 | ) | (12.9 | %) | (897 | ) | (3.5 | %) | (2,393 | ) | (376 | ) | (6.9 | %) | ||||||||||||||
Interest income |
13 | 0.1 | % | 17 | 0.1 | % | 15 | 2 | — | |||||||||||||||||||
Other (loss)/income, net |
(23 | ) | (0.2 | %) | (1 | ) | — | 4,591 | 720 | 13.3 | % | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Income before income tax expense |
4,799 | 35.7 | % | 3,946 | 15.4 | % | 920 | 144 | 2.6 | % | ||||||||||||||||||
Income tax expense |
— | — | — | — | (671 | ) | (105 | ) | (1.9 | %) | ||||||||||||||||||
Income from continuing operations, net of tax |
4,799 | 35.7 | % | 3,946 | 15.4 | % | 249 | 39 | 0.7 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Income/(loss) from discontinued operation, net of tax |
42,438 | 316.0 | % | 29,639 | 115.3 | % | (244,069 | ) | (38,300 | ) | (708.7 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income/(loss) |
47,237 | 351.7 | % | 33,585 | 130.7 | % | (243,820 | ) | (38,261 | ) | (708.0 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income/(loss) attributable to the Company’s ordinary shareholders |
47,237 | 351.7 | % | 33,585 | 130.7 | % | (243,820 | ) | (38,261 | ) | (708.0 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Other comprehensive loss |
||||||||||||||||||||||||||||
Foreign currency translation adjustment, net of nil tax |
— | — | (7,957 | ) | (31.0 | %) | (4,586 | ) | (720 | ) | (13.3 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Comprehensive income/(loss) |
47,237 | 351.7 | % | 25,628 | 99.7 | % | (248,406 | ) | (38,980 | ) | (721.3 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total comprehensive income/(loss) attributable to the Company’s ordinary shareholders |
47,237 | 351.7 | % | 25,628 | 99.7 | % | (248,406 | ) | (38,980 | ) | (721.3 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, |
||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(in thousands) |
||||||||||||||||
Selected Consolidated Cash Flows: |
||||||||||||||||
Net cash provided by operating activities from continuing operations |
60,978 | 46,831 | 63,071 | 9,897 | ||||||||||||
Net cash (used in)/provided by operating activities from discontinued operation |
(2,203 | ) | 2,624 | (32,464 | ) | (5,094 | ) | |||||||||
Net cash (used in)/provided by investing activities from continuing operations |
(20,595 | ) | 12,069 | (114,735 | ) | (18,004 | ) | |||||||||
Net cash (used in)/provided by investing activities from discontinued operation |
(14,144 | ) | 7,689 | (40,316 | ) | (6,326 | ) | |||||||||
Net cash (used in)/provided by financing activities from continuing operations |
(40,550 | ) | 150,790 | 52,104 | 8,176 | |||||||||||
Net cash provided by/(used in) financing activities from discontinued operation |
38,588 | (24,000 | ) | 63,567 | 9,975 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents |
— | (7,957 | ) | (4,586 | ) | (720 | ) | |||||||||
Net increase/(decrease) in cash and cash equivalents |
22,074 | 188,047 | (13,358 | ) | (2,096 | ) | ||||||||||
Cash and cash equivalents at beginning of the year |
2,648 | 24,723 | 212,770 | 33,388 | ||||||||||||
Cash and cash equivalents at end of the year |
24,722 | 212,770 | 199,412 | 31,292 |
ITEM 6. |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
Name |
Age |
Position with the Company | ||||
Executive Directors and Officers: |
||||||
Fen Ye |
50 | Director; Chairlady | ||||
Biao Wei |
50 | Director; Chief Executive Officer | ||||
Fang Ye |
48 | Director | ||||
Hong Ye |
45 | Director | ||||
Guoliang Chen |
54 | Principal of Lianwai School | ||||
Luoyuan Ye |
40 | Chief Financial Officer | ||||
Non-Executive Directors: |
||||||
Teck Yong Heng |
48 | Independent Director | ||||
Yan Kit Lee |
51 | Independent Director |
Country of Principal Executive Offices | China | |||||||
Foreign Private Issuer | Yes | |||||||
Disclosure Prohibited Under Home Country Law | No | |||||||
Total Number of Directors | 6 | |||||||
Female | Male | Non-Binary |
Did not disclose | |||||
Part I: |
||||||||
Directors | 3 | 3 | 0 | 0 | ||||
Part II: | ||||||||
Underrepresented Individual in Home Country | 0 | |||||||
LGBTQ+ | 0 | |||||||
Did Not Disclose Demographic Background | 0 |
• | selecting and appointing auditors and pre-approving all auditing and non-auditing services permitted to be performed by such independent auditors; |
• | reviewing with the independent auditors any audit problems or difficulties and management’s response; |
• | reviewing and approving all proposed related party transactions; |
• | discussing the annual audited financial statements with management and the independent auditors; |
• | reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; |
• | meeting separately and periodically with management and our independent auditors; |
• | reporting regularly to the board of directors; |
• | monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance; and |
• | other matters that are specifically assigned to our audit committee by our board of directors from time to time; |
• | reviewing and making recommendations to the board of directors with respect to directors’ compensation; |
• | reviewing and approving to the board with respect to the compensation for our chief executive officer and other executive officers; |
• | reviewing periodically and approving any incentive compensation or equity plans, programs or other similar arrangements; |
• | approving guidelines for senior management salary, incentive, stock option, benefit and other compensation levels; and |
• | producing an annual report on executive compensation in accordance with applicable rules and regulations. |
• | identifying and recommending nominees for election by the shareholders or appointment by the board of directors; |
• | reviewing annually with the board of directors its current composition with regards to characteristics such as independence, age, skills, experience, diversity and availability of service to us; |
• | advising the board of directors on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and |
• | advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as monitoring our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken. |
• | convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings; |
• | declaring dividends and distributions; |
• | appointing officers and determining the term of office and responsibilities of the officers; |
• | exercising the borrowing powers of our company and mortgaging the property of our company; and |
• | approving the transfer of shares in our company, including the registration of such shares in our register of members. |
Function |
Number of Employees |
|||
Executive Directors and senior management |
5 | |||
Teachers |
370 | |||
Counselors |
77 | |||
Administrative staff |
12 | |||
Campus security |
12 | |||
Accounting and finance staff |
10 | |||
Supporting staff |
54 | |||
Total |
540 |
ITEM 7. |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
• | each person or entity that we know beneficially owns or will beneficially own more than 5% of our outstanding ordinary shares; |
• | each director or executive officer who beneficially owns or will beneficially own more than 1% of our outstanding ordinary shares; and |
• | all of our directors and executive officers as a group. |
Ordinary Shares Beneficially Owned |
||||||||
Number |
% (2) |
|||||||
Directors and Executive Officers (1) : |
||||||||
Fen Ye |
45,000,000 | 67.5 | ||||||
Biao Wei (3) |
— | — | ||||||
Fang Ye |
2,500,000 | 3.75 | ||||||
Hong Ye |
2,500,000 | 3.75 | ||||||
