# EDGAR Filing Document

**Accession Number:** 0001716770
**File Stem:** 0001213900-25-069961
**Filing Date:** 2025-7
**Character Count:** 678370
**Document Hash:** bf19c26e5d6550c3eeb198273d2b3dd0
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-25-069961.hdr.sgml**: 20250731

**ACCESSION NUMBER**: 0001213900-25-069961

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 84

**CONFORMED PERIOD OF REPORT**: 20250331

**FILED AS OF DATE**: 20250731

**DATE AS OF CHANGE**: 20250731

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Wah Fu Education Group Ltd
- **CENTRAL INDEX KEY:** 0001716770
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-EDUCATIONAL SERVICES [8200]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 000000000
- **STATE OF INCORPORATION:** D8
- **FISCAL YEAR END:** 0331

**FILING VALUES:**
- **FORM TYPE:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38619
- **FILM NUMBER:** 251171411

**BUSINESS ADDRESS:**
- **STREET 1:** RM 505 BLDG NO. 40, NO. 1 DISHENG N ST
- **STREET 2:** ECONOMIC & TECHNOLOGICAL DEVELOP. ZONE
- **CITY:** BEIJING
- **STATE:** F4
- **ZIP:** 100176
- **BUSINESS PHONE:** 86 10 57925024

**MAIL ADDRESS:**
- **STREET 1:** RM 505 BLDG NO. 40, NO. 1 DISHENG N ST
- **STREET 2:** ECONOMIC & TECHNOLOGICAL DEVELOP. ZONE
- **CITY:** BEIJING
- **STATE:** F4
- **ZIP:** 100176

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION** 

**WASHINGTON, D.C. 20549**

**FORM 20-F**

**(Mark One)**

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

**OR**

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

**For the fiscal year ended March 31, 2025**

**OR**

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

**OR**

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

Date of event requiring this shell company report _________________________

**For the transition period from __________________ to_____________________________**

Commission file number: 001-38619

---

| |
|:---|
| **Wah Fu Education Group Ltd.** |
| (Exact name of Registrant as specified in its charter) |

---

---

| |
|:---|
| **British Virgin Islands** |
| (Jurisdiction of incorporation or organization) |

---

---

| |
|:---|
| **L207b, Hesheng Fortune Plaza, No.13 Deshengmenwai Street**<br> **Xicheng District, Beijing, China 100088** |
| (Address of principal executive oﬃces) |

---

---

| |
|:---|
| **Yang Yu**<br> **Tel: + 86 10 59942599 Fax: + 86 10 85171378**<br> **L207b, Hesheng Fortune Plaza, No.13 Deshengmenwai Street**<br> **Xicheng District, Beijing, China 100088** |
| (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) |

---

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

---

| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| **Ordinary shares, par value US$0.01 per share** | **WAFU** | **NASDAQ Capital Market** |

---

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

<u>None</u> <br> (Title of Class)

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

<u>None</u> <br> (Title of Class)

The number of outstanding shares of each of the issuer's classes of capital or common stock as of March 31, 2025 was: 2,922,559 ordinary shares and 1,488,000 Class A shares, par value $0.01 per share.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐ Yes ☒ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

☐ Yes ☒ No

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

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

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ <br> Emerging growth company ☐

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

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

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

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

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

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

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

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

Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

**WAH FU EDUCATION GROUP LIMITED**

**FORM 20-F ANNUAL REPORT**

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| [**PART I**](#a_001) | [**PART I**](#a_001) | 1 |
| **Item 1.** | [**Identity of Directors, Senior Management and Advisers**](#a_002) | 4 |
| **Item 2.** | [**Offer Statistics and Expected Timetable**](#a_003) | 4 |
| **Item 3.** | [**Key Information**](#a_004) | 4 |
| **Item 4.** | [**Information on the Company**](#a_005) | 47 |
| **Item 4A.** | [**Unresolved Staff Comments**](#a_006) | 73 |
| **Item 5.** | [**Operating and Financial Review and Prospects**](#a_007) | 74 |
| **Item 6.** | [**Directors, Senior Management and Employees**](#a_008) | 87 |
| **Item 7.** | [**Major Shareholders and Related Party Transactions**](#a_009) | 93 |
| **Item 8.** | [**Financial Information**](#a_010) | 94 |
| **Item 9.** | [**The Offering and Listing.**](#a_011) | 95 |
| **Item 10.** | [**Additional Information.**](#a_012) | 96 |
| **Item 11.** | [**Quantitative and Qualitative Disclosures About Market Risk.**](#a_013) | 102 |
| **Item 12.** | [**Description of Securities Other than Equity Securities.**](#a_014) | 102 |
| [**PART II**](#a_015) | [**PART II**](#a_015) | 103 |
| **Item 13.** | [**Defaults, Dividend Arrearages and Delinquencies.**](#a_016) | 103 |
| **Item 14.** | [**Material Modifications to the Rights of Security Holders and Use of Proceeds.**](#a_017) | 103 |
| **Item 15.** | [**Controls and Procedures.**](#a_018) | 103 |
| **Item 16.** | [**\[Reserved\]**](#a_019) | 105 |
| **Item 16A.** | [**Audit committee financial expert.**](#a_020) | 105 |
| **Item 16B.** | [**Code of Ethics.**](#a_021) | 105 |
| **Item 16C.** | [**Principal Accountant Fees and Services.**](#a_022) | 105 |
| **Item 16D.** | [**Exemptions from the Listing Standards for Audit Committees.**](#a_023) | 105 |
| **Item 16E.** | [**Purchases of Equity Securities by the Issuer and Affliated Purchasers.**](#a_024) | 105 |
| **Item 16F.** | [**Corporate Governance.**](#a_026) | 106 |
| **Item 16G.** | [**Mine Safety Disclosure.**](#a_027) | 106 |
| **Item 16H.** | [**Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.**](#a_028) | 106 |
| **Item 16I.** | [**Insider trading policies**](#a_029) | 106 |
| **Item 16J.** | [**Cybersecurity.**](#a_030) | 106 |
| [**PART III**](#a_031) | [**PART III**](#a_031) | 108 |
| **Item 17.** | [**Financial Statements.**](#a_032) | 108 |
| **Item 18.** | [**Financial Statements.**](#a_033) | 108 |
| **Item 19.** | [**Exhibits.**](#a_034) | 108 |
| [SIGNATURES](#a_035) | [SIGNATURES](#a_035) | 109 |
| [INDEX TO CONSOLIDATED FINANCIAL STATEMENTS](#a_036) | [INDEX TO CONSOLIDATED FINANCIAL STATEMENTS](#a_036) | F-1 |

---

i

**PART I**

**CERTAIN INFORMATION**

In this annual report on Form 20-F, unless otherwise indicated, "Wah Fu" refers to Wah Fu Education Group Limited, a company organized in the British Virgin Islands ("BVI"); "we," "us," "our," "our company," the "Company" or similar terms refer to Wah Fu Education Group Limited and/or its consolidated subsidiaries, other than the variable interest entity, Beijing Huaxia Dadi Digital Information Technology Co., a PRC company, and Beijing Huaxia Dadi Digital Information Technology Co., Ltd. – Shandong Branch, the branch company of Beijing Huaxia Dadi Digital Information Technology Co., unless the context otherwise indicates; and "VIE" refers respectively to the variable interest entity and its subsidiaries, Beijing Huaxia Dadi Digital Information Technology Co., Ltd. and its subsidiaries, such as Huafu Wanrun (Guangzhou) Education Technology, Sichuan Huafu Gengyun Education Technology Co., Ltd., and Hunan Huafu Haihui Learning Technology Co., Ltd. Wah Fu conducts its operations in China primarily through its wholly foreign owned enterprises ("WFOEs") and their directly owned subsidiaries, and through contractual arrangements with the VIE in China. As a result, Wah Fu does not conduct any business on its own. The financial results of the VIE and its subsidiaries are consolidated into our financial statements for accounting purposes, but we do not hold any equity interest in the VIE or any of its subsidiaries. Investors are purchasing an interest in Wah Fu, the British Virgin Islands holding company.

Unless the context indicates otherwise, all references to "China" and the "PRC" refer to the People's Republic of China, all references to "Renminbi" or "RMB" are to the legal currency of the People's Republic of China and all references to "U.S. dollars," "dollars" and "$" are to the legal currency of the United States. This annual report contains translations of Renminbi amounts into U.S. dollars at specified rates solely for the convenience of the reader. We make no representation that the Renminbi or U.S. dollar amounts referred to in this report could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. On March 31, 2025, the cash buying rate announced by the People's Bank of China was RMB7.1782 to $1.00.

Investing in Wah Fu's securities is highly speculative and involves a significant degree of risk. Wah Fu is not an operating company established in the PRC, but a holding company incorporated in the British Virgin Islands, or the BVI. As a holding company with no material operations of its own, Wah Fu conducts the majority of its operations through its WFOEs and their directly owned subsidiaries, and through contractual arrangements with the VIE in China. There are contractual arrangements between the WFOE and VIE entity established in the PRC in which Wah Fu does not hold any equity interest, and the VIE's subsidiaries based in the PRC, which contain some of our operations and assets in China. This variable interest entity structure involves unique risks to investors. The contractual arrangements with the VIE have not been tested in court. This variable interest entity structure is used to provide investors with contractual exposure to foreign investment in China-based companies where Chinese law prohibits or restricts direct foreign investment in the operating companies. Due to PRC legal restrictions on foreign ownership in internet-based businesses, we do not have any equity ownership of the VIE; instead, we receive the economic benefits of the VIE's business operations through certain contractual arrangements.

As a result of such a series of contractual arrangements, Wah Fu and its subsidiaries become the primary beneficiary of the VIE for accounting purposes and the VIE as a PRC consolidated entity under U.S. GAAP. We consolidate the financial results of the VIE and its subsidiaries in our consolidated financial statements in accordance with U.S. GAAP. Neither we nor our investors own any equity ownership in, direct foreign investment in, or control through such ownership/investment of the VIE. These contractual arrangements have not been tested in a court of law in the PRC. As a result, investors in Wah Fu's ordinary shares are not purchasing an equity interest in the VIE or its subsidiaries but instead are purchasing an equity interest in Wah Fu, the BVI holding company.

Investors may never hold equity interests in the Chinese operating company. The Chinese regulatory authorities could disallow this variable interest entity structure, which would likely result in a material change in Wah Fu's operations and/or a material change in the value of the securities we have registered for sale, including that it could cause the value of Wah Fu's securities to significantly decline or become worthless.

In addition, as Wah Fu conducts substantially all of its operations in China through its WFOEs in China, it is subject to legal and operational risks associated with having substantially all of its operations in China, which risks could result in a material change in Wah Fu's operations and/or the value of the securities Wah Fu has registered for sale or could significantly limit or completely hinder Wah Fu's ability to offer or continue to offer Wah Fu's securities to investors and cause the value of Wah Fu's securities to significantly decline or be worthless. Recently, the PRC government initiated a series of regulatory actions and made a number of public statements on the regulation of business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement. As of the date of this report, as advised by our PRC legal counsel, Beijing Haotai Law Firm ("Haotai"), we are not directly subject to these regulatory actions or statements, as we have not implemented any monopolistic behavior and our business does not involve the collection of user data, implicate cybersecurity, or involve any other type of restricted industry. Further, as of the date of this report, as advised by Haotai, no effective laws or regulations in the PRC explicitly require us to seek approval from the China Securities Regulatory Commission (the "CSRC") or any other PRC governmental authorities for our overseas listing, nor has our company, any of our subsidiaries, or the VIE or any of its subsidiaries, received any inquiry, notice, warning or sanctions regarding our planned overseas listing from the CSRC or any other PRC governmental authorities. However, since these statements and regulatory actions by the PRC government are newly published and official guidance and related implementation rules have not been issued, it is highly uncertain what the potential impact such modified or new laws and regulations will have either on the WFOEs' or VIE's daily business operation, the ability to accept foreign investments and list on a U.S. or other foreign exchange. The Standing Committee of the National People's Congress (the "SCNPC") or other PRC regulatory authorities may in the future promulgate laws, regulations or implementing rules that requires our company, the WFOEs, the VIE or any of its subsidiaries to obtain regulatory approval from Chinese authorities before offering securities in the U.S. Any future Chinese, U.S., BVI or other rules and regulations that place restrictions on capital raising or other activities by companies with extensive operations in China could adversely affect Wah Fu's business and results of operations. See "*Item 3. Key Information - D. Risk Factors- Risks Related to Doing Business in China*" beginning for a detailed description of various risks related to doing business in China and other information that should be considered before making a decision to purchase any of Wah Fu's securities.

**Transfer of Cash through our Organization**

Wah Fu can transfer cash to its subsidiaries through capital contributions and/or intercompany loans, and Wah Fu's subsidiaries can transfer cash to Wah Fu through dividends or other distributions and/or intercompany loans. Additionally, Wah Fu's subsidiaries can transfer cash to the VIE through loans, service fees, and the VIE can transfer cash to Wah Fu as service fees under the VIE agreements (the "VIE Agreements") and/or through loans. We intend to settle amounts owed under the VIE Agreements. The aforesaid transactions, including capital injection and loans, would be eliminated upon consolidation.

Our cash primarily consists of cash on hand and cash in banks in the PRC and Hong Kong, which is unrestricted for withdrawal and use and is deposited with banks in China. As of March 31, 2025 and March 31, 2024, we had approximately $10.1 million and $11.0 million of cash in banks, respectively, and had no outstanding bank loans or third-party loans due. Funds are transferred between our WFOEs, including Beijing Huaxia Dadi Distance Learning Services Co., Ltd. ("Distance Learning") and Shanghai Xin Fu Network Technology Co., Ltd ("Shanghai Xin Fu"), WFOEs' subsidiaries, and the VIE for their daily operation purposes.

There is no assurance that the PRC government will not intervene or impose restrictions on the ability of us, our subsidiaries, and the VIE to transfer cash. Most of our cash is in Renminbi, and the PRC government could prevent the cash maintained from leaving the PRC, could restrict deployment of the cash into the business of the VIE and its subsidiaries, and restrict the ability to pay dividends. For details regarding the restrictions on our ability to transfer cash between us, our subsidiaries, and the VIE, see "*Item 3.D. Risk Factors- Risks Related to Doing Business in China*"

We currently do not have cash management policies that dictate how funds are transferred between us, our subsidiaries, and the VIE. For details regarding the restrictions on our ability to transfer cash between Wah Fu, our subsidiaries, and the VIE, see "*Item 3. Key Information - D. Risk Factors-Risks Related to Doing Business in China- Restrictions on currency exchange or outbound capital flows may limit our ability to utilize our PRC revenue effectively*," and "*Item 3. Key Information - D. Risk Factors-Risks Related to Doing Business in China- Our PRC subsidiary is subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy our liquidity requirements*.**"**

**The Holding Foreign Companies Accountable Act (the "HFCAA")**

Our ordinary shares may be prohibited from trading on a national exchange or "over-the-counter" markets under the Holding Foreign Companies Accountable Act (the "HFCAA") if the Public Company Accounting Oversight Board (the "PCAOB") is unable to inspect our auditor for three consecutive years beginning in 2021. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act ("AHFCAA"), and on December 29, 2022, legislation entitled "Consolidated Appropriations Act, 2023" (the "Consolidated Appropriations Act") was signed into law by President Biden, which contained, among other things, an identical provision to the AHFCAA and amended the HFCA Act by requiring the SEC to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the prohibition on trading. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.

Pursuant to the HFCAA, the PCAOB issued a Determination Report on December 16, 2021 ("Determination Report") which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China of the PRC, and (2) Hong Kong. In addition, the PCAOB's report identified the specific registered public accounting firms which are subject to these determinations. On August 26, 2022, a Statement of Protocol was signed by the PCAOB, the CSRC and the Ministry of Finance of the PRC governing inspections and investigations of audit firms based in mainland China and Hong Kong (the "Statement of Protocol"). The PCAOB was required to assess whether it is able to inspect and investigate completely registered public accounting firms headquartered in mainland China and Hong Kong by the end of 2022. On December 15, 2022, the PCAOB board announced that it has completed the inspections, determined that it had complete access to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, and voted to vacate the Determination Report. At the same time, the PCAOB also made it clear that it does not have to wait another year to reassess its determinations. Should the PCAOB deem that the PRC authorities obstruct or otherwise fail to facilitate its access in any way and at any point in the future, the PCAOB has the right to act immediately to consider the need to issue a new determination and vacate its determination issued on December 15, 2022. Should that happen, we could be named as a "Covered Issuer" and if the PCAOB determines that our auditor has not been subject to PCAOB inspections for two consecutive years already, it could require the SEC to prohibit our securities from trading on any U.S. stock exchanges. Once the December 15, 2022 determination is vacated, this two consecutive year period will be calculated beginning from the first time the PCAOB was blocked completed access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and will not restart at December 15, 2022. As of the date of this report, our auditor, YCM CPA INC., is a PCAOB-registered public accounting firm headquartered in the United States and is subject to regular PCAOB inspections. Notwithstanding the foregoing, in the future, if there is any regulatory change or step taken by PRC regulators that does not permit our auditor to provide audit documentations located in mainland China or Hong Kong to the PCAOB for inspection or investigation, or the PCAOB re-evaluates its determination as a result of any obstruction with the implementation of the Statement of Protocol in the future, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading of our securities, including trading on the national exchange and trading on "over-the-counter" markets, may be prohibited under the HFCAA.

See also "*Item 3.D. Risk Factors — Risks Related to Doing Business in China — Our ordinary shares may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors. The delisting of our ordinary shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. The Consolidated Appropriations Act 2023 contained, among other things, an identical provision to HFCAA, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two.*"

**FORWARD-LOOKING STATEMENTS**

This report contains "forward-looking statements" for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that represent our beliefs, projections, and predictions about future events. All statements other than statements of historical fact are "forward-looking statements," including any projections of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements of management's beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the foregoing. Words such as "may," "will," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," and similar expressions, as well as statements in the future tense, identify forward-looking statements.

These statements are necessarily subjective and involve known and unknown risks, uncertainties, and other important factors that could cause our actual results, performance, or achievements, or industry results, to differ materially from any future results, performance, or achievements described in or implied by such statements. Actual results may differ materially from expected results described in our forward-looking statements, including with respect to correct measurement and identification of factors affecting our business or the extent of their likely impact, and the accuracy and completeness of the publicly available information with respect to the factors upon which our business strategy is based or the success of our business.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether, or the times by which, our performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and management's belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, those factors discussed under the headings "Risk Factors", "Operating and Financial Review and Prospects," and elsewhere in this report.

**ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS**

Not Applicable.

**ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE**

Not Applicable.

**ITEM 3. KEY INFORMATION**

**Contractual Arrangements and Corporate Structure**

Wah Fu Education Group Ltd. is a British Virgin Islands holding company and currently conducts substantially all of our business operations in the PRC through our wholly foreign owned entities ("WFOEs") incorporated in the PRC and certain business operations through the PRC consolidated variable interest entity ("VIE"), with which one of our WFOEs has entered into contractual arrangements. Due to PRC legal restrictions on foreign ownership and investment in the value-added telecommunications market, we rely on a series of contractual arrangements among VIE and its shareholders to operate our online and mobile platforms in China. These contractual arrangements entered into with the VIE allow us to (i) exercise effective control over the VIE, (ii) receive substantially all of the economic benefits of the VIE, and (iii) have an exclusive option to purchase all or part of the equity interests in the VIE when and to the extent permitted by PRC law. These contractual arrangements include exclusive business cooperation agreements, exclusive option agreements, equity interest pledge agreements, and power of attorney, as the case may be. As a result of these contractual arrangements, we exert effective control over, and are considered the primary beneficiary of, the VIE and consolidate its operating results in our financial statements under U.S. GAAP. As used in this annual report, unless otherwise indicated, "we," "us," "our," the "Company," "Wah Fu" or similar terms refer to Wah Fu Education Group Limited, a company organized in the British Virgin Islands and/or its consolidated subsidiaries, other than the variable interest entity, including its wholly owned subsidiaries, Beijing Huaxia Dadi Distance Learning Services Co., Ltd. ("Beijing Distance Learning") and Shanghai Xin Fu Network Technology Co., Ltd. ("Shanghai Network Technology"), and their subsidiaries in PRC, but excluding the variable interest entity, Beijing Huaxia Dadi Digital Information Technology Co., Ltd. ("Beijing Digital Information"), a PRC company, and its subsidiaries, unless the context otherwise indicates; and "VIE" refers to Beijing Huaxia Dadi Digital Information Technology Co., Ltd. and its subsidiaries, including Huafu Wanrun (Guangzhou) Education Technology Co., Ltd., Sichuan Huafu Gengyun Education Technology Co., Ltd., and Hunan Huafu Haihui Learning Technology Co., Ltd.

Beijing Digital Information holds our Internet Content Provider ("ICP") license necessary to operate our online platform in China, our domain names, including www.edu-edu.com, our registered trademarks in China and our registered software copyrights that are essential to the Company's online operation in the PRC. For the years ended March 31, 2025 and 2024, 5.0% and 10.7% of our consolidated revenue was derived from Beijing Digital Information. Our affiliated variable interest entity, Beijing Digital Information, did not pay any fee to our PRC subsidiaries, Beijing Distance Learning and Shanghai Xinfu Network Technology, for fiscal years ending March 31, 2025 and 2024 and since the VIE Agreements were executed in August 2017. We did not receive any dividends from our PRC subsidiaries in the past two fiscal years and expect that we will receive dividends in the near future.

As a result of such a series of contractual arrangements, Wah Fu and its subsidiaries become the primary beneficiary of the VIE for accounting purposes and the VIE as a PRC consolidated entity under U.S. GAAP. We consolidate the financial results of the VIE and its subsidiaries in our consolidated financial statements in accordance with U.S. GAAP. Neither we nor Wah Fu's investors own any equity ownership in, direct foreign investment in, or control through such ownership/investment of the VIE. These contractual arrangements have not been tested in a court of law in the PRC. As a result, investors in Wah Fu's ordinary shares are not purchasing an equity interest in the VIE or its subsidiaries but instead are purchasing an equity interest in Wah Fu, the BVI holding company.

The diagram below shows our corporate structure as of the date of this report, including the WFOEs, the VIE, and its subsidiaries. However, investors are cautioned that the enforceability of such VIE Agreements has not been tested in a court of law. Wah Fu conducts operations in China primarily through WFOEs and its subsidiaries, and through contractual arrangements with the VIE in China. As a result, Wah Fu does not conduct any business on its own. The VIE structure is used to provide investors with contractual exposure to foreign investment in China-based companies where Chinese law prohibits or restricts direct foreign investment in the operating companies. Due to PRC legal restrictions on foreign ownership in internet-based businesses, we do not have any equity ownership of the VIE; instead, we receive the economic benefits of the VIE's business operations through certain contractual arrangements. As a result of such a series of contractual arrangements, Wah Fu and its subsidiaries become the primary beneficiary of the VIE for accounting purposes and the VIE as a PRC consolidated entity under U.S. GAAP. We consolidate the financial results of the VIE and its subsidiaries in our consolidated financial statements in accordance with U.S. GAAP. Neither we nor Wah Fu's investors own any equity ownership in, direct foreign investment in, or control through such ownership/investment of the VIE. Investors are purchasing an interest in Wah Fu, the BVI holding company.

![](image_001.jpg)

If the PRC government deems that our contractual arrangements with the VIEs do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to material penalties or be forced to relinquish our interests in those operations or otherwise significantly change our corporate structure. See "*Risk Factors – Risks Related to Our Corporate Structure - Any failure by Beijing Digital Information or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our busines*s." If we are unable to maintain effective control, we would not be able to continue to consolidate Beijing Digital Information's financial results. See "*Risk Factors – Risks Related to Our Corporate Structure - If the PRC government finds that the contractual arrangements that establish the structure for holding our ICP license do not comply with applicable PRC laws and regulations, we could be subject to severe penalties or be forced to relinquish our interests in those operations*" and "*Risk Factors – Risks Related to Our Corporate Structure - We rely on contractual arrangements with Beijing Digital Information and its shareholders for a portion of our business operations, which may not be as effective as direct ownership in providing operational contro*l."

**VIE Financial Information**

Set forth below is selected consolidated statements of operations and cash flows for the fiscal years ended March 31, 2025, 2024, and 2023, and selected balance sheet information as of March 31, 2025, 2024, and 2023 showing financial information for the parent company Wah Fu Education Group Limited, the WFOEs (as defined below) and WFOEs' subsidiaries (as defined below), the VIE and VIE's subsidiaries, eliminating entries and consolidated information (in dollars). In the tables below, the column headings correspond to the following entities in the organizational diagram on page 5. See also VIE and consolidated financial information in Note 2 of our financial statements.

For the purposes of this section:

● "parent" refers to Wah Fu Education Group Limited;

● "WFOEs" refers to Beijing Distance Learning and Shanghai Network Technology, each a wholly foreign-owned enterprise of the Company in China;

● "VIE and its subsidiaries" refer to Beijing Huaxia Dadi Digital Information Technology Co., Ltd ("Digital Information") and its subsidiaries, which are collectively controlled through contractual arrangements by Beijing Distance Learning.

S**elected Condensed Consolidation Schedule of Balance Sheet**

**As of March 31, 2025**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |<br><br>**Parent** |<br>**WOFE and**<br>**WOFE's**<br>**Subsidiary** |<br>**VIE and**<br>**VIE's**<br>**Subsidiary** | **Elimination**<br>**Entries and**<br>**Reclassification**<br>**Entries** |<br><br>**Consolidated** |
| **Cash** | $533330 | 9235625 | 362437 |  | 10131392 |
| **Intercompany receivable** |  | 2826942 |  | (2826942) |  |
| **Total Current Assets** | 2328354 | 14353401 | 373282 | (2826942) | 14228095 |
| **Total Non-current Assets** | 298014 | 919154 | 2995 |  | 1220163 |
| **Intercompany payable** | 254623 |  | 2572319 | (2826942) |  |
| **Total Liabilities** | 657662 | 3054508 | 2793476 | (2826942) | 3678705 |
| **Total Shareholders' Equity** | 1968705 | 12218046 | (2417198) |  | 11769553 |

---

**As of March 31, 2024**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Parent** | **WOFE and<br> WOFE's<br> Subsidiary** | **VIE and<br> VIE's<br> Subsidiary** | **Elimination<br> Entries and<br> Reclassification<br> Entries** | **Consolidated** |
| **Cash** | $986957 | 9618646 | 440105 |  | 11045708 |
| **Intercompany receivable** |  | 2979684 |  | (2979684) |  |
| **Total Current Assets** | 2807148 | 14399286 | 446055 | (2979684) | 14672805 |
| **Total Non-current Assets** | 298014 | 1182156 | 3448 |  | 1483618 |
| **Intercompany payable** | 254623 |  | 2725061 | (2979684) |  |
| **Total Liabilities** | 585373 | 3462024 | 2929473 | (2979684) | 3997187 |
| **Total Shareholders' Equity** | 2519788 | 12119418 | (2479970) |  | 12159236 |

---

\* Intercompany receivable from VIE and intercompany payable to WFOE represented a loan to VIE for working capital purpose.

**Condensed Consolidated Statements of Operations Data**

**For the year ended March 31, 2025**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31, 2025** | **For the year ended March 31, 2025** | **For the year ended March 31, 2025** | **For the year ended March 31, 2025** | **For the year ended March 31, 2025** |
|  | **Parent<br> Only** | **WOFE and WOFE's Subsidiary** | **VIE and VIE's Subsidiary** | **Eliminating adjustments** | **Consolidated Totals** |
| **Revenue** | $- | 5879366 | 307279 |  | 6186645 |
| **Intercompany revenue** |  |  | 252169 | (252169) |  |
| **Cost of revenue and related tax** |  | 3510825 | 98925 |  | 3609750 |
| **Cost from intercompany** |  | 252169 |  | (252169) |  |
| **Gross Profit** |  | 2368541 | 208354 |  | 2576895 |
| **Total operating expenses** | 583457 | 2228083 | 157817 |  | 2969357 |
| **Operating Income (expense)** | (583457) | 140458 | 50537 |  | (392462) |
| **Net Income(expense)** | (565963) | 142501 | 50614 |  | (372848) |

---

**For the year ended March 31, 2024**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31, 2024** | **For the year ended March 31, 2024** | **For the year ended March 31, 2024** | **For the year ended March 31, 2024** | **For the year ended March 31, 2024** |
|  | **Parent<br> Only** | **WOFE and<br> WOFE's<br> Subsidiary** | **VIE and<br> VIE's<br> Subsidiary** | **Eliminating<br> adjustments** | **Consolidated<br> Totals** |
| **Revenue** | $- | 6452686 | 770534 |  | 7223220 |
| **Intercompany revenue** |  |  | 337686 | (337686) |  |
| **Cost of revenue and related tax** |  | 4017459 | 214794 |  | 4232253 |
| **Cost from intercompany** |  | 337686 |  | (337686) |  |
| **Gross Profit** |  | 2435227 | 555740 |  | 2990967 |
| **Total operating expenses** | 473479 | 2540077 | 217933 |  | 3231489 |
| **Operating Income (expense)** | (473479) | (104850) | 337807 |  | (240522) |
| **Net Income(expense)** | (454706) | (261678) | 339524 |  | (376860) |

---

**For the year ended March 31, 2023**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31, 2023** | **For the year ended March 31, 2023** | **For the year ended March 31, 2023** | **For the year ended March 31, 2023** | **For the year ended March 31, 2023** |
|  | **Parent<br> Only** | **WOFE and<br> WOFE's<br> Subsidiary** | **VIE and<br> VIE's<br> Subsidiary** | **Eliminating<br> adjustments** | **Consolidated<br> Totals** |
| **Revenue** | $- | $9984110 | $708503 | $- | $10692613 |
| **Intercompany revenue** |  |  | 149211 | (149211) |  |
| **Cost of revenue and related tax** |  | 4703711 | 301999 |  | 5005710 |
| **Cost from intercompany** |  | 149211 |  | (149211) |  |
| **Gross Profit** |  | 5280399 | 406504 |  | 5686903 |
| **Total operating expenses** | 451123 | 2920758 | 303054 |  | 3674935 |
| **Operating Income (expense)** | (451123) | 2359641 | 103450 |  | 2011968 |
| **Net Income(expense)** | (434476) | 1924253 | 119846 |  | 1609623 |

---

**Selected Condensed Consolidation Schedule of Cash Flows**

**For the year ended March 31, 2025**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31, 2025** | **For the year ended March 31, 2025** | **For the year ended March 31, 2025** | **For the year ended March 31, 2025** | **For the year ended March 31, 2025** |
|  | **Parent**<br>**Only** | **WOFE and**<br> **WOFE's**<br>**Subsidiary** | **VIE and**<br> **VIE's**<br>**Subsidiary** | **Eliminating**<br>**adjustments** |<br>**Consolidated** |
| **OPERATING ACTIVITIES** | | | | | |
| **Net income (Loss)** | $(493674) | $113812 | $7014 | $- | $(372848) |
| Intercompany receive |  | 138575 | 267299 | (405874) |  |
| Intercompany payment |  | (267299) | (138575) | 405874 |  |
| **Net cash provided by (used in) operating activities** | (468507) | (421018) | (76066) |  | (965592) |
| **Net cash provided by (used in) investing activities** |  | (10627) |  |  | (10627) |
| **Net cash provided (used in) financing activities** | 14880 | 48144 |  |  | 63024 |
| Intercompany receive |  |  |  |  |  |
| Intercompany payment |  |  |  |  |  |
| **Effect of exchange rate fluctuation on cash** |  | 481 | (1602) |  | (1121) |

---

**For the year ended March 31, 2024**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31, 2024** | **For the year ended March 31, 2024** | **For the year ended March 31, 2024** | **For the year ended March 31, 2024** | **For the year ended March 31, 2024** |
|  | **Parent**<br>**Only** | **WOFE and WOFE's**<br>**Subsidiary** | **VIE and VIE's**<br>**Subsidiary** | **Eliminating**<br>**adjustments** |<br>**Consolidated** |
| **OPERATING ACTIVITIES** | | | | | |
| **Net income (Loss)** | $(454706) | $30473 | $47373 | $- | $(376860) |
| Intercompany receive |  | 279053 | 357947 | (637000) |  |
| Intercompany payment |  | (357947) | (279053) | 637000 |  |
| **Net cash provided by (used in) operating activities** | (524251) | (318921) | 75862 |  | (767310) |
| **Net cash provided by (used in) investing activities** |  | (231440) |  |  | (231440) |
| **Net cash provided (used in) financing activities** |  |  |  |  |  |
| Intercompany receive |  |  |  |  |  |
| Intercompany payment |  |  |  |  |  |
| **Effect of exchange rate fluctuation on cash** |  | (503717) | (19288) |  | (523005) |

---

**For the year ended March 31, 2023**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31, 2023** | **For the year ended March 31, 2023** | **For the year ended March 31, 2023** | **For the year ended March 31, 2023** | **For the year ended March 31, 2023** |
|  | **Parent**<br>**Only** | **WOFE and WOFE's**<br>**Subsidiary** | **VIE and VIE's**<br>**Subsidiary** | **Eliminating**<br>**adjustments** |<br>**Consolidated** |
| **OPERATING ACTIVITIES** | | | | | |
| **Net income (Loss)** | $(434476) | $1987073 | $119846 | $- | $1672443 |
| Intercompany receive |  |  | 73269 | (73269) |  |
| Intercompany payment |  | (73269) |  | 73269 |  |
| **Net cash provided by (used in) operating activities** | (429642) | 2131273 | (89131) |  | 1612500 |
| **Net cash provided by (used in) investing activities** |  | 42313 | (5437) |  | 36876 |
| **Net cash provided (used in) financing activities** |  |  |  |  |  |
| Intercompany receive |  |  |  |  |  |
| Intercompany payment |  |  |  |  |  |
| **Effect of exchange rate fluctuation on cash** |  | (805773) | (39585) |  | (845358) |

---

**Cash and Asset Flows through Our Organization**

Wah Fu is a holding company with no operations of its own. We conduct our operations through our subsidiaries in China. As a result, although other means are available for us to obtain financing at the holding company level, Wah Fu's ability to pay dividends to its shareholders and to service any debt it may incur may depend upon dividends paid by our PRC subsidiaries. If any of our PRC subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict our PRC subsidiaries' ability to pay dividends to Wah Fu. In addition, our PRC subsidiaries are permitted to pay dividends to Wah Fu only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Further, our PRC subsidiaries are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies.

Under PRC laws and regulations, our PRC subsidiaries are subject to certain restrictions with respect to paying dividends or otherwise transferring any of their net assets to us. Remittance of dividends by a wholly foreign-owned enterprise out of China is also subject to examination by the banks designated by the State Administration of Foreign Exchange, or SAFE. The amounts restricted include the paid-up capital and the statutory reserve funds of our PRC subsidiaries, totaling $975,014, $975,014, and $975,014 as of March 31, 2025, 2024 and 2023, respectively.

Furthermore, cash transfers from our PRC subsidiaries to entities outside of China are subject to PRC government controls on currency conversion. To the extent cash in our business is in the PRC/Hong Kong or a PRC/Hong Kong entity, such cash may not be available to fund operations or for other use outside of the PRC/Hong Kong due to restrictions and limitations imposed by the governmental authorities on the ability of us or our PRC/Hong Kong subsidiaries to transfer cash outside of the PRC/Hong Kong. Shortages in the availability of foreign currency may temporarily delay the ability of our PRC subsidiaries to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency-denominated obligations. In view of the foregoing, to the extent cash in our business is held in China or by a PRC entity, such cash may not be available to fund operations or for other use outside of the PRC. For risks relating to the fund flows of our operations in China, see *"Item 3.D. Risk Factors- Risks Related to Doing Business in China".*

 

Under PRC law, Wah Fu may provide funding to our PRC subsidiaries only through capital contributions or loans, subject to the satisfaction of applicable government registration and approval requirements. As of the date of this annual report, there have been no cash flows between Wah Fu and our subsidiaries.

Funds are transferred among our PRC subsidiaries for working capital purposes, primarily between our WFOE[s], Beijing Huaxia Dadi Distance Learning Services Co., Ltd. and Shanghai Xin Fu Network Technology Co., Ltd., and the VIE, Beijing Huaxia Dadi Digital Information Technology Co. and its subsidiaries. The following table provides a summary of the distributions and working capital funds transferred between the VIE and the WOFEs.

---

| | | | |
|:---|:---|:---|:---|
|  | **Fiscal Years Ended March 31,** | **Fiscal Years Ended March 31,** | **Fiscal Years Ended March 31,** |
|  | **2025** | **2024** | **2023** |
| Cash transferred to VIE from WOFE | $- | $- | $- |

---

The transfer of funds among companies are subject to the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases (2020 Revision, the "Provisions on Private Lending Cases"), which was implemented on August 20, 2020 to regulate the financing activities between natural persons, legal persons and unincorporated organizations. The Provisions on Private Lending Cases set forth that private lending contracts will be upheld as invalid under the circumstance that (i) the lender swindles loans from financial institutions for relending; (ii) the lender relends the funds obtained by means of a loan from another profit-making legal person, raising funds from its employees, illegally taking deposits from the public; (iii) the lender who has not obtained the lending qualification according to the law lends money to any unspecified object of the society for the purpose of making profits; (iv) the lender lends funds to a borrower when the lender knows or should have known that the borrower intended to use the borrowed funds for illegal or criminal purposes; (v) the lending is violations of public orders or good morals; or (vi) the lending is in violations of mandatory provisions of laws or administrative regulations.

**Permissions Required from the PRC Authorities for Our Operations**

Our operations in China are governed by PRC laws and regulations, subject to its change, our business, financial condition or results of operations may be materially impacted. As of the date of this report, as advised by our PRC legal counsel, Beijing Haotai Law Firm, currently there has not been any laws and regulations that have such material impact. However, there is no assurance that there will not be any changes in the economic, political and legal environment in China, where Wah Fu operates, in the future. In addition, in light of the recent statements and regulatory actions by the PRC government, the promulgation of regulations prohibiting foreign ownership of Chinese companies operating in certain industries, which are constantly evolving, and anti-monopoly concerns, we may be subject to the risks of uncertainty of any future actions of the PRC government in this regard including the risk that the PRC government could disallow our holding company structure, which may result in a material change in our operations, including our ability to continue our existing holding company structure, carry on our current business, accept foreign investments, and offer or continue to offer securities to our investors. These adverse actions could cause the value of our securities to significantly decline or become worthless.

We also have operations in mainland China and we are aware that, in recent years, the PRC government initiated a series of regulatory actions and statements to regulate business operations in certain areas in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. For example, on July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law- enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws. Also, on July 10, 2021, the Cyberspace Administration of China (the "CAC") issued a revised draft of the Measures for Cybersecurity Review for public comments, or the Revised Draft, which required that, among others, in addition to "operator of critical information infrastructure", any "data processor" controlling personal information of no less than one million users (which to be further specified) which seeks to list in a foreign stock exchange should also be subject to cybersecurity review, and further elaborated the factors to be considered when assessing the national security risks of the relevant activities.

As advised by Haotai, as of the date of this report, other than those requisite for a domestic company in China to engage in the businesses similar to ours, we are not required to obtain any permission or approvals from the PRC authorities, including the CSRC, the CAC or any other governmental authority that is required to approve our operations. We and our subsidiaries, and the VIEs have received from PRC authorities all requisite licenses, permissions, or approvals needed to engage in the businesses currently conducted in China, and no permission or approval has been denied. The following table provides details on the licenses and permissions held by our PRC subsidiary, the VIEs, and their subsidiaries.

---

| | | | |
|:---|:---|:---|:---|
| **Company** | **License/Permission** | **Issuing Authority** | **Validity** |
| Shanghai Xin Fu Network Technology Co., Ltd | Business License | Market Supervision Bureau of<br> Shanghai Pilot Free Trade Zone | July 20, 2015 - July 19, 2045 |
| Shanghai Xia Shu Network Technology Co., Ltd | Business License | Market Supervision Bureau of<br> Shanghai Chongming District | April 29, 2016 - April 28, 2026 |
| Beijing Huaxia Dadi Distance Learning Services Co., Ltd. | Business License | Market Supervision Bureau of<br> Beijing Economic and Technological Development Zone | December 23, 1999 - December 22, 2039 |
| Huaxia MOOC(Hubei)Network Technology Co., Ltd | Business License | Market Supervision Bureau of<br> Wuhan Donghu New Technology Development Zone | March 15, 2017 - March 15, 2047 |
| Nanjing Suyun Education Technology Co., Ltd. | Business License | Administrative Approval Bureau of<br> Nanjing Gulou District | March 8, 2017 - Long-term |
| Fuzhou Huafu Mingjiao Technology Co., Ltd. | Business License | Market Supervision Bureau of<br> Fuzhou Gulou District | May 21, 2018 -05-21 - May 20, 2068 |
| Beijing Beijing Huaxia Dadi Digital Information Technology Co., Ltd. | Business License | Market Supervision Bureau of Beijing Economic and Technological Development Zone | September 14, 2000 - Long-term |
| Huafu Wanrun (Guangzhou) Education Technology Co., Ltd | Business License | Market Supervision Bureau of<br> Guangzhou Yuexiu District | October 21, 2019 - Long-term |
| Sichuan Huafu GengyunEducation Technology Co., Ltd | Business License | Market Supervision Bureau of<br> Changsha Tianxin District | November 8, 2019 - Long-term |
| Hunan Huafu Haihui Learing Technology Co., Ltd. | Business License | Market Supervision Bureau of<br> Chengdu Chenghua District | June 15, 2015 - June 14, 2065 |
|  Gansu Huafu Chuangxing Technology Co., Ltd | Business License | Market Supervision Bureau of<br> Lanzhou Chengguan District | April 9, 2024 - December 31, 2099 |
|  Beijing Zhihui Xinyu Technology Co., Ltd. | Business License | Market Supervision Bureau of<br> Beijing Haidian District | July 23, 2024 - Long-term |

---

As of the date of this report, as advised by Haotai, neither us nor any of our PRC subsidiaries, the VIEs and their subsidiaries are currently required to obtain any permission approval or licenses from the CSRC or the CAC for the trading of our securities on Nasdaq and the offering of our securities to foreign investors, or any other governmental agency that is required to approve our or our subsidiaries' operations. While the businesses of our subsidiaries in the PRC are subject to cybersecurity review with the CAC, as advised by Haotai, we do not believe we are required to conduct a cybersecurity review because (i) we do not possess a large amount of personal information on more than one million users in our business operations; and (ii) data processed in our business does not have a bearing on national security and thus may not be classified as core or important data by the authorities. However, our operations could be adversely affected, directly or indirectly, by future laws and regulations relating to our business or industry, if we inadvertently conclude that such approvals or permissions are not required when they are, or applicable laws, regulations, or interpretations change and we are required to obtain approvals or permissions in the future. We may be subject to penalties and sanctions imposed by the PRC regulatory agencies, including the CSRC, if we fail to comply with such rules and regulations, which could adversely affect the ability of the Company's securities to continue to trade on Nasdaq, which may cause the value of our securities to significantly decline or become worthless.

Given the uncertainties of interpretation and implementation of laws and regulations and the enforcement practice of government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future. For more detailed information, see *"Item 1A. Risk Factors—Risks Related to Our Business—Risks Related to Doing Business in China"*

 

There may be further prominent risks associated with Wah Fu's operations in the PRC. For example, as a U.S.-listed public company with business revenue derived primarily from our in the PRC, we may face heightened scrutiny, criticism and negative publicity, which could result in a material change in our operations and the value of our ordinary shares. PRC laws and regulations governing our current business operations are sometimes vague and uncertain, and we may face the risk that changes in the policies of the PRC government could have a significant impact upon the business we conduct in the PRC and the profitability of such business. Therefore, these risks associated with having our operations in the PRC could likely cause the value of our securities to significantly decline or be worthless. Furthermore, these risks would likely result in a material change in our business operations or a complete hinderance of our ability to offer or continue to offer our securities to investors. In addition, changes in Chinese internal regulatory mandates, such as the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the "M&A Rules"), the Anti-Monopoly Law, the Cybersecurity Law and the Data Security Law, may target the Company's corporate structure and impact our and our subsidiaries' ability to conduct business in Hong Kong and in Shenzhen, accept foreign investments, or list on an U.S. or other foreign exchange.

The U.S. government, including the SEC, has recently made statements and taken certain actions that may lead to significant changes to U.S. and international relations and will impact companies with connections to the United States or China. The SEC has issued statements primarily focused on companies with significant China-based operations. For example, on July 30, 2021, Gary Gensler, Chairman of the SEC, issued a Statement on Investor Protection Related to Recent Developments in China, pursuant to which Chairman Gensler stated that he has asked the SEC staff to engage in targeted additional reviews of filings for companies with significant China-based operations.

For a detailed description of the risks facing the Company and the risks associated with having our operations in China, please refer to "*Item 1A. Risk Factors - Risks Related to Doing Business in China.*"

**3. A. Selected Financial Data**

The following selected financial information should be read in connection with, and is qualified by reference to, our consolidated financial statements and their related notes and the section entitled "Operating and Financial Review and Prospects" included elsewhere in this annual report. The consolidated statements of operations and other comprehensive income (loss) data for the fiscal years ended March 31, 2025, 2024 and 2023 and the consolidated balance sheets data as of March 31, 2025, 2024, and 2023 are derived from audited consolidated financial statements included elsewhere in this annual report. Our historical results for any prior period are not necessarily indicative of results to be expected in any future period.

**<u>Selected Consolidated Statements of Operations and Other Comprehensive Income (Loss) Data</u>:**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended March 31,** | **For the Years Ended March 31,** | **For the Years Ended March 31,** |
|  | **2025** | **2024** | **2023** |
| Revenues | $6186645 | $7223220 | $10692613 |
| Gross profit | $2576895 | $2990967 | $5686903 |
| Operating expenses | $2969357 | $3231489 | $3674935 |
| Income from operations (loss) | $(392462) | $(240522) | $2011968 |
| Provision (benefit) for Income taxes | $100104 | $130890 | $430529 |
| Net income (loss) | $(372848) | $(376860) | $1672443 |

---

**<u>Selected Consolidated Balance Sheets Data</u>:**

---

| | | | |
|:---|:---|:---|:---|
|  | **As of March 31,** | **As of March 31,** | **As of March 31,** |
|  | **2025** | **2024** | **2023** |
| Current assets | $14228095 | $14672805 | $15995641 |
| Total assets | $15448258 | $16156423 | $17538192 |
| Current liabilities | $3664166 | $3924212 | $4305038 |
| Total liabilities | $3678705 | $3997187 | $4508209 |
| Total shareholders' equity (net assets) | $11769553 | $12159236 | $13029983 |

---

**<u>Selected Consolidated Statements of Cash Flows Data</u>:**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended March 31,** | **For the Years Ended March 31,** | **For the Years Ended March 31,** |
|  | **2025** | **2024** | **2023** |
| Net cash provided by (used in) operating activities | $(965592) | $(767310) | $1612500 |
| Net cash provided by (used in) investing activities | $(10627) | $(231440) | $36876 |
| Net cash provided by financing activities | $63024 | $- | $- |
| Effect of exchange rate changes on cash | $(1121) | $(523005) | $(845358) |
| Net increase (decrease) in cash | $(914316) | $(1521755) | $804018) |
| Cash, beginning of the year | $11045708 | $12567463 | $11763445 |
| Cash, end of the year | $10131392 | $11045708 | $12567463 |

---

**3. B. Capitalization and Indebtedness**

Not Applicable.

**3. C. Reasons For The Offer And Use Of Proceeds**

Not Applicable.

**3. D. Risk Factors**

*An investment in our ordinary shares involves a high degree of risk. You should carefully consider the risks and uncertainties described below together with all other information contained in this annual report, including the matters discussed under the headings "Forward- Looking Statements" and "Operating and Financial Review and Prospects" before you decide to invest in our ordinary shares. We are a holding company with substantial operations in China and are subject to a legal and regulatory environment that in many respects differs from the United States. If any of the following risks, or any other risks and uncertainties that are not presently foreseeable to us, actually occur, our business, financial condition, results of operations, liquidity and our future growth prospects could be materially and adversely affected.*

**RISK FACTORS SUMMARY**

Our business is subject to numerous risks described in the section titled "*Risk Factors*" and elsewhere in this annual report. The main risks set forth below and others you should consider are discussed more fully in the section entitled "*Risk Factors*", which you should read in its entirety.

***Risks Related to Our Business and Industry:***

 ****

Risks and uncertainties related to our business and industry include, but are not limited to, the following:

● If we are not able to continue to attract students to purchase our course packages and to increase the spending of our students on our platforms, our business and prospects will be materially and adversely affected.

● We may not be able to improve the content of our existing courses, develop new courses or services in a timely or cost-effective manner.

● Our business depends on the market recognition of our brand, and if we are unable to maintain and enhance brand recognition, our business, financial condition and results of operations may be materially and adversely affected.

● If we are unable to conduct sales and marketing activities cost-effectively, our results of operations and financial condition may be materially and adversely affected.

● If we are not able to continue to engage and retain qualified teachers, we may not be able to maintain consistent teaching quality on our platforms, and our business, financial condition and operating results may be materially and adversely affected.

● Our historical financial and operating results, growth rates and profitability may not be indicative of future performance.

● If our students' level of performance deteriorates or satisfaction with our services declines, the students may decide to withdraw from our courses and request refunds and our business, financial condition, results of operations and reputation would be adversely affected.

● We face significant competition, and if we fail to compete effectively, we may lose our market share or fail to gain additional market share, which would adversely impact our business, financial condition and operating results.

● Our new courses and services may compete with our existing courses and services.

● If we fail to successfully execute our growth strategies, our business and prospects may be materially and adversely affected.

● We may not be able to adopt new technologies important to our business.

● Unexpected network interruptions, security breaches or computer virus attacks and system failures could have a material adverse effect on our business, financial condition and results of operations.

● Some students may decide not to continue taking our courses for a number of reasons, including a perceived lack of improvement in their performance in specific courses, a change in requirements or general dissatisfaction with our programs, which may adversely affect our business, financial condition, results of operations and reputation.

● Our failure to protect our intellectual property rights may undermine our competitive position, and litigation to protect our intellectual property rights or defend against third party allegations of infringement may be costly and ineffective.

● We may encounter disputes from time to time relating to our use of intellectual property of third parties.

● Failure to protect confidential information of our teachers, students and other customers against security breaches could damage our reputation and brand and substantially harm our business and results of operations.

● Our employees may engage in misconduct or other improper activities or misuse our platforms, which could harm our reputation.