Luoyuan Ye |
— | — | ||||||
Teck Yong Heng |
— | — | ||||||
Yan Kit Lee |
— | — | ||||||
All directors and executive officers as a group |
50,000,000 | 75.0 | ||||||
Principal Shareholders: |
||||||||
Mengxiang Holdings (4) |
45,000,000 | 67.5 | ||||||
Lianwai Holdings Co., Ltd.(5) |
2,500,000 | 3.75 | ||||||
Mengxiang Investment Co., Ltd.(6) |
2,500,000 | 3.75 |
(1) | The address of our directors and executive officers is, No. 818 Hua Yuan Street, Liandu District, Lishui City, Zhejiang Province, 323000, the PRC. |
(2) | For each person and group included in this column, percentage ownership is calculated by dividing the number of ordinary shares beneficially owned by such person or group, including shares that such person or group has the right to acquire within 60 days after March 31, 2021, by the sum of (i) 66,667,000 which is the total number of ordinary shares outstanding as of March 31, 2021, and (ii) the number of ordinary shares such person or group has the right to acquire within 60 days after March 31, 2021. |
(3) | Mr. Biao Wei is the spouse of Ms. Fen Ye. |
(4) | A British Virgin Islands company which is wholly-owned and controlled by Ms. Fen Ye. The registered office of Mengxiang Holdings is at Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town Tortola, British Virgin Islands. |
(5) | A British Virgins Islands company which is wholly-owned and controlled by Ms. Hong Ye. The registered office of Lianwai Holdings Co., Ltd. is at Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, British Virgin Islands. |
(6) | A British Virgin Islands company which is wholly-owned and controlled by Ms. Fang Ye. The registered office of Mengxiang Investment Co., Ltd. is at Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, British Virgin Islands. |
B. |
Significant Changes |
A. |
Offering and Listing Details |
Trading Price (US$) |
||||||||
High |
Low |
|||||||
Annual Highs and Lows |
||||||||
Fiscal Year ended December 31, 2021 |
12.5 | 7.19 | ||||||
Quarterly Highs and Lows |
||||||||
Fourth Quarter of Fiscal Year ended December 31, 2021 |
12.5 | 7.39 | ||||||
Monthly Highs and Lows |
||||||||
January 2022 |
9.95 | 5.75 | ||||||
February 2022 |
7 | 5.05 | ||||||
March 2022 |
5.7 | 4.05 | ||||||
April 2022 (through April 26, 2022) |
5.1 | 4.37 |
B. |
Plan of Distribution |
C. |
Markets |
D. |
Selling Shareholders |
E. |
Dilution |
F. |
Expenses of the Issue |
A. |
Share Capital |
B. |
Memorandum and Articles of Association |
• | the instrument of transfer is lodged with us and is accompanied by the certificate for the shares to which it relates and such other evidence as our directors may reasonably require to show the right of the transferor to make the transfer; |
• | the instrument of transfer is in respect of only one class of share; |
• | the instrument of transfer is properly stamped (if required); |
• | in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; |
• | the shares are free from any lien in favor of the Company; and |
• | a fee of such maximum sum as the Nasdaq Global Market may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof. |
• | the designation of the series; |
• | the number of shares of the series; |
• | the dividend rights, dividend rates, conversion rights, voting rights; and |
• | the rights and terms of redemption and liquidation preferences. |
• | authorize our board of directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by our shareholders. |
• | limit the ability of shareholders to requisition and convene general meetings of shareholders. |
• | the statutory provisions as to the required majority vote have been met; |
• | the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class; |
• | the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and |
• | the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act. |
• | a company acts or proposes to act illegally or ultra vires; |
• | the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and |
• | those who control our company are perpetrating a “fraud on the minority.” |
• | banks; |
• | certain financial institutions; |
• | insurance companies; |
• | regulated investment companies; |
• | real estate investment trusts; |
• | brokers or dealers in stocks and securities, or currencies; |
• | persons who are required to use a mark-to-market method |
• | certain former citizens or residents of the United States subject to Section 877 of the Code; |
• | entities subject to the United States anti-inversion rules; |
• | tax-exempt organizations and entities; |
• | persons subject to the alternative minimum tax provisions of the Code; |
• | persons whose functional currency is other than the United States dollar; |
• | persons holding ADSs or ordinary shares as part of a straddle, hedging, conversion or integrated transaction; |
• | persons holding ADSs or ordinary shares through a bank, financial institution or other entity, or a branch thereof, located, organized or resident outside the United States; |
• | persons that actually or constructively own 10% or more of our stock by vote or value; |
• | persons subject to special tax accounting rules under Section 451(b) of the Code; |
• | persons who acquired ADSs or ordinary shares pursuant to the exercise of an employee stock option or otherwise as compensation; or |
• | partnerships or other pass-through entities, or persons holding ADSs or ordinary shares through such entities. |
• | an individual who is a citizen or resident of the United States; |
• | a corporation (or other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; |
• | an estate, the income of which is subject to United States federal income taxation regardless of its source; or |
• | a trust, if (i) a court within the United States is able to exercise primary supervision over its administration and one or more United States persons have the authority to control all of its substantial decisions or (ii) in the case of a trust that was treated as a domestic trust on August 19, 1996 under the law in effect as of that date, a valid election is in place under applicable Treasury regulations to treat such trust as a domestic trust. |
• | the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or ordinary shares; |
• | the amount allocated to the taxable year of distribution or gain and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC (each, a “pre-PFIC year”) will be taxable as ordinary income; and |
• | the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year, increased by an additional tax equal to the interest on the resulting tax deemed deferred with respect to each such taxable year. |
I. |
Subsidiary Information |
A. |
Debt Securities |
B. |
Warrants and Rights |
C. |
Other Securities |
D. |
American Depositary Shares |
Service |
Fees | |
(1) Issuance of ADSs (e.g., an issuance of ADS upon a deposit of ordinary shares, upon a change in the ADS(s)-to ordinary shares ratio, or for any other reason), excluding ADS issuances as a result of distributions of ordinary shares) |
Up to U.S.$5.00 per 100 ADSs issued | |
(2) Cancelation of ADSs (e.g., a cancelation of ADSs for delivery of deposited property, upon a change in the ADS(s)-to-ordinary |
Up to U.S.$5.00 per 100 ADSs canceled | |
(3) Distribution of cash dividends or other cash distributions (e.g., upon a sale of rights and other entitlements) |
Up to U.S.$5.00 per 100 ADSs held | |
(4) Distribution of ADSs pursuant to (i) stock dividends or other free stock distributions, or (ii) exercise of rights to purchase additional ADSs |