● Allegations, harassment or other detrimental conduct by third parties, as well as the public dissemination of negative, inaccurate or misleading information about us, could harm our reputation and adversely affect the price of our ordinary shares.

● The wide variety of payment methods that we accept subjects us to third-party payment processing-related risks.

● If our senior management is unable to work together effectively or efficiently or if we lose their services, our business may be severely disrupted.

● Our results of operations are subject to seasonal fluctuations.

● We have limited insurance coverage for our operations in China, which could expose us to significant costs and business disruption.

● Any significant interruption in the operations of our customer hotline could adversely affect our ability to respond to potential customers' inquiries and other service requests in a timely manner.

There are certain risks related to our corporate structure which include, but are not limited to, the following:

● If the PRC government finds that the contractual arrangements that establish the structure for holding our Internet Content Provider ("ICP") license do not comply with applicable PRC laws and regulations, we could be subject to severe penalties or be forced to relinquish our interests in those operations.

● We rely on contractual arrangements with Beijing Digital Information and its shareholders for a portion of our business operations, which may not be as effective as direct ownership in providing operational control.

● Substantial uncertainties exist with respect to the enactment timetable, interpretation and implementation of draft PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.

● Any failure by Beijing Digital Information or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.

● If the custodians or authorized users of our controlling non-tangible assets, including chops and seals, fail to fulfill their responsibilities, or misappropriate or misuse these assets, our business and operations could be materially and adversely affected.

● The shareholders of Beijing Digital Information may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.

● We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.

● Our contractual arrangements may be subject to scrutiny by the PRC tax authorities, and a finding that we owe additional taxes could substantially reduce our consolidated net income and the value of your investment.

● If Beijing Digital Information becomes the subject of a bankruptcy or liquidation proceeding, we may lose the ability to use and enjoy its assets, which could reduce the size of our operations and materially and adversely affect our business, ability to generate revenues and the market price of our ordinary shares.

***Risks Related to Doing Business in China***

 ****

We are also subject to risks and uncertainties relating to doing business in China in general, including, but are not limited to, the following:

● Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.

● The PRC government exerts substantial influence over the manner in which we conduct our business activities. The PRC government may also intervene or influence our operations and this offering at any time, which could result in a material change in our operations and our common stock could decline in value or become worthless.

● We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related business.

● New legislation or changes in the PRC laws or policies regarding self-taught education may affect our business operations and prospects.

● Our business is subject to complex and evolving Chinese laws and regulations regarding data privacy and security. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, penalties, changes to our business practices, increased cost of operations, damages to our reputation and brand, or otherwise harm our business.

● The enforcement of the PRC Labor Contract Law and other labor-related regulations in the PRC may adversely affect our business and our results of operations.

● Regulation and censorship of information disseminated over the internet in China may adversely affect our business and reputation and subject us to liability for information displayed on our website.

● The operation of Beijing Digital Information may be deemed by relevant PRC government authority to be beyond its authorized business scope. If the relevant PRC government authorities take actions against Beijing Digital Information, our business and operations could be materially and adversely affected.

● We face risks and uncertainties with respect to the licensing requirement for Internet audio-video programs.

● We are required to obtain various operating licenses and permits and to make registrations and filings for our business operations in China; failure to comply with these requirements may materially adversely affect our business and results of operations.

● Changes in China's economic, political or social conditions or government policies could have a material adverse effect on our business and operations.

● PRC regulations relating to foreign exchange registration of overseas investment by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiary to liability or penalties, limit our ability to inject capital into these subsidiaries, limit PRC subsidiary's ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.

● Restrictions on currency exchange or outbound capital flows may limit our ability to utilize our PRC revenue effectively.

● PRC regulation on loans to, and direct investment in, PRC entities by offshore holding companies and governmental control in currency conversion may delay or prevent us from using the proceeds of the IPO to make loans to our PRC subsidiary and PRC consolidated VIE or make additional capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

● Under the PRC Enterprise Income Tax Law, we may be classified as a PRC "resident enterprise" for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.

● Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.

● Our PRC subsidiary is subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy our liquidity requirements.

● Governmental control of currency conversion may affect the value of your investment.

● The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

● Our ordinary shares may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors. The delisting of our ordinary shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. The Consolidated Appropriations Act 2023 contained, among other things, an identical provision to HFCAA, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two.

● Any policy or legal changes to the self-taught education system in China may significantly affect our results of operations.

***Risks Related to Our Ordinary Shares***

 ****

In addition to the risks and uncertainties described above, we are subject to risks relating to ordinary shares, including, but not limited to, the following:

● Our dual-class share structure, concentrates voting power in our Chairman of the Board and Executive Director, may limit shareholder influence on our Company.

● The trading prices of our ordinary shares are likely to be volatile, which could result in substantial losses to investors.

● Because we are incorporated under the laws of the British Virgin Islands, we may be required to comply with increased reporting requirements.

● If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding our ordinary shares, the market price for our ordinary shares and trading volume could decline.

● The sale or availability for sale of substantial amounts of our ordinary shares could adversely affect their market price.

● Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies.

● There can be no assurance that we will not be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year, which could subject United States investors in our ordinary shares to significant adverse United States income tax consequences.

● You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under British Virgin Islands law. Judgments obtained against us by our shareholders may not be enforceable.

● We have broad discretion in the use of our cash, including the net proceeds from our IPO, and might not use them effectively.

● We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.

● We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an "emerging growth company."

**Risks Related to Our Business and Industry**

***If we are not able to continue to attract students to purchase our course packages and to increase the spending of our students on our platforms, our business and prospects will be materially and adversely affected.***

 ****

Our ability to continue to attract students to purchase our course packages and to increase their spending on our platforms are critical to the continued success and growth of our business. This in turn will depend on several factors, including our ability to effectively market our platforms to a broader base of prospective students, continue to develop, adapt or enhance quality educational content and services to meet the evolving demands of our existing or prospective students and expand our geographic reach. We must also manage our growth while maintaining consistent and high quality of course materials and respond effectively to competitive pressures. If we are unable to continue to attract students to purchase our course packages and to increase the spending of our students on our platform, our revenues may decline, which may have a material adverse effect on our business, financial condition and results of operations.

***We may not be able to improve the content of our existing courses, develop new courses or services in a timely or cost-effective manner.***

 ****

Historically, our core business centered on the exam preparation courses offered through our B2C platform. We have since expanded our course offerings to target students that not only need to take self-taught higher education exams but who desire to educate themselves in other fields of study, as well as a broader range of situation-based education and test preparation targeting a wide range of student demographics. We constantly update and improve the content of our existing courses and develop new courses or services to meet changing market demands. Revisions to our existing courses and our newly developed courses or services may not be well received by existing or prospective students. If we cannot respond effectively to changes in market demands, our business may be adversely affected. Even if we are able to develop new courses or services that are well received, we may not be able to introduce them in a timely or cost-effective manner. If we do not respond adequately to changes in market demands, our ability to attract and retain students may be impaired and our financial results could suffer.

The effectiveness of our program depends on the success of our personalized learning approach to self-taught and adult higher education, which in turn is determined by the efficiency of our data analytics know-how. We might not be able to continue to efficiently monitor and analyze relevant data important for us to provide a personalized learning experience for our students, or to continue to drive our teaching training, curriculum development and other operational aspects of our platforms.

The timing of the introduction of new courses is subject to risks and uncertainties, including our ability to find and retain teachers and attract students. Offering new courses or services or modifying existing courses may require us to invest in content development, increase marketing efforts and re-allocate resources away from other uses. Unexpected technical, operational, logistical or other problems could delay or prevent the introduction of one or more new courses. Moreover, we cannot assure you that any of these courses or programs will match the quality or popularity of those developed by our competitors, achieve widespread market acceptance or contribute the desired level of income. We may have limited experience with the content of new courses or services and may need to adjust our systems and strategies to incorporate new courses or services into our existing course catalogue. If we are unable to continuously improve the content of our existing courses or offer new courses or services in a timely or cost-effective manner, our results of operations and financial condition could be adversely affected.

***Our business depends on the market recognition of our brand, and if we are unable to maintain and enhance brand recognition, our business, financial condition and results of operations may be materially and adversely affected.***

 ****

We believe that the market recognition of our "Huaxia Dadi" brand has significantly contributed to the success of our business and that maintaining and enhancing our brand recognition is critical to sustaining our competitive advantages. Our ability to maintain and enhance brand recognition and reputation depends primarily on the perceived effectiveness and quality of our curriculum and teachers, as well as the success of our branding efforts. Our branding efforts, however, may not be successful and we may incur significant branding costs. If we are unable to maintain and further enhance our brand recognition and reputation and promote awareness of our platforms, we may not be able to maintain our current level of students, fees and engage qualified teachers, and our results of operations may be materially and adversely affected. Furthermore, any negative publicity relating to our company, our courses, teachers, platforms and services, regardless of its veracity, could harm our brand image and in turn materially and adversely affect our business and results of operations.

***If we are unable to conduct sales and marketing activities cost-effectively, our results of operations and financial condition may be materially and adversely affected.***

 ****

We incurred selling and marketing expenses of $852,569, $1,066,649 and $1,129,146 for the years ended March 31, 2025, 2024 and 2023, respectively. As we continue to increase our marketing efforts for our B2C service by establishing office in more provinces, we expect our selling and marketing expenses to increase for the next three years.

Our sales activities may not be well received by students and may not result in the levels of sales that we anticipate, and our free trials may not be attractive to our prospective institution customers and students. Furthermore, we may not be able to achieve the operational efficiency necessary to increase the gross billings per sales and marketing staff. We also may not be able to retain or recruit experienced sales staff, or to efficiently train junior sales staff. Further, marketing and branding approaches and tools in the online education market in China are evolving, especially for mobile platforms. This further requires us to enhance our marketing and branding approaches and experiment with new methods to keep pace with industry developments and student preferences. Failure to refine our existing marketing and branding approaches or to introduce new marketing and branding approaches in a cost-effective manner may reduce our market share, cause our revenues to decline and negatively impact our profitability.

***Collectability of our accounts receivable has adversely impacted our operating cash flow, and may continue to do so.***

 ****

Our net accounts receivable balance was $0.7, $1.0 million, and $0.8 million as of March 31, 2025, 2024 and 2023, respectively. As of March 31, 2025, 2024 and 2023, the accounts receivable derived from our online education cloud service accounted for 100%, 100% and 100%, respectively, of the total accounts receivable balance. The aging of such accounts receivable ranged from 3 months to over one year. As of March 31, 2025, 2024 and 2023, the allowances for doubtful accounts were $599,322, $443,163 and $535,767, respectively.

***If we are not able to continue to engage and retain qualified teachers, we may not be able to maintain consistent teaching quality on our platforms, and our business, financial condition and operating results may be materially and adversely affected.***

 ****

Our teachers are critical to the learning experience of our students and our reputation. We seek to engage highly qualified teachers with strong teaching skills. We must provide competitive pay and other benefits to attract and retain them. Furthermore, as we continue to develop new course contents and lesson formats, we may need to engage additional teachers with appropriate skill sets or backgrounds to deliver instructions effectively. We cannot guarantee that we will be able to effectively engage such teachers quickly, or at all. Further, given other potential more attractive opportunities for our quality teachers, over time, some of them may choose to end their relationship with us. We have not experienced major difficulties in engaging, or retaining qualified teachers in the past, however, we may not always be able to engage and retain enough qualified teachers to keep pace with our growth while maintaining consistent education quality. We may also face significant competition in engaging qualified teachers from our competitors or from other opportunities that are perceived as more desirable. A shortage of qualified teachers, a decrease in the quality of our teachers' performances, whether actual or perceived, or a significant increase in the cost to engage or retain qualified teachers would have a material adverse effect on our business, financial condition and results of operations.

***Our historical financial and operating results, growth rates and profitability may not be indicative of future performance.***

 ****

We had a loss of $372,848 and $376,860 for the year ended March 31, 2025 and 2024 in contrast to the net incomes of $1,672,443 for the years ended March 31, 2023. Any evaluation of our business and our prospects must be considered in light of the risks and uncertainties encountered by companies at our stage of development. The private education market in China is still at the development stage, which makes it difficult to evaluate our business and future prospects. In addition, our past results may not be indicative of future performance because of new businesses developed or acquired by us. Furthermore, our results of operations may vary from period to period in response to a variety of other factors beyond our control, including general economic conditions, global pandemics, and regulations or government actions pertaining to the private education service sector in China, changes in spending on private education and non-recurring charges incurred under unexpected circumstances or in connection with acquisitions, equity investments or other extraordinary transactions. Due to these and other factors, our historical financial and operating results, growth rates and profitability as well as comparisons of our semi-annual and annual operating results may not be indicative of our future performance and you should not rely on them to predict our future performance.

***If our students' level of performance deteriorates or satisfaction with our services declines, the students may decide to withdraw from our courses and request refunds and our business, financial condition, results of operations and reputation would be adversely affected.***

 ****

The success of our business depends in part on our ability to deliver a satisfactory learning experience and improved academic results. Our services may fail to improve a student's academic performance and a student may perform below expectations even after completing our courses. Additionally, student satisfaction with our services may decline. A student's learning experience may also suffer if his or her relationship with our teachers does not meet expectations. We generally offer refunds for the remaining classes in a course to students who withdraw from the course. If a significant number of students fail to improve their academic performance after attending our courses or if their learning experiences with us are unsatisfactory, they may decide to withdraw from our courses and request refunds, and our business, financial condition, results of operations and reputation would be adversely affected.

***We face significant competition, and if we fail to compete effectively, we may lose our market share or fail to gain additional market share, which would adversely impact our business, financial condition and operating results.***

 ****

The private education market in China is fragmented, rapidly evolving and highly competitive. We face competition in self-taught higher education and adult higher education, from existing online and offline education companies. In the future, we may also face competition from new entrants into the private education market.

Some of our competitors may be able to devote more resources than we can to the development and promotion of their education programs and respond more quickly than we can to changes in student demands, market trends or new technologies. In addition, some of our competitors may be able to respond more quickly to changes in student preferences or engage in price-cutting strategies. We cannot assure you that we will be able to compete successfully against current or future competitors. If we are unable to maintain our competitive position or otherwise respond to competitive pressure effectively, we may lose market share or be forced to reduce our fees for course packages, either of which would adversely impact our results of operations and financial condition.

***Our new courses and services may compete with our existing courses and services.***

 ****

We are constantly developing new courses and services to meet changes in student demands, school curriculum, testing materials, admission standards, market trends and technologies. While some of the courses and services that we develop will expand our current course catalogue and services and increase student enrollment, others may compete with or render obsolete our existing courses and services without increasing our total student enrollment. If we are unable to increase our total student enrollment and profitability as we expand our course catalogue and services, our business and growth may be adversely affected.

***If we fail to successfully execute our growth strategies, our business and prospects may be materially and adversely affected.***

 ****

Our growth strategies include further enhancing our brand image to grow our student base and increase student enrollments, developing our online course catalogue and online education platforms, increasing our market penetration, expanding into additional markets, improving the learning experience of our students, and advancing our technology. We may not succeed in executing these growth strategies due to a number of factors, including the following:

● we may fail to identify, and effectively market our services in, new markets with sufficient growth potential into which to expand our network or promote new courses in existing markets;

● we may fail to further promote our platforms;

● we may not be able to continue to enhance our online offerings or expand them to new markets, generate profits from online offerings, or adapt online offerings to changing student needs and technological advances such that we will continue to face significant student acquisition costs in the markets we enter;

● we may not be able to engage and retain a sufficient number of qualified teachers and other personnel;

● we may fail to maintain the technology necessary to deliver a smooth learning experience to our students; and

● we may not be able to identify suitable targets for acquisitions and partnership.

If we fail to successfully execute our growth strategies, we may not be able to maintain our growth rate and our business and prospects may be materially and adversely affected as a result.

***We may not be able to adopt new technologies important to our business.***

 ****

Technology standards in internet and value-added telecommunications services and products in general, and in online education in particular, may change over time. If we fail to anticipate and adapt to technological changes, our market share and our business development could suffer, which in turn could have a material and adverse effect on our financial condition and results of operations. If we are unsuccessful in addressing any of the risks related to new courses, our reputation and business may be materially and adversely affected.

***Unexpected network interruptions, security breaches or computer virus attacks and system failures could have a material adverse effect on our business, financial condition and results of operations.***

 ****

Our business depends on the performance and reliability of the internet infrastructure in China. In China, almost all access to the internet is maintained through state-controlled telecommunications operators. In many parts of China, the internet infrastructure is relatively underdeveloped, and internet connections are generally slower and less stable than in more developed countries. We cannot assure you that the internet infrastructure in China will remain sufficiently reliable for our needs or that either country will ever develop and make available more reliable internet access to our students and teacher. Any failure to maintain the performance, reliability, security or availability of our network infrastructure may cause significant damage to our ability to attract and retain students and teachers. Major risks involving our network infrastructure include:

● breakdowns or system failures resulting in a prolonged shutdown of our servers;

● disruption or failure in the national backbone networks in China, which would make it impossible for students and teachers to access our online and mobile platforms or to engage in live lessons;

● damage from natural disaster or other catastrophic event such as an typhoon, volcanic eruption, earthquake, flood, telecommunications failure, or other similar events in China; and

● any infection by or spread of computer viruses.

Any network interruption or inadequacy that causes interruptions in the availability of our online and mobile platforms or deterioration in the quality of access to our online and mobile platforms could reduce student satisfaction and result in a reduction in the activity level of our students and the number of students purchasing our course packages. Furthermore, increases in the volume of traffic on our online and mobile platforms could strain the capacity of our existing computer systems and bandwidth, which could lead to slower response times or system failures. The internet infrastructure in China may not support the demands associated with continued growth in internet usage. This would cause a disruption or suspension in our lesson delivery, which could hurt our brand and reputation. We may need to incur additional costs to upgrade our technology infrastructure and computer systems in order to accommodate increased demand if we anticipate that our systems cannot handle higher volumes of traffic in the future.

All of our servers and routers, including backup servers, are currently hosted by third-party service providers in Tianjin and Wuhan in China. We also rely on major telecommunication companies to provide us with data communications capacity primarily through local telecommunications lines and internet data centers to host our servers. We may not have access to alternative services and we have no control over the costs of services. If the prices that we pay for telecommunications and internet services in China rise significantly, our gross profit and net income could be adversely affected. In addition, if internet access fees or other charges to internet users increase, our visitor traffic may decrease, which in turn may harm our revenues.

***Some students may decide not to continue taking our courses for a number of reasons, including a perceived lack of improvement in their performance in specific courses, a change in requirements or general dissatisfaction with our programs, which may adversely affect our business, financial condition, results of operations and reputation.***

 ****

The success of our business depends in large part on our ability to retain our students by delivering a satisfactory learning experience and improving their performance in the courses they have taken. If students feel that we are not providing them the experience they are seeking, they may choose not to renew their existing packages. For example, our courses may fail to significantly improve a student's performance in the relevant subject area. Student satisfaction with our programs may decline for a number of reasons, many of which may not reflect the effectiveness of our lessons and teaching methods. Students also need to be self-motivated in order to successfully complete the courses in which they enroll. If students' performances decline as a result of their own study habits or inability to learn the course material, they may not purchase additional lessons from us or refer other students to us, which could materially adversely affect our business.

A student's learning experience may also suffer if his or her relationship with our teaching assistants does not meet expectations. If a significant number of students fail to significantly improve their proficiency in the applicable course subject after taking our lessons or if their learning experiences with us are unsatisfactory, they may not purchase additional lessons from us or refer other students to us and our business, financial condition, results of operations and reputation would be adversely affected.

***Our failure to protect our intellectual property rights may undermine our competitive position, and litigation to protect our intellectual property rights or defend against third party allegations of infringement may be costly and ineffective.***

 ****

We believe that our copyrights, trademarks and other intellectual property are essential to our success. We depend to a large extent on our ability to develop and maintain the intellectual property rights relating to our technology and course materials. We have devoted considerable time and energy to the development and improvement of our websites, mobile apps, and our course materials.

We rely primarily on copyrights, trademarks, trade secrets and other contractual restrictions for the protection of the intellectual property used in our business. Nevertheless, these provide only limited protection and the actions we take to protect our intellectual property rights may not be adequate. Our trade secrets may become known or be independently discovered by our competitors. Third parties may in the future pirate our course materials and may infringe upon or misappropriate our other intellectual property. Infringement upon or the misappropriation of, our proprietary technologies or other intellectual property could have a material adverse effect on our business, financial condition or operating results. Policing the unauthorized use of proprietary technology can be difficult and expensive.

Also, litigation may be necessary to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of the proprietary rights of others. Such litigation may be costly and divert management's attention away from our business. An adverse determination in any such litigation would impair our intellectual property rights and may harm our business, prospects and reputation. Enforcement of judgments in China is uncertain, and even if we are successful in litigation, it may not provide us with an effective remedy. In addition, we have no insurance coverage against litigation costs and would have to bear all costs arising from such litigation to the extent we are unable to recover them from other parties. The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

***We may encounter disputes from time to time relating to our use of intellectual property of third parties.***

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We cannot be certain that third parties will not claim that our business infringes upon or otherwise violates trademarks, patents, copyrights or other intellectual property rights that they hold. We cannot assure you that third parties will not claim that our courses and marketing materials, online courses, products, and platform or other intellectual property developed or used by us infringe upon valid copyrights or other intellectual property rights that they hold. We may be subject to claims by educational institutions and organizations, content providers and publishers, competitors and others on the grounds of intellectual property rights infringement, defamation, negligence or other legal theories based on the content of the materials that we or our teachers distribute or use in our business operation. These types of claims have been brought, sometimes successfully, against print publications and educational institutions in the past. We may encounter disputes from time to time over rights and obligations concerning intellectual property, and we may not prevail in those disputes.

Any claims against us, with or without merit, could be time consuming and costly to defend or litigate, divert our management's attention and resources or result in the loss of goodwill associated with our brand. If a lawsuit against us is successful, we may be required to pay substantial damages and/or enter into royalty or license agreements that may not be based upon commercially reasonable terms, or we may be unable to enter into such agreements at all. We may also lose, or be limited in, the rights to offer some of our programs, parts of our platform and products or be required to make changes to our course materials or websites. As a result, the scope of our course materials could be reduced, which could adversely affect the effectiveness of our curriculum, limit our ability to attract new students, harm our reputation and have a material adverse effect on our results of operations and financial position.

***Failure to protect confidential information of our teachers, students and other customers against security breaches could damage our reputation and brand and substantially harm our business and results of operations.***

 ****

A significant challenge to the online education industry is the secure storage of confidential information and its secure transmission over public networks. Most purchases of our course packages are made through our website and our mobile apps. In addition, online payments for our course packages are settled through third-party online payment services. Maintaining complete security for the storage and transmission of confidential information on our technology platform, such as student names, personal information and billing addresses, is essential to maintaining student confidence.

We have adopted security policies and measures to protect our proprietary data and student information. However, advances in technology, the expertise of hackers, new discoveries in the field of cryptography or other events or developments could result in a compromise or breach of the technology that we use to protect confidential information. We may not be able to prevent third parties, especially hackers or other individuals or entities engaging in similar activities, from illegally obtaining such confidential or private information we hold as a result of our users' visits to our website and use of our mobile apps. Such individuals or entities obtaining our clients' confidential or private information may further engage in various other illegal activities using such information. Any negative publicity regarding our website's or mobile apps' safety or privacy protection mechanisms and policies, and any claims asserted against us or fines imposed upon us as a result of actual or perceived failures, could have a material and adverse effect on our public image, reputation, financial condition and results of operations.

Practices regarding the collection, use, storage, transmission and security of personal information by companies operating over the internet and mobile platforms have recently come under increased public scrutiny. Increased regulation by the PRC government of data privacy on the internet may occur and we may become subject to new laws and regulations applying to the solicitation, collection, processing or use of personal or consumer information that could affect how we store and process the data of our teachers, students and clients. We generally comply with industry standards and are subject to the terms of our own privacy policies. Compliance with any additional laws could be expensive, and may place restrictions on the conduct of our business and the manner in which we interact with our students and other clients. Any failure to comply with applicable regulations could also result in regulatory enforcement actions against us.

Significant capital and other resources may be required to protect against information security breaches or to alleviate problems caused by such breaches or to comply with our privacy policies or privacy-related legal obligations. The resources required may increase over time as the methods used by hackers and others engaged in online criminal activities are increasingly sophisticated and constantly evolving. Any failure or perceived failure by us to prevent information security breaches or to comply with privacy policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other student data, could cause our students to lose trust in us and could expose us to legal claims. Any perception by the public that online transactions or the privacy of user information are becoming increasingly unsafe or vulnerable to attacks could inhibit the growth of online education services generally, which may negatively impact our business prospects.

***Our employees may engage in misconduct or other improper activities or misuse our platforms, which could harm our reputation.***

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We are exposed to the risk of employee fraud or other misconduct. Employee misconduct could include intentionally failing to comply with government regulations, engaging in unauthorized activities and misrepresentation to our potential students and clients during marketing activities, which could harm our reputation. Employee misconduct could also involve improper use of our clients' and teachers' sensitive or classified information, which could result in regulatory sanctions against us and serious harm to our reputation. Employee misconduct could also involve making payments to government officials or third parties that would expose us to being in violation of laws. It is not always possible to deter employee misconduct, and the precautions we take to prevent and detect this activity may not be effective in controlling unknown or unmanaged risks or losses, which could harm our business, financial condition and results of operations.

***Allegations, harassment or other detrimental conduct by third parties, as well as the public dissemination of negative, inaccurate or misleading information about us, could harm our reputation and adversely affect the price of our ordinary shares.***

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We may be subject to allegations by third parties or purported current or former employees, negative internet postings and other negative, inaccurate or misleading publicity related to our business and operations. We may also become the target of harassment or other detrimental conduct by third parties or disgruntled former or current employees. Such conduct may include complaints, anonymous or otherwise, to our board, advisors, regulatory agencies, media or other organizations. Depending on their nature and significance, we may need to conduct internal investigations to appropriately review any such allegations. We may also be subject to government or regulatory inquiries or, investigations or other proceedings as a result of such third-party conduct and may be required to spend significant time and incur substantial costs to address such conduct, and there is no assurance that we will be able to conclusively refute each of the allegations within a reasonable period of time, or at all. Allegations may be posted on the internet, including social media platforms, by anyone anonymously. Any negative, inaccurate or misleading publicity about us or our management can be quickly and widely disseminated. Social media platforms and devices immediately publish the content of their subscribers' and participants' posts, often without filters or checks on the accuracy of the content posted. Information posted on the internet or otherwise publicly released, including by us or our employees, may be inaccurate or misleading, and the information or the inaccurate or misleading nature of the information, may harm our reputation, business or prospects. The harm may be immediate without affording us an opportunity for redress or correction. Our reputation may be negatively affected as a result of the public dissemination of negative, inaccurate, or misleading information about our business and operations, which in turn may cause us to lose market share or students, and adversely affect the price of our ordinary shares.

***The wide variety of payment methods that we accept subjects us to third-party payment processing-related risks.***

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We accept payments using a variety of methods, including bank transfers, online payments with credit cards and debit cards issued by major banks in China, and payment through third-party online payment platforms such as Alipay and WeChat Pay. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs and lower our profit margins. We may also be susceptible to fraud and other illegal activities in connection with the various payment methods we offer. We are also subject to various rules, regulations and requirements, regulatory or otherwise, governing electronic funds transfers which could change or be reinterpreted to make it difficult or impossible for us to comply. If we fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and become unable to accept credit and debit card payments from our students, process electronic funds transfers or facilitate other types of online payments, and our business, financial condition and results of operations could be materially and adversely affected.

***If our senior management is unable to work together effectively or efficiently or if we lose their services, our business may be severely disrupted.***

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Our success heavily depends upon the continued services of our management. In particular, we rely on the expertise and experience of Yang Yu, Xinghui Yang and Cuntao Hou. We also rely on the experience and services from other senior management. If such individuals cannot work together effectively or efficiently, our business may be severely disrupted. If one or more of our senior managers were unable or unwilling to continue in their present positions, we might not be able to replace them easily or at all, and our business, financial condition and results of operations may be materially and adversely affected. If any of our senior management joins a competitor or forms a competing business, we may lose students, teachers, and other key professionals and staff members. Our senior management has entered into employment agreements with us, including confidentiality and non-competition clauses. However, if any dispute arises between our officers and us, we may have to incur substantial costs and expenses in order to enforce such agreements in China or we may be unable to enforce them at all.

***Our results of operations are subject to seasonal fluctuations.***

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Our industry generally experiences seasonality, reflecting a combination of traditional education industry patterns and new patterns associated with the online platforms in particular. Seasonal fluctuations have affected, and are likely to continue to affect, our business. In general, our self-taught examination services experiences lower student enrollment during the month following the four examination periods but enjoys higher student enrollment during the two months before the four examination periods. As to our continuing education services, our sales generally slow down when our cooperating universities and colleges are summer and winter breaks. Our financial condition and results of operations for future periods may continue to fluctuate. As a result, the trading price of our ordinary shares may fluctuate from time to time due to seasonality.

***We have limited insurance coverage for our operations in China, which could expose us to significant costs and business disruption.***

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We do not maintain any liability insurance or property insurance policies covering students, equipment and facilities for injuries, death or losses due to fire, earthquake, flood or any other disaster. Consistent with customary industry practice in China, we do not maintain business interruption insurance, nor do we maintain key-man life insurance. However, as the insurance industry in China is still in an early stage of development, insurance companies in China currently offer limited business-related insurance products. We do not maintain business interruption insurance, nor do we maintain key-man life insurance. We cannot assure you that our insurance coverage is sufficient to prevent us from any loss or that we will be able to successfully claim our losses under our current insurance policy on a timely basis, or at all. If we incur any loss that is not covered by our insurance policies, or the compensated amount is significantly less than our actual loss, our business, financial condition and results of operations could be materially and adversely affected.

***Any significant interruption in the operations of our customer hotline could adversely affect our ability to respond to potential customers' inquiries and other service requests in a timely manner.***

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We have a customer hotline which responds to inquiries from potential customers and provides customer service to our existing customers. We have not experienced any significant interruption in the operations of our customer hotline. We do not currently have a risk mitigation plan for our customer hotline to prevent an interruption of its operation due to natural disasters, accidents or other events. Any significant interruptions as a result of these events or our failure to successfully expand or upgrade our systems or manage the necessary expansions or upgrades in the customer hotline could reduce our ability to respond to customer inquiries or service requests, which could in turn result in the loss of potential customers and damage our reputation.

**Risks Related to Our Corporate Structure**

***If the PRC government finds that the contractual arrangements that establish the structure for holding our Internet Content Provider ("ICP") license do not comply with applicable PRC laws and regulations, we could be subject to severe penalties or be forced to relinquish our interests in those operations.***

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Foreign ownership in entities that provide value-added telecommunication services, is subject to restrictions under current PRC laws and regulations. For example, in accordance with the Guidance Catalog of Industries for Foreign Investment, as amended in June 2017, and other applicable laws and regulations, foreign investors are not allowed to own more than 50% of the equity interests in a value-added telecommunication service provider (except for e-commerce) and any such foreign investor must have experience in providing value- added telecommunications services overseas and maintain a good track record.

We are a British Virgin Islands company and our PRC subsidiaries, Beijing Distance Learning and Shanghai Network Technology are considered foreign-invested enterprises. To comply with PRC laws and regulations, we operate our website, www.edu-edu.com, through the VIE, Beijing Digital Information, which holds our ICP License for www.edu-edu.com. Beijing Digital Information is 51.5% owned by Yang Yu and 48.5% owned by Xinghui Yang. All shareholders of Beijing Digital Information are PRC citizens. We entered into a series of contractual arrangements with Beijing Digital Information and its shareholders, which enable us to:

● exercise effective control over Beijing Digital Information;

● receive substantially all of the economic benefits; and

● have an exclusive option to purchase all or part of the equity interests in Beijing Digital Information when and to the extent permitted by PRC law.

Because of these contractual arrangements, we are the primary beneficiary of Beijing Digital Information and treat it as our PRC consolidated VIE under U.S. GAAP for accounting purposes. We consolidate the financial results of Beijing Digital Information in our consolidated financial statements in accordance with U.S. GAAP.

Beijing Haotai Law Firm, our PRC legal counsel, is of the opinion that (i) the ownership structure of Shanghai Xin Fu and Beijing Distance Learning will not result in any violation of PRC laws or regulations currently in effect; and (ii) the contractual arrangements among Beijing Digital Information and Beijing Distance Learning and its shareholders governed by PRC law are valid, binding and enforceable, and will not result in any violation of PRC laws or regulations currently in effect. Our PRC legal counsel is also of the opinion that there are, however, substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations concerning foreign investment in the PRC, and their application to and effect on the legality, binding effect and enforceability of the contractual arrangements. In particular, we cannot rule out the possibility that PRC regulatory authorities, courts or arbitral tribunals may in the future adopt a different or contrary interpretation or take a view that is inconsistent with the opinion of our PRC legal counsel.

On March 15, 2019, the National People's Congress, China's national legislative body (the "NPC") approved the Foreign Investment Law, which took effect on January 1, 2020. Since it is relatively new, uncertainties exist in relation to its interpretation and its implementation rules that are yet to be issued. The Foreign Investment Law does not explicitly classify whether variable interest entities that are controlled through contractual arrangements would be deemed as foreign-invested enterprises if they are ultimately "controlled" by foreign investors. However, it has a catch-all provision under definition of "foreign investment" that includes investments made by foreign investors in China through other means as provided by laws, administrative regulations or the State Council. Therefore, it still leaves leeway for future laws, administrative regulations or provisions of the State Council to provide for contractual arrangements as a form of foreign investment. Therefore, there can be no assurance that our control over the consolidated VIE through contractual arrangements will not be deemed as foreign investment in the future.

The Foreign Investment Law grants national treatment to foreign-invested entities, except for those foreign-invested entities that operate in industries specified as either "restricted" or "prohibited" from foreign investment in a "negative list" that is yet to be published. It is unclear whether the "negative list" to be published will differ from the current Special Administrative Measures for Market Access of Foreign Investment (Negative List). The Foreign Investment Law provides that foreign-invested entities operating in "restricted" or "prohibited" industries will require market entry clearance and other approvals from relevant PRC government authorities. If our control over the consolidated VIE through contractual arrangements are deemed as foreign investment in the future, and any business of the consolidated VIE is "restricted" or "prohibited" from foreign investment under the "negative list" effective at the time, we may be deemed to be in violation of the Foreign Investment Law, the contractual arrangements that allow us to have control over the consolidated VIE may be deemed as invalid and illegal, and we may be required to unwind such contractual arrangements and/or restructure our business operations, any of which may have a material adverse effect on our business operation.

If, as a result of such contractual arrangement, we or Beijing Digital Information is found to be in violation of any existing or future PRC laws or regulations, or such contractual arrangement is determined as illegal and invalid by the PRC court, arbitral tribunal or regulatory authorities, or we fail to obtain, maintain or renew any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including:

● revoking the business licenses and/or operating licenses of Beijing Distance Learning and/or Beijing Digital Information;

● discontinuing or restricting the conduct of any transactions between Beijing Distance Learning and Beijing Digital Information;

● limiting our business expansion in China by way of entering into contractual arrangements;

● imposing fines, confiscating the income from Beijing Digital Information, or imposing other requirements with which we or Beijing Digital Information may not be able to comply with;

● shutting down our servers or blocking our websites;

● requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with Beijing Digital Information and deregistering the equity pledges of Beijing Digital Information;

● restricting or prohibiting our use of the proceeds of the IPO to finance our business and operations in China;

● imposing additional conditions or requirements with which we may not be able to comply with; or

● take other regulatory or enforcement actions against us that could be harmful to our business.

The imposition of any of these penalties could result in a material and adverse effect on our ability to conduct our business and on our results of operations. If any of these penalties results in our inability to direct the activities of Beijing Digital Information that most significantly impact its economic performance, and/or our failure to receive the economic benefits from Beijing Digital Information, we may not be able to consolidate Beijing Digital Information in our consolidated financial statements in accordance with U.S. GAAP.

***We rely on contractual arrangements with Beijing Digital Information and its shareholders for a portion of our business operations, which may not be as effective as direct ownership in providing operational control.***

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We have relied and expect to continue to rely on contractual arrangements with Beijing Digital Information, as well as its respective shareholders, to operate our www.edu-edu.com website and mobile apps. For a description of these contractual arrangements, see "History and Development of the Company." These contractual arrangements may not be as effective as direct ownership in providing us with control over Beijing Digital Information. For example, Beijing Digital Information and its shareholders could breach their contractual arrangements with us by, among other things, failing to conduct their operations, including maintaining our website and using the domain names and trademarks, in an acceptable manner or taking other actions that are detrimental to our interests.

If we had direct ownership of Beijing Digital Information, we would be able to exercise our rights as a shareholder to change the executive director of Beijing Digital Information, which in turn could effect changes, subject to any applicable fiduciary obligations, at the management level. However, under the current contractual arrangements, we rely on the performance by Beijing Digital Information and its shareholders of their obligations under the contracts to exercise control over Beijing Digital Information. However, the shareholders of Beijing Digital Information may not act in the best interests of the Company or may not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate our business through the contractual arrangements with Beijing Digital Information. We may replace the shareholders of Beijing Digital Information at any time pursuant to our contractual arrangements with it and its shareholders. However, if any dispute relating to these contracts remains unresolved, we will have to enforce our rights under these contracts through the operations of PRC law and therefore will be subject to uncertainties in the PRC legal system. See "— Any failure by Beijing Digital Information or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business." Therefore, our contractual arrangements with Beijing Digital Information may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be.

***Our current corporate structure and business operations may be affected by the Foreign Investment Law.***

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On March 15, 2019, the National People's Congress approved the Foreign Investment Law, which took effect on January 1, 2020. Along with the Foreign Investment Law, the Implementing Rules of Foreign Investment Law promulgated by the State Council and the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Foreign Investment Law promulgated by the Supreme People's Court became effective on January 1, 2020. However, uncertainties still exist in relation to further application and improvement of the Foreign Investment Law and its current implementation and interpretation rules. According to the Foreign Investment Law, "foreign investment" refers to investment activities carried out directly or indirectly by foreign natural persons, enterprises, or other organizations, or "foreign investors," including the following: (i) foreign investors establishing foreign-invested enterprises in China alone or collectively with other investors; (ii) foreign investors acquiring shares, equities, properties, or other similar rights of Chinese domestic enterprises; (iii) foreign investors investing in new projects in China alone or collectively with other investors; and (iv) foreign investors investing through other ways prescribed by laws, regulations, or guidelines of the State Council. The Foreign Investment Law and its current implementation and interpretation rules do not explicitly classify whether variable interest entities that are controlled through contractual arrangements would be deemed as foreign-invested enterprises if they are ultimately "controlled" by foreign investors. However, it has a catch-all provision under the definition of "foreign investment" that includes investments made by foreign investors in China through other means as provided by laws, administrative regulations, or the State Council. Therefore, it still leaves leeway for future laws, administrative regulations, or provisions of the State Council to provide for contractual arrangements as a form of foreign investment. Therefore, there can be no assurance that our control over the VIEs through contractual arrangements will not be deemed as a foreign investment in the future.

The Foreign Investment Law grants national treatment to foreign-invested entities, except for those foreign-invested entities that operate in industries specified as either "restricted" or "prohibited" from foreign investment in a "negative list." The Foreign Investment Law provides that foreign-invested entities operating in "restricted" industries will require market entry clearance and other approvals from applicable PRC government authorities. Pursuant to the 2021 Negative List, the value-added telecommunication services we provide fall within the restricted category. If our control over the VIEs through contractual arrangements is deemed as a foreign investment in the future, and any business of the VIEs is "restricted" or "prohibited" from foreign investment under the "negative list" effective at the time, we may be deemed to be in violation of the Foreign Investment Law, the contractual arrangements that allow us to have control over the VIEs may be deemed as invalid and illegal, and we may be required to unwind such contractual arrangements and/or restructure our business operations, any of which may materially and adversely affect our business operations.

Furthermore, if future laws, administrative regulations or provisions mandate further actions to be taken by companies with respect to existing contractual arrangements, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all. Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely affect our current corporate structure and business operations.

***Any failure by Beijing Digital Information or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.***

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If Beijing Digital Information or its shareholders fail to perform their obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure you will be effective. For example, if the shareholders of Beijing Digital Information, were to refuse to transfer their equity interest in Beijing Digital Information to us or our designee if we exercise the purchase option pursuant to these contractual arrangements, or if they were otherwise to act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractual obligations.

All the agreements under our contractual arrangements with Beijing Digital Information are governed by PRC law and provide for the resolution of disputes through arbitration in China. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. Under PRC law, if the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings, which would require additional expenses and delay. In the event we are unable to enforce these contractual arrangements, we may not be able to exert effective control over Beijing Digital Information, and our ability to conduct our business may be negatively affected.

On March 15, 2019, the National People's Congress promulgated the Foreign Investment Law, which became effective on January 1, 2020 and replace three existing laws on foreign investments in China, namely, the Sino-Foreign Equity Joint Venture Enterprise Law, the Sino-Foreign Cooperative Joint Venture Enterprise Law and the Foreign Owned Enterprise Law, together with their implementations and ancillary regulations to become the legal foundation for foreign investment in the PRC.

According to the Foreign Investment Law, the State Council will publish or approve to publish a catalogue for special administrative measures, or the "negative list." The Foreign Investment Law grants national treatment to foreign invested entities, except for those foreign invested entities that operate in industries deemed to be either "restricted" or "prohibited" in the "negative list." Pursuant to the 2021 Negative List, the value-added telecommunication services we provide fall within the restricted category.

Furthermore, the Foreign Investment Law provides that foreign invested enterprises established according to the existing laws regulating foreign investment may maintain their structure and corporate governance within five years after the implementing of the Foreign Investment Law.

***If the custodians or authorized users of our controlling non-tangible assets, including chops and seals, fail to fulfill their responsibilities, or misappropriate or misuse these assets, our business and operations could be materially and adversely affected.***

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Under PRC law, legal documents for corporate transactions, including agreements and contracts such as the leases and sales contracts that our business relies on, are executed using the chop or seal of the signing entity or with the signature of a legal representative whose designation is registered and filed with the relevant local branch of the SAIC. We generally execute legal documents by affixing chops or seals, rather than having the designated legal representatives sign the documents.

We have three major types of chops—corporate chops, contract chops and finance chops. We use corporate chops generally for documents to be submitted to government agencies, such as applications for changing business scope, directors or company name, and for legal letters. We use contract chops for executing leases and commercial, contracts. We use finance chops generally for making and collecting payments, including, but not limited to issuing invoices. Use of corporate chops and contract chops must be approved by our legal department and administrative department, and use of finance chops must be approved by our finance department. The chops of our PRC subsidiary and the VIE are generally held by the relevant entities so that documents can be executed locally. Although we usually utilize chops to execute contracts, the registered legal representatives of our PRC subsidiary and the VIE have the apparent authority to enter into contracts on behalf of such entities without chops, unless such contracts set forth otherwise. All designated legal representatives of our PRC subsidiary and the VIE have signed employment agreements with us under which they agree to abide by duties they owe to us.

In order to maintain the physical security of our chops, we generally have them stored in secured locations accessible only to the department heads of the legal, administrative or finance departments. Our designated legal representatives generally do not have access to the chops. Although we monitor our employees, including the designated legal representatives of our PRC subsidiary and the consolidated VIE, the procedures may not be sufficient to prevent all instances of abuse or negligence. There is a risk that our employees or designated legal representatives could abuse their authority, for example, by binding the relevant subsidiary or consolidated VIE with contracts against our interests, as we would be obligated to honor these contracts if the other contracting party acts in good faith in reliance on the apparent authority of our chops or signatures of our legal representatives. If any designated legal representative obtains control of the chop in an effort to obtain control over the relevant entity, we would need to have a shareholder or board resolution to designate a new legal representative and to take legal action to seek the for a new chop with the relevant authorities, or otherwise seek legal remedies for the legal representative's misconduct. If any of the designated legal representatives obtains and misuses or misappropriates our chops and seals or other controlling intangible assets for whatever reason, we could experience disruption to our normal business operations. We may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from our operations.

***The shareholders of Beijing Digital Information may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.***

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We have designated individuals who are PRC nationals to be the shareholders of Beijing Digital Information. Beijing Digital Information is owned by Yang Yu and Xinghui Yang. The interests of these individuals as the shareholders of Beijing Digital Information may differ from the interests of the Company as a whole. These shareholders may breach, or cause the VIE to breach, or refuse to renew, the existing contractual arrangements we have with them and Beijing Digital Information, which would have a material and adverse effect on our ability to effectively control Beijing Digital Information. We cannot assure you that when conflicts of interest arise, any or all of these shareholders will act in the best interests of our company or such conflicts will be resolved in our favor.

Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and the Company, except that we could exercise our purchase option under the exclusive option agreement with these shareholders to request them to transfer all of their equity ownership in Beijing Digital Information to Beijing Distance Learning or one or more individuals designated by us. We rely on Messrs. Yu and Yang, who are also our directors, to abide by PRC law, which provides that directors owe a fiduciary duty to the company. Such fiduciary duty requires directors to act in good faith and in the best interests of the company and not to use their positions for personal gains. If we cannot resolve any conflict of interest or dispute between us and the shareholders of Beijing Digital Information, we would have to rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

***We may rely on dividends and other distributions on equity paid by our PRC subsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiary to make payments to us could have a material and adverse effect on our ability to conduct our business.***

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We are a holding company, and we may rely on dividends and other distributions on equity paid by our PRC subsidiaries, Beijing Distance Learning and Shanghai Network Technology, for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. In addition, the PRC tax authorities may require Beijing Distance Learning to adjust its taxable income under the contractual arrangements it currently has in place with the VIE in a manner that would materially and adversely affect its ability to pay dividends and other distributions to us. See "—Our contractual arrangements may be subject to scrutiny by the PRC tax authorities, and a finding that we owe additional taxes could substantially reduce our consolidated net income and the value of your investment."

Under PRC laws and regulations, our PRC subsidiary, which is a wholly foreign-owned enterprise may pay dividends only out of its respective accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. At its discretion, a wholly foreign-owned enterprise may allocate a portion of its after-tax profits based on PRC accounting standards to an enterprise expansion fund, or a staff welfare and bonus fund. The statutory reserve funds, enterprise expansion funds and staff welfare and bonus funds are not distributable as cash dividends.

Any limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. See also "—Risks Related to Doing Business in China—Under the PRC Enterprise Income Tax Law, we may be classified as a PRC "resident enterprise" for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and has a material adverse effect on our results of operations and the value of your investment."

***Our contractual arrangements may be subject to scrutiny by the PRC tax authorities, and a finding that we owe additional taxes could substantially reduce our consolidated net income and the value of your investment.***

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Under PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities. We could face material and adverse tax consequences if the PRC tax authorities determine that the contractual arrangements among our PRC subsidiary and the VIE do not represent an arm's-length price and adjust the VIEs income in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction, for PRC tax purposes, of expense deductions recorded by the VIE, which could in turn increase their tax liabilities. In addition, the PRC tax authorities may impose late payment fees and other penalties to the VIE for under-paid taxes. Our consolidated net income may be materially and adversely affected if our tax liabilities increase or if we are found to be subject to late payment fees or other penalties.

***If Beijing Digital Information becomes the subject of a bankruptcy or liquidation proceeding, we may lose the ability to use and enjoy its assets, which could reduce the size of our operations and materially and adversely affect our business, ability to generate revenues and the market price of our ordinary shares.***

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To comply with PRC laws and regulations relating to foreign ownership restrictions in the online value-added telecommunications business, we hold our ICP license through contractual arrangements with Beijing Digital Information, the VIE, as well as its shareholders. As part of these arrangements, Beijing Digital Information holds assets that are important to the operation of our business.

We do not have priority pledges and liens against Beijing Digital Information's assets. As a contractual and property right matter, this lack of priority pledges and liens has remote risks. If Beijing Digital Information undergoes an involuntary liquidation proceeding, third-party creditors may claim rights to some or all of its assets and we may not have priority against such third-party creditors on Beijing Digital Information's assets. If Beijing Digital Information liquidates, we may take part in the liquidation procedures as a general creditor under the PRC Enterprise Bankruptcy Law and recover any outstanding liabilities owed by Beijing Digital Information to Beijing Distance Learning under the applicable service agreements. To ameliorate the risks of an involuntary liquidation proceeding initiated by a third- party creditor, we closely monitor the operations and finances of Beijing Digital Information through carefully designed budgetary and internal controls to ensure that Beijing Digital Information is well capitalized and is highly unlikely to trigger any third-party monetary claims in excess of its assets and cash resources. Furthermore, Beijing Distance Learning has the ability, if necessary, to provide finance support to Beijing Digital Information to prevent such an involuntary liquidation.

If the shareholders of Beijing Digital Information were to attempt to voluntarily liquidate Beijing Digital Information without obtaining our prior consent, we could effectively prevent such unauthorized voluntary liquidation by exercising our right to request Beijing Digital Information's shareholders to transfer all of their equity ownership interest to Beijing Distance Learning or one or more individuals designated by us in accordance with the option agreements with the shareholders of Beijing Digital Information. In the event that the shareholders of Beijing Digital Information initiate a voluntary liquidation proceeding without our authorization or attempt to distribute the retained earnings or assets of Beijing Digital Information without our prior consent, we may need to resort to legal of the contractual agreements. Any such litigation may be costly and may divert our management's time and attention away from the operation of our business, and the outcome of such litigation would be uncertain.

**Risks Related to Doing Business in China**

***Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.***

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The PRC legal system is based on written statutes. Unlike common law systems, it is a system in which legal cases have limited value as precedents. In the late 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past three decades has significantly increased the protections afforded to various forms of foreign or private-sector investment in China. Our PRC subsidiary is subject to various PRC laws and regulations generally applicable to companies in China. However, since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties.

***The PRC government exerts substantial influence over the manner in which we conduct our business activities. The PRC government may also intervene or influence our operations and this offering at any time, which could result in a material change in our operations and our common stock could decline in value or become worthless.***

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As advised by our PRC legal counsel, Beijing Haotai Law Firm, we currently have not received any notice or administrative order which require the Company to obtain approval from Chinese authorities to list on U.S exchanges, however, if our holding company or any of our PRC subsidiary were required to obtain approval in the future and were denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange, continue to offer securities to investors, or materially affect the interest of the investors and cause significantly depreciation of our price of common stock.

The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters. The central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in our operations in China.

For example, the Chinese cybersecurity regulator announced on July 2, 2021, that it had begun an investigation of Didi Global Inc. (NYSE: DIDI) and two days later ordered that the company's app be removed from smartphone app stores. Similarly, our business segments may be subject to various government and regulatory interference in the regions in which we operate. We could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions. We may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.

Furthermore, it is uncertain when and whether we will be required to obtain permission from the PRC government to list on U.S. exchanges in the future, and even when such permission is obtained, whether it will be denied or rescinded. Although we and our subsidiaries are currently not required to obtain permission or approvals from any of the PRC or Hong Kong government or regulatory agencies, we have not received any denial to list on the U.S. exchange, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry. Recent statements by the Chinese government indicating an intent, and the PRC government may take actions to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or become worthless.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published in a timely manner or at all) that may have retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our ability to continue our operations.

***We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related business.***

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The PRC government extensively regulates the internet industry, including foreign ownership of, and the licensing and permit requirements pertaining to, companies in the internet industry. These internet-related laws and regulations are relatively new and evolving, and their interpretation and enforcement involve significant uncertainties. As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be in violation of applicable laws and regulations. Issues, risks and uncertainties relating to PRC governmental regulation of the internet industry include, but are not limited to, the following.

We only have control over our website through contractual arrangements. We do not own the website in China due to the restriction of foreign investment in businesses providing value-added telecommunication services in China, including internet information provision services. This may significantly disrupt our business, subject us to sanctions, compromise enforceability of related contractual arrangements, or have other harmful effects on us.

The evolving PRC regulatory system for the internet industry may lead to the establishment of new regulatory agencies. For example, in May 2011, the State Council announced the establishment of a new department, the State Internet Information Office (with the involvement of the State Council Information Office, the Ministry of Industry and Information Technology ("MIIT"), and the Ministry of Public Security). The primary role of this new agency is to facilitate the policy-making and legislative development in this field, to direct and coordinate with the relevant departments in connection with online content administration and to deal with cross-ministry regulatory matters in relation to the internet industry.

We are required to obtain and maintain various licenses and permits and fulfill registration and filing requirements in order to conduct and operate our business. If these new laws and regulations are promulgated, additional licenses may be required for our operations. If our operations do not comply with these new regulations at the time they become effective, or if we fail to obtain any licenses required under these new laws and regulations, we could be subject to penalties.

The Circular on Strengthening the Administration of Foreign Investment in an Operation of Value-added Telecommunications Business, issued by the MIIT in July 2006, prohibits domestic telecommunication service providers from leasing, transferring or selling telecommunications business operating licenses to any foreign investor in any form, or providing any resources, sites or facilities to any foreign investor for their illegal operation of a telecommunications business in China. According to this circular, either the holder of a value-added telecommunication services operation permit or its shareholders must directly own the domain names and trademarks used by such license holders in their provision of value-added telecommunication services. The circular also requires each license holder to have the necessary facilities, including servers, for its approved business operations and to maintain such facilities in the regions covered by its license. If an ICP license holder fails to comply with the requirements and also fails to remediate such non-compliance within a specified period of time, the MIIT or its local counterparts have the discretion to take administrative measures against such license holder, including revoking its ICP license. Currently, Beijing Digital Information holds an ICP license and operates our website. Beijing Digital Information owns the relevant domain names and registered trademarks and has the necessary personnel to operate such website.

The interpretation and application of existing PRC law, regulations and policies and possible new laws, regulations or policies relating to the internet industry have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of, internet businesses in China, including our business. We cannot assure you that we have obtained all the permits or licenses required for conducting our business in China or will be able to maintain our existing licenses or obtain new ones.

***New legislation or changes in the PRC laws or policies regarding self-taught education may affect our business operations and prospects.***

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The self-taught education industry in China and our business are subject to regulations and policies in various respects. Relevant rules and regulations could be amended or updated from time to time to accommodate the development of education in China. We may need to change our business practices in order to comply with the new rules and regulations or adapt to policy changes, but we may not be able to do so timely and efficiently. Any such failure may subject us to administrative fines or penalties or other negative consequences which could materially and adversely affect our brand name, reputation, business, financial condition and results of operations. On July 24, 2021, the new policy Opinions on Further Reducing the Burden of Homework and Off-campus Training for Students in Compulsory Education ("Opinions") issued by General Office of the Chinese Communist Party and General Office of the State Council, we followed the laws and industrial policy in China while providing services and has never been involved in providing discipline tutoring or training services for students in compulsory education as mentioned in the Opinions.

***Our business is subject to complex and evolving Chinese laws and regulations regarding data privacy and security. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, penalties, changes to our business practices, increased cost of operations, damages to our reputation and brand, or otherwise harm our business.***

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In the PRC, governmental authorities have enacted a series of laws and regulations to enhance the protection of data privacy and cybersecurity. The Cybersecurity Law of the PRC and relevant regulations require network operators, which may include us, to ensure the security and stability of the services provided via network and protect individual privacy and the security of personal data in general by requiring the consent of internet users prior to the collection, use or disclosure of their personal data. Under the Cybersecurity Law, the owners and administrators of networks and network service providers have various personal information security protection obligations, including restrictions on the collection and use of personal information of users, and they are required to take steps to prevent personal data from being divulged, stolen, or tampered with. Regulatory requirements regarding the protection of personal information are constantly evolving and can be subject to differing interpretations or significant changes, making the extent of our responsibilities in that regard uncertain.

***The enforcement of the PRC Labor Contract Law and other labor-related regulations in the PRC may adversely affect our business and our results of operations.***

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The PRC Labor Contract Law became effective and was implemented on January 1, 2008, which was amended on December 28, 2012. It has reinforced the protection of employees who, under the PRC Labor Contract Law, have the right, among others, to have written labor contracts, to enter into labor contracts with no fixed terms under certain circumstances, to receive overtime wages and to terminate or alter terms in labor contracts. According to the PRC Social Insurance Law, which became effective on July 1, 2011, and the Administrative Regulations on the Housing Funds, Companies operating in China are required to participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance, maternity insurance and housing funds plans, and the employers must pay all or a portion of the social insurance premiums and housing funds for their employees.

As a result of these laws and regulations designed to enhance labor protection, we expect our labor costs will continue to increase. In addition, as the interpretation and implementation of these laws and regulations are still evolving, our employment practice may not at all times be deemed in compliance with the new laws and regulations. If we are subject to severe penalties or incur significant liabilities in connection with labor disputes or investigations, our business and results of operations may be adversely affected.

***Regulation and censorship of information disseminated over the internet in China may adversely affect our business and reputation and subject us to liability for information displayed on our website.***

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The PRC government has adopted regulations governing internet access and the distribution of news and other information over the internet. Under these regulations, internet content providers and internet publishers are prohibited from posting or displaying over the internet content that, among other things, violates PRC laws and regulations, impairs the national dignity of China, or is reactionary, obscene, superstitious, fraudulent or defamatory. Failure to comply with these requirements may result in the revocation of licenses to provide internet content and other licenses, and the closure of the concerned websites. The website operator may also be held liable for such censored information displayed on or linked to the websites. If our website is found to be in violation of any such requirements, we may be penalized by relevant authorities, and our operations or reputation could be adversely affected.

***The operation of Beijing Digital Information may be deemed by relevant PRC government authority to be beyond its authorized business scope. If the relevant PRC government authorities take actions against Beijing Digital Information, our business and operations could be materially and adversely affected.***

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The principal regulations governing private education in China consist of the Education Law of the PRC, the Law on Promoting Private Education, or Private Education Law, and the Implementation Rules of the Law on Promoting Private Education and the latest amendment of Private Education Law was on December 29, 2018 which came into effect on the same date. Under these PRC laws and regulations, sponsors of private schools may choose to establish non-profit or for-profit private schools at their own discretion, while prior to the effectiveness of the Amendment (as further defined below), all private schools shall not be established for for-profit purposes. Nonetheless, school sponsors are not allowed to establish for-profit private schools that are engaged in compulsory education. On December 30, 2016, the Ministry of Education ("MOE"), State Administration for Industry and Commerce ("SAIC") and the Ministry of Human Resources and Social Welfare of the PRC jointly issued the Implementation Rules on the Supervision and Administration of For-profit Private Schools, pursuant to which the establishment, division, merger and other material changes of a for-profit private school shall first be approved by the education authorities or the authorities in charge of labor and social welfare, and then be registered with the competent branch of SAIC.

On April 20, 2018, the MOE issued for public comments the Draft Revision of the Implementation Rules of the Law on Promoting Private Education (the Draft for Comments), or the MOE Draft for Comments. As the consultation period for the MOE Draft for Comments ended in May 2018, on August 10, 2018, the Ministry of Justice of the PRC, or the MOJ, published the committee draft of the Implementation Rules of the Law on Promoting Private Education (Revised Draft), or the MOJ Draft for Approval, for public review and comments. On May 14, 2021, the State Council officially promulgated the revised Implementation Rules of the Law on Promoting Private Education, with an effective date of September 1, 2021 (hereinafter referred to as "the 2021 Implementation Rules"), which made certain significant changes that may affect private schools. The 2021 Implementation Rules further promotes the development of private education by providing that a private school shall enjoy rights or preferential policies stipulated by laws equivalent to those applicable to a public school, which shall primarily include: (i) a private school may enjoy the preferential tax policies stipulated by the State and a non-profit private school may enjoy the same tax policies as a public school; and (ii) the local people's governments shall grant preferential treatments in terms of land use by means of allocation in accordance with the principle of treating non-profit private schools equally as public schools, and for schools that provide education for academic credentials, may provide lands by means of bid invitation, auction or listing, assigning contracts, long-term lease or combination of sale as well as rental and may permit payment in instalments.

The 2021 Implementation Rules stipulates further provisions of the operation and management of private schools. Among other things, (i) Private schools to carry out educational activities online using internet technology shall obtain the corresponding private school operation permits. Private schools that carry out educational activities online using internet technology shall establish and implement internet security management systems and technical measures for security protection as required by law, and shall, upon discovery of the release or transmission of any information prohibited by laws or administrative regulations from release or transmission, immediately have the transmission stopped and remove or otherwise dispose of the information to prevent its dissemination, retain related records, and report the case to relevant authorities; (ii) at the end of each financial year, a for-profit private school shall set aside a portion of not less than 10% of its audited annual net income, and a non-profit private school from its audited annual net increase in assets, as the development fund, which shall be used for the development of the school; (iii) private schools that provide compulsory education are not allowed to enter into transactions with their interested parties, and other private schools shall conduct transactions with their interested parties in a manner that is open, justified and fair, shall be reasonably priced, shall establish standardized decision-making for such transactions and shall not harm the interests of the State, schools and teachers and students. Private schools shall set up an information disclosure mechanism for dealing with their interested parties. The relevant governmental authorities, such as the education department, the human resources and social security departments and the financial departments, shall strengthen the supervision of the agreements entered into between non-profit private schools and their interested parties, and shall review the connected transactions annually; and (iv)any social organizations or individuals shall not control compulsory education private schools or non-profit private schools that implement preschool education through mergers or "structured contracts".

As the 2021 Implementation Rules has just been promulgated, the relevant specific rules regarding online private schools' application for private school permits have not yet been issued, and it is not yet possible to determine whether companies engaging online non-academic education like us fall under the 2021 Implementation Rules. We have not yet received any notice from the competent authority requesting the application for private school permits. We will apply for relevant permits and strengthen network security management if so required, which may result in additional compliance costs. However, we cannot ensure you that private school permits can be obtained in a timely manner. We may also be restricted from further expanding our business, including the limitation on the potential targets we are able to consider for acquisition. If such situations occur, our business, financial condition and prospects would be materially and adversely affected.

We operate online platforms that provide online educational courses to students through the internet, and both of our PRC subsidiary and the VIE are registered with Beijing Administration for Industry and Commerce ("Beijing AIC") as commercial enterprises. As such, we believe the provisions of the Private Education Law and its implementing rules, including without limitation, the requirement for obtaining a private school operating permit, are not applicable to us. However, as the laws and regulations are new, it is unclear that how these laws and regulations will be explained and implemented and we cannot assure you that the competent PRC governmental authorities will not ultimately take a view contrary to our opinion. Moreover, because there is no further official or publicly-available interpretation of the definition of "private schools", there are uncertainties with regard to whether our business currently conducted in PRC will be deemed by the relevant PRC governmental authorities to be "private schools" as defined under the relevant PRC laws and regulations. If our business conducted in PRC is deemed as operating private schools, we may be required to register our PRC entity as a private school with education or training-related items included into its approved business scope. Beijing Digital Information is registered with Beijing AIC as a limited liability company, and its current registered business scope only includes "education consulting" and "computer technology training," without "training" or any other education or training-related items. However, we cannot assure you that we will not be subject to any penalties in the future. If the relevant PRC government authorities discover or determine that Beijing Digital Information operates beyond its authorized business scope, Beijing Digital Information may be ordered to complete the registration for change of business scope within a given period, failing which Beijing Digital Information is subject to a one-time fine of RMB10,000 to RMB100,000, or may be ordered to cease its operation if the relevant authorities determine that Beijing Digital Information is operating without any approval or permit required.

***We face risks and uncertainties with respect to the licensing requirement for Internet audio-video programs.***

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On December 20, 2007, the State Administration of Press Publication Radio Film and Television ("SAPPRFT") and the MIIT jointly promulgated the Administrative Measures Regarding Internet Audio-Video Program Services, or the Internet Audio-Video Program Measures, which became effective on January 31, 2008 and was amended and effective as of August 8, 2015. Among other things, the Internet Audio-Video Program Measures stipulate that no entities or individuals may provide Internet audio-video program services without a License for Online Transmission of Audio-Visual Programs issued by SAPPRFT or its local bureaus or completing the relevant registration with SAPPRFT or its local bureaus, and only state-owned or state-controlled entities are eligible to apply for a License for Online Transmission of Audio-Visual Programs. In a press conference jointly held by the SAPPRFT and MIIT in February 2008 to answer questions relating to the Internet Audio-Video Program Measures, the SAPPRFT and MIIT clarified that those providers of internet audio- visual program services who engaged in such services prior to the promulgation of the Internet Audio-Video Program Measure may re- register and continue their operation of internet audio-visual program services so long as those providers did not violate the relevant laws and regulations in the past, regardless whether they are state-owned or state-controlled entities or not, but any other entities intend to provide internet audio-visual program services shall comply with all requirements specified in the Internet Audio-Video Program Measures. On April 1, 2010, SAPPRFT promulgated the Provisional Implementation of the Tentative Categories of Internet Audio-Visual Program Services, or the Categories, which was modified on March 10, 2017. The Categories clarified the scope of Internet audio-video programs services. According to the Categories, there are four categories of Internet audio-visual program services which are further divided into seventeen sub-categories. The third sub-category to the second category covers the making and editing of certain specialized audio-video programs concerning, among other things, educational content, and broadcasting such content to the general public online. However, there are still significant uncertainties relating to the interpretation and implementation of the Internet Audio-Video Program Measures, in particular, the scope of "internet audio-video programs."

We offer recorded audio-video lectures to our enrolled students only. We believe the limited scope of our audience and the nature of the raw data we transmit distinguishes us from general providers of internet audio-visual program services, such as the operator of online video websites, and the provision of the Audio-Visual Program Provisions are not applicable with regard to our offering of the lessons. However, we cannot assure you that the competent PRC government authorities will not ultimately take a view contrary to our opinion. In addition, as supplementary course materials, we offer certain audio-video contents on our websites and mobile apps for the review of all registered members. If the governmental authorities determine that our relevant activities fall within the definition of "internet audio-video program service" under the Audio-Visual Program Provisions, we may be required to obtain the License for Disseminating Audio-Video Programs through Information Network. If this occurs, we may not be able to obtain such license and we may become subject to penalties, fines, legal sanctions or an order to suspend our use of audio-video content. We cannot assure you that the measures we have taken will be deemed adequate by the authorities and we will not be subject to any penalties or legal sanctions in the future for our use of audio or video contents on our websites.

***We are required to obtain various operating licenses and permits and to make registrations and filings for our business operations in China; failure to comply with these requirements may materially adversely affect our business and results of operations.***

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The internet industry in China is highly regulated by the PRC government. See "Regulations—Regulations Relating to Value-Added Telecommunications Services." We are required to obtain and maintain various licenses and permits and fulfill registration and filing requirements in order to conduct and operate our business currently carried out, and we may be required to obtained additional licenses or permits for our operations as the interpretation and implementation of current PRC laws and regulations are still evolving, and new laws and regulations may also be promulgated. We currently, through our PRC variable interest entity, Beijing Digital Information, hold an ICP license for our website, which is valid from January 11, 2016 to December 23, 2025 and is subject to annual review. Beijing Digital Information, however, may be required to obtain additional licenses or expand the authorized business scope covered under the licenses it currently holds. For example, the contents we use on our websites or mobile apps, including the course materials and video-audio contents we licensed from third parties, may be deemed "Internet cultural products", and our use of those contents may be regarded as "Internet cultural activities", thus we may be required to obtain an Internet Culture Business Operating License for provision of those contents through our online platforms as currently there is no further official or publicly-available interpretation of those definitions. Also, we may be required to obtain a Publication Business Operating License for distribution of course books or other course materials, including electronical version, to our enrolled students. In addition, our providing content through our online platform may be regarded as "online publishing" and may thus subject us to the requirement of obtaining an Online Publishing License. If Beijing Digital Information fails to obtain or maintain any of the required licenses or approvals, its continued business operations in the Internet industry may subject it to various penalties, such as confiscation of illegal revenues, fines and the discontinuation or restriction of its operations. Any such disruption in the business operations of our affiliated entities will materially and adversely affect our business, financial condition and results of operations.

***Changes in China's economic, political or social conditions or government policies could have a material adverse effect on our business and operations.***

Currently all of our business operations are conducted in China and all of our sales are made in China. Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole.

China's economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has implemented measures since the late 1970's emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the PRC government. In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises significant control over the PRC economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies. For example, as a result of China's current nationwide anti- corruption campaign, public school spending has become strictly regulated. To comply with the expenditure control policies of the Chinese government, many public universities, including our clients, temporarily reduced their self-taught education spending in 2017. This caused the demand for our courses in 2017 to decrease. If our clients continue to reduce their demand for our services due to the policies of the Chinese government, this could adversely impact our business, financial condition and operating results.

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While China's economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy, and the rate of growth has been slowing. Some of the governmental measures may benefit the overall Chinese economy but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. Any stimulus measures designed to boost the Chinese economy may contribute to higher inflation, which could adversely affect our results of operations and financial condition. For example, certain operating costs and expenses, such as employee compensation and office operating expenses, may increase as a result of higher inflation.

***PRC regulations relating to foreign exchange registration of overseas investment by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiary to liability or penalties, limit our ability to inject capital into these subsidiaries, limit PRC subsidiary's ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.***

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On July 4, 2014, the State Administration of Foreign Exchange ("SAFE') promulgated the Circular on Relevant Issues Relating to Domestic Resident's Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, which replaced the former Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents to Engage in Financing and Inbound Investment via Overseas Special Purpose Vehicles (generally known as SAFE Circular 75) promulgated by SAFE on October 21, 2005. On February 13, 2015, SAFE further promulgated the Circular on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Circular 13, which took effect on June 1, 2015. This SAFE Circular 13 has amended SAFE Circular 37 by requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.

These circulars require PRC residents to register with qualified banks in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents' legally owned assets or equity interests in domestic enterprises or offshore assets or interests, which is referred to in SAFE Circular 37 as a "special purpose vehicle." These circulars further require amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as an increase or decrease of capital contributed by PRC residents, share transfer or exchange, merger, division or other material events. In the event that a PRC resident holding interests in a special purpose vehicle fails to complete the required SAFE registration, the PRC subsidiary of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiary. Furthermore, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for evasion of foreign exchange controls.

Yang Yu and Xinghui Yang, who directly or indirectly hold shares in our British Virgin Islands holding company and who are known to us as being PRC residents have initiated the application for foreign exchange registrations. However, we may not at all times be fully aware or informed of the identities of all our shareholders or beneficial owners that are required to make such registrations, and we may not always be able to compel them to comply with all relevant foreign exchange regulations. As a result, we cannot assure you that all of our shareholders or beneficial owners who are PRC residents will at all times comply with, or in the future make or obtain any applicable registrations or approvals required by all relevant foreign exchange regulations. The failure or inability of such individuals to comply with the registration procedures set forth in these regulations may subject us to fines or legal sanctions, restrictions on our cross-border investment activities or our PRC subsidiary's ability to distribute dividends to, or obtain foreign-exchange-dominated loans from, our company, or prevent us from making distributions or paying dividends. As a result, our business operations and our ability to make distributions to you could be materially and adversely affected.

Furthermore, as these foreign exchange regulations are still relatively new and their interpretation and implementation has been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant government authorities. We cannot predict how these regulations will affect our business operations or future strategy. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.

***Restrictions on currency exchange or outbound capital flows may limit our ability to utilize our PRC revenue effectively.***

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All of our revenue is denominated in Renminbi. The Renminbi is currently convertible under the "current account," which includes dividends, trade, and service-related foreign exchange transactions, but requires approval from or registration with appropriate government authorities or designated banks under the "capital account," which includes foreign direct investment and loans, such as loans we may secure from our onshore subsidiaries. Currently, our PRC subsidiaries, a foreign invested enterprise, may purchase foreign currency for settlement of "current account transactions," including payment of dividends to us, without the approval of SAFE by complying with certain procedural requirements. However, the relevant PRC governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions.

Since 2016, PRC governmental authorities have imposed more stringent restrictions on outbound capital flows, including heightened scrutiny over "irrational" overseas investments for certain industries, as well as over four kinds of "abnormal" offshore investments, which are:

● investments through enterprises established for only a few months without substantive operation;

● investments with amounts far exceeding the registered capital of onshore parent and not supported by its business performance shown on financial statements;

● investments in targets that are not related to onshore parent's main business; and

● investments with abnormal sources of Renminbi funding suspected to be involved in illegal transfer of assets or illegal operation of underground banking.

On January 26, 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, which tightened the authenticity and compliance verification of cross-border transactions and cross-border capital flow. In addition, the Outbound Investment Sensitive Industry Catalogue (2018) lists certain sensitive industries that are subject to the National Development and Reform Commission ("NDRC")'s pre-approval requirements prior to remitting investment funds offshore, which subjects us to increased approval requirements and restrictions with respect to our overseas investment activity. Since a significant amount of our PRC revenue is denominated in Renminbi, any existing and future restrictions on currency exchange or outbound capital flows may limit our ability to utilize revenue generated in Renminbi to fund our business activities outside of the PRC, make investments, service any debt we may incur outside of China or pay dividends in foreign currencies to our shareholders, including holders of our ordinary shares.

***PRC regulation on loans to, and direct investment in, PRC entities by offshore holding companies and governmental control in currency conversion may delay or prevent us from using the proceeds of the IPO to make loans to our PRC subsidiary and PRC consolidated VIE or make additional capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business.***

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We are an offshore holding company conducting our operations in China through our PRC subsidiary, Beijing Distance Learning. We may make loans to our PRC subsidiary and PRC consolidated VIE subject to the approval from governmental authorities and limitation of amount, or we may make additional capital contributions to our PRC subsidiary.

Any loans to our PRC subsidiary, which is treated as a foreign-invested enterprise under PRC law, are subject to PRC regulations and foreign exchange loan registrations. For example, loans by us to our PRC subsidiary, Beijing Distance Learning, to finance its activities cannot exceed statutory limits and must be registered with the local counterpart of the SAFE. The statutory limit for the total amount of foreign debts of a foreign-invested company is either the difference between the amount of total investment as approved by the MOC or its local counterpart and the amount of registered capital of such foreign-invested company or twice of net worth of the foreign-invested company. We may also decide to finance our PRC subsidiary by means of capital contributions.

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On August 29, 2008, SAFE promulgated the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular 142, regulating the conversion by a foreign-invested enterprise of foreign currency registered capital into RMB by restricting how the converted RMB may be used. SAFE Circular 142 provides that the RMB capital converted from foreign currency registered capital of a foreign-invested enterprise may only be used for purposes within the business scope approved by the applicable governmental authority and may not be used for equity investments within the PRC unless otherwise provided by law. In addition, SAFE strengthened its oversight of the flow and use of the RMB capital converted from foreign currency registered capital of a foreign-invested company. The use of such RMB capital may not be altered without SAFE approval, and such RMB capital may not in any case be used to repay RMB loans if the proceeds of such loans have not been used. Violations of SAFE Circular 142 could result in severe monetary or other penalties. On July 4, 2014, SAFE issued the Circular of the SAFE on Relevant Issues Concerning the Pilot Reform in Certain Areas of the Administrative Method of the Conversion of Foreign Exchange Funds by Foreign-invested Enterprises, or SAFE Circular 36, which launched the pilot reform of administration regarding conversion of foreign currency registered capitals of foreign-invested enterprises in 16 pilot areas. According to SAFE Circular 36, some of the restrictions under SAFE Circular 142 will not apply to the settlement of the foreign exchange capitals of an ordinary foreign-invested enterprise in the pilot areas, and such foreign-invested enterprise is permitted to use Renminbi converted from its foreign-currency registered capital to make equity investments in the PRC within and in accordance with the authorized business scope of such foreign-invested enterprises, subject to certain registration and settlement procedure as set forth in SAFE Circular 36. As this circular is relatively new, there remains uncertainty as to its interpretation and application and any other future foreign exchange related rules. On March 30, 2015, SAFE promulgated Circular on Reforming the Management Approach regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises, or SAFE Circular 19, to expand the reform nationwide. SAFE Circular 19 came into force and replaced both SAFE Circular 142 and SAFE Circular 36 on June 1, 2015. However, SAFE Circular 19 continues to prohibit a foreign-invested enterprise from, among other things, using RMB funds converted from its foreign exchange capitals for expenditure beyond its authorized business scope, providing entrusted loans or repaying loans between non-financial enterprises. Violations of these Circulars could result in severe monetary or other penalties. These circulars may significantly limit our ability to use RMB converted from the net proceeds of the IPO to fund the establishment of new entities in China by our PRC subsidiary, to invest in or acquire any other PRC companies through our PRC subsidiary, or to establish new consolidated VIEs in the PRC.

In light of the various requirements imposed by PRC regulations on loans to, and direct investment in, PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans by us to our PRC subsidiary or PRC consolidated VIE or with respect to future capital contributions by us to our PRC subsidiary. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds from the IPO and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

***Under the PRC Enterprise Income Tax Law, we may be classified as a PRC "resident enterprise" for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and has a material adverse effect on our results of operations and the value of your investment.***

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Under the PRC Enterprise Income Tax Law, or the EIT Law, that became effective in January 2008 and was amended in February 2017, an enterprise established outside the PRC with "de facto management bodies" within the PRC is considered a "resident enterprise" for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. Under the implementation rules to the EIT Law, a "de facto management body" is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise. In addition, a circular, known as STA Circular 82, issued in April 2009 by the State Taxation Administration ("STA"), specifies that certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if the following are located or resident in the PRC: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, company seal, and minutes of board meetings and shareholders' meetings; and half or more of the senior management or directors having voting rights. Further to STA Circular 82, the STA issued a bulletin, known as STA Bulletin 45, which took effect in September 2011, to provide more guidance on the implementation of STA Circular 82 and clarify the reporting and filing obligations of such "Chinese-controlled offshore incorporated resident enterprises." STA Bulletin 45 provides procedures and administrative details for the determination of resident status and administration on post-determination matters. Although both STA Circular 82 and STA Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals, the determining criteria set forth in STA Circular 82 and STA Bulletin 45 may reflect the STA's general position on how the "de facto management body" test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, PRC enterprise groups or by PRC or foreign individuals.

We do not believe that the Company meets all of the conditions above thus we do not believe that the Company is a PRC resident enterprise, though a substantial majority of the members of our management team as well as the management team of our offshore holding company are located in China. However, if the PRC tax authorities determine that the Company is a PRC resident enterprise for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we will be subject to the uniform 25% enterprise income tax on our world-wide income, which could materially reduce our net income. In addition, we will also be subject to PRC enterprise income tax reporting obligations.

Finally, dividends payable by us to our investors and gains on the sale of our shares may become subject to PRC withholding tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains are deemed to be from PRC sources. It is unclear whether non-PRC shareholders of our company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in the ordinary shares.

***Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.***

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Pursuant to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or STA Circular 698, issued by the STA on December 10, 2009, where a foreign investor transfers the equity interests of a resident enterprise indirectly via disposition of the equity interests of an overseas holding company, or an "indirect transfer," and such overseas holding company is located in a tax jurisdiction that (i) has an effective tax rate less than 12.5% or (ii) does not tax foreign income of its residents, the foreign investor shall report the indirect transfer to the competent tax authority. The PRC tax authority will examine the true nature of the indirect transfer, and if the tax authority considers that the foreign investor has adopted an "abusive arrangement" in order to avoid PRC tax, it may disregard the existence of the overseas holding company and re-characterize the indirect transfer and as a result, gains derived from such indirect transfer may be subject to PRC withholding tax at a rate of up to 10%.

On February 3, 2015, the STA issued the Announcement of the State Taxation Administration on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-Resident Enterprises, or STA Bulletin 7, to supersede existing provisions in relation to the "indirect transfer" as set forth in Circular 698, while the other provisions of Circular 698 remain in force. Pursuant to STA Bulletin 7, where a non-resident enterprise indirectly transfers properties such as equity in PRC resident enterprises without any justifiable business purposes and aiming to avoid the payment of enterprise income tax, such indirect transfer must be reclassified as a direct transfer of equity in PRC resident enterprise. To assess whether an indirect transfer of PRC taxable properties has reasonable commercial purposes, all arrangements related to the indirect transfer must be considered comprehensively and factors set forth in STA Bulletin 7 must be comprehensively analyzed in light of the actual circumstances. STA Bulletin 7 also provides that, where a non-PRC resident enterprise transfers its equity interests in a resident enterprise to its related parties at a price lower than the fair market value, the competent tax authority has the power to make a reasonable adjustment to the taxable income of the transaction.

On October 17, 2017, the STA issued the Announcement of the State Taxation Administration on Matters Concerning Withholding of Income Tax of Non-resident Enterprises as Source, or STA Bulletin 37, which repealed the entire Circular 698 and the provision in relation to the time limit for the withholding agent to declare to the competent tax authority for payment of such tax of STA Bulletin 7. Pursuant to STA Bulletin 37, the income from property transfer, as stipulated in the second item under Article 19 of the Law on Enterprise Income Tax, shall include the income derived from transferring such equity investment assets as stock equity. The balance of deducting the equity's net value from the total income from equity transfer shall be taxable income from equity transfer. Where a withholding agent enters into a business contract, involving the income specified in the third paragraph of Article 3 in the Law on Enterprise Income Tax, with a non-resident enterprise, the tax-excluding income of the non-resident enterprise will be treated as the tax-including income, based on which the tax payment will be calculated and remitted, if it is agreed in the contract that the withholding agent shall assume the tax payable.

There has been very limited application of STA Bulletin 7 and STA Bulletin 37 because these regulations were newly issued and came into force in February 2015 and in December 2017 respectively. During the effective period of STA Circular 698, some intermediary holding companies were actually looked through by the PRC tax authorities, and consequently the non-PRC resident investors were deemed to have transferred the PRC subsidiary and PRC corporate taxes were assessed accordingly. It is possible that we or our non-PRC resident investors may become at risk of being taxed under STA Bulletin 7 and STA Bulletin 37 and may be required to expend valuable resources to comply with STA Bulletin 7 and STA Bulletin 37 or to establish that we or our non-PRC resident investors should not be taxed under STA Bulletin 7 and STA Bulletin 37, which may have an adverse effect on our financial condition and results of operations or such non- PRC resident investors' investment in us.

***Our PRC subsidiary is subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy our liquidity requirements.***

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We are a holding company incorporated in the British Virgin Islands. We may need dividends and other distributions on equity from our PRC subsidiaries to satisfy our liquidity requirements. Current PRC regulations permit our PRC subsidiary to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiary is required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of their respective registered capital. Our PRC subsidiary may also allocate a portion of its after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends. As a result of these laws, rules and regulations, our subsidiaries incorporated in China are restricted in their ability to transfer a portion of their respective net assets to their shareholders as dividends. The amounts restricted include the paid-up capital and the statutory reserve funds of our PRC subsidiaries, totaling $975,014, $975,014 and $975,014 as of March 31, 2025, 2024 and 2023, respectively. However, there can be no assurance that the PRC government will not intervene or impose restrictions on our ability to transfer or distribute cash within our organization or to foreign investors, which could result in an inability or prohibition on making transfers or distributions outside of China and may adversely affect our business, financial condition and results of operations.

Furthermore, if our PRC subsidiary incurs debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. In addition, the PRC tax authorities may require us to adjust our taxable income under the contractual arrangements we currently have in place in a manner that would materially and adversely affect our PRC subsidiary's ability to pay dividends and other distributions to us. Any limitation on the ability of our subsidiary to distribute dividends to us or on the ability of the VIE to make payments to us may restrict our ability to satisfy our liquidity requirements.

In addition, the EIT Law, and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises are incorporated.

***Governmental control of currency conversion may affect the value of your investment.***

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The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenues in RMB. Under our current corporate structure, our company in the British Virgin Islands may rely on dividend payments from our PRC subsidiary to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, such as profit distributions and trade and service- related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. Therefore, our PRC subsidiary in China is able to pay dividends in foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC foreign exchange regulation, such as the overseas investment registrations by our shareholders or the ultimate shareholders of our corporate shareholders who are PRC residents. But approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our ordinary shares.

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***The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.***

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The M&A Rules discussed in the preceding risk factor and recently adopted regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex. For example, the M&A Rules require that the MOC be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that have or may have impact on the national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. Mergers, acquisitions or contractual arrangements that allow one market player to take control of or to exert decisive impact on another market player must also be notified in advance to the MOC when the threshold under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, or the Prior Notification Rules, issued by the State Council in August 2008 is triggered. In addition, the security review rules issued by the MOC that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise "national defense and security" concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise "national security" concerns are subject to strict review by the MOC, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from the MOC or its local counterparts may delay or inhibit our ability to complete such transactions. It is unclear whether our business would be deemed to be in an industry that raises "national defense and security" or "national security" concerns. However, the MOC or other government agencies may publish explanations in the future determining that our business is in an industry subject to the security review, in which case our future acquisitions in the PRC, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. Our ability to expand our business or maintain or expand our market share through future acquisitions would as such be materially and adversely affected.

***Our ordinary shares may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors. The delisting of our ordinary shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. The Consolidated Appropriations Act 2023 contained, among other things, an identical provision to HFCAA, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two.***

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Our ordinary shares may be prohibited from trading on a national exchange or "over-the-counter" markets under the Holding Foreign Companies Accountable Act (the "HFCAA") if the Public Company Accounting Oversight Board (the "PCAOB") is unable to inspect our auditor for three consecutive years beginning in 2021. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act ("AHFCAA"), and on December 29, 2022, legislation entitled "Consolidated Appropriations Act, 2023" (the "Consolidated Appropriations Act") was signed into law by President Biden, which contained, among other things, an identical provision to the AHFCAA and amended the HFCA Act by requiring the SEC to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the prohibition on trading. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.

Pursuant to the HFCAA, the PCAOB issued a Determination Report on December 16, 2021 ("Determination Report") which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China of the PRC, and (2) Hong Kong. In addition, the PCAOB's report identified the specific registered public accounting firms which are subject to these determinations. On August 26, 2022, a Statement of Protocol was signed by the PCAOB, the CSRC and the Ministry of Finance of the PRC governing inspections and investigations of audit firms based in mainland China and Hong Kong (the "Statement of Protocol"). The PCAOB was required to assess whether it is able to inspect and investigate completely registered public accounting firms headquartered in mainland China and Hong Kong by the end of 2022. On December 15, 2022, the PCAOB board announced that it has completed the inspections, determined that it had complete access to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, and voted to vacate the Determination Report. At the same time, the PCAOB also made it clear that it does not have to wait another year to reassess its determinations. Should the PCAOB deem that the PRC authorities obstruct or otherwise fail to facilitate its access in any way and at any point in the future, the PCAOB has the right to act immediately to consider the need to issue a new determination and vacate its determination issued on December 15, 2022. Should that happen, we could be named as a "Covered Issuer" and if the PCAOB determines that our auditor has not been subject to PCAOB inspections for two consecutive years already, it could require the SEC to prohibit our securities from trading on any U.S. stock exchanges. Once the December 15, 2022 determination is vacated, this two consecutive year period will be calculated beginning from the first time the PCAOB was blocked completed access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and will not restart at December 15, 2022. As of the date of this report, our auditor, YCM CPA INC, is a PCAOB-registered public accounting firm headquartered in the United States and is subject to regular PCAOB inspections. Notwithstanding the foregoing, in the future, if there is any regulatory change or step taken by PRC regulators that does not permit our auditor to provide audit documentations located in mainland China or Hong Kong to the PCAOB for inspection or investigation, or the PCAOB re-evaluates its determination as a result of any obstruction with the implementation of the Statement of Protocol in the future, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading of our securities, including trading on the national exchange and trading on "over-the-counter" markets, may be prohibited under the HFCAA.

Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Our auditor's registration with the PCAOB took effect in February 2021 and it is currently subject to PCAOB inspections. The PCAOB currently has access to inspect the working papers of our auditor. However, we cannot assure you whether regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor's audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. Further, new laws and regulations or changes in laws and regulations in both the United States and China could affect our ability to list our ordinary shares, which could materially impair the market for and market price of our ordinary shares.

***Any policy or legal changes to the self-taught education system in China may significantly affect our results of operations.***

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On November 30, 2023, the government of the Hunan Province announced that starting from April 2024, all universities in Hunan will no longer recognize examination scores obtained from online self-taught examination platforms, which will negatively affect our results of operations. We do not expect to generate any revenue from the same source in Hunan Province for the foreseeable future.

Even though the decision made by the Hunan government does not affect other provinces in which we operate, there is no guarantee that those provinces will not follow suit and put forward similar policies in the future. If any other provinces adopt similar policies, our operations may be further negatively affected, and revenues from the self-taught examination platforms may decline significantly.

**Risks Related to Our Ordinary Shares**

***Our dual-class share structure, concentrates voting power in our Chairman of the Board and Executive Director, may limit shareholder influence on our Company.***

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In January 2025, we adopted a dual-class share structure consisting of Class A Shares and Ordinary Shares. Each Class A Share entitles the holder to fifteen (15) votes per share, while each Ordinary Share entitles the holder to one (1) vote per share. In connection with this restructuring, we redeemed 1,488,000 Ordinary Shares held by our ***Chairman of the Board and Executive Director***, Mr. Yang Yu, and issued to him 1,488,000 Class A Shares. As a result, Mr. Yu holds all of our outstanding Class A Shares and, together with his holdings of Ordinary Shares, beneficially owns approximately 39.27% of our total outstanding share capital and controls approximately 89.39% of the total voting power. This concentration of voting power may prevent or discourage potential transactions that could benefit our other shareholders, including transactions involving a change of control. It may also reduce the ability of public shareholders to influence important corporate decisions, such as the election of directors or the approval of significant corporate transactions.

***The trading prices of our ordinary shares are likely to be volatile, which could result in substantial losses to investors.***

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The trading prices of our ordinary shares are likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, like the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in the United States. In the past, the widespread negative publicity of alleged fraudulent accounting practices and poor corporate governance of certain U.S. public companies with operations in China were believed to have negatively affected investors' perception and sentiment towards companies with connection with China, which significantly and negatively affected the trading prices of some companies' securities listed in the U.S. A number of PRC companies have listed their securities on U.S. stock markets, and the securities of some of these companies have experienced significant volatility, including price declines in connection with their initial public offerings. The trading performances of these PRC companies' securities after their offerings may affect the attitudes of investors toward PRC companies listed in the United States in general and consequently may impact the trading performance of our ordinary shares, regardless of our actual operating performance.

***Because we are incorporated under the laws of the British Virgin Islands, we may be required to comply with increased reporting requirements.***

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As the global regulatory and tax environment evolves, we may be subject to new or different statutory and regulatory requirements (for example, on January 1, 2019, the Economic Substance (Companies and Limited Partnerships) Act, 2018 of the British Virgin Islands came into force and related regulations and guidance are anticipated in due course). It is difficult to predict what impact the adoption of these laws or regulations, or changes in the interpretation of existing laws or regulations could have on our business, however, compliance with various additional obligations may create significant additional costs that may be borne by us or otherwise affect our management and operations.

In addition to market and industry factors, the price and trading volume for our ordinary shares may be highly volatile for factors specific to our own operations, including the following:

● the financial projections that we may choose to provide to the public, any changes in those projections or our failure for any reason to meet those projections;

● variations in our net revenues, net loss/income, and cash flow;

● changes in the economic performance or market valuation of other education companies;

● announcements of new investments, acquisitions by us or our competitors, strategic partnerships, joint ventures or capital commitments;

● announcements of new services and expansions by us or our competitors;

● detrimental negative publicity about us, our competitors or our industry;

● changes in financial estimates by securities analysts;

● additions or departures of personnel;

● release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities;

● potential litigation or regulatory investigations;

● substantial sales or perception of sales of our ordinary shares in the public market;

● fluctuations in market prices for our products and securities; and

● general economic, regulatory or political conditions in China and the U.S.

Any of these factors may result in large and sudden changes in the volume and price at which our ordinary shares will trade. In addition, the stock market in general, and the market prices for companies with operations in China in particular, have experienced volatility that often has been unrelated to the operating performance of such companies. The securities of some PRC companies that have listed their securities in the United States have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in the trading prices of their securities. The trading performances of these PRC companies' securities after their offerings may affect the attitudes of investors toward PRC companies listed in the United States, which consequently may impact the trading performance of our ordinary shares, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or other matters of other PRC companies may also negatively affect the attitudes of investors towards PRC-based companies in general, including us, regardless of whether we have conducted any inappropriate activities. Further, the global financial crisis and the ensuing economic recessions in many countries have contributed and may continue to contribute to extreme volatility in the global stock markets. These broad market and industry fluctuations may adversely affect operating performance. Volatility or a lack of positive performance in our share price may also adversely affect our ability to retain key employees, some of whom have been granted restricted shares under our share incentive plan.

If Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we could face significant material adverse consequences, including:

● limited availability of market quotations for our securities;

● reduced liquidity with respect to our securities;

● a determination that our shares are "penny stocks," which will require brokers trading in our shares to adhere to more stringent rules and possibly resulting in a reduced level of trading activity in the secondary trading market for our ordinary shares;

● limited amount of news and analyst coverage for our company; and

● a decreased ability to issue additional securities or obtain additional financing in the future.

***If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding our ordinary shares, the market price for our ordinary shares and trading volume could decline.***

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The trading market for our ordinary shares will be influenced by research reports and ratings that industry or securities analysts or ratings agencies publish about us, our business and the online education market in China in general. We do not have any control over these analysts or agencies. If one or more analysts or agencies who cover us downgrade our ordinary shares, or publish unfavorable research about us, the market price for our ordinary shares would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our ordinary shares to decline.

***The sale or availability for sale of substantial amounts of our ordinary shares could adversely affect their market price.***

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Sales of substantial amounts of our Ordinary shares in the public market, or the perception that these sales could occur, could adversely affect the market price of our ordinary shares and could materially impair our ability to raise capital through equity offerings in the future. The ordinary shares that were sold in the IPO are freely tradable without restriction or further registration under the Securities Act, and shares held by our existing shareholders may also be sold in the public market in the future subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of our ordinary shares.

***Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies.***

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We may seek additional capital through a combination of public and private equity offerings, debt financings, collaborations and licensing arrangements. To the extent that we raise additional capital through the sale of equity or debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder. The incurrence of indebtedness would result in increased fixed payment obligations and could involve restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or grant licenses on terms unfavorable to us.

***There can be no assurance that we will not be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year, which could subject United States investors in our ordinary shares to significant adverse United States income tax consequences.***

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A non-United States corporation, such as our company, will be classified as a PFIC, for U.S. federal income tax purposes for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of "passive" income or (ii) 50% or more of the value of its assets (determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income (the "asset test"). Although the law in this regard is not clear, we treat our consolidated VIEs as being owned by us for U.S. federal income tax purposes because we exercise effective control over the consolidated VIEs and are entitled to substantially all of their economic benefits. As a result, we consolidate their results of operations in our consolidated U.S. GAAP financial statements. Assuming that we are the owner of our consolidated VIEs for U.S. federal income tax purposes, and based upon our current and expected income and assets (taking into account goodwill, other unbooked intangibles, and the proceeds from the IPO) and the value of our ordinary shares, we do not presently expect to be a PFIC for the current taxable year or the foreseeable future.

While we do not expect to be or become a PFIC in the current or foreseeable taxable years, the determination of whether we will be or become a PFIC will depend, in part, upon the value of our goodwill and other unbooked intangibles. Furthermore, the determination of whether we will be or become a PFIC will depend, in part, on the composition of our income and assets. Fluctuations in the market price of our ordinary shares may cause us to become a PFIC for the current or subsequent taxable years. The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in the IPO. In addition, because there are uncertainties in the application of the relevant rules, it is possible that the Internal Revenue Service may challenge our classification of certain income and assets as non-passive or our valuation of our tangible and intangible assets.

Because determination of PFIC status is a fact-intensive inquiry made on an annual basis that depends upon the composition of our assets and income, no assurance can be given that we are not or will not become classified as a PFIC. If we were to be or become classified as a PFIC in any taxable year, a U.S. Holder (as defined in "Taxation—United States Federal Income Taxation") may incur significantly increased U.S. federal income tax on gain recognized on the sale or other disposition of our ordinary shares and on the receipt of distributions on the ordinary shares to the extent such gain or distributions is treated as an "excess distribution" under the U.S. federal income tax rules. Further, if we are classified as a PFIC for any year during which a U.S. Holder holds our ordinary shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our ordinary shares. You are urged to consult your tax advisor concerning the United States federal income tax consequences of acquiring, holding, and disposing of ordinary shares if we are or become classified as a PFIC. For more information, see "Taxation—United States Federal Income Taxation."

***You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under British Virgin Islands law.***

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We are a company limited by shares incorporated under the laws of the British Virgin Islands. Our corporate affairs are governed by our memorandum and articles of association, the BVI Business Companies Act (the "Act") and the common law of the British Virgin Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under British Virgin Islands law are to a large extent governed by the Act and the common law of the British Virgin Islands. The common law of the British Virgin Islands is derived in part from comparatively limited judicial precedent in the British Virgin Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the British Virgin Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law are codified in the Act but are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the British Virgin Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the British Virgin Islands. In addition, British Virgin Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

The British Virgin Islands courts are also unlikely:

● to recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws; and

● to impose liabilities against us, in original actions brought in the British Virgin Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature.

There is no statutory recognition in the British Virgin Islands of judgments obtained in the United States, although the courts of the British Virgin Islands will in certain circumstances recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits.

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.

***Judgments obtained against us by our shareholders may not be enforceable.***

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We are a British Virgin Islands company, and all of our assets are located outside of the United States. The majority of our current operations are conducted in China. In addition, a majority of our current directors and officers are nationals and residents of countries other than the United States. Substantially all of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the United States federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the British Virgin Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers.

***We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.***

 ****

We are an "emerging growth company," as defined in the JOBS Act, and we may take advantage of certain exemptions from various requirements applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 for so long as we are an emerging growth company. As a result, if we elect not to comply with such auditor attestation requirements, our investors may not have access to certain information they may deem important.

The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. However, we have elected to "opt out" of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

***We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.***

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Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

● 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 share 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.

We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a semi-annual basis as press releases, distributed pursuant to the rules and regulations of NASDAQ. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely as compared to that required to be filed with the SEC by U.S. domestic issuers. As a British Virgin Islands company listed on NASDAQ, we are subject to the NASDAQ corporate governance listing standards. However, NASDAQ rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the British Virgin Islands, which is our home country, may differ significantly from the NASDAQ corporate governance listing standards. Although we do not currently plan to utilize the home country exemption for corporate governance matters, to the extent that we choose to do so in the future, our shareholders may be afforded less protection than they otherwise would under the NASDAQ corporate governance listing standards applicable to U.S. domestic issuers. As a result, you may not be afforded the same protections or information, which would be made available to you, were you investing in a U.S. domestic issuer.

***We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an "emerging growth company."***

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We are a public company and incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and NASDAQ, impose various requirements on the corporate governance practices of public companies. As a company with less than US$1.235 billion in revenues for our last fiscal year, we qualify as an "emerging growth company" pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company's internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies. However, we have elected to "opt out" of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costly. After we are no longer an "emerging growth company", we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC. For example, as a result of becoming a public company, we will need to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We also expect that operating as a public company will make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

In the past, shareholders of a public company often brought securities class action suits against the company following periods of instability in the market price of that company's securities. If we were involved in a class action suit, it could divert a significant amount of our management's attention and other resources from our business and operations, which could harm our results of operations and require us to incur significant expenses to defend the suit. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

**ITEM 4. INFORMATION ON THE COMPANY**

**4A. History and Development of the Company**

We began our operations in December 1999 through Beijing Distance Learning, a company formed under the laws of PRC. Beijing Distance Learning was formed to engage in the business of online training for self-taught higher education examination in Beijing. In July 2012, we formed Wah Fu Education Group Limited under the laws of the British Virgin Islands as an offshore holding company under the former name "Wah Fu Trade Limited", which was changed to our current name in 2016. In May 2016, we established our wholly-owned Hong Kong subsidiary, Wah Fu Education Holding Limited, which had been dissolved in April 2021. We conduct our business through our subsidiaries and affiliated entities in China, which are described below. Through contractual arrangements described below, we control 100% of Beijing Digital Information. These contractual arrangements allow us to effectively control and derive 100% of the economic interest from Beijing Digital Information under U.S. GAAP, provided, however, we are the primary beneficiary of the VIE for accounting purposes. In addition, we directly own equity interest of a number of PRC entities. Below is a list of our operating subsidiaries and variable interest entity:

● Beijing Huaxia Dadi Distance Learning Services Co., Ltd.: our wholly owned subsidiary formed under the laws of PRC in 1999. The current business operations of Beijing Distance Learning include research and development of long-distance education software and development of long-distance education resources and information.

● Beijing HuaXia Dadi Digital Information Technology Co., Ltd.: our variable interest entity formed under the laws of PRC in September 2000. The current business operations of Beijing Digital Information include platform development, upgrading, maintenance and other related services. This entity also holds an ICP license for our website, www.edu-edu.com.

● Shanghai Xin Fu Network Technology Co., Ltd.: our wholly owned subsidiary formed under the laws of PRC in July 2015 to engage in the business of development of internet technology and computer technology, technological consulting, services and transfer. Shanghai Xin Fu currently doesn't have any business operations.