Up to U.S.$5.00 per 100 ADSs held | |
(5) Distribution of securities other than ADSs or rights to purchase additional ADSs (e.g., upon a spin-off) |
Up to U.S.$5.00 per 100 ADSs held | |
(6) ADS Services |
Up to U.S.$5.00 per 100 ADSs held on the applicable record date(s) established by the depositary | |
(7) Registration of ADS transfers (e.g., upon a registration of the transfer of registered ownership of ADSs, upon a transfer of ADSs into DTC and vice versa, or for any other reason) |
Up to U.S.$5.00 per 100 ADSs (or fraction thereof) transferred | |
(8) Conversion of ADSs of one series for ADSs of another series (e.g., upon conversion of Partial Entitlement ADSs for Full Entitlement ADSs, or upon conversion of Restricted ADSs (each as defined in the Deposit Agreement) into freely transferable ADSs, and vice versa). |
Up to U.S.$5.00 per 100 ADSs (or fraction thereof) transferred |
• | taxes (including applicable interest and penalties) and other governmental charges; |
• | the registration fees as may from time to time be in effect for the registration of ordinary shares on the share register and applicable to transfers of ordinary shares to or from the name of the custodian, the depositary or any nominees upon the making of deposits and withdrawals, respectively; |
• | certain cable, telex and facsimile transmission and delivery expenses; |
• | the fees, expenses, spreads, taxes and other charges of the depositary and/or service providers (which may be a division, branch or affiliate of the depositary) in the conversion of foreign currency; |
• | the reasonable and customary out-of-pocket |
• | the fees, charges, costs and expenses incurred by the depositary, the custodian, or any nominee in connection with the ADR program. |
• | In 2021 we hired a new chief financial officer with responsibility for public disclosures, investor relations, and acquisitions |
• | In 2021 we distributed internal policies and handbooks on topics such as contract management, vendor management, reimbursement management and risk control management to our employees, and conducted training seminars to ensure effective implementation |
• | In 2021 we engaged an independent external consulting firm with extensive U.S. GAAP reporting experience to assist our U.S. GAAP reporting team in preparation of the annual report |
• | In 2021 we engaged an external consulting firm to assist us to assess Section 404 of the Sarbanes-Oxley Act of 2002 compliance readiness and improve overall internal controls and this external consulting firm also provided a Section 404 of the Sarbanes-Oxley Act of 2002 training session to our senior employees |
For the year ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Audit fees (1) |
|
RMB1,174,456.07 (US$179,996.0 |
) |
|
RMB7,224,898.57 (US$1,107,281.1 |
) |
|
RMB1,274,200 (US$200,000 |
) | |||
Tax fees (2) |
|
RMB79,179.69 (US$12,135 |
) |
(1) | “Audit fees” represent the aggregate fees for professional services rendered by our principal auditors for the review of our interim consolidated financial statements, the audit of our annual consolidated financial statements and/or services that are normally provided by the auditors in connection with statutory and regulatory filings or engagements. |
(2) | “Tax fees” represent the aggregate fees for professional services rendered by our principal auditors for tax compliance, tax advice and tax planning. |
a. | the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on our consolidated financial statements, and neither a written report was provided to us or oral advice was provided that WWC, P.C. concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue; or |
b. | any matter that was the subject of a disagreement, or any reportable event as described above. |
ITEM 16.H. |
MINE SAFETY DISCLOSURE |
ITEM 19. |
EXHIBITS |
* | Previously filed |
** | Filed herewith |
*** | Furnished herewith |
Lixiang Education Holding Co., Ltd. | ||||
By: | /s/ Biao Wei | |||
Name: | Biao Wei | |||
Title: | Director and Chief Executive Officer |
F-2 |
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F-3 |
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F-5 |
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F-6 |
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F-7 |
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F-9 |
To: |
The Board of Directors and Shareholders of |
As of December 31, |
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2020 |
2021 |
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RMB |
RMB |
US$(Note 2(g)) |
||||||||||
ASSETS |
||||||||||||
Current assets: |
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Cash and cash equivalents |
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Inventories |
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Prepayments and other current assets |
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Amounts due from Affected Entity, current |
— | — | ||||||||||
Current assets belong to discontinued operation |
— | — | ||||||||||
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Total current assets |
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Non-current assets: |
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Property and equipment, net |
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Land use rights |
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Intangible assets |
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Goodwill |
— | |||||||||||
Deferred tax assets |
— | |||||||||||
Non-Current assets belong to discontinued operation |
— | — | ||||||||||
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Total non-current assets |
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Total assets |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities |
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Short-term borrowings (including short-term borrowings of the consolidated variable interest entities (“VIEs”) without recourse to the Company of RMB |
||||||||||||
Accounts payable (including accounts payable of the consolidated variable interest entities (“VIEs”) without recourse to the Company of RMB d RMB |
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Deferred revenue, current (including deferred revenue, current of the consolidated variable interest entities (“VIEs”) without recourse to the Company of RMB |
||||||||||||
Salary and welfare payable (including salary and welfare payable of the consolidated variable interest entities (“VIEs”) without recourse to the Company of RMB |
||||||||||||
Amounts due to related parties (including amounts due to related parties of the consolidated variable interest entities (“VIEs”) without recourse to the Company of RMB |
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Taxes payable (including taxes payable of the consolidated variable interest entities (“VIEs”) without recourse to the Company of RMB |
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Accrued liabilities and other current liabilities (including accrued liabilities and other current liabilities of the consolidated variable interest entities (“VIEs”) without recourse to the Company of RMB |
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Amounts due to Affected Entity, current |
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Current liabilities belong to discontinued operation |
— | — | ||||||||||
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Total current liabilities |