● Shanghai Xia Shu Network Technology Co., Ltd.: Shanghai Xin Fu wholly owns this subsidiary , which formed under the laws of PRC in April 2016 to enter into agreements relating to the platform in Shanghai for tax reasons.

● Huaxia MOOC(Hubei) Network Technology Co., Ltd.: a company formed under the laws of PRC in March 2017 to provide exam preparation services in Hubei. Beijing Distance Learning currently owns 71% of the equity interest of this entity. Cuntao Hou, our Vice President of Sales, currently owns 4% of the equity interest in this entity. The rest of its equity interest is owned by third-party individuals and entities that are not affiliated with us or any of our officers and directors.

● Nanjing Suyun Education Technology Co., Ltd.: a company formed under the laws of PRC in March 2017 to provide exam preparation services in Jiangsu. Beijing Distance Learning currently owns 70% of the equity interest of this entity. The rest of its equity interest is owned by third-party individuals and entities that are not affiliated with us or any of our officers and directors.

● Guizhou Huafu Qianyun Network Technology Co., Ltd.: a company formed under the laws of PRC in April 2017 to provide exam preparation services in Guizhou. Beijing Distance Learning currently owns 51% of the equity interest of this entity. The rest of its equity interest is owned by third-party individuals and entities that are not affiliated with us or any of our officers and directors.

● Fuzhou Huafu Mingjiao Technology Co., Ltd.: a company formed under the laws of PRC in May 2018 to provide exam preparation services in Fujian. Beijing Distance Learning currently owns 65% of the equity interest of this entity. The rest of its equity interest is owned by third-party individuals that are not affiliated with us or any of our officers and directors.

● Huafu Wanrun (Guangzhou) Education Technology Co., Ltd.: a company formed under the laws of PRC in October 2019 to provide online education services. Beijing Digital Information owns 60% of the equity interest of this entity. The rest of its equity interest is owned by two individuals that are not affiliated with us or any of our officers and director.

● Sichuan Huafu Gengyun Education Technology Co., Ltd.: a company formed under the laws of PRC in November 2019 to provide online education services. Beijing Digital Information owns 60% equity interest of Sichuan Huafu, in December 2021, . Beijing Digital Information was entrusted another 10% equity interest form an individual shareholder, after the Digital Information owned 70% equity interest of Sichuan Huafu. In February 2025, Beijing Digital Information was entrusted another 30% equity interest form an individual shareholder, after the Digital Information owned 100% equity interest of Sichuan Huafu .

● Hunan Huafu Haihui Learning Technology Co., Ltd.: our subsidiary formed under the laws of PRC in June 2015. Beijing Digital Information owns 75% of the equity interests of this entity. Its primary business purpose is to provide technology services in Hunan relating to online platforms for the preparation of various examinations.

● On April 9, 2024, Gansu Huafu Chuangxing Technology Co.,Ltd ("Gansu Huafu"), was established in Gansu Province, China. Distance Learning owns 60% equity interest of Gansu Huafu, and the other 40% equity interest is owned by an individual shareholder.

● On July 23, 2024, Beijing Zhihui Xinyu Technology Co., Ltd. ("Zhihui Xinyu"), was established in Beijing, China. Distance Learning owns 100% equity interest of Zhihui Xinyu.

Due to PRC legal restrictions on foreign ownership and investment in the value-added telecommunications market, we operate our online platform through Beijing Digital Information, the PRC consolidated variable interest entity ("VIE"). Beijing Digital Information holds our ICP license necessary to operate our online platform in China, our domain names, including www.edu-edu.com, our registered trademarks in China and our registered software copyrights that are essential to the Company's online operation in PRC. We rely on a series of contractual arrangements among Beijing Digital Information and its shareholders to operate our online and mobile platforms in China. These contractual arrangements enable us to:

● exercise effective control over Beijing Digital Information;

● receive substantially all of the economic benefits of Beijing Digital Information in consideration for the services provided by us; and

● have an exclusive option to purchase all of the equity interests in Beijing Digital Information when and to the extent permitted under PRC law.

We do not own equity interests in Beijing Digital Information. However, as a result of these contractual arrangements, we are the primary beneficiary of Beijing Digital Information and treat it as our consolidated VIE under U.S. GAAP. We depend upon dividends and other distributions paid to us by our PRC subsidiaries, primarily Beijing Distance Learning. Beijing Distance Learning partially relies on service fees paid by our variable interest entity Beijing Digital Information. For the years ended March 31, 2025, 2024 and 2023, 5.0%, 10.7% and 5.2% of our consolidated revenue was derived from Beijing Digital Information. Our affiliated variable interest entity, Beijing Digital Information, did not pay any fee to our PRC subsidiary, Beijing Distance Learning, for fiscal years ending March 31, 2025, 2024 and 2023 since the VIE agreements were executed in August 2017. We did not receive any dividends from our PRC subsidiaries in the past two fiscal years and expect that these levels will continue in the future.

As discussed in detail in "Regulations – Regulations Relating to Foreign Investment" and "Regulations - Regulations Relating to Foreign Exchange", current PRC laws and regulations set forth restrictions on payment of dividends by PRC companies, foreign exchange and foreign investment in PRC companies. As such, we do not have unfettered access to revenues of our PRC subsidiaries and variable interest entity. See "Risk Factors – Risks Related to Doing Business in China" and "Risk Factor – Risks Related to Our Corporate Structure."

The following is a summary of the contracts by and among our subsidiary Beijing Distance Learning, the VIE Beijing Digital Information, and the shareholders of Beijing Digital Information; each of which is currently in full force and effect.

The series of contractual agreements include the following:

<u>Exclusive Business Cooperation Agreement</u>

Under the business cooperation agreement, Beijing Digital Information engages Beijing Distance Learning as its exclusive technical and operational consultant and under which Beijing Distance Learning agrees to assist in business development and related services necessary to conduct Beijing Digital Information' operational activities. Beijing Digital Information shall not seek or accept similar services from other providers without the prior written approval of Beijing Distance Learning. The agreements will be effective as long as Beijing Digital Information exists. Beijing Distance Learning may terminate this agreement at any time by giving a prior written notice to Beijing Digital Information.

Under the above agreements, the shareholders of Beijing Digital Information irrevocably granted Beijing Distance Learning the power to exercise all voting rights to which they were entitled. In addition, Beijing Distance Learning has the option to acquire all of the equity interests in Beijing Digital Information, to the extent permitted by the then-effective PRC laws and regulations, for nominal consideration. Finally, Beijing Distance Learning is entitled to receive service fees for certain services to be provided to Beijing Digital Information.

<u>Exclusive Option Agreement</u>

Under the exclusive option agreement, in consideration of an aggregate payment of RMB2,000,000, each of the shareholders of Beijing Digital Information has granted Beijing Distance Learning or its designated representative(s) an irrevocable and exclusive option to purchase their equity interests in Beijing Digital Information when and to the extent permitted by PRC law. Beijing Distance Learning or its designated representative(s) has sole discretion as to when to exercise such options, either in part or in full. Without Beijing Distance Learning's written consent, the shareholders of Beijing Digital Information shall not transfer, donate, pledge, or otherwise dispose any equity interests of Beijing Digital Information in any way. The acquisition price for the equity interests will be RMB2,000,000 or the minimum amount of consideration permitted under the PRC law at the time when the option is exercised if such minimum price is higher. The agreement cannot be terminated by Beijing Digital Information or their shareholders. The agreement remains in effective until all the equity interests of each shareholder of Beijing Digital Information transfers to Beijing Distance Learning or its designee(s).

<u>Equity Interest Pledge Agreement</u>

Under the equity interest pledge agreement, each of the shareholders pledged all of their equity interests in Beijing Digital Information to Beijing Distance Learning as collateral to secure their obligations under the equity pledge agreement, the exclusive option agreement and the powers of attorney. If the shareholders of Beijing Digital Information breach their respective contractual obligations, Beijing Distance Learning, as pledgee, will be entitled to certain rights, including the right to dispose the pledged equity interests. Pursuant to the agreement, the shareholders of Beijing Digital Information shall not transfer, assign or otherwise create any new encumbrance on their respective equity interest in Beijing Digital Information without prior written consent of Beijing Distance Learning. The equity pledge right held by Beijing Distance Learning will terminate upon the satisfaction of all its obligations by all parties under the VIE contractual arrangements.

<u>Power of Attorney</u>

Each of the shareholders of Beijing Digital Information has executed a power of attorney to grant Beijing Distance Learning the power of attorney to act on his or her behalf on all matters pertaining to Beijing Digital Information and to exercise all of his or her rights as a shareholder of Beijing Digital Information, including but not limited to convene, attend and vote at shareholders' meetings and designate and appoint directors and senior management members. The power of attorney will remain in effect unless each shareholder ceases to own any equity interests of Beijing Digital Information.

If our variable interest entity and its shareholders fail to perform their obligations under the above contractual arrangements, we could be limited in our ability to enforce these VIE agreements and maintain effective control over our variable interest entity Beijing Digital Information. See "Risk Factors – Risks Related to Our Corporate Structure - Any failure by Beijing Digital Information or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business." If we are unable to maintain effective control, we would not be able to continue to consolidate Beijing Digital Information's financial results.

See "Risk Factors – Risks Related to Our Corporate Structure – If the PRC government finds that the contractual arrangements that establish the structure for holding our Internet Content Provider ("ICP") license do not comply with applicable PRC laws and regulations, we could be subject to severe penalties or be forced to relinquish our interests in those operations" and "Risk Factors – Risks Related to Our Corporate Structure – We rely on contractual arrangements with Beijing Digital Information and its shareholders for a portion of our business operations, which may not be as effective as direct ownership in providing operational control."

The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. You can also view our information on the Company's website at http://www.edu-edu.cn/.

In January 2025, our shareholders approved an amendment to our memorandum and articles of association to adopt a dual-class share structure. Under the new structure, our share capital consists of ordinary shares and Class A shares. Each ordinary share carries one (1) vote per share, and each Class A share carries fifteen (15) votes per share on all matters submitted to shareholders for approval. Concurrent with the adoption of the dual-class structure, we redeemed an aggregate of 1,488,000 ordinary shares held by HFGFR Inc., an entity wholly owned by our Chairman of the Board and Executive Director, Mr. Yang Yu, and reissued to it 1,488,000 Class A shares. As of the date of this annual report, Mr. Yu holds all of our outstanding Class A shares and, together with his ordinary shares, controls a substantial majority of our total voting power. Additionally, our authorized share capital was increased from 30,000,000 shares of a single class of ordinary shares to 600,000,000 shares divided into 500,000,000 ordinary shares and 100,000,000 Class A shares, each with a par value of US$0.01.

See "Risk Factors – Risks Related to Our Ordinary Shares – Our dual-class share structure concentrates voting power in our Chairman of the Board and Executive Director, limiting shareholder influence on our Company" and "Risk Factors – Risks Related to Our Ordinary Shares – Insider sales of ordinary shares may adversely affect the trading price of our shares."

**4B. Business Overview**

We are a provider of online exam preparation services and related technology solutions as well as a producer of online training course materials in China and have been in operation for over 20 years. We develop our own online education materials that are offered through the cloud and that can be used for a wide range of purposes, such as standard examination preparation, professional training and interactive programs for educational purposes other than exam preparation. We also produce thousands of online classes. Our services not only include development of online education platforms and online course materials but also includes comprehensive cloud service for online education and exam preparation training.

**Our Services**

We currently offer online education services and technology research & development services. Our online education services currently include Online Education Cloud Services and Online Training Services.

Online Education Cloud Service ("B2B2C")

We provide online education platforms to institutions, such as universities and training institutions, and online course development service companies. Our teachers are well-regarded and recommended by our clients, which include universities and academic institutions. Through our product development team, we interview and enlist teachers who we use to record teaching sessions. In return, we provide fixed compensation to teachers. We have developed three separate types of B2B2C platforms: a self-study examination platform, a continuing education platform, a non-diploma training platform (which allows students to enroll in courses for college credit), Vocational Education 1+X and Higher Vocational Enrollment Expansion Teaching and Educational Administration Platform, Huafu E-School System and Paperless examination platform. These platforms are available both online and via a mobile app that we design for each of our clients. Currently, we are primarily focused on providing clients with B2B2C services relating to self-study examinations, which are a set of standard national examinations necessary to obtain college degrees in China. We have offered such services since September 2009. We also entered into the adult education field and commenced offering continuing education platforms in late 2016. Currently, over 12,936 courses (including the self-developed courses and authorized courses by third-party educational institutions) are available on such platforms and over 200 universities are using our platforms. We commenced offering our non-diploma training platforms in March 2017. We currently provide services in ten provinces in China and believe that we are the leading service provider in this market. We also have offered the services via the Vocational Education 1+X and Higher Vocational Enrollment Expansion Teaching and Educational Administration Platform, Huafu E-School System and Paperless Examination Platform since 2020. During the year ended March 31, 2025, we provided approximately 3,199,572 courses to students on our platforms.

● Self-Study Examination Platform

This platform is a cloud-based education system for universities, government examination officials as well as students who would like to obtain college degrees through self-taught higher education examination. We created customized homepage systems for each university that uses our platform. Our system allows the university management to import their student data into the data base of our platform and will generate accounts for each specific student. Students can login the platform, choose to participate in recorded or live courses that are available on the platform. The platform will grant government examination officials the authority to monitor the learning process of each student. The platform can record the student's learning data, giving each student a score for evaluation of the performance of each course for use by the university and government officials.

● Continuing Education Platform

This platform is also cloud-based and targets college students and students aiming to complete adult higher education. Similar to the self-study examination platform, this platform offers customized interface for each university using the platform where the school management can integrate their student data into the platform. Students can log in and take courses. The system will keep track of the students' learning data and generate scores based on students' performance for school evaluation. What's different from the self-study examination platform is that this platform offers additional teaching administrative functions, including student profile management, tuition payment, management of different campuses, course arrangement as well as statistical screening management, etc.

● Non-Diploma Training Platform

This platform is cloud-based as well, but serves training institutions and individual students. A large number of traditional face-to-face training institutions can use this platform to provide their training courses online without overspending on personnel, servers and online training platform. Similar to the other systems, the training institutions have their own interfaces and can create accounts for their students to take courses on the platform. In addition, the platform also provides a large number of online educational operations to the training institutions, including the management of their own courses, and pricing, promotion, enrollment and payment functions.

● Vocational Education 1+X and Higher Vocational Enrollment Expansion Teaching and Educational Administration Platform

This is a cloud computing platform for vocational education information management and online teaching. According to the policy requirements set forth under the "National Vocational Education Reform Implementation Plan" and other relevant policy requirements of the PRC Ministry of Education as well as the actual needs of higher vocational colleges, the platform provides information services for vocational colleges to implement "Academic Certificate + Several Vocational Skill Level Certificates" or "1+X" and higher vocational enrollment expansion business. It covers admission evaluation management, educational administration management, teaching resource management, online learning and other related aspects, and provides complete solutions for occupational colleges by providing hardware, software, resources and services.

● Huafu E-School System

Huafu e-school system is a website setup system for individuals, educational institutions and enterprise training centers. It helps customers without in-house technical capacities to create their own brand online schools for free, and provides one-stop "Internet + education" service. The e-school system supports two cooperation models: online education self-supporting and cooperative operation. The platform supports multiple terminals, PC online school, mobile app online school, etc. The self-supporting program is for our own online training programs and the cooperative operation is for institutions that we work with. These institutions can have an independent homepage, which supports their independent domain name and independent brand. The platform can authorize the use of Huafu's existing curriculum resources to institutions or they can also setup and sell their own training courses.

● AI examination platform

This platform is a complete online examination solution for paperless examination of all subjects. The platform integrates key aspects for testing by most universities in China, such as management of question database, test paper, examination, grading, management of examination paper monitoring, etc., and provides related technical services for colleges. Through the platform, the school carries out routine examination evaluation activities such as tests, final examinations and make-up examinations. Students' examination terminals can carry out examinations through app, browser or client-side. The examination process monitoring can adopt face recognition or ID card reader recognition for identity authentication. Teachers can grade papers online or export answers for marking up paper. AI technology can assist teachers in automatically grading subjective questions, improving grading efficiency. Computer paperless examination is an innovation in educational examination methods, with many examination characteristics that cannot be achieved by paper and pencil examinations, and plays an important role in the future development of educational

For all the six platforms, we will be paid by the schools or training institutions based on the number of courses taken by their students.

<u>Online Training Service ("B2C"</u>)

We provide online training and examination preparation services directly to students for a fee. We have been providing this service since 2000. In connection with our B2C service, we provide an online cloud education platform targeting end users, which is available both online and via the mobile app we design for each program. We can also license this platform to other offline education and training institutions for them to offer online services, and to manage their online courses and online users. Students that use this service are primarily college students and students preparing for the self-study examination. In the year ending March 31, 2025, we provided approximately 340,000 courses for students.

*Technology Research & Development Services*

 

Another major aspect of our business is dedicated to developing and maintaining online education platforms and online courses for our clients, comprising universities, government agencies and private clients such as publishers. We also provide consulting, maintenance and updating services relating to online education programs we have developed for our clients. We have provided these services to our clients since Beijing Distance Learning commenced operations in 1999.

**Key Aspects of Our Operations**

*Sales and Marketing*

 

We market our services through both offline and online channels. Since our inception, the bulk of our marketing is done through traditional offline channels. Our sales representative visit our targeted potential customers, such as universities and schools, and then schedule meetings and demos for these potential clients to learn about our services and for us to learn about the specific needs of each potential client. We also develop customers through referrals from existing clients and business partners. We also attend industry conferences to promote our brand and further expand our client base. We started online marketing in 2004, including search engine marketing and mobile app advertising. In recent years we also expanded the online marketing via new media channels, such as WeChat public accounts, Weibo and other social media platforms.

*Fees*

 

<u>Fees for B2B2C business</u>: we provide the platform to universities or schools for free but charge students a fee of RMB10 to 120 per class, depending upon the course.

<u>Fees for our B2C services</u>: we charge fees based on the specific training program. Low-end programs only include online courses and we charge RMB50 to 180 per class for this type of programs. High-end programs include both online courses and in person training.

<u>Technical services fees</u>: we charge service fees based on our development and maintenance costs plus a 30% profit. The fee for each client varies, depending upon the specific program design as well as our costs for providing the services, primarily including human resources and computer hardware and software related expenses. Such fees are set forth in our agreements with such clients.

*Customers*

 

Our customers for our online education services include universities, academic institutions, government agencies, private clients such as publishers as well as students preparing for various types of standard examination. For the B2B2C service, our customers are universities and academic institutions in fourteen provinces in the PRC such as Hunan, Hubei, Jiangsu, Fujian, Shandong, Guizhou, Anhui, Hebei, Guangdong, Guangxi, Shanxi, Sichuan, Jiangxi, and Gansu. Our top customers for the B2B2C service include the College of Hubei University, Huaihua University, Hunan Normal University and Jimei University. Our customers for the B2C service are students located nationwide. For our technology services business, customers include government agencies and private companies such as publishers.

*Technology*

 

<u>Our Proprietar</u>y <u>Platform</u>

&nbsp;&nbsp;&nbsp;&nbsp;1. Development Strategy: We have developed proprietary online
education platforms which we have designed and updated based on the needs of our customers. In addition to traditional training features,
we added additional features to facilitate intellectual studies. We own relatively mature technologies for platform development and can
design specific platforms based on such technologies according to the commercial needs of our customers. We believe that this approach
saves our customers' costs, reduces development period and allows us to quickly respond to market demands.

&nbsp;&nbsp;&nbsp;&nbsp;2. Purposes and Advantages: The primary purpose of our platforms
is for our own business, namely training programs for students preparing for various examinations. Our platform is compatible with Windows,
H5, Android and iOS systems. Our institution customers can develop their own mobile app based on their own data management capacity and
sales system.

&nbsp;&nbsp;&nbsp;&nbsp;3. Platform Security: We have adopted security policies and
measures, including encryption technology, to protect our proprietary data and customer information, and we back up our database, including
customer data, every day.

We engaged a well-known cloud service provider to have a cloud host to provide online services, and cloud storage and cloud-on-demand services. Our IT department regularly monitors the performance of our websites, mobile apps and technology infrastructure to enable us to respond quickly to potential problems. We have not experienced any major problems in our network infrastructure.

*Research and Development*

 

Our technology team also dedicates part of its time to our research and development efforts. Our technology team has experience in the development, design, operation and maintenance of platform products, servers and mobile apps. In the past three years, the number of employees in the technology and development department increased every year. Most of our team members have 5 years or more of experience, 30% of our team members have a master's or a doctorate degree and certain team members have work experience at Fortune 500 companies. Our research and development efforts are closely tied to the market. We adjust our product development and services based on market conditions and government policies. The focuses of our research and development efforts include improving our online training data collection, programs focused on intelligent study, education resource integration and technology service. In the past three years, we keep a stable input in research and development to obtain a technology advantage in the on-line education industry. We anticipate that we will continue to increase the expenditure of research and development in the future.

*Intellectual Property*

 

We currently have 147 software registrations for our online course delivery and examination preparation programs and related mobile applications. We have also registered 24 trademarks with the China Trademark Office.

*Employees*

 

We are headquartered in Beijing, where most of our senior management and technology teams are based. We also host part of our general and administrative personnel, content development professionals and sales and marketing staff in our Beijing offices. The rest of our sales and marketing staff are based in Hunan and Jiangsu. Our offices in Hunan and Jiangxi host our teacher assistance department, technology team and general and administrative personnel.

As of March 31, 2025, we had 110 employees, including 107 full-time employees and 3 part-time employees. As of March 31, 2025, 33 of these employees were based in our headquarters in Beijing and 77 were based in other cities in the PRC. The table below breaks down the full-time personnel of the Company by function:

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| | | |
|:---|:---|:---|
| **Function** | **Number of Employees** | **% of Total** |
| Management | 7 | 6% |
| Technology and Development | 49 | 44% |
| Teaching Assistance | 15 | 14% |
| Sales and Marketing | 16 | 15% |
| Product Development and Customer Service | 11 | 10% |
| General and Administrative | 12 | 11% |
| **Total** | 110 | 100% |

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We enter into employment contracts with our full-time employees. For our full-time employees in China, we also enter into stand-alone confidentiality and non-compete agreements with them. In addition to salaries and benefits, we provide performance-based bonuses for our full-time employees and commission-based compensation for our sales and marketing force.

Foreign teachers delivering paid lessons on our platform are generally not our full-time employees. We enter into service contracts with such teachers, and pay service fees to them based on the number of lessons they teach and their teaching performance.

As required by regulations in China, we participate in various employee social security plans that are organized by municipal and provincial governments for our PRC-based full-time employees, including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing insurance. We are required under PRC law to make contributions from time to time to employee benefit plans for our PRC-based full-time employees at specified percentages of the salaries, bonuses and certain allowances of such employees, up to a maximum amount specified by the local governments in China.

Our employees are not covered by any collective bargaining agreement. We believe that we maintain a good working relationship with our employees, and we have not experienced any significant labor disputes.

*Seasonality*

 

The current operations of the Company have demonstrated seasonality. There are major examinations scheduled in April and October of each year and other examinations scheduled in January and July of each year. As a result, the number of students enrolled in our programs is the highest within the two-month period prior to each exam. In addition, Adult Continue Education business slows down during the summer and winter breaks of our partner schools. See "Risk Factor—Risks Related to Our Business and Industry—Our results of operations are subject to seasonal fluctuations."

*Competition*

 

With respect to the B2B2C service, we believe that we are a leading service provider in the self-study online training area. Our primary competitors are four other companies providing similar types of programs, including Beijing Shangde Online Education Technology Co., Ltd., Suzhou Qingying Feifan Software Technology Co., Ltd., Beijing Aopeng Long Distance Education Center Co., Ltd. and Hongcheng Technology Development Co. Ltd., but we have competitive advantages in terms of geographic coverage, the number of partner schools, the number of courses and our years of operating experience in the industry. With respect to the B2C service, we have two major competitors in the PRC, Beijing Shangde Online Education Technology Co. Ltd. and Bejing Dongda Zhengbao Technology Co., Ltd. Our competitive advantages with respect to this service are our long operating history, our brand recognition and the number and types of courses that we offer. For the B2C service, we compete with traditional offline training institutions as well as well as other companies that provide online training services. In terms of our technology service, we primarily face competition from Shenzhen Youxuepai World Education Development Co., Ltd., Teewon Digital Media Technology Co., Ltd., Founder Tech Co., Ltd. and Hanwon Technology Co., Ltd. Our current client base strongly relies on these services. We face competition from other online and mobile platforms or internet companies that plan to expand their business into the online education industry, but we believe our long-established relationship with our clients, experienced technology team and many years' experience will provide us an edge in competing with these market new entrants.

*Facilities*

 

We lease executive office space in Beijing of an aggregate of 467 square meters. These facilities currently accommodate our management headquarters, as well as part of our sales and marketing, product development and general and administrative activities.

As of the date of this report, we have also leased an aggregate of approximately 1,282 square meters office space in Beijing, Hunan Fujian and Gansu. A summary of our leased properties as of the date of this report is shown below:

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| | | | |
|:---|:---|:---|:---|
| **Location** | **Space**<br> **(in square meters)** | **Address** | **Use** |
| Beijing | 467 | L207b, Hesheng Fortune Plaza, No.13 Deshengmenwai Street, Xicheng District, Beijing, China & Room 1303A, 1303B, Building 40, No. 1 Shengbei Road, Economic Development Zone, Daxing District, Beijing, China | Office |
| Changsha, Hunan | 548 | Room 617-625, Building B1, No. 568 Queyuan Road, Tianxin District, Changsha, Hunan, China | Office |
| Fuzhou, Fujian | 108 | Room 2411, Building 1, Henli Bona Plaza, Gulou District, Fuzhou, Fujian, China | Office |
| Lanzhou,Gansu | 159 | 20th floor, Zhonghai international Plaza, Chengguan District, Lanzhou, Gansu | Office |

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We own office space of 246.9 square meters located at Room 917-920, Building B1, No. 568 Queyuan Road, Tianxin District, Changsha, Hunan.

We also own office space of 166.6 square meters located at Room 12-6, Building 2A, No. 8 Daxueyuan Road, Hongshan District, Wuhan, Hubei.

Other for our office space in Hunan and Hubei, we lease all the facilities we currently occupy from independent third parties. We believe that the facilities that we currently lease are adequate to meet our needs for the foreseeable future, and we believe that we will be able to obtain adequate facilities, principally through leasing of additional properties, to accommodate our future expansion plans.

*Insurance*

 

We currently do not have any insurance coverage other than participation in various government statutory social security plans, including a pension contribution plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan, a maternity insurance plan and a housing provident fund.

*Regulations*

 

This section sets forth a summary of the most significant laws, rules and regulations that affect our business and operations.

**Recent Regulations Relating to Cybersecurity**

On February 17, 2023, with the approval of the State Council, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the "Trial Measures") and five supporting guidelines, which will come into effect on March 31, 2023. According to the Trial Measures, among other requirements, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedures with the CSRC; if a domestic company fails to complete the filing procedures, such domestic company may be subject to administrative penalties; and (2) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and such filings shall be submitted to the CSRC within three business days after the submission of the overseas offering and listing application. On the same day, the CSRC also held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which clarifies that (1) on or prior to the effective date of the Trial Measures, domestic companies that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges may reasonably arrange the timing for submitting their filing applications with the CSRC, and must complete the filing before the completion of their overseas offering and listing; (2) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges, but have not completed the indirect overseas listing; if domestic companies fail to complete the overseas listing within such six-month transition period, they shall file with the CSRC according to the requirements; and (3) the CSRC will solicit opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies with contractual arrangements which duly meet the compliance requirements, and support the development and growth of these companies

In anticipation of the strengthened implementation of cybersecurity laws and regulations and the continued expansion of our business, we face potential risks if we are deemed as a "critical information infrastructure operator" or "platform operator" under the PRC cybersecurity laws and regulations and would be required to follow cybersecurity review procedures. During such review, we may be required to suspend providing any existing or new services to our customers and/or experience other disruptions of our operations, and such review could also result in negative publicity with respect to our Company and diversion of our managerial and financial resources.

As of the date of this annual report, we have not been involved in any investigations or become subject to a cybersecurity review initiated by the CAC based on the Revised Cybersecurity Review Measures, and we have not received any inquiry, notice, warning, sanctions in such respect or any regulatory objections to our listing status from the CAC.

Our operations in China are governed by PRC laws and regulations. As of the date of this report and as advised by our PRC legal counsel, Beijing Haotai Law Firm, neither us nor any of our PRC subsidiaries, or the VIEs and their subsidiaries are currently required to obtain any permission approval or licenses from the CSRC or the CAC for the trading of our securities on Nasdaq and the offering of our securities to foreign investors, or any other governmental agency that is required to approve our or our subsidiaries' operations. While the businesses of our subsidiaries in the PRC are subject to cybersecurity review with the CAC, as advised by Haotai, we do not believe we are required to conduct a cybersecurity review because (i) we do not possess a large amount of personal information on more than one million users in our business operations ; and (ii) data processed in our business does not have a bearing on national security and thus may not be classified as core or important data by the authorities. However, our operations could be adversely affected, directly or indirectly, by future laws and regulations relating to our business or industry, if we inadvertently conclude that such approvals or permissions are not required when they are, or applicable laws, regulations, or interpretations change and we are required to obtain approvals or permissions in the future. We may be subject to penalties and sanctions imposed by the PRC regulatory agencies, including the CSRC, if we fail to comply with such rules and regulations, which could adversely affect the ability of the Company's securities to continue to trade on Nasdaq, which may cause the value of our securities to significantly decline or become worthless.

Given the uncertainties of interpretation and implementation of laws and regulations and the enforcement practice of government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future. For more detailed information, see *"Item 1A. Risk Factors—Risks Related to Our Business—Risks Related to Doing Business in China"*.

**Regulations Relating to Foreign Investment**

***Laws of Wholly Foreign-Owned Enterprise***

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The establishment procedures, examination and approval procedures, registered capital requirement, foreign exchange restriction, accounting practices, taxation and labor matters of a wholly foreign-owned enterprise are governed by the Wholly Foreign-owned Enterprise Law of China, or the Whole Foreign-owned Enterprise Law, which was promulgated by Standing Committee of the National People's Congress ("NPCSC"), and effective as of April 12, 1986, amended on October 31, 2000 and September 3, 2016 and the Implementation Rules for the Wholly Foreign-owned Enterprise Law, which was promulgated by the Ministry of Foreign Economic Relations and Trade on December 12, 1990 and amended on April 12, 2001 and February 19, 2014 by the State Council. According to the Wholly Foreign-owned Enterprise Law and its Implementation Rules, the establishment of wholly foreign-owned enterprises shall be subject to the examination and approval by the MOC, or government at the level of province, autonomous region, municipality directly under the central Chinese Government, municipality separately listed on the State plan or special economic zone, as authorized by the State Council, which will issue a certificate of approval in respect thereof. Where the establishment of wholly foreign-owned enterprises does not involve the implementation of special access administrative measures prescribed by the State, the establishment of wholly foreign-owned enterprises are subject to record-filing management. Profits and other legal rights and interests obtained by foreign investors in China shall be protected by Chinese laws, and legitimate profits, other lawful income and post-liquidation funds received by foreign investors from the wholly foreign-owned enterprises may be remitted abroad.

***The Guidance Catalog of Industries for Foreign Investment***

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Investment activities in the PRC by foreign investors shall comply with the Guidance Catalog of Industries for Foreign Investment (the "Catalog"), which was promulgated and is amended from time to time by MOC and NDRC. The Catalog divides industries into three categories: encouraged foreign invested industries, restricted foreign invested industries and prohibited foreign invested industries. Any industry not listed in the Catalog or any encouraged foreign invested industry listed in the Catalog is a permitted industry. Some restricted industries are limited to equity or contractual joint ventures, while in some cases Chinese partners are required to hold the majority interests in such joint ventures. Foreign investors are not allowed to invest in industries in the prohibited category. On June 28, 2018, NDRC and MOC promulgated the Special Administrative Measures for Access of Foreign Investment (the "Negative List 2018"), which came into effect on July 28, 2018. According to the Negative List 2018, the provision of value-added telecommunications services falls in the restricted category and the percentage of foreign ownership cannot exceed 50% (except for e-commence).

***The M&A Rules***

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The Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, was jointly promulgated by MOC, CSRC, the State-owned Assets Supervision and Administration Commission of the State Council, STA, SAIC and SAFE, on August 8, 2006 and became effective as of September 8, 2006, and were later amended on June 22, 2009. This M&A Rules governs among other things, the purchase and subscription by foreign investors of equity interests in a domestic enterprise, and the purchase and operation by foreign investors of the assets and business of a domestic enterprise. An offshore special purpose vehicle, or SPV, is defined under the M&A Rules as an offshore entity directly or indirectly controlled by Chinese individuals or enterprises for the purpose of an overseas listing, and the main assets of which are the rights and interests in affiliated domestic enterprises. Under the M&A Rules, if a SPV intends to merge with or acquire any domestic enterprise affiliated with such Chinese individuals or enterprises that control the SPV, the proposed merger or acquisition shall be submitted to the MOC for approval. The M&A Rules also require a SPV to obtain an approval from the CSRC prior to the listing and trading of its securities on an overseas stock exchange.

***The PRC Foreign Investment Law***

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On January 1, 2020, the PRC Foreign Investment Law and the Regulations for Implementation of the PRC Foreign Investment Law came into effect and became the principal laws and regulations governing foreign investment in mainland China, replacing the trio of prior laws regulating foreign investment in mainland China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations.

According to the PRC Foreign Investment Law, "foreign investment" refers to the investment activities conducted directly or indirectly in mainland China by foreign individuals, enterprises or other entities, including the following circumstances: (i) the establishment of foreign-invested enterprises in mainland China by foreign investors solely or jointly with other investors, (ii) a foreign investors' acquisition of shares, equity interests, property portions or other similar rights and interests of enterprises in mainland China, (iii) investment in new projects in mainland China by foreign investors solely or jointly with other investors, and (iv) investments made by foreign investors through means stipulated in laws or administrative regulations or other methods prescribed by the State Council.

The PRC Foreign Investment Law has adopted a reformed system with respect to foreign investment administration, under which the PRC government applies national treatment to foreign investors in terms of investment entry and the foreign investor needs to comply with the requirements as provided in the negative list for foreign investment. The negative list will be issued by, amended or released upon approval by the State Council, from time to time. The negative list will consist of a list of industries in which foreign investments are prohibited and a list of industries in which foreign investments are restricted. Foreign investors will be prohibited from making investments in prohibited industries, while foreign investments must satisfy certain conditions stipulated in the negative list for investments in restricted industries. Foreign investments and domestic investments in industries outside the scope of the prohibited industries and restricted industries stipulated in the negative list will be treated equally. Any foreign-invested enterprise established prior to the effectiveness of the PRC Foreign Investment Law may maintain its original corporate forms for a period of five years after January 1, 2020.

The Regulations for Implementation of the PRC Foreign Investment Law restate certain principles of the PRC Foreign Investment Law and further provide that, among others, (1) if a foreign-invested enterprise established prior to the effective date of the PRC Foreign Investment Law fails to adjust its legal form or governance structure to comply with the provisions of the PRC Company Law or the PRC Partnership Enterprises Law as applicable and complete amendment registration before January 1, 2025, the enterprise registration authority will not process other registration matters of the foreign-invested enterprise and may publicize such non-compliance thereafter; (2) the provisions regarding equity interest transfer and distribution of profits and remaining assets as stipulated in the contracts among the joint venture parties of a foreign-invested enterprise established before the effective date of the PRC Foreign Investment Law may, after adjustment of the legal form and governing structure of such foreign-invested enterprise, remain binding upon the parties.

On December 30, 2019, the MOC and the State Administration for Market Regulation ("SAMR") jointly promulgated the Measures for Information Reporting on Foreign Investment, which became effective on January 1, 2020. Pursuant to the measures, where a foreign investor directly or indirectly carries out investment activities in mainland China, the foreign investor or the foreign-invested enterprise must submit the investment information to the competent commerce department for further handling.

In December 2020, the NDRC and the MOC promulgated the Measures for the Security Review of Foreign Investment, which came into effect on January 18, 2021. The NDRC and the MOC established a working mechanism office in charge of the security review of foreign investment. Such measures define foreign investment as direct or indirect investment by foreign investors in mainland China, which includes (i) investment in new onshore projects or establishment of wholly foreign owned onshore companies or joint ventures with foreign investors; (ii) acquiring equity or asset of onshore companies by merger and acquisition; and (iii) onshore investment by and through any other means. Investment in certain key areas with bearing on national security, such as important cultural products and services, important information technology and internet services and products, key technologies and other important areas with bearing on national security which results in the acquisition of de facto control of investee companies, must be filed with a specifically established office before such investment is carried out. What may constitute "onshore investment by and through any other means" or "de facto control" could be broadly interpreted under such measures. It is likely that control through contractual arrangement be regarded as de facto control based on provisions applied to security review of foreign investment in the free trade zone. Failure to make such filing may subject such foreign investor to rectification within prescribed period and will be recorded as negative credit information of such foreign investor in the national credit information system, which would then subject such investors to joint punishment. If such investor fails to or refuses to undertake such rectification, it would be ordered to dispose of the equity or asset and to take any other necessary measures so as to return to the status quo and to erase the impact to national security.

**Regulations Relating to Value-Added Telecommunications Services**

***Licenses for Value-Added Telecommunications Services***

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The State Council issued the Regulations on Telecommunications of China, or the Telecommunications Regulations, on September 25, 2000 which was amended on February 6, 2016, to regulate telecommunications activities in China. The Telecommunications Regulations divide the telecommunications services into two categories, namely "infrastructure telecommunications services" and "value-added telecommunications services." Pursuant to the Telecommunications Regulations, operators of value-added telecommunications services must first obtain a Value-added Telecommunications Business Operating License, or Value-Added Telecommunications License, from the Ministry of Industry and Information Technology, or MIIT, or its provincial level counterparts. On July 3, 2017, the MIIT promulgated the Administrative Measures for the Licensing of Telecommunications Business, effective as of September 1, 2017, which sets forth more specific provisions regarding the types of licenses required to operate value-added telecommunications services, the qualifications and procedures for obtaining such licenses and the administration and supervision of such licenses.

According to the Catalog of Classification of Telecommunications Businesses effective from April 1, 2003, internet information services, also called internet content services, or ICP services, are deemed as a type of value-added telecommunications services. On December 28, 2015, the MIIT published a revised Catalog of Classification of Telecommunication Business, or the 2016 MIIT Catalog, which took effect on March 1, 2016. According to the 2016 MIIT Catalog, internet information services, which include information release and delivery services, information search and query services, information community platform services, information real-times interactive services, and information protection and processing services, continues to be classified as a category of value-added telecommunication services. The Administrative Measures on Internet Information Services, or ICP Measures, also promulgated by the PRC State Council on September 25, 2000 and amended on January 8, 2011, sets forth more specific rules on the provision of ICP services. According to ICP Measures, any company that engages in the provision of commercial ICP services shall obtain a sub-category Value-Added Telecommunications License for Internet Information Services, or ICP license, from the relevant government authorities before providing any commercial internet content services within the PRC, and when the ICP services involve areas of news, publication, education, medical treatment, health, pharmaceuticals and medical equipment, and if required by law or relevant regulations, specific approval from the respective regulatory authorities must be obtained prior to applying for the ICP License from the MIIT or its provincial level counterpart. Pursuant to the above mentioned regulations, "commercial ICP services" generally refers to provision of specific information content, online advertising, web page construction and other online application services through internet for profit making purpose.

***Foreign Investment in Value-Added Telecommunication Services***

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The Regulations on Administration of Foreign-Invested Telecommunications Enterprises, or the FITE Regulations, which took effect on January 1, 2002 and amended on September 10, 2008 and February 6, 2016, are the key regulations that regulate foreign direct investment in telecommunications companies in China. The FITE Regulations stipulate that the foreign investor of a telecommunications enterprise is prohibited from holding more than 50% of the equity interest in a foreign-invested enterprise that provides value-added telecommunications services. In addition, for a foreign investor to acquire any equity interest in a business providing value-added telecommunications services in China, it must demonstrate a positive track record and experience in providing such services.

**Regulations Relating to Private Education in the PRC**

***Education Law of the PRC***

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On March 18, 1995, the National People's Congress of the PRC, or the NPC, enacted the Education Law of the PRC, or the Education Law, which was further amended on August 27, 2009, December 29, 2018 and on April 29, 2021, stipulates that the government formulates plans for the development of education, establishes and operates schools and other types of educational institutions, and in principle, enterprises, institutions, social organizations and individuals are encouraged to operate schools and other types of educational organizations. Comparing to the version of Education Laws that was amended and came into effect on 2009, which provided that no organization or individual may establish or operate a school or any other educational institution for commercial purposes, the current Education Law narrowed the provision prohibiting the establishment or operation of schools or other educational institutions for commercial purposes to only restricting a school or other educational institution founded with governmental funds or donated assets in the amended Education Law.

On April 20, 2022, Standing Committee of the National People's Congress, or the SCNPC, adopted the amended Vocational Education Law of the PRC, or the Amended Vocational Education Law, which went to effective on May 1, 2022 and replaced the previous Vocational Education Law of the PRC adopted in 1996. The Amended Vocational Education Law specifies that the vocational education is as important as regular education and that the state encourages the development of various levels and forms of vocational education, the extensive and equal participation of social forces in vocational education and the international communication and the cooperation in vocational education, and strives to improve vocational education recognition. The Amended Vocational Education Law also provides the establishment and improvement of the vocational education system, deepening cooperation between enterprises and schools, and the improvement of the vocational education guarantee system and measures.

***The Law for Promoting Private Education and the Implementation Rules for the Law for Promoting Private Education***

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The Law for Promoting Private Education of the PRC became effective on September 1, 2003 and the latest amendment, or the ("Amendment"), was on December 29, 2018 which came into effect on the same date. Under the Amendment, sponsors of private schools may choose to establish non-profit or for-profit private schools at their own discretion. Nonetheless, school sponsors are not allowed to establish for-profit private schools that are engaged in compulsory education.

The key features of the Amendment include the following: (i) sponsors of for-profit private schools are entitled to retain the profits and proceeds from the schools and the operation surplus may be allocated to the sponsors pursuant to the PRC Company Law and other relevant laws and regulations; (ii) sponsors of non-profit private schools are not entitled to the distribution of profits or proceed from the non-profit schools and all operation surplus of non-profit schools shall be used for the operation of the schools; (iii) for-profit private schools are entitled to set their own tuition and other miscellaneous fees without the need to seek prior approvals from or report to the relevant government authorities. The collection of fees by non-profit private schools, on the other hand, shall be regulated by the provincial, autonomous regional or municipal governments; (iv) private schools (for-profit and non-profit) may enjoy preferential tax treatments. Non-profit private schools will be entitled to the same tax benefits as public schools. Taxation policies for for-profit private schools after the Amendment taking effect are still unclear as more specific provisions are yet to be introduced; (v) where there is construction or expansion of a non-profit private school, the school may acquire the required land use rights in the form of allocation by the government as a preferential treatment. Where there is construction or expansion of a for-profit private school, the school may acquire the required land use rights by purchasing them from the government; (vi) the remaining assets of non-profit private schools after liquidation shall continue to be used for the operation of non-profit schools. The remaining assets of for-profit private schools shall be distributed to the sponsors in accordance with the PRC Company Law; and people's governments at or above the county level may support private schools by subscribing to their services, provision of student loans and scholarships, and leases or transfers of unused state assets. The governments may further take such measures as government subsidies, bonus funds and incentives for donation in support of non-profit private schools.

On December 30, 2016, the MOE, MCA, SAIC, the Ministry of Human Resources and Social Welfare and the State Commission Office of Public Sectors Reform jointly issued the Implementation Rules on the Classification Registration of Private Schools to reflect the new classification system for private schools as set out in the Amendment. Generally, if a private school established before promulgation of the Amendment chooses to register as a non-profit school, it shall amend its articles of association, continue its operation and complete the new registration process. If such private school chooses to register as a for-profit school, it shall conduct financial liquidation process, have the property rights of its assets such as lands, school buildings and net balance being authenticated by relevant government authorities, pay up relevant taxes, apply for a new Permit for Operating a Private School, re-register as for-profit schools and continue its operation. Specific provisions regarding the above registrations are yet to be introduced by people's governments at the provincial level.

On December 30, 2016, the MOE, SAIC and the Ministry of Human Resources and Social Welfare jointly issued the Implementation Rules on the Supervision and Administration of For-profit Private Schools, pursuant to which the establishment, division, merger and other material changes of a for-profit private school shall first be approved by the education authorities or the authorities in charge of labor and social welfare, and then be registered with the competent branch of SAIC.

On April 20, 2018, the MOE issued for public comments the Draft Revision of the Regulations on the Implementation of the Law for Promoting Private Education of the PRC (the Draft for Comments), or the MOE Draft for Comments. As the consultation period for the MOE Draft for Comments ended in May 2018, on August 10, 2018, the Ministry of Justice ("MOJ") published the committee draft of the Regulations on the Implementation of the Law on Promoting Private Education in PRC (Revised Draft), or the MOJ Draft for Approval, which further provides that private training institutions for language, art, sports, science and technology teaching and private training institutions for adults for cultural education or non-academic continuing education can directly apply for the registration with the local administrative departments for industry and commerce. Pursuant to the MOJ Draft for Approval, organizations that use Internet technology to implement training and education activities online, occupational qualifications or occupational skills activities, or internet technology service platforms that provide services for online implementation of the aforementioned activities shall obtain the corresponding Internet business license and approval from the education administrative authorities and the human resources and social security authorities of the state level where the institution resides and shall not implement educational or teaching activities which require the private school operation permit. The MOJ has not provided the timeframe for the promulgation of the revised implementation rules on the Law for Promoting Private Education of the PRC, even though the public consultation on the MOJ Draft for Approval has ended on September 10, 2018. If the abovementioned MOJ Draft for Approval is enacted as proposed, certain training institutions, such as our private training institutions, are not required to obtain a private school operation permit from education authorities. However, as the MOJ Draft for Approval is still in draft form, there can be no assurance that it will be enacted as proposed or at all.

On May 14, 2021, the State Council officially promulgated the revised Implementation Rules of the Law on Promoting Private Education, with an effective date of September 1, 2021 (hereinafter referred to as "the 2021 Implementation Rules"), which made certain significant changes that may affect private schools. The 2021 Implementation Rules further promotes the development of private education by providing that a private school shall enjoy rights or preferential policies stipulated by laws equivalent to those applicable to a public school, which shall primarily include: (i) a private school may enjoy the preferential tax policies stipulated by the State and a non-profit private school may enjoy the same tax policies as a public school; and (ii) the local people's governments shall grant preferential treatments in terms of land use by means of allocation in accordance with the principle of treating non-profit private schools equally as public schools, and for schools that provide education for academic credentials, may provide lands by means of bid invitation, auction or listing, assigning contracts, long-term lease or combination of sale as well as rental and may permit payment in instalments.

On July 24, 2021, the General Office of the State Council and the General Office of the Central Committee of the Communist Party of China jointly promulgated the Opinions on Further Alleviating the Burden of Homework and Off-campus Training on Students in Compulsory Education Stage, or the Alleviating Burden Opinion, which provides that, among other things, (i) local government authorities shall no longer approve new after-school tutoring institutions providing tutoring services on academic subjects for students in compulsory education, and the existing after-school tutoring institutions providing tutoring services on academic subjects shall be registered as non-profit; (ii) online Academic After-School Tutoring ("AST") Institutions that have filed with the local education administration authorities providing tutoring services on academic subjects shall be subject to review and re-approval procedures by competent government authorities, and any failure to obtain such approval will result in the cancellation of its previous filing and ICP license; (iii) Academic AST Institutions are prohibited from raising funds by listing on stock markets or conducting any capitalization activities and listed companies are prohibited from investing in Academic AST Institutions through capital markets fund raising activities, or acquiring assets of Academic AST Institutions by paying cash or issuing securities; and (iv) foreign capital is prohibited from controlling or participating in any Academic AST Institutions through mergers and acquisitions, entrusted operation, or joining franchise or variable interest entities. Any violation of the foregoing shall be rectified.

Moreover, the Alleviating Burden Opinion specifies a series of operating requirements that after-school tutoring institutions must meet, including, among other things, (i) after-school tutoring institutions shall not provide tutoring services on academic subjects during national holidays, weekends and school breaks; (ii) for online tutoring, each session shall be no more than thirty minutes and the training shall end no later than 9:00 p.m.; (iii) no advertisements for after-school tutoring shall be published or broadcasted in the network platforms and billboards displayed in the mainstream media, new media, public places and residential areas; (iv) the provision of overseas education courses is strictly prohibited; (v) fees charged for academic subjects tutoring in compulsory education shall be included into government- guided price management, and excessive high fees and excessive profit-seeking behaviors will be suppressed; (vi) government authorities will implement risk management and control for the pre-collection of fees by after-school tutoring institutions with requirements such as setting up third-party custodians and risk reserves, and strengthen supervision over loans regarding tutoring services; (vii) online tutoring for preschool-age children is prohibited, and offline academic subjects (including foreign language) tutoring services for preschool-age children is also strictly prohibited; (viii) no more approvals of new after-school tutoring institutions providing tutoring services on academic subjects for pre-school-age children and students on grades ten to twelve will be granted; and (ix) administration and supervision over academic subjects tutoring institutions for students on grades ten to twelve shall be implemented by reference to the relevant provisions of the Alleviating Burden Opinion.

On July 28, 2021, the General Office of MOE promulgated the Notice on Further Clarifying the Scope of Academic Subjects and Non- Academic Subjects of After-School Tutoring in the Compulsory Education*,* which specifies that according to the national curriculum on compulsory education, when after-school institutions carry out tutoring, morality and rule of law, Chinese, history, geography, mathematics, foreign language (including English, Japanese, Russian), physics, chemistry and biology are classified as academic subjects, while sports (or sports and health), art (or music, art), and comprehensive practical activities (including information technology education, labor and technology education) are classified as non-academic subjects. The Guidelines for Classification and Identification of Off-campus Training Programs in Compulsory Education issued in November 2021 by the General Office of MOE further clarifies that off- campus training will be classified as academic subject training if the following criteria are met: (i) the courses are guided by subject knowledge and skills training, and aiming at improving academic performance of the subject; (ii) the training contents mainly involve subjects such as ethics and the rule of law, Chinese, history, geography, mathematics, foreign languages (English, Japanese, Russian), physics, chemistry, biology, etc.; (iii) the training is carried out by way of teachers (including virtual image, artificial intelligence, etc.) teaching, demonstration and interaction, with emphasis on aspects of knowledge explanation, listening, speaking, reading, writing and arithmetic and other subject ability training, and the main process include preview, teaching and review exercises, and as the main process form; (iv) the evaluation of students focuses on screening and selection, and takes academic performance and examination results as the main evaluation basis.