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Non-current liabilities |
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Non-current liabilities belong to discontinued operation |
— | — | ||||||||||
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Total non-current liabilities |
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Total liabilities |
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Commitments and contingencies |
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Shareholders’ equity: |
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Ordinary shares (USD$ |
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Additional paid-in capital |
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Statutory reserves |
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Accumulated other comprehensive loss |
( |
) | ( |
) | ( |
) | ||||||
Retained earnings/(Accumulated deficit) |
( |
) | ( |
) | ||||||||
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
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For the years ended December 31, |
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2019 |
2020 |
2021 |
||||||||||||||
RMB |
RMB |
RMB |
US$ (Note 2(g)) |
|||||||||||||
Net revenues: |
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Revenue from related parties |
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Revenue from third party |
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Revenue from Affected Entity |
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Total net revenue |
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Cost of revenues |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Gross profit |
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Operating expenses: |
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General and administrative expenses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Total operating expenses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Operating income/(loss) |
( |
) | ( |
) | ||||||||||||
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Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Interest income |
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Other (loss)/income, net |
( |
) | ( |
) | ||||||||||||
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Income before income tax expense |
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Income tax expense |
— | — | ( |
) | ( |
) | ||||||||||
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Income from continuing operations, net of tax |
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Income/(loss) from discontinued operation, net of tax |
( |
) | ( |
) | ||||||||||||
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Net income/(loss) |
( |
) | ( |
) | ||||||||||||
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Net income/(loss) attributable to the Company’s ordinary shareholders |
( |
) | ( |
) | ||||||||||||
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Other comprehensive loss |
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Foreign currency translation adjustment, net of nil tax |
— | ( |
) | ( |
) | ( |
) | |||||||||
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Comprehensive income/(loss) |
( |
) | ( |
) | ||||||||||||
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Total comprehensive income/(loss) attributable to the Company’s ordinary shareholders |
( |
) | ( |
) | ||||||||||||
Earnings per share from continuing operations |
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—Basic and diluted |
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Earnings/(loss) per share from discontinued operation |
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—Basic and diluted |
( |
) | ( |
) | ||||||||||||
Weighted average number of ordinary shares used in per share calculation |
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—Basic and diluted |
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Ordinary shares |
Additional paid-in capital |
Statutory reserves |
Accumulated other comprehensive loss |
Retained earnings/(Accumulated deficit) |
Total shareholders’ equity |
|||||||||||||||||||||||
Number of shares |
Amount |
|||||||||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
|||||||||||||||||||||||
Balance as of December 31, 2018 |
— |
— |
||||||||||||||||||||||||||
Net income for the year |
— | — | — | — | — | |||||||||||||||||||||||
Provision of statutory reserve |
— | — | — | — | ( |
) | — | |||||||||||||||||||||
Foreign currency translation |
— | — | — | — | — | — | — | |||||||||||||||||||||
|
|
|
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|||||||||||||||
Balance as of December 31, 2019 |
— |
— |
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Net income for the year |
— | — | — | — | — | |||||||||||||||||||||||
Issuance of ordinary shares upon Initial Public Offering (“IPO”), net of issuance cost |
— | — | — | |||||||||||||||||||||||||
Provision of statutory reserve |
— | — | — | — | ( |
) | — | |||||||||||||||||||||
Foreign currency translation |
— | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||
|
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Balance as of December 31, 2020 |
( |
) |
||||||||||||||||||||||||||
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Net loss for the year |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Provision of statutory reserve |
— | — | — | — | ( |
) | — | |||||||||||||||||||||
Foreign currency translation |
— | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||
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Balance as of December 31, 2021 |
( |
) |
( |
) |
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For the years ended December 31, |
||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||
RMB |
RMB |
RMB |
US$ (Note 2(g)) |
|||||||||||||
Cash flows from operating activities |
||||||||||||||||
Net income/(loss) |
( |
) | ( |
) | ||||||||||||
Net income/(loss) from discontinued operation |
( |
) | ( |
) | ||||||||||||
Net income from continuing operations |
||||||||||||||||
Adjustments for: |
||||||||||||||||
Depreciation of property and equipment |
||||||||||||||||
Amortization of land use rights |
||||||||||||||||
Amortization of acquired intangible assets |
||||||||||||||||
Loss on disposal of property and equipment |
— | — | ||||||||||||||
Gain on acquisition of Youxi Software |
— | — | ( |
) | ( |
) | ||||||||||
Changes in assets and liabilities: |
||||||||||||||||
Inventories |
( |
) | ||||||||||||||
Prepayments and other current assets |
||||||||||||||||
Amounts due from related parties |
— | — | ||||||||||||||
Amounts due from Affected Entity |
— | |||||||||||||||
Accounts payable |
— | ( |
) | ( |
) | |||||||||||
Amounts due to related parties |
( |
) | — |
( |
) | ( |
) | |||||||||
Amounts due to Affected Entity |
||||||||||||||||
Salaries and welfare payable |
||||||||||||||||
Taxes payable |
( |
) | ||||||||||||||
Deferred revenue, current and non-current |
( |
) | ( |
) | ( |
) | ||||||||||
Accrued liabilities and other current liabilities |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Deferred tax assets |
— | — | ( |
) | ( |
) | ||||||||||
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|||||||||
Net cash provided by operating activities from continuing operations |
||||||||||||||||
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Net cash (used in)/provided by operating activities from discontinued operation |