On August 25, 2021, the General Office of MOE issued the Administrative Measures for After-School Tutoring Materials for Primary and Secondary School Students (for Trial Implementation), which, among other things, provide that: (i) after-school tutoring materials for primary and secondary school students and staff preparing such tutoring materials shall meet certain requirements specified in such measures, which include, among other requirements, tutoring materials shall follow the national curriculum standard and shall not provide contents in advance of the school curriculum; (ii) after-school tutoring institutions shall establish internal management system for the tutoring materials and the staff preparing such tutoring materials; (iii) after-school tutoring institutions shall conduct internal review of the tutoring materials and the local education administrations shall conduct external review of the tutoring materials; (iv) after-school tutoring institutions may only use tutoring materials that have been internally and externally reviewed or if the materials have been officially published; (v) after school tutoring institutions shall file with the relevant education administrations the tutoring materials and the staff preparing such materials; and (vi) after-school tutoring institutions in violation of the measures will be subject to rectification and shall not use the relevant tutoring materials during the rectification period; if the after-school tutoring institution refuses to rectify within the time limit or if the violation is severe, its private school operating permit may be revoked by the local education administration.

On September 9, 2021, the General Office of MOE and the General Office of the Ministry of Human Resources and Social Welfare jointly issued the Administrative Measures for Practitioners of the After-School Tutoring Institutions (for Trial Implementation), which set out a series of requirements for the after-school tutoring institutions with respect to their employed teachers, research staff and teaching assistants. After-school tutoring institutions in violation of such requirements will be subject to rectification. If an after-school tutoring institution violates the requirements several times or violates several requirements, such after-school tutoring institution is prohibited from enrollment of students and shall not conduct tutoring activities during the rectification period; and if the after-school tutoring institution refuses to rectify within the time limit or if the violation is severe, its private school operating permit may be revoked by the local education administration.

On September 18, 2021, the General Office of MOE, together with five other government authorities, issued a circular requiring all online after-school tutoring institutions that have filed with the local education administration authorities providing tutoring services on academic subjects to obtain the private school operating permit by the end of 2021, and all online after-school tutoring institutions shall, before obtain such permit, suspend enrollment of students and charging fees.

On October 21, 2021, the MOE, jointly with certain other PRC government authorities, promulgated the Notice on Strengthening the Supervision of After-School Tutoring Institutions Pre-Collection of Fees, which provides that (i) local government authorities shall be responsible for supervising pre-collection of fees by after-school tutoring institutions and (ii) local government authorities will take into consideration local situations when managing the risks associated with pre-collection of fees, and take measures including appointing bank custodians or making provisions of risk reserves.

In March 2022, the MOE, NDRC and SAMR jointly issued the Notice on Regulating Non-Academic After-School Training Institutions, which provide that, among others, (i) non-academic after-school tutoring institutions shall have the corresponding qualifications and their staffs shall have the corresponding proofs for their profession; (ii) non-academic after-school tutoring institutions shall ensure training contents and training methods are suitable for the age, mental and physical characteristics and cognitive level of students; (iii) the training contents, training hours, charging items, charging standards and other information of non-academic after-school tutoring institutions shall be made public and subject to public supervision; (iv) non-academic after-school tutoring institutions shall use the form of service contract for after-school training activities provided to primary and secondary school students, strictly performing contractual obligations and regulating its charging behaviors; (v) non-academic after-school tutoring institutions' unfair competition by fictitious original prices, false discounts, false publicity, monopolistic behaviors and any form of price fraud are prohibited; (vi) the pre-collection of fees by non-academic after-school tutoring institutions shall be deposited to a special account for fee collection and tuition fees shall not be collected in a lump sum, or in disguised form of recharging or measured cards for more than 60 classes or for a course length of more than three months; and (vii) non-academic after-school tutoring institutions shall comply with requirements relating to premise, facilities and fire safety.

On November 30, 2022, the MOE together with twelve other government authorities issued the Opinions on Standardizing Non-Academic After-School Tutoring for Primary and Secondary School Students, which reiterates that local government authorities shall identify corresponding competent authorities for different tutoring categories and shall set forth basic standards for establishment and approval procedures for online and offline tutoring institutions of the corresponding categories based on local conditions. In addition, the opinions provide that local government authorities shall standardize daily operations and strengthen daily supervision of non-academic after-school tutoring, including: (1) in terms of training content and training time, non-academic tutoring institutions shall not provide academic tutoring courses, and the training time shall not conflict with the teaching time of local primary and secondary schools; offline training shall end no later than 20:30, and online training shall end no later than 21:00; (2) in terms of price, non-academic tutoring institutions shall follow the principles of fairness, legality and good faith, set prices according to training costs, market supply and demand, among other factors; and such prices shall be reported to the competent authorities and be made to the public; (3) in terms of pre-collection of fees, all fees collected by the tutoring institution shall be put into special account, and training fees shall not be paid by training loans. The pre-collected fees shall be subject to supervision and shall not be collected for more than 60 classes, for a course length of more than three months or over RMB5,000 in one time or in the form of recharge, card and other disguised charges; (4) all non-academic tutoring institutions shall be included in the unified management through the National Platform for Supervision and Service of After-School Education and Training.

In addition, the Alleviating Burden Opinion Regarding Compulsory Education also requires that local governments shall clarify the competent authorities of non-academic after-school tutoring institutions, by classifying sports, culture and art, science and technology and other non-academic subjects, formulate standards among different classification of non-academic tutoring and conduct strict examination before permitting.

As of the date of this annual report, certain local governments have promulgated rules that require non-academic tutoring service providers that provide certain category of non-academic tutoring services to obtain private school operating permit or approvals from relevant authorities, and certain local governments have released draft rules for public comments on aforesaid requirements.

On March 14, 2023, the MOE together with four other government authorities issued the Interim Measures on Financial Management of After-School Tutoring Institutions, or the Interim Measures, to regulate the financial management of after-school tutoring institutions which provide after-school tutoring services for pre-school children aged 3 to 6 and students in compulsory education and high schools. The Interim Measures clarifies that the funds of after-school tutoring institutions shall be supervised in the whole process of budget management, revenue management, supervision of pre-collected fees and fund use. In particular, the Interim Measures provides that (1) listed companies shall not found or participate in founding after-school tutoring institutions which provide academic after-school tutoring services for students in compulsory education and shall not purchase assets of academic after-school tutoring institutions by means of issuing shares or paying cash; (2) after-school tutoring institutions which provide academic after-school tutoring services for students in compulsory education shall not be controlled or invested by foreign entities including through merger and acquisition, and contractual arrangements, (3) sponsors of non-profit after-school tutoring institutions shall not receive dividends, returns or remaining assets from such institutions.

The MOE issued the Provisional Measures on Administrative Penalties for After-School Tutoring, or Provisional Measures, effective from October 15, 2023, which specify various non-complaint activities of after-school tutoring institutions and stipulate corresponding penalties. According to the Provisional Measures, the conducts of after-school tutoring by any person, legal person or other organization without approval and without satisfying the following conditions constitute unauthorized conducts of after-school tutoring institutions, which shall be ordered to suspend the operations, return collected fees and be imposed a fine: (i) having specific training sites for offline training, or websites or applications for online training; (ii) having more than two training practitioners; and (iii) having organizational structure and division of labor. In addition, if the management of after-school tutoring institutions is chaotic, and involves one of the following acts, the competent government authorities shall require such after-school tutoring institutions to rectify within a certain period of time and issue a warning: (i) enrolling students in violation of regulations such as joint enrollment with primary and secondary schools; (ii) recruiting and managing practitioners in violation of laws, regulations and the other relevant provisions promulgated by the competent department of the State Council; (iii) charging price, charging behavior, pre-collected fee management in violation of laws, regulations and other relevant provisions promulgated by the competent department of the State Council; (iv) containing online game content and links that are not related to tutoring in online after-school tutoring; (v) failing to retain training content, training data and live training images by online after-school tutoring in accordance with relevant provisions promulgated by the competent department of the State Council; (vi) publishing advertisements illegally; and (vii) other disorders that may seriously affect education and teaching. The illegal income (if any) shall be confiscated after the refund of the fees charged; if the situation is serious, the responsible institution shall be ordered to stop recruiting trainees and the license shall be revoked.

On February 8, 2024, the MOE released the Regulations on the Administration of After-School Tutoring (Draft for Comments) which sets out a series of requirements on after-school tutoring. As of the date of this annual report, these draft administrative regulations were released for public comment only, and their respective provisions and anticipated adoption or effective date may be subject to change.

**Regulations Relating to Online and Distance Education**

Pursuant to the Administrative Regulations on Educational Websites and Online and Distance Education Schools issued by the MOE on July 5, 2000, educational websites and online education schools may provide educational services in relation to higher education, elementary education, pre-school education, teaching education, occupational education, adult education, other education and public educational information services. "Educational websites" refer to organizations providing education or education-related information services to website visitors by means of a database or online education platform connected via the Internet or an educational television station through an ISP. "Online education schools" refer to educational websites providing academic education services or training services with the issuance of various certificates. Setting up education websites and online education schools is subject to approval from relevant education authorities, depending on the specific types of education. Any educational website and online education school shall, upon the receipt of approval, indicate on its website such approval information as well as the approval date and file number.

On February 3, 2016, the State Council promulgated the Decision on Cancelling the Second Batch of 152 Items Subject to Administrative Examination and Approval by Local Governments Designated by the Central Government, explicitly cancelled the approval requirements for operating educational websites and online education schools that provided by the Administrative Regulations on Educational Websites and Online Education Schools, and reiterated the principle that administrative approval requirements may only be imposed in accordance with the Administrative Licensing Law.

**Regulations Relating to Internet Information Services**

The Internet Information Service Administrative Measures, or the Internet Information Measures, was promulgated on September 25, 2000 and amended on January 8, 2011. The Internet Information Measures requires that all commercial ICPs to obtain a license for providing Internet information services, or ICP license, from the appropriate telecommunications authorities in order to offer any commercial Internet information services in the PRC. ICPs shall display their ICP license number in a conspicuous location on their home page. In addition, the Internet Information Measures also provide that ICPs that operate in sensitive and strategic sectors, including news, publishing, education, health care, medicine and medical devices, must obtain additional approvals from the relevant authorities regulating those sectors as well.

**Regulations Relating to Internet Culture Activities**

On February 17, 2011, the Ministry of Culture promulgated the Interim Administrative Provisions on Internet Culture, or the Internet Culture Provisions, which became effective on April 1, 2011, as amended by Decision of the Ministry of Culture on Repealing and Amending Certain Departmental Regulations on December 15, 2017. The Internet Culture Provisions require ICPs engaging in commercial "internet culture activities" to obtain a permit from the Ministry of Culture. "Internet cultural activities" is defined in the Internet Culture Provisions as an act of provision of Internet cultural products and related services, which includes (i) the production, duplication, importation, and broadcasting of the Internet cultural products; (ii) the online dissemination whereby cultural products are posted on the Internet or transmitted via the Internet to end-users, such as computers, fixed-line telephones, mobile phones, television sets and games machines, for online users' browsing, use or downloading; and (iii) the exhibition and comparison of the Internet cultural products. In addition, "Internet cultural products" is defined in the Internet Culture Provisions as cultural products produced, broadcast and disseminated via the Internet, which mainly include internet cultural products specially produced for the Internet, such as online music entertainment, online games, online shows and plays (programs), online performances, online works of art and online cartoons, and internet cultural products produced from cultural products such as music entertainment, games, shows and plays (programs), performances, works of art, and cartoons through certain techniques and duplicate those to internet for dissemination.

**Regulations Relating to Online Publishing**

On February 4, 2016, the SAPPRFT and the MIIT jointly issued the Administrative Provisions on Online Publishing Services, or the Online Publishing Provisions which took effect as of March 10, 2016. The Online Publishing Provisions sets out detailed provisions for online publishing activities, which mainly cover issues such as defining online publishing services, licensing and approvals, the administrative and supervisory regime and legal liabilities. According to the Online Publishing Provisions, all online publishing services provided within the territory of China are subject to the Online Publishing Provisions, and an online publishing services permit shall be obtained to provide online publishing services. Pursuant to the Online Publishing Provisions, "online publishing services" refer to providing online publications to the public through information networks; and "online publications" refer to digital works with publishing features such as having been edited, produced or processed and are made available to the public through information networks, including: (i) written works, pictures, maps, games, cartoons, audio/video reading materials and other original digital works containing useful knowledge or ideas in the field of literature, art, science or other fields; (ii) digital works of which the content is identical to that of any published book, newspaper, periodical, audio/video product, electronic publication or the like; (iii) network literature databases or other digital works, derived from any of the aforesaid works by selection, arrangement, collection or other means; and (iv) other types of digital works as may be determined by the SAPPRFT.

**Regulations Relating to Publication Distribution**

Under the Administrative Measures for the Publications Market, or Publications Market Measures, which was jointly promulgated by SAPPRFT and MOC and became effective on June 1, 2016, any enterprise or individual who engages in publication distribution activities shall obtain permission from SAPPRFT or its local counterpart. "Publication" is defined as "books, newspapers, periodicals, audio-video products, and electronic publications," and "distributing" is defined as "wholesale, retail, rental, exhibition and other activities," respectively, in the Publication Market Measures. Any enterprise or individual that engages in retail of publications shall obtain a Publication Business Operating License issued by the local counterpart of SAPPRFT at the county level. In addition, any enterprise or individual that holds a Publication Business Operating License shall file with the relevant local counterpart of SAPPRFT that granted such license to it within 15 days since it begins to carry out any online publication distribution business. Where an entity or individual is engaged in the distribution of publications via the internet or other information networks, it or he/she shall obtain the operation permit for publications.

**Regulations Relating to Online Transmission of Audio-Visual Programs**

The SAPPRFT and the MIIT jointly promulgated the Administrative Provisions on Internet Audio-Visual Program Service, or the Audio- Visual Program Provisions, on December 20, 2007, which came into effect on January 31, 2008 and was amended and effective on August 28, 2015. Under the Audio-Visual Program Provisions, "internet audio-visual program services" is defined as activities of producing, redacting and integrating audio-visual programs, providing them to the general public via internet, and providing service for other people to upload and transmits audio-visual programs, and providers of internet audio-visual program services are required to obtain a License for Online Transmission of Audio-Visual Programs issued by SAPPRFT, or complete certain registration procedures with SAPPRFT. In general, providers of internet audio-visual program services must be either state-owned or state-controlled entities, and the business to be carried out by such providers must satisfy the overall planning and guidance catalog for internet audio-visual program service determined by SAPPRFT. On March 30, 2009, SAPPRFT promulgated the Notice on Strengthening the Administration of the Content of Internet Audio-Visual Programs, which reiterates the pre-approval requirements for the audio-visual programs transmitted via the internet, including through mobile networks, where applicable, and prohibits certain types of internet audio-visual programs containing violence, pornography, gambling, terrorism, superstition or other similarly prohibited elements.

On March 17, 2010, SAPPRFT promulgated the Provisional Implementation of the Tentative Categories of Internet Audio-Visual Program Services, or the Categories, which was modified on March 10, 2017. The Categories clarified the scope of Internet audio-video programs services. According to the Categories, there are four categories of Internet audio-visual program services which are further divided into seventeen sub-categories. The third sub-category to the second category covers the making and editing of certain specialized audio-video programs concerning, among other things, educational content, and broadcasting such content to the general public online. However, there are still significant uncertainties relating to the interpretation and implementation of the Audio-Visual Program Provisions, in particular, the scope of "internet audio-video programs."

**Regulations Relating to the Software Industry**

On June 24, 2000, the State Council issued Certain Policies to Encourage the Development of Software and Integrated Circuit Industries, effective from July 1, 2000, or the Policies, to encourage the development of software and integrated circuit industries in China and to enhance the ability of PRC information technology companies to compete in the international market. The Policies facilitate the development of software and integrated circuit industries in China through various methods, including: (i) encouraging venture capital investments in software industry and providing capital to software enterprises or assisting such software enterprises to raise capital overseas; (ii) providing tax incentives, including an immediate tax rebate for taxpayers who sell self-developed software products before 2010 in the amount of the statutory value-added tax that exceeds 3% and a number of exemptions and reduced corporate income tax rates; (iii) providing government support, such as government funding in the development of software technology; (iv) providing preferential treatments, such as credit facilities with low interest rates to enterprises that export software products; (v) taking various strategies to ensure that the software industry has sufficient expertise; and (vi) implementing measures to enhance intellectual property protection in China. According to Certain Policies to Further Encourage the Development of the Software Industry and the Integrated Circuit Industry which was promulgated on January 28, 2011 by the State Council, preferential value-added tax shall continue to be implemented and relevant preferential business tax policies shall be further implemented and improved. Eligible software enterprises and integrated circuit design enterprises, which engage in software development and testing, information system integration, consulting and operation maintenance, integrated circuit design and other businesses, shall be exempt from business tax and relevant procedures for them shall be simplified.

To qualify for preferential treatments, an enterprise must be recognized as a software enterprise by governmental authorities. A software enterprise is subject to annual inspection, failure to pass such inspection in a given year would cause the enterprise to lose the relevant benefits.

**Regulations Relating to Internet Information Security and Privacy Protection**

The PRC Constitution states that PRC law protects the freedom and privacy of communications of citizens and prohibits infringement of these rights. In recent years, PRC government authorities have enacted laws and regulations on internet use to protect personal information from any unauthorized disclosure. Pursuant to the Decision on Strengthening the Protection of Online Information issued by the NPCSC on December 28, 2012 and the Order for the Protection of Telecommunication and Internet User Personal Information issued by the MIIT in July 16, 2013, any collection and use of user personal information must be subject to the consent of the user, abide by the principles of legality, rationality and necessity and be within the specified purposes, methods and scopes. "Personal information" is defined in these regulations as information that identifies a citizen, the time or location for his use of telecommunication and internet services or involves privacy of any citizen such as his birth date, ID card number, and address. An ICP services provider must also keep information collected strictly confidential, and is further prohibited from divulging, tampering or destroying of any such information, or selling or providing such information to other parties. Any violation of the above decision or order may subject the ICP service provider to warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of filings, closedown of websites or even criminal liabilities.

Pursuant to the PRC Cyber Security Law issued by the Standing Committee of the National People's Congress and effective on June 1, 2017, "personal information" refers to all kinds of information recorded by electronic or otherwise that can be used to independently identify or be combined with other information to identify individuals' personal information including but not limited to: individuals' names, dates of birth, ID numbers, biologically identified personal information, addresses and telephone numbers, etc. The Cyber Security Law also provides that: (i) to collect and use personal information, network operators shall follow the principles of legitimacy, rightfulness and necessity, disclose rules of data collection and use, clearly express the purposes, means and scope of collecting and using the information, and obtain the consent of the persons whose data is gathered; (ii) network operators shall neither gather personal information unrelated to the services they provide, nor gather or use personal information in violation of the provisions of laws and administrative regulations or the scopes of consent given by the persons whose data is gathered; and shall dispose of personal information they have saved in accordance with the provisions of laws and administrative regulations and agreements reached with users; (iii) network operators shall not divulge, tamper with or damage the personal information they have collected, and shall not provide the personal information to others without the consent of the persons whose data is collected. However, if the information has been processed and cannot be recovered and thus it is impossible to match such information with specific persons, such circumstance is an exception.

Pursuant to the Provisions on Internet Security Supervision and Inspection by Public Security Organs, which was promulgated by the Ministry of Public Security and effective on November 1, 2018, the public security departments are authorized to carry out internet security supervision and inspection of the internet service providers from the following aspects, among others: (i) whether the service providers have completed the recordation formalities for online entities, and filed the basic information on and the changes of the accessing entities and users; (ii) whether they have established and implemented the cybersecurity management system and protocols, and appointed the persons responsible for cybersecurity; (iii) whether the technical measures for recording and retaining users' registration information and weblog data are in place according to the law; (iv) whether they have taken technical measures to prevent computer viruses, network attacks and network intrusion; (v) whether they have adopted preventive measures to tackle the information that is prohibited to be issued or transmitted by the laws and administrative regulations in the public information services; (vi) whether they provide technical support and assistance as required by laws to public security departments to safeguard national security and prevent and investigate on terrorist activities and criminal activities; and (vii) whether they have fulfilled the obligations of the grade-based cybersecurity protection and other obligations prescribed by the laws and administrative regulations. In particular, public security departments shall also carry out supervision and inspection on whether an internet service provider has taken required measures to manage information published by users, adopted proper measures to handle the published or transmitted information that is prohibited to be published or transmitted, and kept the relevant records.

In addition, the Office of the Central Cyberspace Affairs Commission, the MIIT, the Ministry of Public Security, and the SAMR jointly issued an Announcement of Launching Special Crackdown Against Illegal Collection and Use of Personal Information by Apps on January 23, 2019 to implement special rectification works against mobile Apps that collect and use personal information in violation of applicable laws and regulations, where business operators are prohibited from collecting personal information irrelevant to their services, or forcing users to give authorization in a disguised manner. On November 28, 2019, the National Internet Information Office, the MIIT, the Ministry of Public Security and the SAMR further jointly issued a notice to classify and identify illegal collection and use of personal information.

According to the Civil Code of China, which became effective on January 1, 2021, a natural person has the right of privacy and the personal information of a natural person will be protected in accordance with law. Information processors may not divulge or tamper with the personal information collected or stored by them and may not illegally provide any natural person's personal information to others without the consent of such natural person.

Pursuant to the Notice on Promulgation of the Rules on the Scope of Necessary Personal Information for Common Types of Mobile Internet Applications, which was promulgated by the CAC, the MIIT and certain other government authorities on March 12, 2021 to be effective on May 1, 2021, "necessary personal information" refers to the personal information necessary for ensuring the normal operation of an app's basic functional services, without which the app cannot achieve its basic functional services. For learning and education apps, the basic functional services are "online tutoring, online classes, etc." and the necessary personal information is mobile phone numbers of registered users.

The SAMR promulgated the Measures for the Supervision and Administration of Online Transactions, which became effective on May 1, 2021. The measures require that online transaction operators shall not force customers, whether or not in a disguised manner, to consent to the collection and use of information not directly related to their business activities by means of one-off general authorization, default authorization, bundling with other authorizations, or the suspension of installation and use. Otherwise, such online transaction operator may be subject to fines and consequences under related laws and regulations, including without limitation suspension of business for rectification and revocation of permits and licenses.

On June 10, 2021, the SCNPC promulgated the Data Security Law of the PRC, which came into effect on September 1, 2021. The Data Security Law provides for data security and privacy obligations on entities and individuals carrying out data activities. The Data Security Law also introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, as well as the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data are tampered with, destroyed, leaked, or illegally acquired or used. The appropriate level of protection measures is required to be taken for each respective category of data. For example, a processor of important data shall designate the personnel and the management body responsible for data security, carry out risk assessments for its data processing activities and file the risk assessment reports with the competent authorities. In addition, the Data Security Law provides a national security review procedure for those data activities which may affect national security and imposes export restrictions on certain data and information. No entity or individual within the territory of the PRC may provide foreign judicial or law enforcement authorities with the data stored within the territory of the PRC without the approval of the competent PRC authorities.

On July 6, 2021, General Office of the State Council of the PRC together with another authority jointly promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities, or the Securities Activities Opinions, which called for the enhanced administration and supervision of overseas-listed China-based companies, proposed to revise the relevant regulation governing the overseas issuance and listing of shares by such companies and clarified the responsibilities of competent domestic industry regulators and government authorities. The Securities Activities Opinions also call for improving laws and regulations on data security, cross-border data flow and management of confidential information.

On July 30, 2021, the State Council promulgated the Regulations on Critical Information Infrastructure Security Protection, which came into effect on September 1, 2021. The regulations provide that, among others, critical information infrastructure, or the CIIO, means important network facilities and information systems in important industries such as public communications and information services, energy, transportation, water conservancy, finance, public services, e-government, defense technology industry and others that may seriously harm national security, national economy, people's livelihood and public interests once damaged, disabled or its data disclosed. Operators shall, base on leveled system for cybersecurity protection, adopt technical protection measures and other necessary measures to deal with cybersecurity security events, defend against cyber-attack and criminal activities, to ensure the safe and stable operation of CIIO, maintain data integrity, confidentiality, and availability pursuant to relevant laws, regulations and the mandatory requirements of national standards. Moreover, the competent supervisory departments of relevant important industries abovementioned shall organize the recognition of the CIIO and promptly notify the operators and Public Security Department of The State Council of the results of the identification.

On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law, which became effective on November 1, 2021. The Personal Information Protection Law aims at protecting the personal information rights and interests, regulating the processing of personal information, ensuring the orderly and free flow of personal information in accordance with the law, and promoting the reasonable use of personal information. Personal information refers to any recorded information related to identified or identifiable natural persons, though it excludes anonymized information. The Personal Information Protection Law also specified the rules for handling sensitive personal information, which includes biometrics, religious beliefs, specific identities, medical health, financial accounts, trails and locations, and personal information of teenagers under fourteen years old and other personal information, which, upon leakage or illegal usage, may easily infringe the personal dignity or harm of safety of livelihood and property. Personal information handlers shall bear responsibility for their personal information handling activities and adopt necessary measures to safeguard the security of the personal information they handle. Otherwise, the personal information handlers will be ordered for rectification or suspension or termination of provision of services, confiscation of illegal income, subject to fines or other penalties.

On January 4, 2022, the CAC published the Revised Cybersecurity Review Measures, which became effective on February 15, 2022 and repealed the Cybersecurity Review Measures promulgated on April 13, 2020. The Revised Cybersecurity Review Measures provide that a critical information infrastructure operator purchasing network products and services, and platform operators carrying out data processing activities, which affect or may affect national security, shall apply for cybersecurity review and that a platform operator with more than one million users' personal information aiming to list abroad must apply for cybersecurity review.

On January 4, 2022, the CAC published the Administrative Provisions on Internet Information Service Algorithm Recommendation on its website, or the Algorithm Recommendation Provisions, which became effective on March 1, 2022 and raise certain new compliance requirements on internet information service providers using algorithm recommendation technology. Specifically, the Algorithm Recommendation Provisions require that such service providers shall provide users with options that are not specific to their personal characteristics or provide users with convenient options to cancel algorithmic recommendation services.

**Regulations Relating to Intellectual Property Rights**

***Copyright and Software Registration***

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The NPCSC adopted the Copyright Law in 1990 and amended it in 2001 and 2010, respectively. The amended Copyright Law extends copyright protection to Internet activities, products disseminated over the Internet and software products. In addition, there is a voluntary registration system administered by the China Copyright Protection Center. The amended Copyright Law also requires registration of a copyright pledge. To address the problem of copyright infringement related to the content posted or transmitted over the Internet, the National Copyright Administration and the MIIT jointly promulgated the Measures for Administrative Protection of Copyright Related to Internet on April 29, 2005. This measure became effective on May 30, 2005.

The Computer Software Protection Regulations was promulgated by the State Council on June 4, 1991 and last amended on January 30, 2013 which stipulates that Chinese citizens, legal entities or other organizations enjoy, in accordance with these Regulations, copyright in the software which they have developed, whether published or not. In order to further implement the Computer Software Protection Regulations, the State Copyright Bureau issued the Computer Software Copyright Registration Procedures on February 20, 2002, which apply to software copyright registration, license contract registration and transfer contract registration.

***Patents***

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The NPCSC adopted the Patent Law of the PRC in 1984 and amended it in 1992, 2000 and 2008, respectively. A patentable invention, utility model or design must meet three conditions: novelty, inventiveness and practical applicability. Patents cannot be granted for scientific discoveries, rules and methods for intellectual activities, methods used to diagnose or treat diseases, animal and plant breeds or substances obtained by means of nuclear transformation. The Patent Office under the State Intellectual Property Office is responsible for receiving, examining and approving patent applications. A patent is valid for a twenty-year term for an invention and a ten-year term for a utility model or design, starting from the application date. Except under certain specific circumstances provided by law, any third party user must obtain consent or a proper license from the patent owner to use the patent, or else the use will constitute an infringement of the rights of the patent holder.

***Domain Name***

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On November 5, 2004, the MIIT promulgated the Measures for Administration of Domain Names for the Chinese Internet, or the Domain Name Measures, as amended on August 24, 2017. According to the Domain Name Measures, "domain name" shall refer to the character identifier for identifying and locating the hierarchical structure of a computer on the Internet, which corresponds to the Internet protocol (IP) address of the computer concerned. A domain name registration service shall observe the principle of "first apply, first register". Where the domain name is completed, the applicant for the domain name registration shall be the holder of the domain name. The holder of the domain name shall pay operation fees for a registered domain name on a regular basis. If the domain name holder fails to pay the corresponding operation fees as required, the original domain name registry shall write it off and notify the holder of the domain name in written form.

***Trademark***

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Trademarks are protected by the PRC Trademark Law which was adopted in 1982 and subsequently amended in 1993, 2001 and 2013 as well as the Implementation Regulation of the PRC Trademark Law adopted by the State Council in 2002 and amended in 2014. The Trademark Office under the SAIC handles trademark registrations and grants a term of ten years to registered trademarks which may be renewed for consecutive ten-year periods upon request by the trademark owner. Trademark license agreements must be filed with the Trademark Office for record. The PRC Trademark Law has adopted a "first-to-file" principle with respect to trademark registration. Where a trademark for which a registration has been made is identical or similar to another trademark which has already been registered or been subject to a preliminary examination and approval for use on the same kind of or similar commodities or services, the application for registration of such trademark may be rejected. Any person applying for the registration of a trademark may not prejudice the existing right first obtained by others, nor may any person register in advance a trademark that has already been used by another party and has already gained a "sufficient degree of reputation" through such party's use.

On April 23, 2019, the Standing Committee of the National People's Congress promulgated the latest amendment of Trademark Law, which came into effect on November 1, 2019. Compared to the currently effective Trademark Law, the latest amendment of Trademark Law additionally provides that, among other things, (i) an application for registration of a malicious trademark not for use shall be rejected and (ii) those who apply for trademark registration maliciously shall be given administrative penalties of warning or fines according to the circumstances; those who file trademark lawsuits maliciously shall be punished by the people's court according to applicable laws.

**Regulations Relating to Foreign Exchange**

***Foreign Exchange Settlement***

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The Circular of the State Administration of Foreign Exchange on Reforming the Management Approach regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises, which was promulgated by the SAFE on March 30, 2015 and became effective as of June 1, 2015, adopts the approach of discretional foreign exchange settlement, under which the foreign exchange capital in the capital account of a foreign-invested enterprise for which the foreign-invested enterprise has obtained confirmation by the local SAFE branches regarding the rights and interests of monetary contribution (or the book-entry registration of monetary contribution by the banks) can be settled at the banks based on the actual operation needs of such foreign-invested enterprise. The capital in Renminbi obtained by the foreign-invested enterprise from the discretionary settlement of foreign exchange capital shall be managed under the account pending for foreign exchange settlement payment. The proportion of discretionary settlement of foreign exchange capital is temporarily determined as 100%, subject to the adjustment of the SAFE.

***Regulations Relating to Foreign Exchange Registration of Overseas Investment by PRC Residents***

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SAFE Circular on Relevant Issues Relating to Domestic Resident's Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or Circular 37, issued by SAFE and effective in July 4, 2014, regulates foreign exchange matters in relation to the use of special purpose vehicles, or SPVs, by PRC residents or entities to seek offshore investment and financing and conduct round trip investment in China. Under Circular 37, a SPV refers to an offshore entity established or controlled, directly or indirectly, by PRC residents or entities for the purpose of seeking offshore financing or making offshore investment, using legitimate domestic or offshore assets or interests, while "round trip investment" refers to the direct investment in China by PRC residents or entities through SPVs, namely, establishing foreign-invested enterprises to obtain the ownership, control rights and management rights. Circular 37 requires that, before making contribution into an SPV, PRC residents or entities are required to complete foreign exchange registration with the SAFE or its local branch. SAFE Circular 37 further provides that option or share-based incentive tool holders of a non-listed SPV can exercise the options or share incentive tools to become a shareholder of such non-listed SPV, subject to registration with SAFE or its local branch.

PRC residents or entities who have contributed legitimate domestic or offshore interests or assets to SPVs but have yet to obtain SAFE registration before the implementation of the Circular 37 shall register their ownership interests or control in such SPVs with SAFE or its local branch. An amendment to the registration is required if there is a material change in the SPV registered, such as any change of basic information (including change of such PRC residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions. Failure to comply with the registration procedures set forth in Circular 37, or making misrepresentation on or failure to disclose controllers of foreign-invested enterprise that is established through round-trip investment, may result in restrictions on the foreign exchange activities of the relevant foreign-invested enterprises, including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant PRC residents or entities to penalties under PRC foreign exchange administration regulations.

**Regulations Relating to Employment and Social Insurance**

Pursuant to the PRC Labor Law effective as of January 1, 1995 (as last amended on December 29, 2018), and the PRC Labor Contract Law effective as of January 1, 2008 (as amended on December 28, 2012), a written labor contract shall be executed by employer and an employee when the employment relationship is established, and an employer is under an obligation to sign an unlimited-term labor contract with any employee who has worked for the employer for ten consecutive years. Further, if an employee requests or agrees to renew a fixed-term labor contract that has already been entered into twice consecutively, the resulting contract must have an unlimited term, with certain exceptions. All employers are required to establish a system for labor safety and sanitation, strictly abide by state rules and standards and provide employees with appropriate workplace safety training. Moreover, all PRC enterprises are generally required to implement a standard working time system of eight hours a day and forty hours a week, and if the implementation of such standard working time system is not appropriate due to the nature of the job or the characteristics of business operation, the enterprise may implement a flexible working time system or comprehensive working time system after obtaining approvals from the relevant authorities.

Pursuant to the Social Insurance Law of China effective from July 1, 2011 (as last amended on December 29, 2018), and the Housing Fund Regulation which was amended and became effective on March 24, 2002, employers in China shall pay contributions to the social insurance plan and the housing fund plan for their employees, and such contribution amount payable shall be calculated based on the employee actual salary in accordance with the relevant regulations.

**Regulations Relating to Taxation**

***PRC Enterprise Income Tax Law***

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In January 2008, the PRC Enterprise Income Tax Law, or the EIT Law, took effect (as last amended on December 29, 2018). The EIT Law applies a uniform 25% enterprise income tax rate to both foreign-invested enterprises and domestic enterprises, except where tax incentives are granted to special industries and projects. An enterprise established outside China with "de facto management bodies" within China is considered a "resident enterprise" for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. According to the EIT Law and its implementation regulations, certain high and new technology enterprises which have proprietary intellectual property rights and simultaneously meet the prescribed requirements as stipulated in the implementation regulations of the EIT Law and other relevant regulations are permitted to enjoy a reduced EIT rate of 15%.

Under the EIT Law and its implementation regulations, dividends generated from the business of a PRC subsidiary after January 1, 2008 and payable to its foreign investor may be subject to a withholding tax rate of 10% if the PRC tax authorities determine that the foreign investor is a non-resident enterprise, unless there is a tax treaty with China that provides for a preferential withholding tax rate. Distributions of earnings generated before January 1, 2008 are exempt from PRC withholding tax.

Under the PRC Enterprise Income Tax Law, an enterprise established outside China with "de facto management bodies" within China is considered a "resident enterprise" for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. The implementing regulations of the EIT Law define the term "de facto management bodies" as a management body which substantially manages, or has control over the business, personnel, finance and assets of an enterprise. On April 22, 2009, the State Taxation Administration, or STA issued the Circular on Issues Concerning the Identification of Chinese-Controlled Overseas Registered Enterprises as Resident Enterprises in Accordance With the Actual Standards of Organizational Management, or Circular 82, which provides certain specific criteria for determining whether the "de facto management bodies" of a PRC-controlled enterprise that is incorporated offshore is located in China. However, there are no further detailed rules or precedents governing the procedures and specific criteria for determining "de facto management body."

On February 3, 2015, the STA issued the Announcement of the State Taxation Administration on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-resident Enterprises, or STA Bulletin 7, extends its tax jurisdiction to transactions involving the transfer of taxable assets through offshore transfer of a foreign intermediate holding company. Pursuant to STA Bulletin 7, where a non-resident enterprise indirectly transfers properties such as equity in PRC resident enterprises without any justifiable business purposes and aiming to avoid the payment of enterprise income tax, such indirect transfer must be reclassified as a direct transfer of equity in PRC resident enterprise. To assess whether an indirect transfer of PRC taxable properties has reasonable commercial purposes, all arrangements related to the indirect transfer must be considered comprehensively and factors set forth in STA Bulletin 7 must be comprehensively analyzed in light of the actual circumstances. In addition, STA Bulletin 7 has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market.

On October 17, 2017, the STA issued the Announcement of the State Taxation Administration on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or STA Bulletin 37, which came into effect on December 1, 2017. The STA Bulletin 37 further clarifies the practice and procedure of the withholding of non-resident enterprise income tax.

Where non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may become at risk of being required to file a return and taxed under STA Bulletin 7 and/or STA Bulletin 37 and we may be required to expend valuable resources to comply with STA Bulletin 7 and/or STA Bulletin 37 or to establish that we should not be held liable for any obligations under STA Bulletin 7 and/or STA Bulletin 37.

***PRC Value-Added Tax Law***

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Pursuant to the Interim Regulations on Value-added Tax of China, or VAT Regulations which was promulgated by the State Council on December 13, 1993 and became effective as of January 1, 1994 and further amended on November 5, 2008, February 6, 2016 and November 19, 2017, all units and individuals engaging in the sale of goods, provision of processing, repair and fitting services, and importation of goods within the territory of China are taxpayers of value-added tax ("VAT"), and shall pay VAT in accordance with the VAT Regulations. According to the VAT Regulations, a VAT tax rate at 17% applies to the Chinese enterprises unless otherwise exempted or reduced according to the VAT Regulations and other relevant regulations.

Pursuant to the Circular on Comprehensively Promoting the Pilot Program of the Collection of Value-added Tax in Lieu of Business Tax jointly promulgated by the State Taxation Administration and the Ministry of Finance ("Circular 36"), the pilot program of the collection of VAT in lieu of business tax shall be promoted nationwide in a comprehensive manner as of May 1, 2016. Entities and individuals engaged in sales of services, intangible assets or real property within the territory of the PRC are value-added taxpayers, and shall pay VAT rather than business tax. Any taxable activities of taxpayers shall be subject to a tax rate of 6%, except those taxpayers who provide services related to transportation, postal services, basic telecommunications, construction, leasing of real property, sell any real property, transfer any land use rights, leasing services of tangible personal property or any cross-board taxable activity.

Pursuant to the Circular of the Ministry of Finance and the State Taxation Administration on Adjusting Value-added Tax Rates which was promulgated by Ministry of Finance and State Taxation Administration on April 4, 2018 and became effective on May 1, 2018, for the purpose of improving the value-added tax system, adjustments to relevant policies on VAT rates are notified. Where a taxpayer engages in a taxable sales activity for the VAT purpose or imports goods, the previous applicable 17% and 11% tax rates are adjusted to be 16% and 10%, respectively. On March 20, 2019, the Ministry of Finance, the STA and the General Administration of Customs jointly issued the Notice on the Policy Concerning Deepening the Reform of Value Added Tax, or Notice 39, which became effective on April 1, 2019. The Notice 39 further changed the Value Added Tax rate of 16% and 10% into 13% and 9%.

**4C. Organizational Structure**

The following chart reflects our organizational structure as of the date of this report. For descriptions of our subsidiaries and variable interest entity, please see "4A. History and Development of the Company."

![](image_002.jpg)

**4D. Property, Plants and Equipment**

We own office space of 166.6 square meters located at Room 12-6, Building 2A, No. 8 Daxueyuan Road, Hongshan District, Wuhan, Hubei. As of March 31, 2025, we have also leased an aggregate of approximately 1,282 square meters office space in Beijing, Jiangsu, Hunan and Fujian. For descriptions of our leased properties, please see "Item 4B. Business Overview – Facilities."

**ITEM 4A. UNRESOLVED STAFF COMMENTS**

Not Applicable

**ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS**

*The following discussion and analysis should be read in conjunction with our consolidated financial statements, the notes to those financial statements and other financial data that appear elsewhere in this annual report. In addition to historical information, the following discussion contains forward-looking statements based on current expectations that involve risks and uncertainties. Actual results and the timing of certain events may differ significantly from those projected in such forward-looking statements due to a number of factors, including those set forth in "Risk Factors" and elsewhere in this report. Our consolidated financial statements are prepared in conformity with U.S. GAAP.*

 

**5A. Operating Results**

**<u>Business Overview</u>**

We are a holding company incorporated under the laws of the British Virgin Islands. Through our subsidiaries and variable interest entity, we provide online exam preparation services and related technology solutions and produce online training course materials in China and have been in operation for over 20 years. We develop our own online education materials that are offered through the cloud and that can be used for a wide range of purposes, such as standard examination preparation, professional training and interactive programs for educational purposes other than exam preparation. We also produce thousands of online classes. Our services not only include development of online education platforms and online course materials but also include comprehensive cloud service for online education and exam preparation training. The bulk of our operations is conducted via our wholly owned subsidiaries, primarily Beijing Huaxia Dadi Distance Learning Services Co., Ltd., while the rest of our business operations, including certain portions of our B2C services and technology services, are conducted through our variable interest entity Beijing Huaxia Dadi Digital Information Technology Co., Ltd. We do not directly own the businesses or assets in the PRC that are operated by our variable interest entity, including our PRC internet content license.

In fiscal year 2025, we continued to increase our efforts in expanding our business and services of online education. With the development of our original platform and new platforms such as Vocational Education 1+X and Higher Vocational Enrollment Expansion Teaching and Educational Administration Platform, Huafu E-School System and Paperless Examination Platform. We provided more courses, attracted more customers and cooperated with more education institutions. On the other hand, we focused our business on online education services and did not make great efforts on our technological development services; most of our current technological development services are one- off, and the subsequent maintenance services for upkeep did not generate significant revenue.

**Factors Affecting Our Results of Operations**

We benefited significantly from the following recent trends in the China educational and career enhancement services market and we anticipate that the demand for online education will continue to grow:

***Increasing Internet and broadband penetration rates in China -*** We have benefited from the rapid improvement of internet and broadband connectivity in China, which have increased the accessibility of online education courses as an effective and convenient way for people to meet their educational and career development needs.

***Increasing awareness of the importance of higher and professional education* -** We believe people in China are increasingly willing to invest in higher and professional education as it may lead to better career opportunities and enhanced earning power. We also believe that the market for post- secondary education and career enhancement services in China is expected to grow due to demand from various sources, including demand from employers for well-trained professionals, demand from an increasing number of high school and university graduates seeking employment that requires practical skills and professional certifications, and demand from working professionals who wish to further achieve their career and salary advancement potential.

***Need to differentiate oneself from peers* -** Each step of academic advancement requires an individual to differentiate oneself. Despite China's rapid economic growth, university students in China are experiencing difficulties in finding an ideal job that meets their salary and personal growth expectations upon graduation. We believe that, in this highly competitive job market, many students may choose to enhance their core skill sets by taking additional training courses or obtaining a second degree to differentiate themselves from their peers in order to get a better job. This may increase demand for our services and products.

While our business is influenced by factors affecting the education and career enhancement industries in China generally and by conditions in each of the geographic markets we serve within China, we believe our business is more directly affected by company- specific factors, including, among others:

***Number of enrollments in our courses* -** Our ability to generate and grow our revenues is primarily affected by our ability to increase the number of course enrollments. This in turn is driven by several factors, including government and industry requirements for education in various professions, recognition of our brand and services, Internet and broadband connectivity rate, and the perceived effectiveness of our education courses.

***Fees for our courses* -** Our revenue is also affected by the amount of fees we charge for our courses, which depends on the overall demand, the prices and availability of competing courses, and the perception of the quality and effectiveness of our courses. We may also experience pricing pressure as we expand our course offerings into new areas, or new service within existing areas that we cover, in an effort to attract new course participants.

***Our ability to expand the range of courses and other services* -** Our ability to address market needs by expanding the range of our course offerings and other services has a direct impact on our ability to maintain growth in our course enrollments. Diversifying our sources of revenues also helps protect us from potential reduced course enrollment due to down-turns in certain industries or professions. To date, we have provided not only diversified online education courses, such as courses of laws, mathematics, accounting, nursing to participants, but also technological development and operation services to other educational organizations such as universities. In the future, we will continue to expand our course offerings in other areas to diversify and further grow our revenues.

***Our ability to maintain and expand cooperation with universities and colleges* -** our ability to maintain and expand our customer base will have a material impact on our operations. A majority of our revenue is derived from our cooperation with universities and colleges. We have entered into agreements with more than 100 universities and colleges to provide online education services or technological services and expect to keep expanding our customer base in the near future. If we fail to maintain or further expand our customer base, our results of operations will be adversely affected.

**Results of Operations**

The following table sets forth the key components of our results of operations for the years ended March 31, 2025, 2024 and 2023, in dollars and as a percentage of revenue.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **March 31,**<br>**2025** | **% of**<br>**Revenue** | **March 31,**<br>**2024** | **% of**<br>**Revenue** | **March 31,**<br>**2023** | **% of**<br>**Revenue** |
| Revenue | $6186645 | 100% | $7223220 | 100% | $10692613 | 100% |
| Cost of revenue and business and sales related tax | 3609750 | 58% | 4232253 | 59% | 5005710 | 47% |
| **Gross profit** | 2576895 | 42% | 2990967 | 41% | 5686903 | 53% |
| Selling expenses | 852569 | 14% | 1066649 | 15% | 1129146 | 11% |
| General and administrative expenses | 2116788 | 34% | 2164840 | 30% | 2545789 | 24% |
| **Income (loss) from operations** | (392462) | (6)% | (240522) | (3)% | 2011968 | 19% |
| Interest income | 169636 | 3% | 155360 | 2% | 139345 | 1% |
| Loss from long-term investment | **(7206)** | **-**% | **-** | **-%** | **(43785)** | **-** |
| Other income (expenses) | (42712) | (1)% | (160808) | (2)% | (4556) | 0% |
| **Income (loss) before income tax provision** | **(272744)** | **(4)%** | **(245970)** | **(3)%** | **2102972** | **20%** |
| Provision (benefit) for income taxes | 100104 | 2% | 130890 | 2% | 430529 | 4% |
| **Net income (loss)** | $(372848) | **(6)%** | $**(376860)** | **(5)%** | $**1672443** | **16%** |
| Other comprehensive income (loss): foreign currency translation gain (loss) | (31715) | (1)% | (493887) | (7)% | (752987) | (7)% |
| Less: Comprehensive income (loss) attributable to non-controlling interest | (43989) | (1) | 2370 | -% | (1786) | -% |
| **Comprehensive income (loss) attributable to Wah Fu Education Group Ltd.** | $**(360574)** | (6)% | $**(873117)** | (12)% | $**921242** | 9% |

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**Results of Operations for the years ended March 31, 2025 and 2024**

***Revenues***

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We derive revenues from online education services and technological development and operation services. Our net revenues are presented net of PRC business tax and related surcharges, as well as value-added taxes. The following table sets forth a breakdown of our total revenues for the periods indicated:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the years ended March 31,** | **For the years ended March 31,** | **For the years ended March 31,** | **For the years ended March 31,** | **Variance** | **Variance** |
|  | **2025** | **%** | **2024** | **%** | **Amount** | **%** |
| Online education services | $5684089 | 91.88% | $7012452 | 97.08% | $(1328363) | (18.94)% |
| Technological development and operation service | 502556 | 8.12% | 210768 | 2.92% | 291788 | 138.44% |
| **Total Amount** | $6186645 | 100.00% | $7223220 | 100.00% | $(1036575) | (14.35)% |

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We derive most of our revenues from online education services, through our B2B2C services and B2C services. For B2B2C service, we provide online education platforms to institutions, such as universities and training institutions. For B2C service, we provide online training and examination preparation services directly to students for a fee. Our online education services mainly consist of courses designed for self-taught learners pursuing higher education degrees, including laws, mathematics, accounting, nursing, administration management and others. In addition, we provide continuing education, professional development and general interest courses to students, such as information technology, accounting and language courses.

Since we provide our B2B2C service mainly through universities and educational institutions for the higher education degrees, our service period is directly related to school years and the examination periods. Each province organizes its own self-taught higher education exams, usually two to four times a year, which will impact the number of course participants and the number of courses we provide.

On the other hand, our B2C service is not impacted by school years and examination periods as much, because the courses we provide are more diverse and not degree oriented.

We also provide technological development and operation services, such as information technology system design and monitoring, daily system support, cloud platform development and other related services.

For the years ended March 31, 2025 and 2024, revenue derived from online education services were $5,684,089 and $7,012,452, respectively, which represented a decrease of $1,328,363 or 18.94%. The decrease was primarily due to a decrease in the revenue from B2B2C service. During fiscal year 2025, due to the implementation of local policies in Hunan province since November 2023, the province has suspended the use of process assessment scores for newly enrolled students in the self-study examination since the year 2024. Accordingly, our revenue from B2B2C services decrease this period. For the uncertainty of the policy, we expected that the income from this part will decrease in the future.

For the years ended March 31, 2025 and 2024 revenue from technological development and operation services was $502,556 and $210,768, respectively, represents an increase of $291,788 or 138.44%. The increase mainly due to we provided technological support for server clients on their tanning classes in this period. we expected that the income from this part will have a slightly increase in the future.

***Cost of Revenue***

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The following table sets forth the breakdown of the Company's cost of revenue for the years ended March 31, 2025 and 2024 respectively:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **Variance** | **Variance** |
|  | **2025** | **%** | **2024** | **%** | **Amount** | **%** |
| Online education services | $3466241 | 96.02% | $4116822 | 97.27% | $(650581) | (15.80)% |
| Technological development and operation service | 116461 | 3.23% | 82917 | 1.96% | 33544 | 40.46% |
| Business and sales related tax | 27048 | 0.75% | 32514 | 0.77% | (5466) | (16.81)% |
| **Total Amount** | $3609750 | 100.00% | $4232253 | 100.00% | $(622503) | (14.71)% |

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Cost of revenue accounted for 58% and 59% of our net revenues in the fiscal years ended March 31, 2025 and 2024, respectively. Cost of revenue mainly comprised of salaries and related expenses for our teaching support, course and content development, website maintenance and information technology engineers and other employees, fees paid to our course lecturers, depreciation and amortization expenses, server relocation and bandwidth leasing fees paid to third-party providers, commission fees paid to third-party cooperate institutions and other miscellaneous expenses.