( |
) | ( |
) | ( |
) | ||||||||||
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Net cash provided by operating activities |
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Cash flows from investing activities: |
||||||||||||||||
Purchase of short-term investments |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Proceeds from maturity of short-term investments |
||||||||||||||||
Purchase of property and equipment |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Loans lent to related parties |
( |
) | ( |
) | — | — | ||||||||||
Repayments of loans by related parties |
— | — | ||||||||||||||
Receipts of the consideration from the divestiture of Lianwai Kindergarten |
— | — | — | |||||||||||||
Advance deposit for intent acquisition |
— | — | ( |
) | ( |
) | ||||||||||
Purchase of Youxi Software |
— | — | ( |
) | ( |
) | ||||||||||
Purchase of Qingtian International School |
— | — | ( |
) | ( |
) | ||||||||||
|
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|||||||||
Net cash (used in)/provided by investing activities from continuing operations |
( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
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|||||||||
Net cash (used in)/provided by investing activities from discontinued operation |
( |
) | ( |
) | ( |
) | ||||||||||
|
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|||||||||
Net cash (used in)/provided by investing activities |
( |
) | ( |
) | ( |
) | ||||||||||
|
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|
|||||||||
Cash flows from financing activities: |
||||||||||||||||
Proceeds from short-term borrowings with banks |
Repayments of short-term borrowings with banks |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Proceeds from short-term borrowings from related parties |
— | — | — | |||||||||||||
Repayment of short-term borrowings to related parties |
( |
) | — | — | — | |||||||||||
Repayments of loan payable due to Lianwai Kindergarten |
( |
) | — | — | — | |||||||||||
Proceeds from issuance of ordinary shares upon IPO |
— | — | — | |||||||||||||
Cash paid for initial public offering related costs |
— | ( |
) | — | — | |||||||||||
|
|
|
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|||||||||
Net cash (used in)/provided by financing activities from continuing operations |
( |
) | ||||||||||||||
|
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|||||||||
Net cash provided by/(used in) financing activities from discontinued operation |
( |
) | ||||||||||||||
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Net cash (used in)/provided by financing activities |
( |
) | ||||||||||||||
|
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|||||||||
Effect of exchange rate changes on cash and cash equivalents |
— | ( |
) | ( |
) | ( |
) | |||||||||
Net increase/(decrease) in cash and cash equivalents |
( |
) | ( |
) | ||||||||||||
Cash and cash equivalents at the beginning of year |
||||||||||||||||
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|||||||||
Cash and cash equivalents at the end of year |
||||||||||||||||
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Supplemental disclosure of cash flow information: |
||||||||||||||||
Cash paid for interest expenses |
— |
— |
||||||||||||||
Cash paid for income tax expenses |
— | — | ||||||||||||||
Supplemental schedule of non-cash investing and financing activities: |
||||||||||||||||
Payables for Qingtian International School acquisition |
— | — | | |||||||||||||
Payables for property and equipment |
— | — |
1. |
Organization and Principal Activities |
(a) |
Principal activities |
1. |
Organization and Principal Activities (Continued) |
Name of subsidiaries and VIE |
Date of establishment |
Place of incorporation |
Percentage of direct or indirect economic ownership |
Principal activities | ||||||
Wholly owned subsidiaries of the Company: |
||||||||||
Lianwai Investment Co., Ltd. (“Lianwai investment”) |
Established on |
% | holding | |||||||
Hong Kong Mengxiang Education Development Group Limited (“HK Mengxiang”) |
Established on |
% | ||||||||
Zhejiang Mengxiang Consulting Services Co., Ltd. (“Liandu WFOE”) |
Established on |
% | ||||||||
Zhejiang Lishui Xianke Agricultural Products Distribution Co., Ltd. (“Lishui Xianke”) |
Established on |
% | ||||||||
Hangzhou Youxi Information Technology Co., Ltd. (“Youxi Software”) |
Established on |
% | ||||||||
Variable Interest Entities (“VIEs”) |
||||||||||
Zhejiang Lishui Mengxiang Education Development Company Limited (“Lishui Mengxiang VIE”) |
Established on |
% | Liandu Foreign Language School | |||||||
Qingtian Overseas Chinese International School (“Qingtian International School”) |
Established on |
% |
(b) |
Group history |
1) | On September 6, 2018, the Company was incorporated in the Cayman Islands by Ms. Fen Ye, Ms. Fang Ye, and Ms. Hong Ye (the “founders.”). |
2) | On |
3) | On |
4) | On |
5) | On |
1. |
Organization and Principal Activities (Continued) |
(c) |
Contractual Agreements with VIEs |
1. |
Organization and Principal Activities (Continued) |
1. |
Organization and Principal Activities (Continued) |
(d) |
Combined financial information of the VIEs |
As of December 31, |
||||||||||||
2020 |
2021 |
|||||||||||
RMB |
RMB |
US$ (Note 2(g)) |
||||||||||
ASSETS |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
||||||||||||
Amounts due from inter-company entities |
||||||||||||
Prepayments and other current assets |
||||||||||||
Current assets belong to discontinued operation |
— | — | ||||||||||
|
|
|
|
|
|
|||||||
Total current assets |
||||||||||||
|
|
|
|
|
|
|||||||
Non-current assets: |
||||||||||||
Property and equipment, net |
||||||||||||
Land use rights |
||||||||||||
Intangible assets |
||||||||||||
Goodwill |
— | |||||||||||
Non- assets belong to discontinued operationc urrent |
— | — | ||||||||||
|
|
|
|
|
|
|||||||
Total non-current assets |
||||||||||||
|
|
|
|
|
|
|||||||
Total assets |
||||||||||||
|
|
|
|
|
|
|||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||
Current liabilities |
||||||||||||
Short-term borrowings |
||||||||||||
Accounts payable |
||||||||||||
Deferred revenue, current |
||||||||||||
Salary and welfare payable |
||||||||||||
Amounts due to related parties |
||||||||||||
Tax payable |
||||||||||||
Amount due to inter-company entities |
— |
|||||||||||
Accrued liabilities and other current liabilities |
||||||||||||
Amounts due to Affected Entity, current |
||||||||||||
Current liabilities belong to discontinued operation |
— | — | ||||||||||
|
|
|
|
|
|
|||||||
Total current liabilities |
||||||||||||
|
|
|
|
|
|
|||||||
Non-current liabilities |
||||||||||||
Non-current liabilities belong to discontinued operation |
— | — | ||||||||||
|
|
|
|
|
|
|||||||
Total non-current liabilities |
||||||||||||
|
|
|
|
|
|
|||||||
Total liabilities |
||||||||||||
|
|
|
|
|
|
1. |
Organization and Principal Activities (Continued) |
For the years ended December 31, |
||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||
RMB |
RMB |
RMB |
US$ (Note 2(g)) |
|||||||||||||
Net revenues from continuing operations |
||||||||||||||||
Net revenues from discontinued operation |
||||||||||||||||
Net income/(loss) from continuing operations |
( |
) | ( |
) | ||||||||||||
Net income/(loss) from discontinued operation |
( |
) | ( |
) | ||||||||||||
Net cash provided by operating activities |
||||||||||||||||
Net cash (used in)/provided by investing activities |
( |
) | ( |
) | ( |
) | ||||||||||