For the years ended March 31, 2025 and 2024, cost of revenue from online education services were $3,466,241 and $4,116,822, respectively, representing a decrease of $650,581 or 15.80%. The decrease was mainly due to the reduction of commission fees. Commission fee paid to our third-party corporate institutions based on revenue decreased.

For the years ended March 31, 2025 and 2024, cost of revenue from technological development and operation service were $116,461 and $82,917, respectively. The increase mainly due to the increase of revenue of technological development and operation service.

***Gross Profit***

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The following table sets forth the breakdown of the Company's gross profit for the years ended March 31, 2025 and 2024, respectively:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **Variance** | **Variance** |
|  | **2025** | **%** | **2024** | **%** | **Amount** | **%** |
| Online education services | $2191679 | 85.05% | $2863758 | 95.75% | $(672079) | (23.47)% |
| Technological development and operation service | 385216 | 14.95% | 127209 | 4.25% | 258007 | 202.82% |
| **Total Amount** | $2576895 | 100.00% | $2990967 | 100.00% | $(414072) | (13.84)% |

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Gross profit from online education services decreased by $672,079 or 23.47% for the year ended March 31, 2025 as compared to the same period of 2024. The decrease of gross profit from online education services was mainly due to the decrease in revenue.

Gross profit from technological development and operation services increased by $258,007 or 202.82% for the year ended March 31, 2025 as compared to the same period of 2024.

The gross margin of fiscal year 2025 was 42% compared to 41% for the fiscal year 2024.The gross margin keep in stable in the two years.

***Expenses***

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The following table sets forth the breakdown of our operating expenses for the years ended March 31, 2025 and 2024, respectively:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **Variance** | **Variance** |
|  | **2025** | **%** | **2024** | **%** | **Amount** | **%** |
| Selling expenses | $852569 | 28.71% | $1066649 | 33.01% | $(214080) | (20.07)% |
| General and administrative expenses | 2116788 | 71.29% | 2164840 | 66.99% | (48052) | (2.22)% |
| **Total Amount** | $2969357 | 100.00% | $3231489 | 100.00% | $(262132) | (8.11)% |

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Selling expenses primarily consist of salaries and related expenses of our sales team, sales commissions, and advertising and promotion expenses. Our selling expenses decreased by 20.07% to $852,569 million in fiscal year 2025 from $1,066,649 million in fiscal year 2024. This decrease was primarily due to the decrease in salaries for our sales department since our revenue of fiscal year 2025 decreased.

*General and Administrative Expenses*

For the year ended March 31, 2025, our general and administrative expenses were $2,116,788, representing a decrease of $48,052 or 2.22% as compared to the same period of 2024. The decrease of general and administrative expenses was mainly due to the decrease of salaries and related welfare as the reduction in the total workforce.

***Interest Income, net***

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Interest income is primarily generated from our cash deposits in the banks and interest from loans to third parties and related parties. For the year ended March 31, 2025, interest income was $169,636 as compared to interest income of $155,360 in the same period of 2024.

***Provision for Income Taxes***

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The Company's income tax provisions were $100,104 and $130,890 in fiscal year 2025 and 2024, respectively, as a result of a decreased in net incomes for the PRC subsidiaries.

***Net losses***

 ****

Our net losses were $372,848 and $376,860 for the years ended March 31, 2025 and 2024. The reasons are as discussed above.

***Comprehensive income (loss)***

 ****

The foreign currency translation gain or loss resulting from translation of the financial statements expressed in RMB to USD is reported in other comprehensive income (loss) in the consolidated statements of operations and comprehensive income (loss). The comprehensive losses were $360,574 and $873,117 for the years ended March 31, 2025 and 2024. The foreign currency translation losses were $31,715 and $493,887 in the fiscal year 2025 and 2024, respectively.

***Working Capital***

The following table provides the information about our working capital at March 31, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | **As of<br> March 31,**<br> **2025** | **As of<br> March 31,**<br> **2024** |
| Current Assets | $14228095 | $14672805 |
| Current Liabilities | $3664166 | 3924212 |
| Working Capital | $10563929 | $10748593 |

---

Working capital decreased by $184,664 or 1.72% from March 31, 2024 to March 31, 2025. Our working capital requirements are influenced by the level of our operations, the quantity and amount of our sales contracts, the progress of execution on our customer contracts, and the timing of accounts receivable collections.

***Capital Commitments and Contingencies***

 ****

Capital commitments refer to the allocation of funds for a possible liability in the near future arising out of capital expenditures. Contingency refers to a condition that arises from past transactions or events, the outcome of which will be confirmed only by the occurrence or non-occurrence of uncertain future events.

As of March 31, 2025 and 2024, we had no material capital commitments or contingent liabilities.

***Cash Flows***

 ****

The following table provides detailed information about our net cash flows for the years ended March 31, 2025 and 2024.

---

| | | |
|:---|:---|:---|
|  | **For the years ended<br> March 31,** | **For the years ended<br> March 31,** |
|  | **2025** | **2024** |
| Net cash provided by (used in) operating activities | $(965592) | $(767310) |
| Net cash provided by (used in) investing activities | (10627) | (231440) |
| Net cash provided by (used in) financing activities | 63024 |  |
| Effect of exchange rate changes on cash | (1121) | (523005) |
| Net increase (decrease) in cash | (914316) | (1521755) |
| Cash, beginning of the year | 11045708 | 12567463 |
| Cash, end of the year | $10131392 | $11045708 |

---

*Operating Activities*

Net cash used in operating activities during the year ended March 31, 2025 was $1.0 million. Net loss for fiscal year 2025 was $0.4 million, other receivables increased by $0.8 million and deferred revenue decreased by $0.2 million.

Net cash used in operating activities during the year ended March 31, 2024 was $0.8 million. Net loss for fiscal year 2024 was $0.4 million, Account receivable increased by $0.7 million, provision for doubtful accounts increased $0.4 million, deferred revenue increased by $0.2 million.

*Investing Activities*

 

For the year ended March 31, 2025 and 2024 net cash used in investing activities amounted to $0.01 million and $0.2 million.

*Financing Activities*

 

For the year ended March 31, 2025 cash provided by financing activities was $0.06 million when there was no cash provided or used in the year ended Mach 31, 2024.

**Results of Operations for the years ended March 31, 2024 and 2023**

***Revenues***

 ****

We derive revenues from online education services and technological development and operation services. Our net revenues are presented net of PRC business tax and related surcharges, as well as value-added taxes. The following table sets forth a breakdown of our total revenues for the periods indicated:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the years ended March 31,** | **For the years ended March 31,** | **For the years ended March 31,** | **For the years ended March 31,** | **Variance** | **Variance** |
|  | **2024** | **%** | **2023** | **%** | **Amount** | **%** |
| Online education services | $7012452 | 97.08% | $10508873 | 98.28% | $(3496421) | (33.27)% |
| Technological development and operation service | 210768 | 2.92% | 183740 | 1.72% | 27027 | 14.71% |
| **Total Amount** | $7223220 | 100.00% | $10692613 | 100.00% | $(3469393) | (32.45)% |

---

We derive most of our revenues from online education services, through our B2B2C services and B2C services. For B2B2C service, we provide online education platforms to institutions, such as universities and training institutions. For B2C service, we provide online training and examination preparation services directly to students for a fee. Our online education services mainly consist of courses designed for self-taught learners pursuing higher education degrees, including laws, mathematics, accounting, nursing, administration management and others. In addition, we provide continuing education, professional development and general interest courses to students, such as information technology, accounting and language courses.

Since we provide our B2B2C service mainly through universities and educational institutions for the higher education degrees, our service period is directly related to school years and the examination periods. Each province organizes its own self-taught higher education exams, usually two to four times a year, which will impact the number of course participants and the number of courses we provide.

On the other hand, our B2C service is not impacted by school years and examination periods as much, because the courses we provide are more diverse and not degree oriented.

We also provide technological development and operation services, such as information technology system design and monitoring, daily system support, cloud platform development and other related services.

For the years ended March 31, 2024 and 2023, revenue derived from online education services were $7,012,452 and $10,508,873, respectively, which represented a decrease of $3,496,421 or 33.27%. The decrease was primarily due to a decrease in the revenue from B2B2C service. During fiscal year 2024, due to the implementation of local policies in Hunan province in November 2023, the province has suspended the use of process assessment scores for newly enrolled students in the self-study examination for the year 2024. Accordingly, our revenue from B2B2C services decrease this period. For the uncertainty of the policy, we expected that the income from this part will decrease in the future.

For the years ended March 31, 2024 and 2023 revenue from technological development and operation services was $210,768 and $183,740, respectively, represents an increase of $27,027 or 14.71%.

***Cost of Revenue***

 ****

The following table sets forth the breakdown of the Company's cost of revenue for the years ended March 31, 2024 and 2023 respectively:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **Variance** | **Variance** |
|  | **2024** | **%** | **2023** | **%** | **Amount** | **%** |
| Online education services | $4116822 | 97.27% | $4871273 | 97.31% | $(754451) | (15.49)% |
| Technological development and operation service | 82917 | 1.96% | 100219 | 2.00% | (17302) | (17.26)% |
| Business and sales related tax | 32514 | 0.77% | 34218 | 0.68% | (1704) | (4.98)% |
| **Total Amount** | $4232253 | 100.00% | $5005710 | 100.00% | $(773457) | (15.45)% |

---

Cost of revenue accounted for 59% and 47% of our net revenues in the fiscal years ended March 31, 2024 and 2023, respectively. Cost of revenue mainly comprised of salaries and related expenses for our teaching support, course and content development, website maintenance and information technology engineers and other employees, fees paid to our course lecturers, depreciation and amortization expenses, server relocation and bandwidth leasing fees paid to third-party providers, commission fees paid to third-party cooperate institutions and other miscellaneous expenses.

For the years ended March 31, 2024 and 2023, cost of revenue from online education services were $4,116,822 and $4,871,273, respectively, representing a decrease of $754,451 or 15.49%. The decrease was mainly due to the reduction of commission fees. Commission fee paid to our third-party corporate institutions based on revenue decreased.

For the years ended March 31, 2024 and 2023, cost of revenue from technological development and operation service were $82,917 and $100,219, respectively. As we switched our business focus to online educational services, a we might further adjust our employee structure and transfer technical employees to develop and maintain our self-used platforms to reduce cost of revenue from technical development and operation service.

***Gross Profit***

 ****

The following table sets forth the breakdown of the Company's gross profit for the years ended March 31, 2024 and 2023, respectively:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **Variance** | **Variance** |
|  | **2024** | **%** | **2023** | **%** | **Amount** | **%** |
| Online education services | $2863758 | 95.75% | $5604072 | 98.54% | $(2740313) | (48.90)% |
| Technological development and operation service | 127209 | 4.25% | 82831 | 1.46% | 44377 | 53.58% |
| **Total Amount** | $2990967 | 100.00% | $5686903 | 100.00% | $(2695936) | (47.41)% |

---

Gross profit from online education services decreased by $2,740,313 or 48.90% for the year ended March 31, 2024 as compared to the same period of 2023. The decrease of gross profit from online education services was mainly due to the decrease in revenue.

Gross profit from technological development and operation services increased by $44,377 or 53.58% for the year ended March 31, 2024 as compared to the same period of 2023.

The gross margin of fiscal year 2024 was 41% compared to 53% for the fiscal year 2023.The decrease of gross margin was mainly due to online education services. For the online education services revenue decrease during fiscal year 2024, the cost of online education revenue include fixed cost (e.g. salaries and related expenses for our teaching support, course and content development), thus the cost of online education services not decrease so sharply with the revenue, the gross margin from online education service decreased in this year.

***Expenses***

 ****

The following table sets forth the breakdown of our operating expenses for the years ended March 31, 2024 and 2023, respectively:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **For the year ended March 31,** | **Variance** | **Variance** |
|  | **2024** | **%** | **2023** | **%** | **Amount** | **%** |
| Selling expenses | $1066649 | 33.01% | $1129146 | 30.73% | $(62497) | (5.53)% |
| General and administrative expenses | 2164840 | 66.99% | 2545789 | 69.27% | (380949) | (14.96)% |
| **Total Amount** | $3231489 | 100.00% | $3674935 | 100 | $(443446) | (12.07)% |

---

Selling expenses primarily consist of salaries and related expenses of our sales team, sales commissions, and advertising and promotion expenses. Our selling expenses decreased by 5.53% to $1.07 million in fiscal year 2024 from $1.13 million in fiscal year 2023. This decrease was primarily due to the decrease in salaries for our sales department since our revenue of fiscal year 2024 decreased.

*General and Administrative Expenses*

For the year ended March 31, 2024, our general and administrative expenses were $2,164,840, representing a decrease of $380,949 or 14.96% as compared to the same period of 2023. The decrease of general and administrative expenses was mainly due to the decrease of salaries and related welfare as the reduction in the total workforce and decrease in provision for bad debts.

***Interest Income, net***

 ****

Interest income is primarily generated from our cash deposits in the banks and interest from loans to third parties and related parties. For the year ended March 31, 2024, interest income was $155,360 as compared to interest income of $139,345 in the same period of 2023.

***Provision (Benefit) for Income Taxes***

 ****

The Company's income tax provision were $130,890 and $430,529 in fiscal year 2024 and 2023, respectively, as a result of a decreased in net income.

***Net income (loss)***

 ****

Our net loss was $376,860 for the years ended March 31, 2024 when it was an income of $1,609,623 for the years ended March 31, 2023. These are mainly due to the decrease of revenue, as discussed above.

***Comprehensive income (loss)***

 ****

The foreign currency translation gain or loss resulting from translation of the financial statements expressed in RMB to USD is reported in other comprehensive income (loss) in the consolidated statements of operations and comprehensive income (loss). The comprehensive loss was $873,117 for the years ended March 31, 2024 when it was comprehensive income of $921,242 for the year ended March 31, 2023. The change was mainly due to the net loss of $376,860 for the fiscal year 2024 when it was a net income of $1,672,443 compared to fiscal year 2023. The foreign currency translation loss were $493,887 and $752,987 in the fiscal year 2024 and 2023, respectively.

***Working Capital***

The following table provides the information about our working capital at March 31, 2024 and 2023:

---

| | | |
|:---|:---|:---|
|  | **As of<br> March 31,**<br> **2024** | **As of<br> March 31,**<br> **2023** |
| Current Assets | $14672805 | $15995641 |
| Current Liabilities | $3924212 | 4305038 |
| Working Capital | $10748593 | $11690603 |

---

Working capital decreased by $942,010 or 8.1% from March 31, 2023 to March 31, 2024. Our working capital requirements are influenced by the level of our operations, the quantity and amount of our sales contracts, the progress of execution on our customer contracts, and the timing of accounts receivable collections.

***Capital Commitments and Contingencies***

 ****

Capital commitments refer to the allocation of funds for a possible liability in the near future arising out of capital expenditures. Contingency refers to a condition that arises from past transactions or events, the outcome of which will be confirmed only by the occurrence or non-occurrence of uncertain futures events.

As of March 31, 2024 and 2023, we had no material capital commitments or contingent liabilities.

***Cash Flows***

 ****

The following table provides detailed information about our net cash flows for the years ended March 31, 2024 and 2023.

---

| | | |
|:---|:---|:---|
|  | **For the years ended<br> March 31,** | **For the years ended<br> March 31,** |
|  | **2024** | **2023** |
| Net cash provided by (used in) operating activities | $(767310) | $1612500 |
| Net cash provided by (used in) investing activities | (231440) | 36876 |
| Net cash provided by (used in) financing activities |  |  |
| Effect of exchange rate changes on cash | (523005) | (845358) |
| Net increase (decrease) in cash | (1521755) | 804018 |
| Cash, beginning of the year | 12567463 | 11763445 |
| Cash, end of the year | $11045708 | $12567463 |

---

*Operating Activities*

Net cash used in operating activities during the year ended March 31, 2024 was $0.8 million. Net loss for fiscal year 2024 was $0.4 million, Account receivable increased by $0.7 million, provision for doubtful accounts increased $0.4 million, deferred revenue increased by $0.2 million.

Net cash provided by operating activities during the year ended March 31, 2023 was $1.6 million. Net income for fiscal year 2023 was $1.7 million, including recovery of $0.5 million provision for doubtful accounts and $0.2 million depreciation and amortization. Deferred revenue decreased by $0.3 million.

*Investing Activities*

 

For the year ended March 31, 2024 net cash used in investing activities amounted to $0.2 million when it was net cash provided by investing activities of $0.03 million for the year ended March 31, 2023.

*Financing Activities*

 

For the year ended March 31, 2024 and 2023, there were no net cash provided by or used in financing activities.

***Transfer of Cash through our Organization***

Wah Fu can transfer cash to its subsidiaries through capital contributions and/or intercompany loans, and Wah Fu's subsidiaries can transfer cash to Wah Fu through dividends or other distributions and/or intercompany loans. Additionally, Wah Fu's subsidiaries can transfer cash to the VIE through loans, service fees and the VIE can transfer cash to Wah Fu as service fees under the VIE Agreements and/or through loans. We intend to settle amounts owed under the VIE Agreements. The aforesaid transactions including capital injection and loans, would be eliminated upon consolidation.

Our cash primarily consists of cash on hand and cash in banks in the PRC and Hong Kong, which is unrestricted for withdrawal and use and is deposited with banks in China. As of March 31, 2025 and March 31, 2024, we had approximately $10.1 million and $11.0 million of cash in bank, respectively, and had no outstanding bank loans or third-party loans due. Funds are transferred between our WFOEs, Beijing Huaxia Dadi Distance Learning Services Co., Ltd. ("Distance Learning") and Shanghai Xin Fu Network Technology Co., Ltd., WFOEs' subsidiaries, and the VIE for their daily operation purposes.

There is no assurance that the PRC government will not intervene or impose restrictions on the ability of us, our subsidiaries and the VIE to transfer cash. Most of our cash is in Renminbi, and the PRC government could prevent the cash maintained from leaving the PRC, could restrict deployment of the cash into the business of the VIE and its subsidiaries and restrict the ability to pay dividends. For details regarding the restrictions on our ability to transfer cash between us, our subsidiaries and the VIE, see "*Item 3.D. Risk Factors- Risks Related to Doing Business in China*"

We currently do not have cash management policies that dictate how funds are transferred between us, our subsidiaries, and the VIE.

***Recent accounting pronouncements***

On November 27, 2023, FASB issued Accounting Standards Update No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which requires that an entity disclose significant segment expenses impacting profit and loss that are regularly provided to the chief operating decision maker. The update is required to be applied retrospectively to prior periods presented, based on the significant segment expense categories identified and disclosed in the period of adoption. The amendments in ASU 2023-07 are required to be adopted for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is in the process of evaluation the impact of adopting this new guidance on its consolidated financial statements.

On December 14, 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 requires that entities disclose specific categories in their rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The new standard is effective for the Company beginning December 15, 2024, with early adoption permitted effective for fiscal years beginning January 1, 2024. The Company is in the process of evaluation the impact of adopting this new guidance on its consolidated financial statements.

In November 2024, the FASB issued Accounting Standards Update 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2024-03"). The objective of ASU 2024-03 is to improve disclosures about a public entity's expenses, primarily through additional disaggregation of income statement expenses. In January 2025, the FASB further clarified the effective date of ASU 2024-03 with the issuance of Accounting Standards Update 2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2025-01"). ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted and may be applied either on a prospective or retrospective basis. The Company is currently evaluating the impact ASU 2024-03 will have on its financial statement disclosures.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.

**5B. Liquidity and Capital Resources**

Our cash primarily consists of cash on hand and cash in banks in China, which is unrestricted for withdrawal and use and is deposited with banks in China. As of March 31, 2025, 2024 and 2023, we had approximately $10.1, $11.0 million and $12.6 million of cash in bank, respectively, and had no outstanding bank loans or third-party loans due.

Management believes that our current cash and cash flows from current and future operations will be sufficient to meet our working capital needs for at least the next 12 months. We intend to continue carefully executing our growth plans and managing market risk.

**Cash and Asset Flows through Our Organization**

Wah Fu is a holding company with no operations of its own. We conduct our operations through our subsidiaries in China. As a result, although other means are available for us to obtain financing at the holding company level, Wah Fu's ability to pay dividends to its shareholders and to service any debt it may incur may depend upon dividends paid by our PRC subsidiaries. If any of our PRC subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict our PRC subsidiaries' ability to pay dividends to Wah Fu. In addition, our PRC subsidiaries are permitted to pay dividends to Wah Fu only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Further, our PRC subsidiaries are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies.

Under PRC laws and regulations, our PRC subsidiaries are subject to certain restrictions with respect to paying dividends or otherwise transferring any of their net assets to us. Remittance of dividends by a wholly foreign-owned enterprise out of China is also subject to examination by the banks designated by the State Administration of Foreign Exchange, or SAFE. The amounts restricted include the paid- up capital and the statutory reserve funds of our PRC subsidiaries, totaling $975,014, $975,014, and $975,014, as of March 31, 2025, 2024 and 2023, respectively.

Furthermore, cash transfers from our PRC subsidiaries to entities outside of China are subject to PRC government controls on currency conversion. To the extent cash in our business is in the PRC/Hong Kong or a PRC/Hong Kong entity, such cash may not be available to fund operations or for other use outside of the PRC/Hong Kong due to restrictions and limitations imposed by the governmental authorities on the ability of us or our PRC/Hong Kong subsidiaries to transfer cash outside of the PRC/Hong Kong. In view of the foregoing, to the extent cash in our business is held in China or by a PRC entity, such cash may not be available to fund operations or for other use outside of the PRC. For risks relating to the fund flows of our operations in China, see *"Item 3.D. Risk Factors- Risks Related to Doing Business in China"*

 

Under PRC law, Wah Fu may provide funding to our PRC subsidiaries only through capital contributions or loans, subject to satisfaction of applicable government registration and approval requirements. As of the date of this annual report, there have been no cash flows between Wah Fu and our subsidiaries.

Funds are transferred among our PRC subsidiaries for working capital purposes, primarily between our WOFE, Beijing Huaxia Dadi Distance Learning Services Co., Ltd., and the VIE, Beijing Huaxia Dadi Digital Information Technology Co., a PRC company, and its subsidiaries. The following table provides a summary of the distributions and working capital funds transferred between the VIE and the WOFE.

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| | | | |
|:---|:---|:---|:---|
|  | **Fiscal Years Ended March 31,** | **Fiscal Years Ended March 31,** | **Fiscal Years Ended March 31,** |
|  | **2025** | **2024** | **2023** |
| Cash transferred to VIE from WOFE | $- | $- | $- |

---

The transfer of funds among companies are subject to the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases (2020 Revision, the "Provisions on Private Lending Cases"), which was implemented on August 20, 2020 to regulate the financing activities between natural persons, legal persons and unincorporated organizations. The Provisions on Private Lending Cases set forth that private lending contracts will be upheld as invalid under the circumstance that (i) the lender swindles loans from financial institutions for relending; (ii) the lender relends the funds obtained by means of a loan from another profit-making legal person, raising funds from its employees, illegally taking deposits from the public; (iii) the lender who has not obtained the lending qualification according to the law lends money to any unspecified object of the society for the purpose of making profits; (iv) the lender lends funds to a borrower when the lender knows or should have known that the borrower intended to use the borrowed funds for illegal or criminal purposes; (v) the lending is violations of public orders or good morals; or (vi) the lending is in violations of mandatory provisions of laws or administrative regulations.

**Capital Expenditure**

We did not have any significant capital expenditures for the fiscal years ended September 30, 2022, 2023 and 2024, as we do not heavily rely on property and equipment to operate.

**5C. Research and Development, Patents and Licenses, etc.**

See the discussion under the headings "Research and Development", "Intellectual Property" and "Patents" in Item 4 above.

**5D. Trend Information**

Other than as disclosed elsewhere in this annual report on Form 20-F, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended March 31, 2025 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial condition.

**5. E. Off-Balance Sheet Arrangements**

There were no off-balance sheet arrangements for the years ended March 31, 2025, 2024 and 2023, that have or that in the opinion of management are likely to have, a current or future material effect on our financial condition or results of operations.

**5. F. Tabular Disclosure of Contractual Obligations**

The following table represents our contractual commitments as of March 31, 2025:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** |
|  | **Total** | **Within<br> 1 Year** | **2-3 Years** | **4-5 Years** | **After<br> 5 Years** |
| Operating lease obligations | $134449 | $119861 | $14588 | $- | $- |

---

There have been no material changes to our contractual obligations since March 31, 2025.

**ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES**

**6. A. Directors, Executive Officers and Key Employees**

The following table sets forth the name, age, positions and a brief description of the business experience of each of our directors, executive officers and key employees as of the date hereof.

---

| | | |
|:---|:---|:---|
| **Directors and Executive Officers** | **Age** | **Position/Title** |
| Yang Yu | 53 | Chairman of the Board and Executive Director |
| Xinghui Yang | 54 | Chief Executive Officer and Director |
| Shuting Ai | 42 | Chief Financial Officer |
| Cuntao Hou | 46 | Vice President |
| Defang Li | 80 | Director |
| Yik C Chan | 67 | Director |
| Wenxiang Xing | 62 | Director |

---

There are no family relationships among our directors and officers. There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a director or member of senior management, except as disclosed in Note 10 in the "accompanying consolidated financial statements." The address of each of our directors and executive officers is L207b, Hesheng Fortune Plaza, No.13 Deshengmenwai Street, Xicheng District, Beijing, China 201204.

***Executive Officers and Directors***

 ****

*Yang Yu* has been serving as Chairman of the Board of Directors and Executive Director of the Company since November 2016. Mr. Yu has been serving as the executive director of several of our subsidiaries and VIE, including the executive director of Beijing Distance Learning since July 2015, the executive director of Beijing Digital Information since October 2012, the executive director of Shanghai Xia Shu network Technology Co., Ltd. since April 2016 and the executive director of Shanghai Xin Fu Network Technology Co., Ltd. since July 2015. He has also been the acting executive director of Beijing Hao Hua Hao Tai Investment Co., Ltd, an investment company, since July 2009. Mr. Yu obtained his Ph.D. in law from China University of Political Science & Law, a Master of Laws degree from Xi'an Jiaotong University and a Bachelor's Degree in Medicine from The Fourth Military Medical University in Xi'an, China.

*Xinghui Yang* has been serving as director of the Company since March 2013 and Chief Executive Officer of the Company since November 2016. Mr. Yang has served as chief executive officer of our wholly owned subsidiary Beijing Distance Learning since March 2013 and Deputy General Manager of this subsidiary from November 2006 to February 2013. He has also been serving as chief executive officer of Beijing Digital Information since March 2013. While with Beijing Distance Learning, Mr. Yang managed the daily operations of the company. From October 2003 to October 2006, Mr. Yang served as Deputy General Manager of Beijing Meiming Media Co., Limited, an integrated marketing company. Mr. Yang obtained his B.S. in Industrial & Electrical Automation from Beijing Information Science & Technology University and his M.B.A from University of International Business and Economics in Beijing, China.

*Shuting Ai* has been serving as our Chief Financial Officer since June 2021. Ms. Ai has been serving as the Director at Horwath Capital China since July 2011, where she was responsible for financial consulting in connection with overseas IPOs, especially Hong Kong and the U.S. From July 2006 to June 2011, Ms. Ai served as senior project manager at Da Hua Certified Public Accountants, which is one of the largest accounting firms in China. Ms. Ai received her Bachelor's degree in accounting from Beijing Technology and Business University in 2006.

*Cuntao Hou* has been Vice President of the Company since December 2016. Mr. Hou has held various managerial positions at our subsidiaries. He has served as General Manager of Beijing Distance Learning since May 2019 where he has been in charge of marketing and sales. He has also been serving as the General Manager of Hunan Huafu Haihui Learning Technology Co., Ltd., our subsidiary based in Hunan, China, in charge of key aspects of daily operations. Mr. Hou was previously the Assistant Manager of the Marketing Department at Beijing Distance Learning from June 2006 to July 2013, responsible for sales and marketing in relation to the company's self-study education preparation programs. He joined Beijing Distance Learning in June 2003 and worked as a software engineer at the company's R&D Department until June 2006. He then served as Assistant Manager of the R&D Department at Beijing Distance Learning from July 2006 to May 2009. Mr. Hou obtained his B.S. degree in Computer Science from Beijing Applied Science and Technology University and his B.A. degree in Management from Beijing Normal University in Beijing, China.

*Defang Li* has been serving as an independent director since August 2018. Mr. Li has been a professor at Beijing Normal University since 1986. He has also held various leadership positions at the university, including Dean of the Continuing Education Department, Dean of Higher Vocational Education and Deputy Dean of Network Education School. In addition to his positions at Beijing Normal University, Mr. Li has been in leadership positions at various professional associations dedicated to education since 2005. He is currently Deputy Secretary of the National Colleges & Universities Modern Remote Education Collaboration, Vice President of Beijing Adult Education Association and Secretary of National Teachers' Network Association. Mr. Li has published two books and over 20 articles on education related subjects. He received his M.A. in Social Anthropology, Cultural Anthropology & Folklore Studies and his B.A. in Chinese Literature from Beijing Normal University in Beijing, China.

*Yik C Chan* has been serving as an independent director since August 2018. Since 2016, Mr. Chan has served as the Managing Director Asia of IAA-Advisory Associates, which provides specialized advisory services in leasing and asset finance in the areas of strategy and planning, corporate development, mergers and acquisitions, vendor and captive finance, turnaround and restructures, international expansion and funding strategies. Before joining IAA, from 2012 to 2016, Mr. Chan served as Operating Partner of CITIC Capital, one of the largest private equity firms in China, where he operated in the non-bank financial services industry, including leasing, commercial factoring and supply chains financing. From 2007 to 2012, Mr. Chan served as Chief Executive Officer of BNP Paribas Leasing Solutions China, a provider of leasing and finance solutions, a position he held from the company's inception in 2007. Mr. Chan is an experienced general manager and finance and treasury executive with more than 30 years' experience in private equity, global leasing, supply chains, and structured finance in the US, Pan Asia and China. Mr. Chan is a Certified Public Accountant in the U.S. and received a B.A. in Accounting from Baruch College and a M.B.A. in Business Administration from New York University.

*Wenxiang Xing* has been serving as an independent director since December 2018. Mr. Xing has been a professor at Central University of Finance and Economics since July 2008 and was a professor of China University of Geosciences from November 2005 to July 2008. Mr. Xing has previously served as a director of a number of companies. He has served as Chairman of the Board of Directors of Shenneng Environmental Protection Development Group Co., Ltd. since August 2016. From March 2000 to November 2005, he served as President of Yida Group Co., Ltd and Chairman of the Board of Directors of Yida Group Investment & Development Co., Ltd. In addition, Mr. Xing has served as an independent director of other public companies. He served as an independent director of Fujian Longma Environmental Sanitation Equipment Co., Ltd from September 2010 to September 2016. He also served as an independent director of Yi Lianzhong Information Technology Co. Ltd. from June 2012 to June 2018. Mr. Xing received a Ph.D. in Chinese philosophy from Hebei University in 2010, a Master's degree in Economics in 1994 from Liaoning University and a Bachelor's degree in philosophy in 1984 from the same institution.

Each of our directors will serve as a director until our next annual general meeting and until their successors are duly elected and qualified.

**6. B. Compensation**

For the year ended March 31, 2025, the aggregate cash compensation that we paid to our executive officers and directors was approximately $172,150. For the year ended March 31, 2024, the aggregate cash compensation that we paid to our executive officers and directors was approximately $175,906. For the year ended March 31, 2023, the aggregate cash compensation that we paid to our executive officers and directors was approximately $217,320. There are no service contracts between us and any of our directors, except for those directors who are also our executive officers. Pursuant to PRC law, we make contributions equal to certain percentages of each employee's salary for his or her pension insurance, medical insurance, housing fund, unemployment and other statutory benefits. Other than the above-mentioned statutory contributions mandated by applicable PRC law and the insurance policy, we have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors.

**Employment Agreements**

We have entered into employment agreements with each of our executive officers. We may terminate an executive officer's employment for cause at any time without advance notice or remuneration, if (i) the executive officer is convicted or pleads guilty to a felony or to an act of fraud, misappropriation or embezzlement, (ii) the executive officer has been negligent or acted dishonestly to our detriment, (iii) the executive officer has engaged in actions amounting to misconduct or failed to perform his/her duties thereunder and such failure continues after the executive officer is afforded a reasonable opportunity to cure such failure, (iv) the executive officer has died, or (v) the executive officer has a disability which shall mean a physical or mental impairment which, as reasonably determined by our board of directors, renders the executive officer unable to perform the essential functions of his/her employment with us, even with reasonable accommodation that does not impose an undue hardship on the Company, for more than 180 days in any 12-month period, unless a longer period is required by applicable law, in which case that longer period would apply. We may also terminate an executive officer's employment under PRC Labor Law Articles 36, 39 40 and 41 and under other applicable laws and regulations. An executive officer may terminate his or her employment at any time by giving a thirty days' prior written notice.

Each executive officer has agreed to hold, at all times during and after the termination or expiry of his or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any of our confidential information, or the confidential or proprietary information disclosed to the executive officer by or obtained by the executive officer from us either directly or indirectly in writing, orally or otherwise, if specifically indicated to be confidential or reasonably expected to be confidential.

In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and for two years following the last date of employment. Specifically, each executive officer has agreed not to (i) approach our suppliers, clients, customers or contacts of us or other persons or entities introduced to the executive officer in the executive officer's capacity as our representative for the purposes of doing business with such persons or entities which will harm the business relationship between the Company and such persons and/or entities; (ii) unless expressly consented to by us, assume employment with or provide services to any of our competitors, engage, whether as principal, partner, licensor or otherwise, any of our competitors; or (iii) unless expressly consented to by us, seek directly or indirectly, by the offer of alternative employment or other inducement whatsoever, to solicit the services of any of our employees who is employed by us.

We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company.

Each executive officer has agreed to hold in confidence any confidential information that he has obtained about the Company.

**6. C. Board Practices**

**Terms of Directors and Officers**

*Expiration of Term of Directors*

 

Pursuant to our memorandum and articles of association, the business of our company is managed by our board of directors. Commencing with the first annual meeting of the shareholders, directors are elected for a term of office to expire at the next succeeding annual meeting of the shareholders after their election. Each director will hold office until the expiration of his or her term of office and until his or her successor has been elected and qualified, or until his or her earlier death, resignation or removal by the shareholders or a resolution passed by the majority of the directors.

In the interim between annual meetings of shareholders, or special meetings of shareholders called for the election of directors, any vacancy on the board of directors may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum, or by the sole remaining director. A director elected to fill a vacancy resulting from death, resignation or removal of a director will serve for the remainder of the full term of the director whose death, resignation or removal will have caused such vacancy and until his successor will have been elected and qualified.

 

*Director Remuneration Upon Termination*

The directors may receive such remuneration as our board of directors may determine from time to time. The compensation committee will assist the directors in reviewing and approving the compensation structure for the directors. Currently, our directors are not entitled to receive any remuneration upon termination of employment.

*Audit Committee*

 

Our audit committee consists of Yik C. Chan, Wenxiang Xing and Defang Li. have determined that each of these three director nominees satisfies the "independence" requirements of the NASDAQ Listing Rules and meet the independence standards under Rule 10A-3 under the Securities Exchange Act of 1934, as amended. We have determined that Mr. Chan qualifies as an "audit committee financial expert." The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of the Company. The audit committee is responsible for, among other things:

● selecting the independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by the independent registered public accounting firm;

● reviewing with the independent registered public accounting firm any audit problems or difficulties and management's response;

● reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act;

● discussing the annual audited financial statements with management and the independent registered public accounting firm;

● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any special steps taken to monitor and control major financial risk exposures;

● annually reviewing and reassessing the adequacy of our audit committee charter;

● meeting separately and periodically with management and the independent registered public accounting firm;

● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance; and

● reporting regularly to the board.

*Compensation Committee*

 

Our compensation committee consists of Wenxiang Xing and Yik C. Chan, each of whom satisfies the independence requirements of Rule 5605 of the NASDAQ rules. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which their compensation is deliberated upon. The compensation committee is responsible for, among other things:

● reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers;

● reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors;

● reviewing periodically and approving any incentive compensation or equity plans, programs or other similar arrangements; and

● selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person's independence from management.

*Nominating and Corporate Governance Committee*

 

Our corporate governance and nominating committee consists of Defang Li and Yik C. Chan, each of whom satisfies the independence requirements of Rule 5605 of the NASDAQ rules. The nominating and corporate governance committee assists the board in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee is responsible for, among other things:

● recommending nominees to the board for election or re-election to the board, or for appointment to fill any vacancy on the board;

● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience, expertise, diversity and availability of service to us;

● selecting and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating and corporate governance committee itself;

● developing and reviewing the corporate governance principles adopted by the board and advising the board with respect to significant developments in the law and practice of corporate governance and our compliance with such laws and practices; and

● evaluating the performance and effectiveness of the board as a whole.

**Board Diversity**

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Board Diversity Matrix (As of March 31, 2025)** | **Board Diversity Matrix (As of March 31, 2025)** | **Board Diversity Matrix (As of March 31, 2025)** | **Board Diversity Matrix (As of March 31, 2025)** | **Board Diversity Matrix (As of March 31, 2025)** |
| Country of Principal Executive Offices: | People's Republic of China | People's Republic of China | People's Republic of China | People's Republic of China |
| Foreign Private Issuer | Yes | Yes | Yes | Yes |
| Disclosure Prohibited Under Home Country Law | No | No | No | No |
| Total Number of Directors | 5 | 5 | 5 | 5 |
|  | **Female** | **Male** | **Non-Binary** | **Did Not Disclose Gender** |
| **Part I: Gender Identity** |  |  |  |  |
| Directors | 0 | 5 | N/A | N/A |
| **Part II: Demographic Background** |  |  |  |  |
| Underrepresented Individual in Home Country Jurisdiction | 0 | 0 | 0 | 0 |
| LGBTQ+ | 0 | 0 | 0 | 0 |

---

Under Rule 5606(f)(2) and Rule 5606(f)(6) of the Nasdaq Listing Rules, we are required to have, or disclose why we do not have, at least one "diverse" (as such term is defined in Rule 5606(f)(2)(B) of the Nasdaq Listing Rules) director by December 31, 2026. As of the date hereof, we did not have at least one diverse director because we have not yet identified a suitable candidate. We will continue our search for a suitable candidate in order to increase the diversity of our board.

**6. D. Employees**

See the section entitled "Employees" in Item 4.B above.

**6. E. Share Ownership**

As of March 31, 2025, 4,410,559 of our equity securities were outstanding, consisting of 2,922,559 ordinary shares and 1,488,000 Class A shares. Each ordinary share entitles its holder to one vote per share, and each Class A share entitles its holder to fifteen votes per share. All outstanding Class A shares are held by our Chairman of the Board and Executive Director, Mr. Yang Yu, through HFGFR INC.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. The percentages of shares beneficially owned in the table below are based on 4,410,559 ordinary shares outstanding as of March 31, 2025.

The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of March 31, 2025 by:

● each of our directors and executive officers; and

● each person known to us to beneficially own more than 5% of our outstanding ordinary shares.

Unless otherwise noted below, the address for each listed shareholder, director or executive officer is L207b, Hesheng Fortune Plaza, No.13 Deshengmenwai Street, Xicheng District, Beijing, China 201204.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class A <br> Shares Beneficially<br> Owned** | **Class A <br> Shares Beneficially<br> Owned** | **Ordinary<br> Shares Beneficially<br> Owned** | **Ordinary<br> Shares Beneficially<br> Owned** | **Voting<br> Power** |
| <br>**Name of Beneficial Owner** | **Number** | **%** | **Number** | **%** | **%** |
| **Directors, Director Nominees and Named Executive Officers:** | | | | | |
| Yang Yu <sup>(1)</sup> | 1488000 | 100% | 244032 | 5.53% | 89.39% |
| Xinghui Yang <sup>(2)</sup> |  | -% | 1233968 | 4.89% | 4.89% |
| Gao Yao |  | -% |  | -% |  |
| Cuntao Hou |  | -% |  | -% |  |
| Defang Li |  | -% |  | -% |  |
| Yik C Chan |  | -% |  | -% |  |
| Wenxiang Xing |  | -% |  | -% |  |
| **Directors and executive officers as a group** |  |  |  |  |  |
| **5% or Greater Shareholders:** |  |  |  |  |  |
| River Business Limited <sup>(3)</sup> |  | -% | 1158000 | 26.26% | 4.59% |
| Silver Thousand International <sup>(4)</sup> |  | -% | 320000 | 7.26% | 1.27% |
| HFGFR Inc. | 1488000 | 100% |  | -% | 88.42% |

---

(1) Includes 1,488,000 Class A shares and
 244,032 ordinary shares held through HFGFR INC. (Silver Thousand International is 76.26% owned by HFGFR
 INC). Mr. Yu controls approximately 89.39% of the total voting power of our outstanding share
 capital.

(2) Includes 1,158,000 ordinary shares held through River Business
Limited and 75,968 ordinary shares held through Silver Thousand International. Mr. Yang holds approximately 4.9% of the total voting
power.

(3) The registered office address of River Business Limited is
Sea Meadow House, PO Box 173, Road Town, Tortola, VG1110 British Virgin Islands. As the holder of all of the equity interest in River
Business Limited, Xinghui Yang has voting and dispositive power with respect to all of the ordinary shares of the Company held by River
Business Limited.

(4) The registered office address of Silver Thousand International
is Sea Meadow House, PO Box 173, Road Town, Tortola, VG1110, British Virgin Islands. As of the date of this report, Silver Thousand International
is 76.26% owned by HFGFR INC. and 23.74% owned by Yang Xinghui.

(5) The business address of HFGFR INC. is Ajeltake Road, Ajeltake
Island, Majuro, Marshall Islands MH96960. As the holder of all of the equity interest in HFGFR INC., Yu Yang has voting and dispositive
power with respect to all of the ordinary shares of the Company held by HFGFR INC.

**6. F. Disclosure of a Registrant's Action to Recover Erroneously Awarded Compensation**

None.

**ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS**

**7. A. Major Shareholders**

See Item 6.E., "Share Ownership," for a description of our major shareholders.

**7. B. Related Party Transactions**

The Company's related parties balance consisted of the following:

*(i) Loan to related parties:*

---

| | | |
|:---|:---|:---|
|  | **As of<br> March 31,<br> 2025** | **As of<br> March 31,<br> 2024** |
| Loan to related parties(a) | $1795024 | $1778524 |

---

(a) The balance is due from Horwath Capital Consultants Limited
 ("Horwath Capital"), to which the Company's chairman serves as a director. On November 1, 2019 and December 4,
 2019, the Company loaned $851,825 and $1,650,000 to Horwath Capital, respectively. The loan bears an interest rate of 4% and is not
 guaranteed. The maturity was July 31, 2020. On July 20, 2020 and March 30, 2021, Horwath Capital fully repaid $851,825 and $1,650,000
 to the Company, respectively. On April 1, 2022 and April 7, 2022, the company loaned $300,000 and $1,350,000 to Horwath Capital.
 The loan bears an interest rate of 1% and is not guaranteed. The maturity was September 30, 2025.

*(ii) Due to related party:*

 

---

| | | |
|:---|:---|:---|
|  | **As of<br> March 31,<br> 2025** | **As of<br> March 31,<br> 2024** |
| Due to shareholders | $478278 | $315512 |
| Due to related parties | $478278 | $315512 |

---

(b) The balance of due to shareholders
mainly due to the principal shareholders of the Company who provide funds for the Company's operations. The payables are unsecured,
non-interest bearing and due on demand.

**7. C. Interests of Experts and Counsel**

Not applicable.

**ITEM 8. FINANCIAL INFORMATION**

**Consolidated Statements and Other Financial Information**

The financial statements required by this item may be found at the end of this report on 20-F, beginning on page F-1.

**Legal Proceedings**

We are not currently, and have not recently been, a party to any material legal or administrative proceedings. We are not aware of any material legal or administrative proceedings threatened against us. From time to time, we are subject to various legal or administrative proceedings arising in the ordinary course of our business.

**Dividends**

We have never declared or paid any dividend on our ordinary shares and we do not anticipate paying any dividends on our ordinary shares in the future. We currently intend to retain all future earnings to finance our operations and to expand our business.

**No Significant Changes**

No significant changes to our financial condition have occurred since the date of the annual financial statements contained herein.

**ITEM 9. THE OFFER AND LISTING**

**9. A. Offer and Listing Details**

Our ordinary shares are listed for trading on the NASDAQ Capital Market under the symbol "WAFU." Our ordinary shares are not listed on any other exchanges.

**9. B. Plan of Distribution**

Not Applicable.

**9. C. Markets**

Our ordinary shares are currently traded on the NASDAQ Capital Market.

**9. D. Selling Shareholders**

Not Applicable.

**9. E. Dilution**

Not Applicable.

**9. F. Expenses of the Issuer**

Not Applicable.

**ITEM 10. ADDITIONAL INFORMATION**

**10. A. Share Capital**

Not Applicable.

**10. B. Memorandum and Articles of Association**

The information required by Item 10.B of Form 20-F is included in Exhibits 1.1 and 2.1 to this Annual Report which is hereby incorporated by reference.

**10. C. Material Contracts**

Below is a summary of all material contracts to which we are a party dated within the preceding two years from the date hereof:

In addition to the series of variable interest entity agreements discussed under "Item 4A. History and Development of the Company," we have entered into the following material agreements.

*Service Agreements with Hunan Open University*

 

We have entered into service agreements in provide paperless examination technology service base on our paperless examination platform to Hunan Open University. Pursuant to the agreement, we have agreed to development, maintenance, security and technical consulting services in relation to the Administrative Law Enforcement Qualification Examination hold by Hunan Open University. Under our agreement with Hunan Open University, we are entitled to a service fee of RMB 10 per course for Hunan Open University, depending on how many test takers take the exam. The service period of the agreement was from February 2023 to February 2024.

**10. D. Exchange Controls**

***British Virgin Islands***

 ****

There are currently no exchange control regulations in the British Virgin Islands applicable to us or our shareholders.

***The PRC***

 ****

China regulates foreign currency exchanges primarily through the following rules and regulations:

● Foreign Currency Administration Rules of 1996, as amended; and

● Administrative Rules of the Settlement, Sale and Payment of Foreign Exchange of 1996.

As we disclosed in the risk factors above, Renminbi is not a freely convertible currency at present. Under the current PRC regulations, conversion of Renminbi is permitted in China for routine current-account foreign exchange transactions, including trade and service related foreign exchange transactions, payment of dividends and service of foreign debts. Conversion of Renminbi for most capital- account items, such as direct investments, investments in PRC securities markets and repatriation of investments, however, is still subject to the approval of SAFE.

Pursuant to the above-mentioned administrative rules, foreign-invested enterprises may buy, sell and/or remit foreign currencies for current account transactions at banks in China with authority to conduct foreign exchange business by complying with certain procedural requirements, such as presentment of valid commercial documents. For capital-account transactions involving foreign direct investment, foreign debts and outbound investment in securities and derivatives, approval from SAFE is a pre-condition. Capital investments by foreign-invested enterprises outside China are subject to limitations and requirements in China, such as prior approvals from the PRC Ministry of Commerce or SAFE.

**10. E. Taxation**

*The following discussion of British Virgin Islands, PRC and United States federal income tax consequences of an investment in our ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this report, all of which are subject to change. This discussion does not deal with all possible tax consequences relating to an investment in our ordinary shares, such as the tax consequences under state, local and other tax laws.*

 

**British Virgin Islands Taxation**

The Company and all dividends, interest, rents, royalties, compensation and other amounts paid by the Company to persons who are not resident in the BVI and any capital gains realized with respect to any shares, debt obligations, or other securities of the Company by persons who are not resident in the BVI are exempt from all provisions of the Income Tax Ordinance in the BVI.

No estate, inheritance, succession or gift tax, rate, duty, levy or other charge is payable by persons who are not resident in the BVI with respect to any shares, debt obligation or other securities of the Company.

All instruments relating to transfers of property to or by the Company and all instruments relating to transactions in respect of the shares, debt obligations or other securities of the Company and all instruments relating to other transactions relating to the business of the Company are exempt from payment of stamp duty in the BVI. This assumes that the Company does not hold an interest in real estate in the BVI.

There are currently no withholding taxes or exchange control regulations in the BVI applicable to the Company or its members.

**People's Republic of China Taxation**

Under the EIT Law, an enterprise established outside the PRC with "de facto management bodies" within the PRC is considered a "resident enterprise" for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. Under the implementation rules to the EIT Law, a "de facto management body" is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise.

Our PRC subsidiary and PRC consolidated VIE are companies incorporated under PRC law and, as such, are subject to PRC enterprise income tax on their taxable income in accordance with the relevant PRC income tax laws. Pursuant to the EIT Law, which became effective on January 1, 2008 and was amended on February 24, 2017, a uniform 25% enterprise income tax rate is generally applicable to both foreign-invested enterprises and domestic enterprises, except where a special preferential rate applies. The enterprise income tax is calculated based on the entity's global income as determined under PRC tax laws and accounting standards. We are subject to VAT at a rate of 6% on the services we provide, less any deductible VAT we have already paid or borne. We are also subject to surcharges on VAT payments in accordance with PRC law.

In addition, the STA Circular 82 issued by the STA in April 2009 specifies that certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if the following are located or resident in the PRC: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, company seal, minutes of board meetings and shareholders' meetings; and half or more of the senior management or directors having voting rights. Further to STA Circular 82, the STA issued the STA Bulletin 45, which took effect in September 2011 and was revised by the Announcement of the State Taxation Administration on Revising Certain Taxation Normative Documents in 2018. STA Circular 45 provides more guidance on the implementation of STA Circular 82. In particular, STA Bulletin 45 provides for procedures and administration details of determination on resident status and administration on post-determination matters. Wah Fu is a company incorporated outside the PRC. As a holding company, its key assets are its ownership interests in its subsidiaries, and its key assets are located, and its records (including the resolutions of its board of directors and the resolutions of its shareholders) are maintained, outside the PRC. As such, we do not believe that Wah Fu meet all of the conditions above or are PRC resident enterprises for PRC tax purposes. For the same reasons, we believe our other entities outside of China are not PRC resident enterprises either. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term "de facto management body." There can be no assurance that the PRC government will ultimately take a view that is consistent with us. If the PRC tax authorities determine that our British Virgin Islands holding company is a PRC resident enterprise for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. One example is that a 10% withholding tax would be imposed on dividends we pay to our non-PRC enterprise shareholders and with respect to gains derived by our non-PRC enterprise shareholders from transferring our shares and potentially a 20% of withholding tax would be imposed on dividends we pay to our non-PRC individual shareholders and with respect to gains derived by our non-PRC individual shareholders from transferring our shares s. See "Risk Factors—Risk Related to Doing Business in China—Under the PRC Enterprise Income Tax Law, we may be classified as a PRC "resident enterprise" for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and has a material adverse effect on our results of operations and the value of your investment."

As a British Virgin Islands holding company, we may receive dividends from our PRC subsidiaries. The EIT Law and its implementing rules provide that dividends paid by a PRC entity to a non-resident enterprise for income tax purposes is subject to PRC withholding tax at a rate of 10%, subject to reduction by an applicable tax treaty with China. There is currently no such preferential tax treaty between China and British Virgin Islands.

In January 2009, the STA promulgated the Provisional Measures for the Administration of Withholding of Enterprise Income Tax for Non- resident Enterprises, pursuant to which the entities that have the direct obligation to make certain payments to a non-resident enterprise should be the relevant tax withholders for the non-resident enterprise, and such payments include: income from equity investments (including dividends and other return on investment), interest, rents, royalties and income from assignment of property as well as other incomes subject to enterprise income tax received by non-resident enterprises in China. Further, the measures provide that in case of an equity transfer between two non-resident enterprises which occurs outside China, the non-resident enterprise which receives the equity transfer payment must, by itself or engage an agent to, file tax declaration with the PRC tax authority located at place of the PRC company whose equity has been transferred, and the PRC company whose equity has been transferred should assist the tax authorities to collect taxes from the relevant non-resident enterprise. The STA issued a STA Circular 59 together with the MOF in April 2009 and a STA Circular 698 in December 2009. Both Circular 59 and Circular 698 became effective retroactively as of January 1, 2008. By promulgating and implementing these two circulars, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-resident enterprise. Under STA Circular 698, where a non-resident enterprise transfers the equity interests of a PRC "resident enterprise" indirectly by disposition of the equity interests of an overseas holding company, and such overseas holding company is located in certain low tax jurisdictions, the non-resident enterprise, being the transferor, must report to the relevant tax authority of the PRC "resident enterprise" this Indirect Transfer. The PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC tax at a rate of up to 10%. On February 3, 2015, the STA issued the Announcement of the State Taxation Administration on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-Resident Enterprises, or STA Bulletin 7, to supersede existing provisions in relation to the Indirect Transfer as set forth in Circular 698, while the other provisions of Circular 698 remain in force. STA Bulletin 7 introduces a new tax regime that is significantly different from that under Circular 698. Public Notice extends its tax jurisdiction to capture not only Indirect Transfer as set forth under Circular 698 but also transactions involving transfer of immovable property in China and assets held under the establishment and place, in China of a foreign company through the offshore transfer of a foreign intermediate holding company. STA Bulletin 7 also addresses transfer of the equity interest in a foreign intermediate holding company widely. In addition, STA Bulletin 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings. However, it also brings challenges to both the foreign transferor and transferee of the Indirect Transfer as they have to make self-assessment on whether the transaction should be subject to PRC tax and to file or withhold the PRC tax accordingly. Although it appears that STA Circular 698 and/or STA Bulletin 7 was not intended to apply to share transfers of publicly traded companies, there is uncertainty as to the application of STA Circular 698 and/or STA Bulletin 7 and we and our non-resident investors may be at risk of being required to file a return and being taxed under STA Circular 698 and/or STA Bulletin 7 and we may be required to expend valuable resources to comply with STA Circular 698 or to establish that we should not be taxed under STA Circular 698 and/or STA Bulletin 7.

On October 17, 2017, the STA issued the Announcement of the State Taxation Administration on Matters Concerning Withholding of Income Tax of Non-resident Enterprises as Source, or STA Bulletin 37, which repealed the entire Circular 698 and the provision in relation to the time limit for the withholding agent to declare to the competent tax authority for payment of such tax of STA Bulletin 7. Pursuant to STA Bulletin 37, the income from property transfer, as stipulated in the second item under Article 19 of the Law on Enterprise Income Tax, shall include the income derived from transferring such equity investment assets as stock equity. The balance of deducting the equity's net value from the total income from equity transfer shall be taxable income from equity transfer. Where a withholding agent enters into a business contract, involving the income specified in the third paragraph of Article 3 in the Law on Enterprise Income Tax, with a non-resident enterprise, the tax-excluding income of the non-resident enterprise will be treated as the tax-including income, based on which the tax payment will be calculated and remitted, if it is agreed in the contract that the withholding agent shall assume the tax payable.

**United States Federal Income Taxation**

The following discussion is a summary of U.S. federal income tax considerations generally applicable to U.S. Holders (as defined below) of the ownership and disposition of our ordinary shares. This summary applies only to U.S. Holders that hold our ordinary shares as capital assets (generally, property held for investment) and that have the U.S. dollar as their functional currency. This summary is based on U.S. tax laws in effect as of the date of this report, on U.S. Treasury regulations in effect or, in some cases, proposed as of the date of this report, and judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change, which could apply retroactively and could affect the tax consequences described below. Moreover, this summary does not address the U.S. federal estate, gift, Medicare, backup withholding, and alternative minimum tax considerations, or any state, local, and non-U.S. tax considerations, relating to the ownership and disposition of our ordinary shares. The following summary does not address all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances or to persons in special tax situations such as:

● banks and other financial institutions;

● insurance companies;

● pension plans;

● cooperatives;

● regulated investment companies;

● real estate investment trusts;

● broker-dealers;

● traders that elect to use a mark-to-market method of accounting;

● certain former U.S. citizens or long-term residents;

● tax-exempt entities (including private foundations);

● persons liable for alternative minimum tax;

● persons holding stock as part of a straddle, hedging, conversion or integrated transaction;

● persons that actually or constructively own 10% or more of the total combined voting power of all classes of our voting stock; or

● partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding common stock through such entities.

**Investors are urged to consult their own tax advisors regarding the application of U.S. federal taxation to their particular circumstances, and the state, local, non-U.S., or other tax consequences of the ownership and disposition of our ordinary shares.**

For purposes of this discussion, a "U.S. Holder" is a beneficial owner of our ordinary shares that is, for U.S. federal income tax purposes:

● an individual who is a citizen or resident of the United States;

● a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States 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 U.S. federal income taxation regardless of its source; or

● a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions, or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our ordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding our ordinary shares and their partners are urged to consult their tax advisors regarding an investment in our ordinary shares.

***Passive Foreign Investment Company Considerations***

 ****

A non-U.S. corporation, such as our company, will be classified as a PFIC, for U.S. federal income tax purposes for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of "passive" income or (ii) 50% or more of the value of its assets (determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income (the "asset test"). For this purpose, cash and cash equivalents are categorized as passive assets and the company's goodwill and other unbooked intangibles are taken into account as non-passive assets. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, more than 25% (by value) of the stock.

Although the law in this regard is not clear, we treat our consolidated VIEs as being owned by us for U.S. federal income tax purposes because we exercise effective control over the consolidated VIEs and are entitled to substantially all of their economic benefits. As a result, we consolidate their results of operations in our consolidated U.S. GAAP financial statements. If it were determined that we are not the owner of the consolidated VIEs for U.S. federal income tax purposes, we would likely be treated as a PFIC for the current taxable year and any subsequent taxable year. Assuming that we are the owner of the VIEs for U.S. federal income tax purposes, and based upon our current and expected income and assets (including goodwill, other unbooked intangibles, and the cash proceeds following our initial public offering), we do not presently expect to be a PFIC for the current taxable year or the foreseeable future.

While we do not expect to be or become a PFIC in the current or foreseeable taxable years, no assurance can be given in this regard because the determination of whether we will be or become a PFIC is a factual determination made annually that will depend, in part, upon the composition of our income and assets. Furthermore, the composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in our initial public offering. Under circumstances where our revenue from activities that produce passive income significantly increase relative to our revenue from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming classified as a PFIC may substantially increase. In addition, because there are uncertainties in the application of the relevant rules, it is possible that the Internal Revenue Service may challenge our classification of certain income and assets as non-passive or our valuation of our tangible and intangible assets, each of which may result in our becoming a PFIC for the current or subsequent taxable years. If we were classified as a PFIC for any year during which a U.S. Holder held our ordinary shares, we generally would continue to be treated as a PFIC for all succeeding years during which such U.S. Holder held our ordinary shares even if we cease to be a PFIC in subsequent years, unless certain elections are made.

The discussion herein under "Dividends" is written on the basis that we will not be or become classified as a PFIC for U.S. federal income tax purposes. If we are treated as a PFIC, the U.S. federal income tax considerations that apply generally are discussed under "Passive Foreign Investment Company Rules."

**10. F. Dividends and Paying Agents**

Not Applicable.

**10. G. Statement by Experts**

Not Applicable.

**10. H. Documents on Display**

The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and will file reports, registration statements and other information with the SEC. The Company's reports, registration statements and other information can be inspected on the SEC's website at www.sec.gov. You may also visit us on website at http://www.edu-edu.cn. However, information contained on our website does not constitute a part of this annual report.

**10. I. Subsidiary Information**

Not Applicable.

**10. J. Annual Report to Security Holders**

Not Applicable.

**ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

*Foreign Exchange Risk*

 

Our functional currency is RMB, and our financial statements are presented in U.S. dollars. RMB has gradually appreciated against U.S. dollars over the past few years. The average exchange rate for U.S. dollars against RMB has changed from US$1.00 for RMB7.1671 in the year ended March 31, 2024 to US$1.00 for RMB7.2163 in the year ended March 31, 2025. The change in the value of RMB relative to the U.S. dollar may affect our financial results reported in the U.S. dollar terms without giving effect to any underlying change in our business or results of operation. If using the average exchange rate of fiscal 2024, our revenue, cost of revenue and total expenses, including selling expenses and general and administrative expenses, for the year ended March 31, 2025 would increase by approximately $0.04 million, $0.02 million and $0.02 million, respectively.

Currently, our assets, liabilities, revenues and costs are denominated in RMB, our exposure to foreign exchange risk will primarily relate to those financial assets denominated in U.S. dollars. Any significant revaluation of RMB against U.S. dollar may materially affect our earnings and financial position, and the value of, and any dividends payable on, our ordinary shares in U.S. dollars in the future.

*Credit Risk*

 

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. As of March 31, 2025 and 2024, $533,330 and $986,957 of the Company's cash were on deposits at financial institutions in Hong Kong, are insured by Hong Kong Deposit Board and subject to a certain limitation of HKD500,000 (about $64,267). As of March 31, 2025 and 2024, $9,598,062 and $10,058,751 of the Company's cash were on deposits at financial institutions in the mainland China, where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness.

Accounts receivable are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risk. The risk is mitigated by the Company's assessment of its customers' creditworthiness and its ongoing monitoring of outstanding balances.

*Inflation Risk*

 

Inflationary factors such as increases in the cost of our product and overhead costs may adversely affect our operating results. Although we do not believe that inflation has had a material effect on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross profit and selling, general and administrative expenses as a percentage of net sales if the selling prices of our services do not increase with these increased costs.

**ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES**

None.

**PART II**

**ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES**

Not Applicable.

**ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS**

Not Applicable.

**ITEM 15. CONTROLS AND PROCEDURES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Disclosure Controls and Procedures*

 

Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, management concluded that our disclosure controls and procedures over financial reporting was not effective as of the end of the period covered by this annual report. This conclusion was based on the material weakness in our internal control over financial reporting further described below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Management's Report on Internal Control Over Financial Reporting*

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such item is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for our company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with U.S. GAAP and includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of a company's assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that a company's receipts and expenditures are being made only in accordance with authorizations of a company's management and directors, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of a company's assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management has conducted an assessment, including testing of the design and the effectiveness of our internal control over financial reporting as of March 31, 2025. In making its assessment, management used the criteria in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in *Internal Control — Integrated Framework (2013)*.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected and corrected on a timely basis.

The Company identified deficiencies related to corporate governance, management's application of disclosure requirements for SEC reporting and documentation of our financial statement reporting process. Such deficiencies are common for companies of our size.

The Company identified deficiencies related to management's application of disclosure requirements for SEC reporting and documentation of our financial statement reporting process. Although our accounting staff employees are professional and experienced in accounting requirements and procedures generally accepted in the PRC, management has determined that they require additional training and assistance in U.S. GAAP methods and SEC reporting. Our management's assessment of the control deficiency over accounting and finance personnel as of March 31, 2025 considered the below factors, including:

● how adequately we complied with U.S. GAAP on transactions; and

● how accurately we prepared supporting information to provide to our independent auditors on a interim and annual basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) *Attestation Report of Independent Registered Public Accounting Firm*

 

We are a non-accelerated filer under the rules of the Securities and Exchange Commission. Accordingly, we are not required to include in this annual report an attestation report of our independent registered public accounting firm.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during our fiscal year ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Remediation Initiatives

For fiscal year 2025, we implemented our remediation plan to address the underlying causes of the material weakness described above by hiring accounting staff who understands U.S. GAAP methods and SEC reporting measures and also educating existing staff on these subjects. For fiscal year 2026, we plan to continue improving our internal control by implementing the following remediation plans, including:

● Reassessing the design and operation of internal controls over financial reporting, including interim and annual accruals cutoff procedures and review procedures related to information received from our outside consulting technical experts;

● continuing our training of accounting personnel so they can better on U.S. GAAP methods and SEC reporting matters; and

● Increasing staffing levels and expertise to implement this remediation plan.

Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent or detect 100% of all errors and fraud that may occur. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

**ITEM 16. RESERVED**

**ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT**

Our audit committee consists of Yik C. Chan, Wenxiang Xing and Defang Li. Our board of directors has determined that Yik C. Chan, Wenxiang Xing and Defang Li are "independent directors" within the meaning of NASDAQ Stock Market Rule 5605(a)(2) and meet the criteria for independence set forth in Rule 10A-3(b) of the Exchange Act. Yik C. Chan meets the criteria of an audit committee financial expert as set forth under the applicable rules of the SEC.

**ITEM 16B. CODE OF ETHICS**

Our board of directors has adopted a code of business conduct and ethics. The purpose of the code is to promote ethical conduct and deter wrongdoing. The policies outlined in the Code are designed to ensure that our directors, executive officers and employees act in accordance with not only the letter but also the spirit of the laws and regulations that apply to our business. We expect our directors, executive officers and employees to exercise good judgment, to uphold these standards in their day-to-day activities, and to comply with all applicable policies and procedures in the course of their relationship with the company. Any amendment to or waivers of the Code for members of our board of directors and our executive officers that are required to be disclosed by the rules of the SEC or NASDAQ will be disclosed on our website at http://www.edu-edu.cn within four business days following the amendment or waiver. During fiscal year 2021, no amendments to or waivers from the Code were made or given for any of our executive officers.

Our code of business conduct and ethics are publicly available on our website at http://www.edu-edu.cn.

**ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

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| | | |
|:---|:---|:---|
|  | **Year Ended<br> March 31,**<br> **2025** | **Year Ended<br> March 31,**<br> **2024** |
| Audit fees\* | $247000 | $185000 |

---

The policy of our audit committee and our board of directors is to pre-approve all audit and non-audit services provided by our principal auditors, including audit services, audit-related services, and other services as described above, other than those for de minimis services which are approved by the audit committee or our board of directors prior to the completion of the services.

**ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES**

Not Applicable.

**ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS**

None.

**ITEM 16F. CORPORATE GOVERNANCE**

Our ordinary shares are listed on the NASDAQ Capital Market, or NASDAQ. As such, we are subject to corporate governance requirements imposed by NASDAQ. Under NASDAQ rules, listed non-US companies such as ourselves may, in general, follow their home country corporate governance practices in lieu of some of the NASDAQ corporate governance requirements. A NASDAQ -listed non-US company is required to provide a general summary of the significant differences to its US investors either on the company website or in its annual report distributed to its US investors. We are committed to a high standard of corporate governance. As such, we endeavor to comply with the NASDAQ corporate governance practices and there is no significant difference between our corporate governance practices and what the NASDAQ requires of domestic U.S. companies.

**ITEM 16G. MINE SAFETY DISCLOSURE**

Not applicable.

**ITEM 16H. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS**

Not applicable.

**ITEM 16I. INSIDER TRADING POLICIES**

We have adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of our securities by our directors, senior management, and employees that are reasonably designed to promote compliance with applicable insider trading laws, rules, and regulations, and applicable listing standards.

A copy of our insider trading policies and procedures are filed as an exhibit to this annual report.

**ITEM 16J. CYBERSECURITY**

***Risk Management and Strategy***

 ****

We have implemented comprehensive cybersecurity risk assessment procedures to ensure effectiveness in cybersecurity management, strategy and governance and reporting cybersecurity risks. We have also integrated cybersecurity risk management into our overall enterprise risk management system.

We have developed a comprehensive cybersecurity threat defense system to address both internal and external threats. This system encompasses various levels, including network, host and application security and incorporates systematic security capabilities for threat defense, monitoring, analysis, response, deception and countermeasures. We strive to manage cybersecurity risks and protect sensitive information through various methods, including technical safeguards, procedural requirements, an intensive monitoring program on our corporate network, continuous testing of our security posture both internally and with outside vendors, a robust incident response program, a review of the effectiveness of our security system with reference to applicable security standards by qualified third parties and regular cybersecurity awareness training for employees. Our Operation and Maintenance Department continuously monitor the performance of our platforms and infrastructure to enable us to respond quickly to potential problems, including potential cybersecurity threats.

As of the date of this annual report, we have not experienced any material cybersecurity incidents or identified any material cybersecurity threats that have affected or are reasonably likely to materially affect us, our business strategy, results of operations or financial condition.

 ****

***Governance***

The vice president of the Company, Mr. Cuntao Hou, is responsible for overseeing the Company's cybersecurity risk management and be informed of risks from cybersecurity threats. Mr. Hou shall review, approve and maintain oversight of the disclosure (i) on Form 6-K for material cybersecurity incidents (if any) and (ii) related to cybersecurity matters in the periodic reports (including annual report on Form 20-F) of the Company. In addition, at the management level, we have established the information security committee which consists of executives, including the person in charge of our operation and maintenance department who has experience in dealing with confidentiality-related cybersecurity issues, and is chaired by our vice president to oversee and manage cybersecurity related matters and formulate policies as necessary. Our operation and maintenance department reports to our information security committee on a quarterly basis regarding its assessment, identification and management on material risks from cybersecurity threats happened in the ordinary course of our business operations. If a cybersecurity incident occurs, our operation and maintenance department will promptly organize relevant personnel for internal assessment and, depending on the situation, seek the opinions of external experts. If it is determined that the incident could potentially be a material cybersecurity event, our operation and maintenance department will promptly report the investigation and assessment results to our information security committee, which will decide on the relevant response measures and whether any disclosure is necessary. If such disclosure is determined to be necessary, our information security committee shall promptly prepare disclosure material for review and approval by vice president it is disseminated to the public.

**Part III**

**Item 17. FINANCIAL STATEMENTS**

We have elected to provide financial statements pursuant to Item 18.

**Item 18. FINANCIAL STATEMENTS**

The consolidated financial statements of Wah Fu Education Group Ltd., and its subsidiaries are included at the end of this annual report.

**Item 19. EXHIBITS**

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| | |
|:---|:---|
| **Exhibit Number** | **Description of Documents** |
| 1.1 | [Form of amended and restated memorandum and articles of association\*](ea024948301ex1-1_wahfu.htm) |
| 2.1 | [Description of Securities\*](ea024948301ex2-1_wahfu.htm) |
| 4.1 | [Exclusive Business Cooperation Agreement, dated August 16, 2017, by and between Beijing Huaxia Dadi Distance Learning Services Co., Ltd. and Beijing Huaxia Dadi Digital Information Technology Co., Ltd. (1)](https://www.sec.gov/Archives/edgar/data/1716770/000121390018003224/ff12018ex10-1_wahfu.htm) |
| 4.2 | [Exclusive Option Agreement, dated August 16, 2017, by and among Beijing Huaxia Dadi Distance Learning Services Co., Ltd., Yang Yu, Xinghui Yang and Beijing Huaxia Dadi Digital Information Technology Co., Ltd. (1)](https://www.sec.gov/Archives/edgar/data/1716770/000121390018003224/ff12018ex10-2_wahfu.htm) |
| 4.3 | [Equity Interest Pledge Agreement, dated August 18, 2017, by and among Beijing Huaxia Dadi Distance Learning Services Co., Ltd., Yang Yu, Xinghui Yang and Beijing Huaxia Dadi Digital Information Technology Co., Ltd. (1)](https://www.sec.gov/Archives/edgar/data/1716770/000121390018003224/ff12018ex10-3_wahfu.htm) |
| 4.4 | [Form of Power of Attorney(1)](https://www.sec.gov/Archives/edgar/data/1716770/000121390018003224/ff12018ex10-4_wahfu.htm) |
| 4.5 | [English Translation of Property Lease Agreement, dated June 1, 2016, by and between Beijing Huaxia Dadi Distance Learning Services Co., Ltd. and Beijing Jinkai Gongda Investment Management Co., Ltd. (1)](https://www.sec.gov/Archives/edgar/data/1716770/000121390018003224/ff12018ex10-5_wahfu.htm) |
| 4.6 | [Platform and Online Course Development, dated April 24, 2017, by and between Beijing Huaxia Dadi Digital Information Co., Ltd. and Zhengqing Heya Education Technology (Beijing) Co., Ltd. (1)](https://www.sec.gov/Archives/edgar/data/1716770/000121390018003224/ff12018ex10-12_wahfu.htm) |
| 4.7 | [English Translations of Online Course Resource Purchase Contract, dated December 19, 2017, by and between Beijing Huaxia Dadi Distance Learning Services Co., Ltd. and Higher Education Press Co., Ltd. (2)](https://www.sec.gov/Archives/edgar/data/1716770/000121390018007738/ff12018a3ex10-14_wahfu.htm) |
| 4.8 | [Employment Agreement, dated November 11, 2011, by and between Beijing Huaxia Dadi Distance Learning Services Co., Ltd. and Xinghui Yang (3)](https://www.sec.gov/Archives/edgar/data/1716770/000121390019016065/f20f2019ex4-15_wahfu.htm) |
| 4.9 | [Employment Agreement, dated January 1, 2018, by and between the Company and Gao Yao (3)](https://www.sec.gov/Archives/edgar/data/1716770/000121390019016065/f20f2019ex4-16_wahfu.htm) |
| 4.10 | [Employment Agreement, dated June 1, 2020, by and between the Company and Shuting Ai (4)](https://www.sec.gov/Archives/edgar/data/1716770/000121390021039831/f20f2021ex4-10_wahfueducat.htm) |
| 8.1 | [Subsidiaries of the Registrant (5)](https://www.sec.gov/Archives/edgar/data/1716770/000121390020022516/f20f2020ex8-1_wahfueducation.htm) |
| 11.1 | [Code of Ethics (6)](https://www.sec.gov/Archives/edgar/data/1716770/000101376224002645/ea020974701ex11-1_wahfu.htm) |
| 11.2 | [Insider Trading Policies (6)](https://www.sec.gov/Archives/edgar/data/1716770/000101376224002645/ea020974701ex11-2_wahfu.htm) |
| 12.1 | [Certificate of Principal Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act\*](ea024948301ex12-1_wahfu.htm) |
| 12.2 | [Certificate of Principal Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act\*](ea024948301ex12-2_wahfu.htm) |
| 13.1 | [Certificate of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002\*](ea024948301ex13-1_wahfu.htm) |
| 13.2 | [Certificate of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002\*](ea024948301ex13-2_wahfu.htm) |
| 97.1 | [Clawback Policy (6)](https://www.sec.gov/Archives/edgar/data/1716770/000101376224002645/ea020974701ex97-1_wahfu.htm) |

---

\* Filed as an exhibit hereto.

(1) Incorporated by reference to our Registration Statement on Form
F-1, filed on March 20, 2018.

(2) Incorporated by reference to our Registration Statement on Form
F-1/A, filed on June 15, 2018.

(3) Incorporated by reference to our 20-F, filed on August 15, 2019.

(4) Incorporated by reference to our 20-F, filed on August 2, 2021.

(5) Incorporated by reference to our 20-F, filed on August 17, 2020.

(6) Incorporated by reference to our 20-F, filed on July 30, 2024.

**SIGNATURES** 

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

---

| | |
|:---|:---|
| **WAH FU EDUCATION GROUP LIMITED** | **WAH FU EDUCATION GROUP LIMITED** |
| */s/ Yang Yu* | */s/ Yang Yu* |
| Name: | Yang Yu |
| Title: | Chairman of the Board of the Directors |

---

Date: July 31, 2025

![](fin_001.jpg)

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and the shareholders of

Wah Fu Education Group Ltd

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheets of Wah Fu Education Group Ltd. and subsidiaries (collectively, the "Company") as of March 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive (loss), changes in shareholders' equity, and cash flows for the years ended March 31, 2025, 2024 and 2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2025 and 2024, and the results of its operations and its cash flows for the years ended March 31, 2025, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statement. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matters**

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

***Revenue Recognition for Online Education Services***

*Description of the Matter*

As described in Note 2 to the consolidated financial statements, the Company generates revenue primarily from providing online education services, including audio-video course content, mock examinations and online chat rooms during the subscription service period. The Company typically satisfies its performance obligations in contracts with customers upon render of the services. For examination service, the revenue is recognized at a point in time when customer/student completes the examination on the platform. Except examination service, all other revenues for the online education service are recognized on a straight-line basis over the active academic service period, which excludes school breaks.

We identified revenue recognition for online education services as a critical audit matter due to the significant judgment involved in evaluating whether services had been fully delivered as of the reporting date. The Company's customer contracts vary in structure, and the supporting documentation of service delivery includes a mix of system-generated data and customer confirmations, which required the application of audit judgment and the use of system-generated data audit procedures.

*How the Critical Audit Matter Was Addressed in the Audit*

 

Our audit procedures related to revenue recognition for online education services included the following, among others:

● Obtained an understanding of the Company's revenue recognition policies and evaluated their consistency with ASC 606, Revenue from contracts with customers for online education service and relevant internal controls over revenue recognition.

● Assessing the identification of performance obligations, evaluating terms of customer contracts, and inspecting signed contracts to confirm that services were delivered to and accepted by customers.

● We selected a sample of revenue transactions and inspected supporting documentation such as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Customer-signed service completion confirmations,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o System access logs confirming customer administrator login activity,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Screenshots and reports of student enrollment counts used as billing triggers.

● We tested the accuracy of system-generated data used to calculate student usage by comparing it with customer billing and contract terms.

● We confirmed that customer accounts were active and operational during the service period by performing system walkthroughs and testing user access where applicable.

● We traced a sample of revenue amounts to invoices and cash receipts to validate completeness and accuracy.

● We assessed whether revenue was recorded in the correct period by examining service delivery cut-off around year-end.

● We evaluated the sufficiency of the Company's disclosures related to revenue recognition in the financial statements.

*/s/ YCM CPA INC.*

 

We have served as the Company's auditor since 2021.

PCAOB ID 6781

Irvine, California

July 31, 2025

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **As of <br> March 31,**<br>**2025** | **As of <br> March 31,**<br>**2024** |
| **ASSETS** |  |  |
| **CURRENT ASSETS:** |  |  |
| Cash | $10131392 | $11045708 |
| Accounts receivable, net | 717709 | 1039580 |
| Other receivables, net | 966687 | 188441 |
| Loan to third parties, current | 522335 | 524969 |
| Loan to related parties | 1795024 | 1778524 |
| Other current assets | 94948 | 95583 |
| **TOTAL CURRENT ASSETS** | **14228095** | **14672805** |
| Loan to third parties, noncurrent | 224588 | 194229 |
| Property and equipment, net | 411736 | 485660 |
| Intangible assets, net |  | 7456 |
| Long-term investments | 137804 | 138498 |
| Operating lease right-of-use assets | 140556 | 341895 |
| Long-term rent deposit | 44228 | 53303 |
| Deferred tax assets, net | 261251 | 262577 |
| **TOTAL ASSETS** | $**15448258** | $**16156423** |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| **CURRENT LIABILITIES:** |  |  |
| Due to related parties | $478278 | $315512 |
| Deferred revenue | 1636802 | 1818426 |
| Operating lease liabilities, current | 117711 | 260283 |
| Taxes payable | 1013350 | 969595 |
| Other payables | 107013 | 176257 |
| Accrued expenses and other liabilities | 156756 | 173791 |
| Accounts payable | 154256 | 210348 |
| **TOTAL CURRENT LIABILITIES** | **3664166** | **3924212** |
| Operating lease liabilities, noncurrent | 14539 | 72975 |
| **TOTAL LIABILITIES** | **3678705** | **3997187** |
| **COMMITMENTS AND CONTINGENCIES** |  |  |
| **SHAREHOLDERS' EQUITY** |  |  |
| Ordinary shares, $0.01 par value, 500,000,000 authorized, 2,922,559 and 4,410,559 shares issued and outstanding as of March 31, 2025 and 2024, respectively | 29226 | 44106 |
| Class A, $0.01 par value, 100,000,000 authorized, 1,488,000 and nil shares issued and outstanding as of March 31, 2025 and 2024, respectively | 14880 |  |
| Additional paid-in capital | 5139116 | 5124236 |
| Statutory reserve | 867530 | 867530 |
| Retained earnings | 5897255 | 6362554 |
| Accumulated other comprehensive loss | (1236374) | (1248648) |
| Total Wah Fu shareholders' equity | **10711633** | **11149778** |
| Non-controlling interest | **1057920** | **1009458** |
| **TOTAL SHAREHOLDERS' EQUITY** | **11769553** | **12159236** |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** | $**15448258** | $**16156423** |

---

The accompanying notes are an integral part of these consolidated financial statements.

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended March 31,** | **For the Years Ended March 31,** | **For the Years Ended March 31,** |
|  | **2025** | **2024** | **2023** |
| **REVENUE** | $**6186645** | $**7223220** | $**10692613** |
| **COST OF REVENUE** |  |  |  |
| &nbsp;&nbsp;&nbsp;Cost of revenue | 3582702 | 4199739 | 4971492 |
| &nbsp;&nbsp;&nbsp;Business and sales related tax | 27048 | 32514 | 34218 |
| **GROSS PROFIT** | **2576895** | **2990967** | **5686903** |
| **OPERATING EXPENSES** |  |  |  |
| Selling expenses | 852569 | 1066649 | 1129146 |
| General and administrative expenses | 2116788 | 2164840 | 2545789 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | **2969357** | **3231489** | **3674935** |
| **INCOME FROM OPERATIONS** | **(392462)** | **(240522)** | **2011968** |
| **OTHER INCOME (EXPENSES)** |  |  |  |
| Interest income | 169636 | 155360 | 139345 |
| Loss from long-term investment | (7206) | - | (43785) |
| Other income (expenses) | (42712) | (160808) | (4556) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total other income (expenses), net** | 119718 | (5448) | 91004 |
| **INCOME BEFORE INCOME TAX PROVISION** | **(272744)** | **(245970)** | **2102972** |
| **PROVISION FOR INCOME TAX** | 100104 | 130890 | 430529 |
| **NET (LOSS) INCOME** | **(372848)** | **(376860)** | **1672443** |
| &nbsp;&nbsp;&nbsp;Less: net (loss) income attributable to non-controlling interest | 92451 | (321572) | 766551 |
| **NET (LOSS) INCOME ATTRIBUTABLE TO WAH FU EDUCATION GROUP LIMITED** | $**(465299)** | $**(55288)** | $**905892** |
| **COMPREHENSIVE (LOSS) INCOME** |  |  |  |
| &nbsp;&nbsp;&nbsp;Net (loss) income | (372848) | (376860) | 1672443 |
| &nbsp;&nbsp;&nbsp;Other comprehensive (loss) income: foreign currency translation | (31715) | (493887) | (752987) |
| &nbsp;&nbsp;&nbsp;Total comprehensive (loss) income | **(404563)** | **(870747)** | **919456** |
| &nbsp;&nbsp;&nbsp;Less: Comprehensive income (loss) attributable to non-controlling interest | (43989) | 2370 | (1786) |
| **COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO WAH FU EDUCATION GROUP LIMITED** | $**(360574)** | $**(873117)** | $**921242** |
| **(Loss) earnings per Ordinary share - basic and diluted** |  |  |  |
| Ordinary shares | $(0.11) | $(0.01) | 0.20 |
| Class A | $(0.11) | $- | - |
| **Weighted average shares outstanding - basic and diluted** |  |  |  |
| Ordinary shares | 4084422 | 4429195 | 4440085 |
| Class A | 326137 | - | - |

---

The accompanying notes are an integral part of these consolidated financial statements.

**WAH FU EDUCATION COMPANY LIMITED AND SUBSIDIARIES**

**CONSOLIDATION STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY**

**FOR THE YEARS ENDED MARCH 31, 2025, 2024 AND 2023**

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Shares** | **Common Shares** | **Class A** | **Class A** | | | | | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Additional<br> Paid-in**<br>**Capital** | **Statutory**<br>**Reserve** | **Retained**<br>**Earnings** | **Accumulated<br> Other Comprehensive<br> Income**<br>**(Loss)** | **Total Wah Fu**<br> **Shareholders'**<br>**Equity** | **Non-<br> controlling**<br>**Interest** | **Total<br> Shareholders'**<br>**Equity** |
| **Balance, March 31, 2022** | **4440085** | $**44401** | **-** | **-**  | $**4798793** | $**657329** | $**5722151** | $**(1190)** | $**11221484** | $**788656** | $**12010140** |
| Increase ownership of a subsidiary |  | - |  | - | 325148 | - | - | - | 325148 | (224761) | 100387 |
| Net income |  | - |  | - | - | - | 905892 | - | 905892 | 766551 | 1672443 |
| Appropriation of statutory reserve |  | - |  | - | - | 210201 | (210201) | - | - | - | - |
| Foreign currency translation loss | - | - | - | - | - |  | - | (751201) | (751201) | (1786) | (752987) |
| **Balance, March 31, 2023** | **4440085** | $**44401** | **-** | **-**  | $**5123941** | $**867530** | $**6417842** | $**(752391)** | $**11701323** | $**1328660** | $**13029983** |
| Common stock returned | (29526) | (295) | - | - | 295 |  |  |  | - | - | - |
| Net income |  | - |  | - | - | - | (55288) | - | (55288) | (321572) | (376860) |
| Foreign currency translation loss | - | - | - | - | - |  | - | (496257) | (496257) | 2370 | (493887) |
| **Balance, March 31, 2024** | **4410559** | $**44106** | **-** | **-**  | $**5124236** | $**867530** | $**6362554** | $**(1248648)** | $**11149778** | $**1009458** | $**12159236** |
| Redemption of Ordinary shares & reissue Class A shares | (1488000) | (14880) | 1488000 | 14880 | 14880 |  |  |  | 14880 |  | 14880 |
| Net income |  |  |  | - | - | - | (465299) | - | (465299) | 92451 | (372848) |
| Foreign currency translation loss | - | - | - | - | - | - | - | 12274 | 12274 | (43989) | (31715) |
| **Balance, March 31, 2025** | **2922559** | $**29226** | **1488000** | **14880** | $**5139116** | $**867530** | $**5897255** | $**(1236374)** | $**10711633** | $**1057920** | $**11769553** |

---

The accompanying notes are an integral part of these consolidated financial statements.

**WAH FU EDUCATION COMPANY LIMITED AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS** 

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended March 31,** | **For the Years Ended March 31,** | **For the Years Ended March 31,** |
|  | **2025** | **2024** | **2023** |
| **Cash flows from operating activities:** |  |  |  |
| **Net (Loss) Income** | $**(372848)** | $**(376860)** | $**1672443** |
| **Adjustments to reconcile net income to net cash provided by operating activities:** |  |  |  |
| Depreciation and amortization | 89441 | 124031 | 176243 |
| Amortization of right-of-use assets | 235161 | 222758 | 234115 |
| Loss (gain) from disposal of property and equipment | 534 | (2195) | 938 |
| Provision for doubtful accounts | 128929 | 446452 | 537018 |
| Loss from long-term investments | - | - | 12277 |
| Interest income | (48009) | (48357) | (49422) |
| Deferred tax expense (benefit) | 9 | 94498 | 270090 |
| **Changes in operating assets and liabilities:** |  |  |  |
| Accounts receivable | 159161 | (733684) | 252307 |
| Other receivable | (773358) | 37876 | 55174 |
| Other current assets | 133 | (29767) | 14588 |
| Deferred revenue | (173469) | (190505) | (1566977) |
| Taxes payable | 48891 | (96023) | 211911 |
| Other payable | 46303 | 57253 | (60289) |
| Operating lease liabilities | (234872) | (252785) | (196848) |
| Accounts payable and accrued expenses | (71598) | (20002) | 48932 |
| **Net cash (used in) provided by operating activities** | **(965592)** | **(767310)** | **1612500** |
| **Cash flows from investing activities:** |  |  |  |
| Purchase of property and equipment | (10876) | (95020) | (37237) |
| Proceeds from loans to third parties | - | - | 2919 |
| Proceeds from disposal of property and equipment | 249 | 3106 | - |
| Payments made for loans to third parties | - | - | (29190) |
| Purchase of long-term investment | - | (139526) | 100384 |
| **Net cash (used in) provided by investing activities** | **(10627)** | **(231440)** | **36876** |
| **Cash flows from financing activities:** |  |  |  |
| Advance from related parties | 64083 | - | - |
| Repayment to related parties | (15939) | - | - |
| Proceeds from issuance of class A shares | 14880 | - | - |
| **Net cash provided by financing activities** | **63024** | **-**  | **-**  |
| **Effect of exchange (loss) gain on cash** | **(1121)** | **(523005)** | **(845358)** |
| **Net increase (decrease) in cash** | **(914316)** | **(1521755)** | **804018** |
| **Cash at beginning of the year** | **11045708** | **12567463** | **11763445** |
| **Cash at end of the year** | $**10131392** | $**11045708** | $**12567463** |
| **Supplemental cash flow information** |  |  |  |
| Cash paid for income taxes | $55554 | $34327 | $33631 |
| **Non-cash investing activities** |  |  |  |
| Right of use assets obtained in exchange for operating lease obligations | $34420 | $203714 | $478269 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 – ORGANIZATION AND BUSINESS DESCRIPTION**

Wah Fu Education Group Limited ("Wah Fu") was incorporated under the laws of the British Virgin Islands on July 23, 2012. Wah Fu is a holding company whose primary purpose is to develop business opportunities in the People's Republic of China ("PRC" or "China").

In December 2012, Wah Fu acquired 100% equity interest of Beijing Huaxia Dadi Distance Learning Services Co., Ltd. ("Distance Learning") and its Variable Interest Entity ("VIE"), Beijing Huaxia Dadi Digital Information Technology Co., Ltd ("Digital Information"), with a consideration totaling Chinese Renminbi ("RMB") 2,000,000 (approximately $0.3 million). Distance Learning is a Chinese nation-wide online education services provider founded on December 23, 1999. Digital Information is a technological development and operation services provider founded on September 14, 2000. Due to PRC legal restrictions on foreign ownership and investment in, among other areas, value-added telecommunications services, which include internet content providers, or ICPs, Wah Fu cannot have a direct ownership in Digital Information. As an alternative, Distance Learning entered into a series of contractual agreements with the owners of Digital Information. These agreements include an Exclusive Business Cooperation Agreement, an Equity Interest Pledge Agreement, an Exclusive Option Agreement and Powers of Attorney.

Pursuant to the above agreements, Distance Learning has the exclusive right to provide Digital Information consulting services related to business operations including technology and management. All the above contractual agreements obligate Distance Learning to absorb a majority of the risk of loss from Digital Information's activities and entitle Distance Learning to receive a majority of their residual returns. In essence, Distance Learning has gained effective control over Digital Information. Therefore, the Company believes that Digital Information should be considered as VIE under the Statement of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810 "Consolidation". Accordingly, the accounts of Digital Information are consolidated with those of Distance Learning and ultimately are consolidated into those of Wah Fu.

On July 20, 2015, Wah Fu established Shanghai Xin Fu Network Technology Co., Ltd. ("Shanghai Xin Fu"), a wholly foreign-owned enterprise (the "WFOE") under the laws of the PRC. Shanghai Xin Fu owns 100% equity interest of Shanghai Xia Shu Network Technology Co., Ltd, ("Shanghai Xia Shu"), a company formed on April 29, 2016 under the laws of PRC. On June 15, 2015, Hunan Huafu Haihui Learning Technology Co., Ltd. ("Hunan Huafu") was incorporated in Hunan Province, China. Shanghai Xia Shu owned 75% equity interest of Hunan Huafu, and the other 25% equity interest is owned by two unrelated individual shareholders. On September 9, 2019, Shanghai Xia Shu transferred 75% equity interest of Hunan Huafu to Digital Information with a consideration of RMB 100 (approximately $14).

On March 8, 2017, Nanjing Suyun Education Technology Co., Ltd. ("Nanjing Suyun") was founded in Jiangsu Province, China. Distance Learning owns 70% equity interest of Nanjing Suyun, and the other 30% equity interest is owned by an individual shareholder. On March 15, 2017, Huaxia MOOC Internet Technology Co., Ltd. ("Huaxia MOOC") was founded in Hubei Province, China. Distance Learning owns 51% equity interest of Huaxia MOOC, and the other 49% equity interest is owned by three unrelated individual shareholders, respectively. On January 31, 2023, Distance Learning, our wholly owned subsidiary, signed an equity transfer agreement with Hubei Education Investment Co., Ltd. ("Hubei Education") to acquire the 20% equity interests of Huaxia MOOC Internet Technology Co., Ltd. ("Huaxia MOOC") owned by Hubei Education. The total consideration of the acquisition was RMB 714,984 (approximately $100,388). After the transaction, the Distance Learning's equity interest of Huaxia MOOC increased from 51% to 71%.

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 – ORGANIZATION AND BUSINESS DESCRIPTION (CONTINUED)**

On April 25, 2017, Guizhou Huafu Qianyun Network Technology Co., Ltd. ("Guizhou Huafu") was established in Guizhou Province, China. Distance Learning owns 51% equity interest of Guizhou Huafu, and the other 49% equity interest is owned by a third party company.

On May 21, 2018, Fuzhou Huafu Mingjiao Technology Co., Ltd. ("Fuzhou Huafu") was established in Fujian Province, China. Distance Learning owns 65% equity interest of Fuzhou Huafu, and three individual shareholders own 25%, 6% and 4% equity interest of Fuzhou Huafu, respectively.

On October 21, 2019, Huafu Wanrun (Guangzhou) Education Technology Co., Ltd. ("Guangzhou Huafu"), was established in Guangdong Province, China. Digital Information owns 60% equity interest of Guangzhou Huafu, and the other 40% equity interest is owned by two individual shareholders.

On November 8, 2019, Sichuan Huafu Gengyun Education Technology Co., Ltd. ("Sichuan Huafu"), was established in Sichuan Province, China. Digital Information owns 100% equity interest of Sichuan Huafu.

On July 4, 2022, Chongqing Huafu Yuyun Network Technology Co., Ltd ("Chongqing Huafu"), was established in Chongqing Province, China. Distance Learning owns 55% equity interest of Chongqing Huafu, and the other 45% equity interest is owned by a third party company. Chongqing Huafu was dissolved on April 30, 2024.

On April 9, 2024, Gansu Huafu Chuangxing Technology Co.,Ltd ("Gansu Huafu"), was established in Gansu Province, China. Distance Learning owns 60% equity interest of Gansu Huafu, and the other 40% equity interest is owned by a individual shareholder.

On July 23, 2024, Beijing Zhihui Xinyu Technology Co., Ltd. ("Zhihui Xinyu"), was established in Beijing, China. Distance Learning owns 100% equity interest of Zhihui Xinyu.

Wah Fu, its subsidiaries and its subsidiary's consolidated VIE (collectively, the "Company") are primarily engaged in providing online education services and technological development and operation services in China.

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2** – **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***Basis of Presentation and Principles of Consolidation***

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The consolidated financial statements include the financial statements of Wah Fu, its subsidiaries and its subsidiary's VIE. All inter-company balances and transactions have been eliminated upon consolidation.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Company** | **Date of<br> establishment** | **Place of<br> establishment** | **Percentage of<br> legal<br> ownership by<br> Wah Fu** | **Principal activities** |
| **Subsidiaries:** |  |  |  |  |
| Distance Learning | December 23, 1999 | Mainland, PRC | 100% | Provider of online education services and technological development and operation services |
| Shanghai Xin Fu | July 20, 2015 | Mainland, PRC | 100% | No operating revenues |
| Shanghai Xia Shu | April 29, 2016 | Mainland, PRC | 100% | No operating revenues |
| Hunan Huafu | June 15, 2015 | Mainland, PRC | 75% | Provider of online education services |
| Nanjing Suyun | March 8, 2017 | Mainland, PRC | 70% | Provider of online education services |
| Huaxia MOOC | March 15, 2017 | Mainland, PRC | 71% | Provider of online education services |
| Guizhou Huafu | April 25, 2017 | Mainland, PRC | 51% | Provider of online education services |
| Fuzhou Huafu | May 21, 2018 | Mainland, PRC | 65% | Provider of online education services |
| Guangzhou Huafu | October 21, 2019 | Mainland, PRC | 60% | Provider of online education services |
| Sichuan Huafu | November 8, 2019 | Mainland, PRC | 100% | Provider of online education services |
| Chongqing Huafu\* | July 4, 2022 | Mainland, PRC | 55% | Provider of online education services |
| Gansu Huafu | April 9, 2024 | Mainland, PRC | 60% | Provider of online education services |
| Zhihui Xinyu | July 23, 2024 | Mainland, PRC | 100% | Provider of online education services |
| **Variable interest entity** |  |  |  |  |
| Digital Information | September 14, 2000 | Mainland, PRC | Nil | Provider of technological development and operation service and holder of Internet Content Provider ("ICP") License |

---

\* Chongqing Huafu was dissolved on August 30, 2024.

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2** – **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***Consolidation of Variable Interest Entities***

In accordance with accounting standards regarding consolidation of variable interest entities, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. The VIE with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. The Company has determined that Distance Learning is the primary beneficiary of Digital Information's risks and rewards.

The following tables set forth the assets, liabilities, results of operations and changes in cash of the VIE, Digital Information, which were included in the Company's consolidated balance sheets, statements of operations and comprehensive loss and cash flows:

---

| | | |
|:---|:---|:---|
|  | **As of<br> March 31,<br> 2025** | **As of<br> March 31,<br> 2024** |
| Current assets | $373282 | $446055 |
| Non-current assets | 2995 | 3448 |
| Total assets | 376277 | 449503 |
| Current liabilities | 221156 | 204412 |
| Intercompany payables\* | 2572319 | 2725061 |
| Total liabilities | 2793475 | 2929473 |
| Net assets | $(2417198) | $(2479970) |

---

\* Intercompany payables are eliminated upon consolidation.

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended** | **For the Years Ended** | **For the Years Ended** |
|  | **March 31,<br> 2025** | **March 31,<br> 2024** | **March 31,<br> 2023** |
| Revenue\* | $307279 | $770534 | $708503 |
| Net Income (loss) | $50614 | $339524 | $119846 |

---

\* Intercompany sales are eliminated upon consolidation.

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended** | **For the Years Ended** | **For the Years Ended** |
|  | **March 31,<br> 2025** | **March 31,<br> 2024** | **March 31,<br> 2023** |
| Net cash (used in) provided by operating activities\* | $(76066) | $75862 | $(89131) |
| Net cash used in investing activities | - | - | (5437) |
| Effect of exchange (loss) gain on cash | (1602) | (19288) | (39585) |
| Net (decrease) increase in cash | $(77668) | $56574 | $(134153) |

---

\* Intercompany operating activities are eliminated upon consolidation.

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2** – **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***Non-controlling interests***

U.S. GAAP requires that non-controlling interests in subsidiaries and affiliates be reported in the equity section of a company's balance sheets. In addition, the amounts attributable to the net income of those subsidiaries are reported separately in the consolidated statements of operations and comprehensive income (loss).

***Use of estimates***

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during each reporting period. Actual results could differ from those estimates. Significant accounting estimates reflected in the Company's consolidated financial statements include the allowances for doubtful accounts, valuation allowance for deferred tax assets, estimated useful lives and fair value in connection with the impairment of property and equipment, and lease assumptions. Actual results could differ from these estimates.

***Reclassifications***

 ****

Certain items in the financial statements of comparative period have been reclassified to conform to the financial statements for the current period. The reclassification has no impact on the total assets and total liabilities as of March 31, 2025 and 2024 or on the statements of operations for the years ended March 31, 2025, 2024 and 2023.

***Cash and cash equivalent***

The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. As of March 31, 2025 and 2024, the Company had no cash equivalents. The Company maintains its cash with various financial institutions mainly in the mainland China and Hong Kong Special Administrative Region of PRC (the "Hong Kong"). Cash maintained in banks within the People's Republic of China of less than RMB 0.5 million (equivalent to $64,267) per bank are covered by "deposit insurance regulation" promulgated by the State Council of the People's Republic of China. Balances in banks in Hong Kong are insured by Hong Kong Deposit Board and subject to a certain limitation.

***Accounts receivable, net***

Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually grants credit to customers with good credit standing with a maximum of 90 days. As China's online education market is intensely competitive in recent years, in order to retain existing and attract new universities, educational institutions and technological service customers to capture additional market share, the Company extends more credit sales with longer credit terms to certain customers which have a well-established business relationship with the Company for more than five years.

As of March 31, 2025 and 2024, the accounts receivables were $0.7 million and $1.0 million respectively. As of March 31, 2025 and 2024, no accounts receivables were due from customers accounting for 10% or more of total outstanding receivables nor 10% or more of total revenues.

The Company estimates the adequacy of reserves for doubtful accounts based on individual account analysis and historical collections. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management's best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded against accounts receivable balances, with a corresponding charge recorded in the consolidated statements of operations and comprehensive income (loss). Actual amounts received may differ from management's estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. As of March 31, 2025 and 2024, the allowances for doubtful accounts were $599,322 and $443,163, respectively.

Accounts receivable aging consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of<br> March 31, <br> 2025** | **As of <br> March 31, <br> 2024** |
| Less than 12 months | $892772 | $1272371 |
| More than 12 months | 424259 | 210372 |
| Less: allowance for doubtful accounts | (599322) | (443163) |
| Total accounts receivable, net | $717709 | $1039580 |

---

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2** – **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***Loans to third parties***

Loans to third parties are cash advances mainly used for short-term funding to unrelated companies with which the Company has business relationships. To earn interest income with relatively low risk, the Company provided loans from time to time. The interest rate of these loans mostly was 6% per annum. Loans to third parties are reviewed periodically as to whether their carrying values remain realizable.