Net cash (used in)/provided by financing activities |
( |
) | ( |
) | ||||||||||||
Net increase/(decrease) in cash and cash equivalents |
( |
) | ( |
) | ( |
) |
(e) |
Risks associated with VIE arrangements |
• |
revoking the business and operating licenses of the Company’s PRC subsidiaries or VIEs; |
• |
discontinuing or restricting the operations of any related-party transactions among Liandu WFOE or VIEs; |
• |
imposing fines or other requirements with which the Company or Liandu WFOE or VIEs may not be able to comply; |
• |
requiring the Company to restructure operations in such a way as to compel the Company to establish new entities, re-apply for the necessary licenses or relocate the businesses, staff and assets; |
• |
imposing additional conditions or requirements with which the Company may not be able to comply; or |
• |
restricting the use of proceeds from our additional public offering or financing to finance the business and operations in China. |
1. |
Organization and Principal Activities (Continued) |
2. |
Principal Accounting Policies |
(a) |
Basis of preparation |
(b) |
Use of estimates |
2. |
Principal Accounting Policies (Continued) |
(c) |
Consolidation |
(d) |
Deconsolidation |
(e) |
Business Combination |
2. |
Principal Accounting Policies (Continued) |
(f) |
Functional currency and foreign currency translation |
(g) |
Convenience translation |
2. |
Principal Accounting Policies (Continued) |
(h) |
Fair value of financial instruments |
(i) |
Cash and cash equivalents |
(j) |
Inventories |
2. |
Principal Accounting Policies (Continued) |
(k) |
Property and equipment, net |
Buildings | ||
Electronic devices and other general equipment | ||
Leasehold improvements | Over the shorter of lease term or the estimated useful lives of the assets |
(l) |
Land use rights, net |
(m) |
Impairment of long-lived assets |
(n) |
Goodwill, net |
(o) |
Deferred revenue |
2. |
Principal Accounting Policies (Continued) |
(p) |
Revenue recognition |
2. |
Principal Accounting Policies (Continued) |
(q) |
Leases |
(r) |
Cost of revenues |
(s) |
General and administrative expenses |
(t) |
Government subsidies |
(u) |
Employee social security and welfare benefits |
(v) |
Income taxes |
2. |
Principal Accounting Policies (Continued) |
(w) |
Statutory reserves |
(x) |
Related parties |
(y) |
Dividends |
(z) |
Earnings/(loss) per share |
(aa) |
Comprehensive income/(loss) |
2. |
Principal Accounting Policies (Continued) |
(bb) |
Segment reporting |
(cc) |
Recently issued accounting pronouncements |
3. |
Discontinued operation |
As of December 31, |
||||||||||||
2020 |
2021 |
|||||||||||
RMB |
RMB |
US$(Note 2(h)) |
||||||||||
ASSETS |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
||||||||||||
Inventories |
||||||||||||
Prepayments and other current assets |
||||||||||||
Amounts due from continuing operations |
||||||||||||
|
|
|
|
|
|
|||||||
Total current assets |
||||||||||||
|
|
|
|
|
|
|||||||
Non-current assets: |
||||||||||||
Property and equipment, net |
||||||||||||
|
|
|
|
|
|
|||||||
Total non-current assets |
||||||||||||
|
|
|
|
|
|
|||||||
Total assets |
||||||||||||
|
|
|
|
|
|
|||||||
LIABILITIES |
||||||||||||
Current liabilities |
||||||||||||
Short-term borrowings |
||||||||||||
Accounts payable |
||||||||||||
Deferred revenue, current |
||||||||||||
Salary and welfare payable |
||||||||||||
Tax payable |
||||||||||||
Accrued liabilities and other current liabilities |
||||||||||||
Amounts due to continuing operations |
||||||||||||
|
|
|
|
|
|
|||||||
Total current liabilities |
||||||||||||
|
|
|
|
|
|
|||||||
Non-current liabilities |
||||||||||||
Deferred revenue, non-current |
||||||||||||
|
|
|
|
|
|
|||||||
Total non-current liabilities |
||||||||||||
|
|
|
|
|
|
|||||||
Total liabilities |
||||||||||||
|
|
|
|
|
|
For the years ended December 31, |
||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||
RMB |
RMB |
RMB |
US$ (Note 2( g )) |
|||||||||||||
Net revenues: |
||||||||||||||||
Total net revenue |
||||||||||||||||
Cost of revenues |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating expenses: |
||||||||||||||||
General and administrative expenses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
3. |
Discontinued operation ( C ontinued) |
Operating income |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Interest income |
||||||||||||||||
Other income, net |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income before income tax expense |
||||||||||||||||
Income tax expense |
— | — | — | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income before one-off loss upon deconsolidation of the Affected Entity |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
One-off loss upon deconsolidation of the Affected Entity, net of tax |
— | — | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income/(loss) from discontinued operation |
( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
For the years ended December 31, |
||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||
RMB |
RMB |
RMB |
US$ (Note 2(g)) |
|||||||||||||
Net cash (used in)/provided by operating activities |
( |
) | ( |
) | ( |
) | ||||||||||
Net cash (used in)/provided by investing activities |
( |
) | ( |
) | ( |
) | ||||||||||
Net cash provided by/(used in) financing activities |
( |
) |
4. |
Business combination |
Amount |
||||
RMB |
||||
Fair value of total consideration transferred: |
||||
Cash consideration |
||||
Cash acquired from business combination |
( |
) | ||
|
|
|||
Subtotal |
||||
Recognized amounts of identifiable assets acquired and liability assumed: |
||||
Current assets |
||||
Intangible asset - computer software |
||||
Current liabilities |
( |
) | ||
Deferred tax assets |
||||
Total identifiable net assets |
||||
|
|
|||
Other income* |
||||
|
|
* | The excess of the total consideration over the fair value of the assets acquired was recorded as other income, which was due to the deferred tax assets recognized since the management considered it more likely than not that Youxi Software could generate sufficient pre-tax profit in the next 5 consecutive years and the deferred tax assets will be utilized in the future. |
4. |
Business combination (Continued) |
Amount |
||||
RMB |
||||
Fair value of total consideration transferred: |
||||
Cash consideration |
||||
Cash acquired from business combination |
( |
) | ||
|
|
|||
Subtotal |
||||
Recognized amounts of identifiable assets acquired and liability assumed: |
||||
Current assets |
||||
Non-current assets |
||||
Current liabilities |
( |
) | ||
Total identifiable net liabilities |
( |
) | ||
|
|
|||
Goodwill* |
||||
|
|
* | The goodwill was primarily attributable to the synergy from the joint students recruiting events and channel, program design, development and marketing, and teacher training and recruitment opportunities. The goodwill is not deductible for tax purposes. |
5. |
Cash and cash equivalents |
RMB equivalent (US$) |
RMB |
Total in RMB |
||||||||||||||
China |
||||||||||||||||
Overseas |
Non VIE |
VIE s |
||||||||||||||
December 31, 2020 |
||||||||||||||||
December 31, 2021 |
6. |
Prepayments and Other current assets |
As of December 31, |
||||||||
2020 |
2021 |
|||||||
Advance deposit for intent acquisition (1) |
||||||||
Prepaid rental fees |
||||||||
Prepayments of services |
||||||||
Receivables of over-paid income tax |
||||||||
Others |
||||||||
|
|
|
|
|||||
Total |
|
|||||||
|
|
|
|
7. |
Property and equipment, net |
As of December 31, |
||||||||
2020 |
2021 |
|||||||
Cost: |
||||||||
Buildings |
||||||||
Electronic devices and other general equipment |
||||||||
Leasehold improvements |
||||||||
|
|
|
|
|||||
Total cost |
||||||||
Less: Accumulated depreciation |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Property and equipment, net |
||||||||
|
|
|
|
8. |
Land use rights |
As of December 31, |
||||||||
2020 |
2021 |
|||||||
Cost: |
||||||||
Land use rights |
|
|
||||||
Less: Accumulated amortization |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Land use rights, net |
||||||||
|
|
|
|
9. |
Taxes payable |
As of December 31, |
||||||||
2020 |
2021 |
|||||||
Value-added tax |
||||||||
Surtaxes |
||||||||
Withholding individual income tax |
||||||||
|
|
|
|
|||||
Total |
|
|
||||||
|
|
|
|
10. |
Accrued liabilities and other liabilities |
As of December 31, |
||||||||
2020 |
2021 |
|||||||
Qingtian I nternational S chool acquisi tion payable (1) |
||||||||
Payables to third parties (2) |
||||||||
Deposits related to the Group staff apartment sales (3) |
|
|||||||
Accrued insurance expenses |
||||||||
Audit fee payable |
||||||||
Leasehold improvement payables |
||||||||
Interests payable |
||||||||
Others |
||||||||
|
|
|
|
|||||
Total |
|
|||||||
|
|
|
|
(1) | On August 31, 2021, the Group acquired |
(2) |
Payables to third parties were loans for daily operational purposes, with 1.5% interest rate and due within one year. |
(3) |
Deposit prepaid to the Group for intention of purchasing the Group’s staff apartments which can be freely withdrawn before final approval of the ownership transfer. |
11. |
Ordinary shares |
12. |
Short-term borrowings |
Annual Interest Rate |
Maturity (Months) |
As of December 31, 2020 |
As of December 31, 2021 |
|||||||||||||
Short-term borrowings: |
||||||||||||||||
China CITIC Bank |
— | |||||||||||||||
China CITIC Bank |
— | |||||||||||||||
Bank of Ningbo |
— | |||||||||||||||
Bank of Ningbo |
— | |||||||||||||||
|
|
|
|
|||||||||||||
Total |
||||||||||||||||
|
|
|
|
13. |
Revenue |
For the years ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Revenue from Affected Entity: |
||||||||||||
Rental revenue |
||||||||||||
Food procurement services |
— | |||||||||||
|
|
|
|
|
|
|||||||
Subtotal |
||||||||||||
Revenue from related party: |
||||||||||||
Rental revenue |
||||||||||||
Revenue from third parties : |
||||||||||||
Tuition fees |
— | — | ||||||||||
Uniform |
— |
|||||||||||
Meals |
— |
— |
||||||||||
Accommodation |
— |
— |
||||||||||
Rental revenue |
||||||||||||
Others |
||||||||||||
|
|
|
|
|
|
|||||||
Subtotal |
||||||||||||
|
|
|
|
|
|
|||||||
Total revenue |
||||||||||||
|
|
|
|
|
|
14. |
Income taxes |
(a) | Cayman Islands |
(b) | Hong Kong profits tax |
(c) | British Virgin Islands |
(d) | PRC Enterprise Income Tax (“EIT”) |
14. |
Income taxes (Continued) |
For the years ended |
||||||||||||
December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Current |
— | — | ||||||||||
Deferred |
— | — | ( |
) | ||||||||
Less from discontinued operation |
— | — | — | |||||||||
|
|
|
|
|
|
|||||||
Total from continuing operations |
— | — | ||||||||||
|
|
|
|
|
|
For the years ended |
||||||||||||
December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
% |
% |
% |
||||||||||
PRC Statutory income tax rates |
% | % | % | |||||||||
Effect of preferential tax rates |
( |
%) |
( |
%) |
% | |||||||
Effect of non-taxable gain (1) |
— |
— |
( |
%) | ||||||||
Change of valuation allowance |
— |
— |
% | |||||||||
|
|
|
|
|
|
|||||||
Effective tax rate |
% | |||||||||||
|
|
|
|
|
|
(1) |
Non-taxable gain was primarily due to gain from the acquisition of Youxi Software. |
As of December 31, |
||||||||
2020 |
2021 |
|||||||
Deferred tax assets: |
||||||||
Net operating loss carry-forwards |
— | |||||||
Less: valuation allowance |
— | ( |
) | |||||
|
|
|
|
|||||
Net deferred tax assets |
— | |||||||
|
|
|
|
Net operating loss carryforwards 2022 |
— | |||
2023 |
— | |||
2024 |
||||
2025 |
||||
2026 |
||||
|
|
|||
Total |
||||
|
|
15. |
Leases |
For the years ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Rental Income: |
||||||||||||
Lianwai Kindergarten |
||||||||||||
Lishui Yuanmeng Training Company Limited |
||||||||||||
Grocery stores |
||||||||||||
|
|
|
|
|
|
|||||||
Total |
||||||||||||
|
|
|
|
|
|
16. |
Commitments and contingencies |
(a) |
Commitments |
(b) |
Litigation |
17. |
Related party transaction and balances |
Name of related parties |
Relationship | |
Ms. Fen Ye | ||
Ms. Fang Ye | ||
Ms. Shou E Yan | ||
Ms. Chun E Ye | ||
Mr. Wu Wei | ||
Lishui Yuanmeng Training Company Limited (“Yuanmeng”) | ||
Lianwai Kindergarten |
(a) | Significant transactions with related parties for continuing operations |
Years ended |
||||||||||||
December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Rental revenue: |
||||||||||||
–Yuanmeng |
||||||||||||
–Lianwai Kindergarten |
||||||||||||
|
|
|
|
|
|
|||||||
Total |
|
|
||||||||||
|
|
|
|
|
|
Years ended |
||||||||||||
December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Loans lent to related parties: |
||||||||||||
Ms. Fen Ye |
— | — | ||||||||||
Mr. Wu Wei |
— | — | ||||||||||
Ms. Chun E Ye |
— | |||||||||||
|
|
|
|
|
|
|||||||
Total |
— | |||||||||||
|
|
|
|
|
|
Years ended |
||||||||||||
December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Repayments of loans to related parties: |
||||||||||||
Ms. Fang Ye |
— | — | ||||||||||
Mr. Wu Wei |
— | — | ||||||||||
Ms. Chun E Ye |
— | |||||||||||
|
|
|
|
|
|
|||||||
Total |
— | |||||||||||
|
|
|
|
|
|
Years ended |
||||||||||||
December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Proceeds from short-term borrowings from related parties: |
||||||||||||
Ms. Fen Ye |
— | — | ||||||||||
Repayments of short-term borrowings to related parties: |
||||||||||||
Ms. Fen Ye |
— | — | ||||||||||
Repayment of loans due to Lianwai Kindergarten: |
— | — |
17. |
Related party transaction and balances (continued) |
(b) |
Balances with related parties for continuing operations |
As of December 31, |
||||||||
2020 |
2021 |
|||||||
Due to related parties: |
||||||||
Advances from related parties for rental: |
||||||||
Lianwai Kindergarten |
||||||||
|
|
|
|
|||||
Total |
|
|
||||||
|
|
|
|
(c) |
Balances with Affected Entity for continuing operations |
As of December 31, |
||||||||
2020 |
2021 |
|||||||
Due from Affected Entity: |
||||||||
Account receivables from Affected Entity |
||||||||
Other receivables from Affected Entity |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total |
||||||||
|
|
|
|
As of December 31, |
||||||||
2020 |
2021 |
|||||||
Due to Affected Entity: |
||||||||
Payables to Affected Entity: |
||||||||
Advance from Affected Entity |
||||||||
|
|
|
|
|||||
Total |
||||||||
|
|
|
|
18. |
Restricted net assets |
19. |
Subsequent events |
20. |
Information: Condensed financial statements of the Company |
20. |
Information: Condensed financial statements of the Company ( C ontinued) |
As of December 31, |
||||||||||||
2020 |
2021 |
|||||||||||
RMB |
RMB |
US$ (Note 2(g)) |
||||||||||
ASSETS |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
||||||||||||
Prepayments and other current assets |
||||||||||||
Amounts due from subsidiaries and VIEs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total current assets |
||||||||||||
|
|
|
|
|
|
|||||||
Non-current assets: |
||||||||||||
Investment in subsidiaries and VIEs |
||||||||||||
|
|
|
|
|
|
|||||||
Total non-current assets |
||||||||||||
|
|
|
|
|
|
|||||||
Total assets |
||||||||||||
|
|
|
|
|
|
|||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||
Current liabilities: |
||||||||||||
Accrued liabilities and other current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Investment deficit in subsidiaries and VIEs |
|
|
|
|
|
|
|
|
|
|
|
|
Amounts due to subsidiaries and VIEs |
||||||||||||
|
|
|
|
|
|
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) | ( |
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Total liabilities and shareholders’ equity |
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20. |
Information: Condensed financial statements of the Company (Continued) |
For the years ended December 31, |
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2020 |
2021 |
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RMB |
RMB |
RMB |
US$ (Note 2 (g)) |
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Operating expenses |
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General and administrative expenses |
( |
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( |
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Equity in profit/(loss) of subsidiaries and VIEs, net |
( |
) |
( |
) | ||||||||||||
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Income/(loss) from subsidiaries and VIEs |
( |
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( |
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Net income/(loss) |
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Other comprehensive loss, net of nil tax |
( |
) |
( |
) |
( |
) | ||||||||||
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For the years ended December 31, |
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2020 |
2021 |
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RMB |
RMB |
RMB |
US$ (Note 2 (g)) |
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Effect of exchange rate changes on cash |
( |
) |
( |
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( |
) | ||||||||||
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Net increase/(decrease) in cash and cash equivalents |
( |
) |
( |
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Cash and cash equivalents, beginning of year |
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Exhibit 12.1
Certification by the Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Biao Wei, certify that:
1. | I have reviewed this Amendment No. 1 the to annual report on Form 20-F of Lixiang Education Holding Co., Ltd.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. | The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and |
5. | The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting. |
Date: August 24, 2022
By: | /s/ Biao Wei | |
Name: Biao Wei | ||
Title: Chief Executive Officer |
Exhibit 12.2
Certification by the Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Luoyuan Ye, certify that:
1. | I have reviewed this Amendment No. 1 to the annual report on Form 20-F of Lixiang Education Holding Co., Ltd.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. | The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and |
5. | The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting. |
Date: August 24, 2022
By: | /s/ Luoyuan Ye | |||
Name: | Luoyuan Ye | |||
Title: | Chief Financial Officer |
Exhibit 13.1
Certification by the Principal Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Amendment No.1 to the Annual Report of Lixiang Education Holding Co., Ltd. (the Company) on Form 20-F for the fiscal year ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Biao Wei, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: August 24, 2022
By: | /s/ Biao Wei | |
Name: Biao Wei | ||
Title: Chief Executive Officer |
Exhibit 13.2
Certification by the Principal Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Amendment No.1 to the Annual Report of Lixiang Education Holding Co., Ltd. (the Company) on Form 20-F for the fiscal year ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Luoyuan Ye, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: August 24, 2022
By | /s/ Luoyuan Ye | |
Name: Luoyuan Ye | ||
Title: Chief Financial Officer |
Exhibit 15.1
![]() |
德恒律师事务所 | DeHeng Law Offices | ||||
12/F, Tower B, Focus Place, No.19 Finance Street | Tel: (86) 010-52682888 | |||||
Beijing, P.R. China 100033 | Fax: (86) 010-52682999 | |||||
中国●北京西城区金融街19号富凯大厦B座12层 | Website: www.Dehenglaw.com | |||||
邮编: 100033 | E-mail: DeHeng@Dehenglaw.com |
August 24, 2022
To: | Lixiang Education Holding Co., Ltd. |
No. 818 Hua Yuan Street
Liandu District, Lishui City
Zhejiang Province, 323000
Peoples Republic of China
Dear Sirs,
Solely in connection with the Companys annual report on Form 20-F for the year ended December 31, 2021 (the Annual Report) , we hereby consent to the references to our firm and the summary of our opinion under the headings Enforceability of Civil Liabilities on page 3, Item 3. Key InformationPermissions Required for Our Operations in China on page 10, Item 3. Key InformationRisks Relating to Doing Business in China on page 48 and page 50, and Item 4. Information on the CompanyC. Organizational Structure on page 86 separately included in the Annual Report, which is filed with the Securities and Exchange Commission (the SEC) on August 24, 2022. We also consent to the filing with of this consent letter with the SEC as an exhibit to the Annual Report.
In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder.
Yours faithfully, |
For and on behalf of |
DeHeng Law Offices |
/s/ Zhang Xiaodan |
张晓丹 (Zhang Xiaodan) |
- Page 1 of 1 -
Exhibit 15.3
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the annual report (Amendment No.1 to Form 20-F) of our report dated April 28, 2022, except for Note 3, as to which the date is August 24, 2022, relating to the consolidated balance sheets of Lixiang Education Holding Co., Ltd. as of December 31, 2021 and 2020 and the related consolidated statements of operations and comprehensive income/(loss), changes in shareholders equity, and cash flows for the three-year period ended December 31, 2021, and the related notes.
We also consent to the reference of WWC, P.C., as an independent registered public accounting firm, as experts in matters of accounting and auditing.
/s/ WWC, P.C. | ||
San Mateo, California | WWC, P.C. | |
August 24, 2022 | Certified Public Accountants | |
PCAOB ID: 1171 |
Exhibit 15.5
Our ref SQG/772919-000001/24730463v2
Lixiang Education Holding Co., Ltd.
No. 818 Hua Yuan Street
Liandu District, Lishui City, Zhejiang Province, 323000
Peoples Republic of China
24 August 2022
Dear Sirs
Lixiang Education Holding Co., Ltd.
We have acted as legal advisers as to the laws of the Cayman Islands to Lixiang Education Holding Co., Ltd., an exempted company with limited liability incorporated in the Cayman Islands (the Company), in connection with the filing by the Company with the United States Securities and Exchange Commission (the SEC) of an annual report on Form 20-F for the year ended 31 December 2021 (Form 20-F).
We hereby consent to the reference of our firm under the heading Enforceability of Civil Liabilities and Item 10. Additional Information E. Taxation Cayman Islands Taxation in the Form 20-F.
We consent to the filing with the SEC of this consent letter as an exhibit to the Annual Report. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the U.S. Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder.
Yours faithfully
/s/ Maples and Calder (Hong Kong) LLP
Maples and Calder (Hong Kong) LLP
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