***Property and equipment, net***

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided on a straight-line basis, less estimated residual value, over an asset's estimated useful life. Following are the estimated useful lives of the Company's property and equipment:

---

| | |
|:---|:---|
|  | **Estimated<br> useful lives** |
| Buildings | 20 years |
| Electronic equipment | 4 - 5 years |
| Office equipment and furniture | 4 - 5 years |
| Motor vehicles | 4 - 5 years |
| Leasehold improvements | The shorter of the lease term and useful life |

---

Repair and maintenance costs are charged to expense as incurred, whereas the cost of renewals and betterment that extends the useful lives of property and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the cost and accumulated depreciation from the asset and accumulated depreciation accounts with any resulting gain or loss reflected in the consolidated statements of operations and comprehensive income (loss) in other income or expenses.

***Capitalized software development costs***

The Company capitalizes the costs incurred during the application development stage, which include direct costs mainly consisting of payroll and payroll related taxes and benefits. Costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs, if direct and incremental, are capitalized until the software is substantially complete and ready for its intended use. Capitalization ceases upon the completion of all substantial testing. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable that the expenditures will result in additional features and functionality. Maintenance costs are expensed as incurred. Internal use software is amortized on a straight-line basis over its estimated useful life, generally five years.

***Impairment of long-lived assets***

The Company assesses its long-lived assets such as property and equipment for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Factors which may indicate potential impairment include a significant underperformance related to the historical or projected future operating results or a significant negative industry or economic trend. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If property and equipment and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds their fair value. The Company did not record any impairment loss on its long-lived assets during the years ended March 31, 2025, 2024 and 2023.

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2** – **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***Long-term investment***

The Company's investments in unconsolidated entities consist of equity method investments and equity investments without readily determinable fair value.

The Company follows ASC Topic 321, Investments Equity Securities ("ASC 321") to account for investments that do not have readily determinable fair value and over which the Company does not have significant influence. The Company uses the measurement alternative to measure those investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer, if any.

For an investee over which the Company has the ability to exercise significant influence, but does not own a controlling interest, the Company accounts for that investment using the equity method. Significant influence is generally considered to exist when the Company has an ownership interest in the voting stock of the investee between 20% and 50%. Other factors, such as representation on the investee's board of directors, voting rights and the impact of commercial arrangements, are also considered in determining whether the equity method of accounting is appropriate.

An impairment charge is recorded if the carrying amount of the investment exceeds its fair value and this condition is determined to be other-than temporary. The impairment loss for fiscal years 2025, 2024 and 2023 were nil, nil and $43,785, respectively.

***Revenue recognition***

The Company previously recognized revenue when the following four criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the service has been rendered, (iii) the fees are fixed or determinable, and (iv) collectability is reasonably assured.

On April 1, 2018, the Company adopted Accounting Standards Update ("ASU") 2014-09 Revenue from Contracts with Customers (FASB ASC Topic 606) ("ASC 606") using the modified retrospective method under which cumulative effects are recognized at the date of the initial application of ASC 606. With the adoption of ASC 606, revenue is recognized when all of the following five steps are met: (i) identify the contract(s) with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; (v) recognize revenue when (or as) each performance obligation is satisfied. The Company believes that its current revenue recognition policies are generally consistent with the new revenue recognition standards set forth in ASC 606. Based on the Company's assessment, potential adjustments to input measures are not expected to be pervasive to the majority of its contracts. As such, the Company has concluded that the adoption of this new guidance will not result in a material cumulative catch-up adjustment to the opening balance sheet or retained earnings at the effective date or any other material impact on its consolidated financial statements.

*Online education service*

The online education services provided by the Company to its customers are an integrated service, including audio-video course content, mock examinations and online chat rooms during the subscription service period. Audio-video course content, mock examinations and online chat rooms are not practical to be sold on standalone basis and have never been sold separately. Therefore, the Company's contracts have a single performance obligation for an integrated service and the transaction price is stated in the contracts, usually as a price per student or course. Quantity of students enrolled or courses provided is determined before rendering service. The Company typically satisfies its performance obligations in contracts with customers upon render of the services. For examination service, the revenue is recognized at a point in time when customer/student completes the examination on the platform. Customer/student is able to direct use of and obtain substantially all of the benefits from the online education platform at the time the services are delivered. Except examination service, all other revenues for the online education service are recognized on a straight line basis over the active academic service period, which excludes school breaks. The subscription period for non-examination service is from few months to five years. Customer/student can access to the courses anytime during the subscription period. The online education services could also be separated to online education cloud services ("B2B2C"), which are provided through educational institutions to individual students, the study period depends on their universities and college usually from few months to five years, and online training services ("B2C"), which are provided to students directly, valid period for the B2C is 6 months. B2C services can be cancelled and is refundable no later than 24 hours after enrollment. B2B2C services cannot be cancelled and is not refundable after enrollment. Based on the Company's historical experience, complete satisfaction of the performance obligation, and the Company's best judgment, returns and allowances are not a significant aspect of the revenue recognition process as historically they have been immaterial.

As of March 31, 2025, the Company had approximately $0.96 million in remaining performance obligations that are unsatisfied or partially unsatisfied. The Company expects to recognize by December, 2027.

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2** – **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***Revenue recognition (Continued)***

*Technological development and operation service*

Revenues from technological development service, including information technology system design and cloud platform development, are recognized when the system or platform are delivered and accepted by the customers. The entire process normally completed within a year. Upon delivery of services, project completion inspection and customer acceptance notice are required as proof of the completion of performance obligations, which is a confirmation of customer to its ability to direct the use of and obtain substantially all of the benefits from, the design and development service. In instances where substantive completion inspection and customer acceptance provisions are specified in contracts, revenues are deferred until all inspection and acceptance criteria have been met.

From time to time, the Company enters into arrangement to provide technological support and maintenance service of online platforms to its customers. the Company's efforts are expended evenly throughout the service period. The revenues for the technological support and maintenance service are recognized over the support and maintenance services period, usually from 3 months to one year. The Company's contracts have a single performance obligation and are primarily on a fixed-price basis. No significant returns, refund and other similar obligations during each reporting period.

The core principle underlying the revenue recognition ASU is that the Company will recognize revenue to represent the transfer of services to customers in an amount that reflects the consideration to which the Company expects to be entitled to in such exchange. This will require the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when services are provided to a customer.

As of March 31, 2025, the Company had approximately $37,374 in remaining performance obligations that are unsatisfied or partially unsatisfied. The Company expects to recognize by June, 2025.

The Company's accounts receivable consists primarily of receivables related to providing online education services to enrolled students, and contract receivable associated with providing technological development and operation services to education institutions, in which the Company's contracted performance obligations have been satisfied, amount billed and the Company has an unconditional right to payment. Payment terms and conditions vary by contract types. For most of B2B2C contracts and technical development and operation service contracts, payment is due from customers within 30 days of the invoice date, and the contracts do not have significant financing components. The Company's revenue is recognized when control of the promised services is rendered and the payment from customers is not contingent on a future event. For non-examination service and operation services, in which the customer simultaneously receives and consumes the benefits as the Company performs, revenue is recognized based on the passage of time. For examination service and technical development, revenue is recognized at a point in time, when control is transferred and the customer accepts the output. The Company generally invoices its customers at the time service are performed and revenue is not recognized prior to billing, therefore, the Company does not have any contract assets. The Company also does not have significant capitalized commissions or other costs as of March 31, 2025 and 2024.

The Company's contract liability, which is reflected in its consolidated balance sheets as deferred revenue, represents the Company's unsatisfied performance obligations as of March 31, 2025 and 2024. This is primarily composed of revenue for online course tuition received in advance from B2C services and B2B2C services. If a course is provided over a period end, deferred revenue is recorded for the revenue related to the course conducted in the next period. Normally, B2C service provides service to students directly, they can choose the courses they need on our platform, the valid period for the B2C service is 6 months, and thus the deferred revenue for B2C service is recognized as revenue over 6 months. However, we have treated deferred revenue for B2B2C with a longer recognition period which will be recognized from few months to five years. Such variance in B2B2C recognition of deferred revenue is due to a student's university and college degree length; this ranges from few months to five years, and online training services, which are provided to students directly, has period of six months.

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2** – **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***Revenue recognition (Continued)***

Such deferred revenue consists primarily of revenues from online education services. Costs cannot distinguish whether the costs relate to unsatisfied performance obligations or to satisfied performance obligations (or partially satisfied performance obligations).

***Income taxes***

The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The provisions of ASC 740-10-25, "Accounting for Uncertainty in Income Taxes," prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company does not believe that there was any uncertain tax position as of March 31, 2025 and 2024.

***Value added tax ("VAT")***

Sales revenue derived from the invoiced online education service, and technological development and operation service is subject to VAT since 2014. Prior to that, the Company was subject to a fixed rate of business tax of 3%. The applicable VAT rates are 6% and 3% for the entities that are general taxpayer and small-scale taxpayer, respectively. Distance Learning and Digital Information are both considered VAT general taxpayers since June 2015. Hunan Huafu became to a VAT general taxpayer since August 2018. Shanghai Xia Shu, Shanghai Xin Fu, Nanjing Suyun, Guizhou Huafu, Fuzhou Huafu, Sichuan Huafu, Guangzhou Huafu, Gansu Huafu and Zhihui Xinyu are VAT small-scale taxpayers since the date of incorporation.

Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in the line item of taxes payable on the consolidated balance sheets. All of the VAT returns of the Company have been and remain subject to examination by the tax authorities for five years from the date of filing.

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2** – **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***Leases***

On April 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842). For all leases that were entered into prior to the effective date of Topic 842, the Company elected to apply the package of practical expedients. Based on this guidance the Company did not reassess the following: (1) whether any expired or existing contracts are or contain leases; (2) the lease classification for any expired or existing leases; and (3) initial direct costs for any existing leases. The adoption of Topic 842 did not have a material impact on the Company's consolidated statements of operations and comprehensive income (loss).

The adoption of Topic 842 resulted in the presentation of approximately $47,000 of operating lease assets and operating lease liabilities on the consolidated balance sheet as of April 1, 2019. See Note 9 for additional information.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets, operating lease liabilities, current, and operating lease liabilities, non-current on the Company's consolidated balance sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

***Foreign currency translation***

Since the Company operates in the PRC, the Company's functional currency is the Chinese RMB. The Company's consolidated financial statements have been translated into the reporting currency, the United States Dollar ("USD"). Assets and liabilities of the Company are translated at the exchange rate at each reporting period end date. Equity is translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income (loss). Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the result of operations. RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into USD at the rates used in translation.

***Earnings (loss) per share***

The Company computes earnings (loss) per share ("EPS") in accordance with ASC 260, "Earnings per Share" ("ASC 260"). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2** – **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***Comprehensive income (loss)***

Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). The foreign currency translation gain or loss resulting from translation of the financial statements expressed in RMB to USD is reported in other comprehensive income (loss) in the consolidated statements of operations and comprehensive income (loss).

***Fair value of financial instruments***

The Company follows the provisions of FASB ASC 820, "Fair Value Measurements and Disclosures" ("ASC 820"). ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2 - Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3 - Inputs are unobservable inputs which reflect the reporting entity's own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The carrying amounts reported in the balance sheets for cash, accounts receivable, other receivables, loans to third parties, current, other current assets, deferred offering costs, due to related parties, deferred revenue, operating lease liabilities, current, taxes payable, other payables, accrued expenses and other liabilities approximate their fair value based on the short-term maturity of these instruments.

***Risks and uncertainties***

The operations of the Company are located in the PRC. Accordingly, the Company's business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company's operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among other factors, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political, regulatory and social conditions in the PRC, and by changes in governmental policies or interpretations with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations, this may not be indicative of future results.

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2** – **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

***Concentrations and credit risk***

*Credit risk*

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. As of March 31, 2025 and 2024, $533,330 and $986,957 of the Company's cash were on deposits at financial institutions in Hong Kong, are insured by Hong Kong Deposit Board and subject to a certain limitation of HKD 500,000 (about $64,268). As of March 31, 2025 and 2024, $9,598,062 and $10,058,751 of the Company's cash were on deposits at financial institutions in the mainland China, where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness.

Accounts receivable are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risk. The risk is mitigated by the Company's assessment of its customers' creditworthiness and its ongoing monitoring of outstanding balances.

*Customer and supplier concentration risk*

The Company's revenues are derived from enrolled students or institutions that are located primarily in China. For the years ended March 31, 2025, 2024 and 2023, no customers accounted for over 10% of the Company's total revenue.

As of March 31, 2025 and 2024, no customer accounted for 10% of the total outstanding accounts receivable balance.

For the years ended March 31, 2025, 2024 and 2023, no suppliers accounted for more than 10% of total purchases.

***Statements of cash flows***

In accordance with FASB ASC Topic 230, "Statement of Cash Flows," cash flows from the Company are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the Company's statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.

***Recent accounting pronouncements***

On December 14, 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 requires that entities disclose specific categories in their rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The new standard is effective for the Company beginning December 15, 2024, with early adoption permitted effective for fiscal years beginning January 1, 2024. The Company is in the process of evaluation the impact of adopting this new guidance on its consolidated financial statements.

In November 2024, the FASB issued Accounting Standards Update 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2024-03"). The objective of ASU 2024-03 is to improve disclosures about a public entity's expenses, primarily through additional disaggregation of income statement expenses. In January 2025, the FASB further clarified the effective date of ASU 2024-03 with the issuance of Accounting Standards Update 2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2025-01"). ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted and may be applied either on a prospective or retrospective basis. The Company is currently evaluating the impact ASU 2024-03 will have on its financial statement disclosures.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 3 – ACCOUNTS RECEIVABLE, NET**

Accounts receivable consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of<br> March 31, <br> 2025** | **As of <br> March 31, <br> 2024** |
| Accounts receivable | $1317031 | $1482743 |
| Less: allowance for doubtful accounts | (599322) | (443163) |
| Total accounts receivable, net | $717709 | $1039580 |

---

Provisions for doubtful accounts were $128,929, $443,163 and $535,768 for the years ended March 31, 2025, 2024 and 2023, respectively.

**NOTE 4 – LOANS TO THIRD PAIRTIES, NET**

Loans to third parties consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of <br> March 31,<br> 2025** | **As of <br> March 31,<br> 2024** |
| **Loans to third parties, current:** | | |
| Beijing Chuangyouyi Education Technology Co., Ltd (a) | $52512 | $83099 |
| Beijing Dejinbao Mining Engineering Co., Ltd (b) | 496093 | 498594 |
| Individual Person (c) | 27561 | 27700 |
| **Loans to third parties, noncurrent:** |  |  |
| Beijing Dejinbao Mining Engineering Co., Ltd (b) | 224588 | 194229 |
| Less: allowance for doubtful accounts |  |  |
| Beijing Chuangyouyi Education Technology Co., Ltd (a) | (53830) | (84424) |
| **Total loan to third parties, net** | $746924 | $719198 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(a) On December 25, 2017, Distance Learning loaned RMB 600,000 (USD 82,682 as of March 31, 2025) to Beijing Chuangyouyi Education Technology Co., Ltd ("Chuangyouyi"). The loan bears an interest rate of 6% and is not guaranteed. The maturity was December 24, 2018. Chuangyouyi repaid RMB 218,937 (USD 30,170 as of March 31, 2025) to the company during in September and December 2024. The remaining balance of RMB 381,063 (USD 52,512 as of March 31, 2025) upon maturity, the Company has fully accrued allowance for the balance.

&nbsp;&nbsp;&nbsp;&nbsp;(b) On September 5, 2017, Distance Learning loaned RMB3,000,000 (USD 413,411 as of March 31, 2025) to Beijing Dejinbao Mining Engineering Co., Ltd ("Dejinbao"). The loan bears an interest rate of 6% and is not guaranteed. The original maturity was September 5, 2019, and was later extended to September 5, 2023. On September 27, 2018, Distance Learning loaned an additional RMB600,000 (USD 82,682 as of March 31, 2025) to Dejinbao. The loan bears an interest rate of 6% and is not guaranteed. The maturity of the loan is September 26, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;(c) On February 13, 2023, Distance Learning loaned RMB200,000 (USD 27,561 as of March 31, 2024) to a third part. The loan to an individual person is unsecured, non-interest bearing and due on demand.

**NOTE 5 – PROPERTY AND EQUIPMENT, NET**

Property and equipment, net consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of <br> March 31,<br> 2025** | **As of <br> March 31,<br> 2024** |
| Buildings | $458948 | $461262 |
| Electronic equipment | 126520 | 123109 |
| Office equipment and furniture | 212481 | 221780 |
| Motor vehicles | 236794 | 237988 |
| Software | - | 347150 |
| Leasehold improvements | 159714 | 160519 |
| Subtotal | 1194457 | 1551808 |
| Less: accumulated depreciation and amortization | (782721) | (1058691) |
| Property and equipment, net | $411736 | $493117 |

---

Depreciation expense were $82,432, $124,031, $176,243 and for the years ended March 31, 2025, 2024 and 2023, respectively.

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 6 – LONG-TERM INVESTMENTS**

The Company's investments in unconsolidated entities consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of**<br>**March 31,**<br>**2025** | **As of**<br>**March 31,**<br>**2024** |
| Equity investments without readily determinable fair value: |  |  |
| &nbsp;&nbsp;&nbsp;Beijing Tianyuebowen Science and Technology Co., Ltd. (a) | $124023 | $124649 |
| &nbsp;&nbsp;&nbsp;Zhongtai International Education Technology (Beijing) Co., Ltd. (b) | 137804 | 138498 |
| Equity method investment: |  |  |
| &nbsp;&nbsp;&nbsp;Huafu IKE International Education Consultant (Beijing) Co., Ltd. (c) | 137804 | 138498 |
| Impairment of investments in unconsolidated entities |  |  |
| Beijing Tianyuebowen Science and Technology Co., Ltd. (a) | (124023) | (124649) |
| &nbsp;&nbsp;&nbsp;Zhongtai International Education Technology (Beijing) Co., Ltd. (b) | (137804) | (138498) |
| Total | $137804 | $138498 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(a) On June 2, 2016, the Company invested RMB 0.9 million (approximately $0.12 million as of March 31, 2024) in exchange for 10% equity interest of Tianyuebowen through its related party, Beijing Haohua Haofu Investment Co., Ltd. ("Haohua Haofu"). Haohua Haofu signed the investment agreement on behalf of Digital Information and transferred 10% ownership of Tianyuebowen to the Company subsequently. RMB 0.9 million was paid in full by the Company in June 2016. Due to the continual losses of Tianyuebowen, the company believes that the probability of recovering the investment in Tianyuebowen is low. Therefore the investment in Beijing Tianyuebowen is fully impaired in fiscal year 2023.

&nbsp;&nbsp;&nbsp;&nbsp;(b) On August 15, 2016, the Company invested RMB 1.0 million (approximately $0.14 million as of March 31, 2025) in exchange for 15% equity interest of Zhongtai International Education Technology (Beijing) Co., Ltd. ("Zhongtai") through Haohua Haofu. Haohua Haofu signed the investment agreement on behalf of Digital Information and transferred the 15% ownership of Zhongtai to the Company subsequently. RMB 1.0 million was paid in full by the Company in August 2016. Due to the continual losses of Zhongta, the company believes that the probability of recovering the investment in Zhongta is low. Therefore the investment in Zhongtai is fully impaired in fiscal year 2023.

&nbsp;&nbsp;&nbsp;&nbsp;(c) On April 12, 2023, the Company signed an cooperate contract with Beijing IKE Kids education consultant Co., Ltd. invested RMB 1.0 million (approximately $0.14 million as of March 31, 2024) in exchange for 20% equity interest of the new established company Huafu IKE International Education Consultant (Beijing) Co., Ltd., the company accounted for it as an equity method investment in accordance with ASC 323, as the Company retained significant influence over Beijing IKE Kids education consultant Co., Ltd.

**NOTE 7 – RELATED PARTIES BLALANCE**

The Company's related parties balance consisted of the following:

*(i) Loan to related parties:*

---

| | | |
|:---|:---|:---|
|  | **As of<br> March 31,<br> 2025** | **As of<br> March 31,<br> 2024** |
| Loan to related parties(a) | $1795024 | $1778524 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(a) The balance is due from Horwath Capital Consultants Limited ("Horwath Capital"), to which the Company's chairman serves as a director. On November 1, 2019 and December 4, 2019, the Company loaned $851,825 and $1,650,000 to Horwath Capital, respectively. The loan bears an interest rate of 4% and is not guaranteed. The maturity was July 31, 2020. On July 20, 2020 and March 30, 2021, Horwath Capital fully repaid $851,825 and $1,650,000 to the Company, respectively. On April 1, 2022 and April 7, 2022, the company loaned $300,000 and $1,350,000 to Horwath Capital. The loan bears an interest rate of 1% and is not guaranteed. The maturity was September 30, 2025.

*(ii) Due to related party:*

---

| | | |
|:---|:---|:---|
|  | **As of<br> March 31,<br> 2025** | **As of<br> March 31,<br> 2024** |
| Due to shareholders | $478278 | $315512 |
| Due to related parties | $478278 | $315512 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(b) The balance of due to shareholders mainly due to the principal shareholders of the Company who provide funds for the Company's operations. The payables are unsecured, non-interest bearing and due on demand.

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 8 – TAXES**

***Corporate Income Taxes ("CIT")***

The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. Wah Fu is an offshore holding company and is not subject to tax on income or capital gains under the laws of the British Virgin Islands.

Wah Fu Holding was incorporated in Hong Kong and is subject to Hong Kong corporate income tax at a rate of 8.25% on assessable profits up to HK$2,000,000 and 16.5% on any part of assessable profits over HK$2,000,000.

Distance Learning was registered in the PRC and is subject to corporate income tax at a reduced rate of 15% starting from 2014, when it was approved by local government as a High-technology Company. The certificate of High-technology Company will expire in November 2026.Huaxia MOOC was approved by local government as a High-technology Company since November 2022, Huaxia Mook is subject to corporate income tax at a reduced rate of 15%. The certificate of High-technology Company will expire in November 2025.

Hunan Huafu, Digital Information, Shanghai Xia Shu, Shanghai Xin Fu, Nanjing Suyun, Guizhou Huafu, Fuzhou Huafu, Sichuan Huafu, Guangzhou Huafu Gansu Huafu and Zhihui Xinyu were registered in the PRC and they were approved by local government as small-scaled minimal profit enterprises. According to the Announcement of the Ministry of Finance and the State Administration of Taxation No. 6 of 2023, small-scaled minimal profit enterprises are subject to corporate income tax at a reduced rate of 5% since January 1, 2023 to December 31, 2027.

*(i) The components of the income tax expense (benefit) are as follows:*

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended March 31,** | **For the Years Ended March 31,** | **For the Years Ended March 31,** |
|  | **2025** | **2024** | **2023** |
| Current income tax provision | $100095 | $36392 | $160439 |
| Deferred income tax provision (benefit) | 9 | 94498 | 270090) |
| Total | $100104 | $130890 | $430529 |

---

*(ii) The following table summarizes deferred tax assets resulting from differences between the financial reporting basis and tax basis of assets and liabilities:*

---

| | | |
|:---|:---|:---|
|  | **As of<br> March 31,<br> 2025** | **As of<br> March 31,<br> 2024** |
| Allowance for doubtful accounts | $76836 | $66511 |
| Deferred revenue | 184875 | 196097 |
| Net operating loss carry-forwards | 748 | 1177 |
| Total deferred tax asset | 262459 | 263785 |
| Valuation allowance | (1208) | (1208) |
| Deferred tax assets, net | $261251 | $262577 |

---

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 8 – TAXES (CONTINUED)**

***Corporate Income Taxes ("CIT") (Continued)***

According to Chinese tax regulations, net operating loss ("NOL") can be carried forward to offset operating income for five years. A valuation allowance is established for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize their benefits, or that the realization of future deductions is uncertain. Management performs an assessment over future taxable income to analyze whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

*(iii) The following table reconciles the PRC statutory rates to the Company's effective tax rate for the years ended March 31, 2025, 2024 and 2023:*

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended** | **For the Years Ended** | **For the Years Ended** |
|  | **March 31, <br> 2025** | **March 31, <br> 2024** | **March 31, <br> 2023** |
| Statutory PRC income tax rate | 25% | 25% | 25% |
| Favorable tax rate impact (a) | (10.3)% | (5.3)% | (7.7)% |
| Permanent difference | -% | -% | 0.3% |
| Change in valuation allowance | 2.5% | 2.0% | 1.2% |
| Effective tax rate | 17.2% | 21.7% | 18.8% |

---

&nbsp;&nbsp;&nbsp;&nbsp;(a) Distance Learning and Huaxia Muke are subject to a favorable tax rate of 15%; Hunan Huafu, Digital Information, Shanghai Xia Shu, Shanghai Xin Fu, Nanjing Suyun, Guizhou Huafu, Fuzhou Huafu, Sichuan Huafu ,Guangzhou Huafu Gansu Huafu and Zhihui Xinyu are subject to a favorable tax rate of 5%.

***Taxes payable***

Taxes payable consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of <br> March 31, <br> 2025** | **As of <br> March 31,<br> 2024** |
| Income tax payable | $992973 | $953222 |
| Value added tax payable | 13950 | 10046 |
| Other taxes payable | 6427 | 6327 |
| Total | $1013350 | $969595 |

---

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 9 – LEASES**

On April 1, 2019, the Company adopted ASU 2016-02, Leases (ASC Topic 842). For all leases that were entered into prior to the effective date of Topic 842, the Company elected to apply the package of practical expedients. The Company leases office space under non-cancelable operating leases, with terms typically ranging from one to four years. The Company determines whether an arrangement is or includes an embedded lease at contract inception.

Operating lease assets and lease liabilities are recognized at commencement date and initially measured based on the present value of lease payments over the defined lease term. Lease expense is recognized on a straight-line basis over the lease term.

The components of lease expense were as follows:

---

| | | |
|:---|:---|:---|
|  | **March 31,<br> 2025** | **March 31,<br> 2024** |
| Operating lease cost | $245886 | $226489 |
| **Weighted Average Remaining Lease Term (Months)** |  |  |
| Operating leases | 12 | 17 |
| **Weighted Average Discount Rate** |  |  |
| Operating leases | 4.43% | 4.75% |
| Operating leases Right-of-use assets | $140556 | $341895 |
| Operating Lease liabilities | $132250 | $333258 |

---

Maturities of lease liabilities were as follows:

---

| | |
|:---|:---|
| **Twelve months ending March 31,** | |
| 2026 | $119861 |
| 2027 | 14588 |
| 2028 | - |
| &nbsp;&nbsp;&nbsp;Total Lease Payments | 134449 |
| Less Imputed Interest | 2199 |
| Total | $132250 |

---

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 10 – EQUITY**

***Ordinary shares***

On April 1, 2021 the underwriter elects to exercise the purchase warrants which the company offering to the underwriter for initial public offering services. The total exercise shares should be 29,526 at a price of $6.25 per share used cashless method. Due to a calculation mistake the company erroneously issued 59,052 shares to the underwriter. Base on the negotiation with the underwriter, the 29,526 shares returned to the Company on June 20, 2023.

On January 21, 2025, Wah Fu Education Group Ltd. (the "Company") amended and restated its memorandum and articles of association, including

● Creation of a new class of Class A shares with each Class A share being entitled to fifteen (15) votes on all matters subject to vote at general meetings of the Company. Any Class A Shares which are fully paid may be converted into ordinary shares on a one-for-one basis at the option of the holder of such Class A Shares upon giving five days' notice by such holder to the Company.

● The maximum number of shares that the Company is authorized to issue was increased from 30,000,000 ordinary shares of US$0.01 par value each to 600,000,000 shares divided into 500,000,000 ordinary shares with a par value of US$0.01 each and 100,000,000 Class A shares with a par value of US$0.01 each.

● The redemption of 1,488,000 ordinary shares held by HFGFR Inc. and reissue of 1,488,000 Class A Shares to HFGFR Inc. were approved.

As of March 31, 2025, 4,410,559 of our shares were outstanding, consisting of 2,922,559 ordinary shares and 1,488,000 Class A shares. All outstanding Class A shares are held by our Chairman of the Board and Executive Director, Mr. Yang Yu, through HFGFR INC

***Statutory reserves***

The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC ("PRC GAAP"). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity's registered capital. Appropriations to the surplus reserve are made at the discretion of the Board of Directors. As of March 31, 2025 and 2024, the balances of statutory reserves were $867,530.

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 11 – SEGMENT REPORTING**

ASC 280, "Segment Reporting," establishes standards for reporting information about operating segments on a basis consistent with the Company's internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company's business segments. The Company uses the "management approach" in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company's chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company's reportable segments. Management, including the chief operating decision maker, reviews operation results by the revenue of different products. Based on management's assessment, the Company has determined that it has two operating segments: online education services, and technological development and operation service. Our online education service consists of two types of online services: Online Education Cloud Service ("B2B2C") and Online Training Service ("B2C").

The following tables present summary information by segment for the years ended March 31, 2025, 2024 and 2023, respectively:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Year Ended** | **For the Year Ended** | **For the Year Ended** |
|  | **March 31,<br> 2025** | **March 31,<br> 2024** | **March 31,<br> 2023** |
| Revenue from Online Education Service |  |  |  |
| &nbsp;&nbsp;&nbsp;Revenue from B2B2C Service | $5663747 | $6875040 | $10358996 |
| &nbsp;&nbsp;&nbsp;Revenue from B2C Service | 20342 | 137412 | 149877 |
| Revenue from Technological Development and Operation Service | 502556 | 210768 | 183740 |
| Total | $6186645 | $7223220 | $10692613 |

---

All the Company's revenue was generated from its business operation in China.

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Year Ended March 31, 2025** | **For the Year Ended March 31, 2025** | **For the Year Ended March 31, 2025** |
|  | **Online<br> Education <br> Service** | **Technological<br> Development<br> and <br> Operation<br> Service** | **Total** |
| Revenue | $5684089 | $502556 | $6186645 |
| Cost of revenue and related tax | 3492409 | 117341 | 3609750 |
| Gross profit | $2191680 | $385215 | $2576895 |
| Selling expense | 783313 | 69256 | 852569 |
| Depreciation and amortization | $82175 | $7266 | $89441 |
| Total capital expenditures | $9993 | $883 | $10876 |

---

**WAH FU EDUCATION GROUP LIMITED AND SUBSIDIARIES**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 11 – SEGMENT REPORTING (CONTINUED)**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Year Ended March 31, 2024** | **For the Year Ended March 31, 2024** | **For the Year Ended March 31, 2024** |
|  | **Online<br> Education<br> Service** | **Technological<br> Development<br> and <br> Operation<br> Service** | **Total** |
| Revenue | $7012452 | $210768 | $7223220 |
| Cost of revenue and related tax | 4148694 | 83559 | 4232253 |
| Gross profit | $2863758 | $127209 | $2990967 |
| Selling expense | 1035525 | 31124 | 1066649 |
| Depreciation and amortization | $169574 | $5097 | $174671 |
| Total capital expenditures | $95020 | $- | $95020 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Year Ended March 31, 2023** | **For the Year Ended March 31, 2023** | **For the Year Ended March 31, 2023** |
|  | **Online<br> Education<br> Service** | **Technological<br> Development<br> and <br> Operation<br> Service** | **Total** |
| Revenue | $10508873 | $183740 | $10692613 |
| Cost of revenue and related tax | 4904801 | 100909 | 5005710 |
| Gross profit | $5604072 | $82831 | $5686903 |
| Selling expense | 1109743 | 19403 | 1129146 |
| Depreciation and amortization | $173214 | $3029 | $176243 |
| Total capital expenditures | $37237 | $- | $37237 |

---

---

| | | |
|:---|:---|:---|
|  | **As of<br> March 31, <br> 2025** | **As of<br> March 31, <br> 2024** |
| Total assets: |  |  |
| Online Education Service | $14193359 | $15706920 |
| Technological Development and Operation Service | 1254899 | 449503 |
| Total Assets | $15448258 | $16156423 |

---

**NOTE 12** – **SUBSEQUENT EVENTS**

Management has evaluated subsequent events through July 31, 2025, the date which the financial statements were available to be issued. All subsequent events requiring recognition as of March 31, 2025 have been incorporated into these financial statements and there are no subsequent events that require disclosure in accordance with FASB ASC Topic 855, "Subsequent Events."

## Exhibit 1.1

**Exhibit 1.1**

**BRITISH VIRGIN ISLANDS**

**THE BVI BUSINESS COMPANIES ACT<br>(AS REVISED)**

**MEMORANDUM OF ASSOCIATION<br>AND<br>ARTICLES OF ASSOCIATION<br>OF**

**WAH FU EDUCATION GROUP LIMITED**

華富教育集團有限公司

**Amended on 22**<sup>nd</sup> **August, 2016 by a Written Resolution of the<br>Directors dated 17**<sup>th</sup> **June, 2016.**

**Further amended and restated<br>on 16**<sup>th</sup> **March, 2018**

**As further amended and restated<br>on 27**<sup>th</sup> **March 2018**

**As further amended and<br>restated on [•]**

**BC No: 1725237**

**Incorporated this 23**<sup>rd</sup> **day of July, 2012.**

------

TERRITORY OF THE BRITISH VIRGIN ISLANDS

THE BVI BUSINESS COMPANIES ACT

(AS REVISED)

**MEMORANDUM OF ASSOCIATION**

**OF**

**<u>WAH FU EDUCATION GROUP</u> <u>LIMITED</u>**

華富教育集團有限公司

**(The Company shall have a foreign character name** 華富教育集團有限公司 **in addition to its English name WAH FU EDUCATION GROUP LIMITED)**

A COMPANY LIMITED BY SHARES

**1. DEFINITIONS AND INTERPRETATION**

1.1. In this Memorandum of Association and the attached Articles of Association, if not inconsistent with the subject or context:

"**Act**" means the BVI Business Companies Act (As Revised), as amended from time to time, and includes the BVI Business Companies Regulations (As Revised) and any other regulations made under the Act;

"**AGM**" means an annual general meeting of the Shareholders;

"**Articles**" means the attached Articles of Association of the Company;

"**Chairman**" means a person who is appointed as chairman to preside over a meeting of the Company and "**Chairman of the Board**" means a person appointed as chairman of the board of directors pursuant to Regulation 12 of the Articles;

"**Class A Shares**" means the class A shares in the Company with a par value of US$0.01 each;

"**Company's Website**" means the website of the Company and/or its web-address or domain name (if any);

"**Conversion Ratio**" has the meaning given to that term in Sub-Regulation 3.8 of the Articles;

"**Distribution**" in relation to a distribution by the Company to a shareholder means the direct or indirect transfer of an asset, other than Shares, to or for the benefit of the Shareholder, or the incurring of a debt to or for the benefit of a Shareholder, in relation to Shares held by a Shareholder, and whether by means of a purchase of an asset, the purchase, redemption or other acquisition of Shares, a distribution of indebtedness or otherwise, and includes a dividend;

"**Electronic Communication**" means a communication sent by electronic means, including electronic posting to the Company's Website, transmission to any number, address or internet website (including the website of the Securities and Exchange Commission) or other electronic delivery methods as otherwise decided and approved by the Directors;

"**Electronic Transactions Act**" means the Electronic Transactions Act (As Revised) of the British Virgin Islands;

"**Eligible Person**" means individuals, corporations, trusts, the estates of deceased individuals, partnerships and unincorporated associations of persons;

"**Memorandum**" means this Memorandum of Association of the Company;

"**Ordinary Shares**" means the ordinary shares in the Company with a par value of US$0.01 each;

"**Permitted Transferee**" in respect of a person, means any other person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such person, and (a) in the case of a natural person, shall include, without limitation, such person's spouse, parents, children, siblings, mother-in-law and father-in-law and brothers and sisters-in-law, whether by blood, marriage or adoption or anyone residing in such person's home, a trust for the benefit of any of the foregoing, a company, partnership or any natural person or entity wholly or jointly owned by any of the foregoing and (b) in the case of an entity, shall include a partnership, a corporation or any natural person or entity which directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such entity.

**"Recognised Exchange"** has the meaning given in the Act and includes, for the avoidance of doubt, the NASDAQ Stock Market, provided however, that the rules of any such Recognised Exchange shall not apply to the Company or any Shares until such Shares are listed on that Recognised Exchange and that the rules of the Recognised Exchange shall only apply to those Shares which are listed on such Recognised Exchange and not any other Shares.

**"Registrar"** means the Registrar of Corporate Affairs appointed under section 229 of the Act;

"**Resolution of Directors**" means either:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a resolution approved at a duly convened and constituted meeting of directors of the Company or of a committee of directors of the Company by the affirmative vote of a majority of the directors present at the meeting who voted except that where a director is given more than one vote, he shall be counted by the number of votes he casts for the purpose of establishing a majority or such other majority as may be specified in the Memorandum and Articles; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a resolution consented to in writing by the majority of directors or by the majority of members of a committee of directors of the Company, as the case may be;

"**Resolution of Shareholders**" means a resolution approved at a duly convened and constituted meeting of the Shareholders of the Company by the affirmative vote of a majority of in excess of 50% of the votes of the Shares entitled to vote thereon which were present at the meeting and were voted or such other threshold as may be specified in the Memorandum and Articles. For the avoidance of doubt, a Resolution of Shareholders may not be passed by consent in writing of the Shareholders.

"**Seal**" means any seal which has been duly adopted as the common seal of the Company;

"**Securities**" means Shares and debt obligations of every kind of the Company, and including without limitation options, warrants and rights to acquire shares or debt obligations;

"**Securities and Exchange Commission**" means the United States Securities and Exchange Commission;

"**Share**" means a share issued or to be issued by the Company, including an Ordinary Share or a Class A Share;

"**Shareholder**" means an Eligible Person whose name is entered in the register of members of the Company as the holder of one or more Shares or fractional Shares;

"**Treasury Share**" means a Share that was previously issued but was repurchased, redeemed or otherwise acquired by the Company and not cancelled; and

"**written**" or any term of like import includes information generated, sent, received or stored by electronic, electrical, digital, magnetic, optical, electromagnetic, biometric or photonic means, including electronic data interchange, electronic mail, telegram, telex or telecopy, and "**in writing**" shall be construed accordingly.

1.2. In the Memorandum and the Articles, unless the context otherwise requires a reference to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a "**Regulation**" is a reference to a regulation of the Articles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a "Clause" is a reference to a clause of the Memorandum;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) voting by Shareholders is a reference to the casting of the votes attached to the Shares held by the Shareholder voting;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the Act, the Memorandum or the Articles is a reference to the Act or those documents as amended or, in the case of the Act, any re-enactment thereof; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) the singular includes the plural and vice versa.

1.3. Any words or expressions defined in the Act unless the context otherwise requires bear the same meaning in the Memorandum and the Articles unless otherwise defined herein.

1.4. Headings are inserted for convenience only and shall be disregarded in interpreting the Memorandum and the Articles.

**2. NAME**

The name of the Company is WAH FU EDUCATION GROUP LIMITED (華富教育集團有限公司).

**(The Company shall have a foreign character name** 華富教育集團有限公司 **in addition to its English name WAH FU EDUCATION GROUP LIMITED)**

**3. STATUS**

The Company is a company limited by shares.

**4. REGISTERED OFFICE AND REGISTERED AGENT**

4.1. The first registered office of the Company was at Akara Bldg., 24 De Castro Street, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands, the office of the first registered agent.

4.2. The current registered office of the Company is at Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands.

4.3. The first registered agent of the Company was Mossack Fonseca & Co. (B.V.I.) Ltd., P.O. Box 3136, Road Town, Tortola, British Virgin Islands.

4.4. The current registered agent of the Company is Maples Corporate Services (BVI) Limited, Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands.

4.5. The Company may by Resolution of Shareholders or by Resolution of Directors change the location of its registered office or change its registered agent.

4.6. Any change of registered office or registered agent will take effect on the registration by the Registrar of a notice of the change filed by the existing registered agent or a legal practitioner in the British Virgin Islands acting on behalf of the Company.

4.7. If at any time the Company does not have a registered agent it may, by Resolution of Shareholders or Resolution of Directors, appoint a registered agent.

**5. CAPACITY AND POWERS**

5.1. Subject to the Act and any other British Virgin Islands legislation, the Company has, irrespective of corporate benefit:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) full capacity to carry on or undertake any business or activity, do any act or enter into any transaction; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) for the purposes of paragraph (a), full rights, powers and privileges.

5.2. For the purposes of section 9(4) of the Act, there are no limitations on the business that the Company may carry on.

**6. NUMBER AND CLASSES OF SHARES**

6.1. The Company is authorised to issue a maximum of 600,000,000 shares divided into two classes as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) 500,000,000 Ordinary Shares with a par value of US$0.01 each; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) 100,000,000 Class A Shares with a par value of US$0.01 each.

6.2. The Company may issue fractional Shares and a fractional Share shall have the corresponding fractional rights, obligations and liabilities of a whole share of the same class or series of shares.

6.3. Shares may be issued in one or more series of Shares as the directors may by Resolution of Directors determine from time to time.

**7. RIGHTS OF SHARES**

7.1. Each Ordinary Share in the Company confers upon the Shareholder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the right to one vote at a meeting of the Shareholders of the Company, voting together with the other Shares as a single class;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the right to an equal share in any dividend paid by the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the right to an equal share in the distribution of the surplus assets of the Company on its liquidation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) no right to convert into Class A Shares.

7.2. Each Class A Share in the Company confers upon the Shareholder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the right to 15 votes for each Class A Share held at a meeting of the Shareholders of the Company, voting together with the other Shares as a single class, except as provided by applicable laws or regulations or by the provisions of the Articles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the right to an equal share in any dividend paid by the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the right to an equal share in the distribution of the surplus assets of the Company on its liquidation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) subject to such Class A Share being fully paid, the right to convert into Ordinary Shares as described in Sub-Regulations 3.8 to 3.11 of the Articles.

7.3. The Company may by Resolution of Directors redeem, purchase or otherwise acquire all or any of the Shares in the Company subject to Regulation 3 of the Articles.

**8. VARIATION OF RIGHTS**

If at any time the Shares are divided into different classes, the rights attached to any class may only be varied, whether or not the Company is in liquidation, with the consent in writing of or by a resolution passed at a meeting by the holders of not less than two-thirds of the issued shares in that class.

**9. RIGHTS NOT VARIED BY THE ISSUE OF SHARES PARI PASSU**

The rights conferred upon the holders of the Shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the Shares of that class, be deemed to be varied by the creation or issue of further Shares ranking *pari passu* therewith.

**10. REGISTERED SHARES**

10.1. The Company shall issue registered shares only.

10.2. The Company is not authorised to issue bearer shares, convert registered shares to bearer shares or exchange registered shares for bearer shares.

**11. TRANSFER OF SHARES**

A Share may be transferred in accordance with Regulation 6 of the Articles.

**12. AMENDMENT OF THE MEMORANDUM AND THE ARTICLES**

12.1. Subject to Clause 8, the Company may amend the Memorandum or the Articles by Resolution of Shareholders or by Resolution of Directors, save that no amendment may be made by Resolution of Directors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to restrict the rights or powers of the Shareholders to amend the Memorandum or the Articles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) to change the percentage of Shareholders required to pass a Resolution of Shareholders to amend the Memorandum or the Articles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) in circumstances where the Memorandum or Articles cannot be amended by the Shareholders; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) to this Clause 12.

12.2. Any amendment of the Memorandum or the Articles will take effect on the registration by the Registrar of a notice of amendment, or restated Memorandum and Articles, filed by the registered agent.

We, MOSSACK FONSECA & CO. (B.V.I.) LTD., of P.O. Box 3136, Road Town, Tortola, British Virgin Islands for the purpose of incorporating a BVI Business Company under the laws of the British Virgin Islands hereby sign this Memorandum of Association the 23<sup>rd</sup> day of July, 2012.

Incorporator

Sgd. Dawnalee Hodge

……………………….………………..........<br>Dawnalee Hodge<br>Authorised Signatory<br>MOSSACK FONSECA & CO. (B.V.I.) LTD.

TERRITORY OF THE BRITISH VIRGIN ISLANDS

THE BVI BUSINESS COMPANIES ACT

(AS REVISED)

**ARTICLES OF ASSOCIATION**

**OF**

**<u>WAH</u> <u>F</u><u>U</u> <u>E</u><u>DU</u><u>C</u><u>AT</u><u>I</u><u>ON</u> <u>GROUP L</u><u>I</u><u>MITED</u>**

華富教育集團有限公司

**(The Company shall have a foreign character name** 華富教育集團有限公司 **in addition to its English name WAH FU EDUCATION GROUP LIMITED)**

A COMPANY LIMITED BY SHARES

**1. REGISTERED SHARES**

1.1. Subject to Regulation 1.4, every Shareholder is entitled, on request, to a certificate signed by a director of the Company, or any other person authorised by Resolution of Directors, or under the Seal specifying the number of Shares held by him and the signature of the director, officer or authorised person and the Seal may be facsimiles.

1.2. Any Shareholder receiving a certificate shall indemnify and hold the Company and its directors and officers harmless from any loss or liability which it or they may incur by reason of any wrongful or fraudulent use or representation made by any person by virtue of the possession thereof. If a certificate for Shares is worn out or lost it may be renewed on production of the worn out certificate or on satisfactory proof of its loss together with such indemnity as may be required by Resolution of Directors.

1.3. If several Eligible Persons are registered as joint holders of any Shares, any one of such Eligible Persons may give an effectual receipt for any Distribution.

1.4. Subject to the Act and the rules of the Recognised Exchange, the directors without further consultation with the holders of any Shares or Securities may resolve that any class or series of Shares or other Securities in issue or to be issued from time to time may be issued, registered or converted to uncertificated form and the practices instituted by the operator of the relevant system. No provision of these Articles will apply to any uncertificated shares or Securities to the extent that they are inconsistent with the holding of such shares or securities by means of a relevant system.

1.5. Conversion of Shares held in uncertificated form into Shares held in certificated form, and vice versa, may be made in such manner as the directors, in its absolute discretion, may think fit (subject always to the requirements of the relevant system concerned). The Company or any duly authorised transfer agent shall enter on the register of members how many Shares are held by each member in uncertificated form and certificated form and shall maintain the register of members in each case as is required by the relevant system concerned.

**2. SHARES**

2.1. Subject to these Articles and any applicable rules of a relevant Recognised Exchange. Shares and other Securities may be issued at such times, to such Eligible Persons, for such consideration and on such terms as the directors may by Resolution of Directors determine.

2.2. The Company shall not issue any Class A Shares without the prior consent in writing of holders of two-thirds of the issued Class A Shares, or the sanction of a resolution passed at a separate meeting of the holders of the Class A Shares by a two-thirds majority of holders present and voting at such meeting (whether in person or by proxy).

2.3. Section 46 of the Act (*Pre-emptive rights*) does not apply to the Company.

2.4. A Share may be issued for consideration in any form, including money, a promissory note, or other written obligation to contribute money or property, real property, personal property (including goodwill and know-how), services rendered or a contract for future services.

2.5. No Shares may be issued for a consideration other than money, unless a Resolution of Directors has been passed stating:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the amount to be credited for the issue of the Shares; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) that, in the opinion, of the directors, the present cash value of the non-money consideration for the issue is not less than the amount to be credited for the issue of the Shares.

2.6. The Company shall keep a record of a register (the "**register of members**") containing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the names and addresses of the Eligible Persons who hold Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the number of each class and series of Shares held by each Shareholder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the date on which the name of each Shareholder was entered in the register of members; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the date on which any Eligible Person ceased to be a Shareholder.

2.7. The register of members may be in any such form as the directors may approve, but if it is in magnetic, electronic or other data storage form, the Company must be able to produce legible evidence of its contents. Until the directors otherwise determine, the magnetic, electronic or other data storage form shall be the original register of members.

2.8. A Share is deemed to be issued when the name of the Shareholder is entered in the register of members.

**3. REDEMPTION AND CONVERSION OF SHARES AND TREASURY SHARES**

3.1. Subject to any applicable rules of a Recognised Exchange, the Company may purchase, redeem or otherwise acquire and hold its own Shares save that the Company may not purchase, redeem or otherwise acquire its own Shares without the consent of Shareholders whose Shares are to be purchased, redeemed or otherwise acquired unless the Company is permitted by the Act or any other provision in the Memorandum or Articles to purchase, redeem or otherwise acquire the Shares without their consent.

3.2. The Company may only offer to purchase, redeem or otherwise acquire Shares if the Resolution of Directors authorising the purchase, redemption or other acquisition contains a statement that the directors are satisfied, on reasonable grounds, that immediately after the acquisition the value of the Company's assets will exceed its liabilities and the Company will be able to pay its debts as they fall due.

3.3. Sections 60 (*Process for acquisition of own shares*), 61 (*Offer to one or more shareholders*) and 62 (*Shares redeemed otherwise than at the option of company*) of the Act shall not apply to the Company.

3.4. Shares that the Company purchases, redeems or otherwise acquires pursuant to this Regulation may be cancelled or held as Treasury Shares except to the extent that such Shares are in excess of 50 percent of the issued Shares in which case they shall be cancelled but they shall be available for reissue.

3.5. All rights and obligations attaching to a Treasury Share are suspended and shall not be exercised by the Company while it holds the Share as a Treasury Share.

3.6. Treasury Shares may be transferred by the Company on such terms and conditions (not otherwise inconsistent with the Memorandum and the Articles) as the Company may by Resolution of Directors determine.

3.7. Where Shares are held by another body corporate of which the Company holds, directly or indirectly, shares having more than 50 per cent of the votes in the election of directors of the other body corporate, all rights and obligations attaching to the Shares held by the other body corporate are suspended and shall not be exercised by the other body corporate.

3.8. Any Class A Shares which are fully paid may be converted into Ordinary Shares on a one-for-one basis (the "**Conversion Ratio**") at the option of the holder of such Class A Shares upon giving five days' notice by such holder to the Company.

3.9. Any conversion of Class A Shares into Ordinary Shares pursuant to the Memorandum and these Articles shall be effected by the re-designation of each Class A Share into one Ordinary Share. Such conversion shall become effective forthwith upon entries being made in the register to record the re-designation of the relevant Class A Shares as Ordinary Shares. For the avoidance of doubt, such re-designation shall not be effected by a redemption and reissue of Shares.

3.10. The Conversion Ratio shall also be adjusted to account for any subdivision (by share subdivision, exchange, capitalisation, rights issue, reclassification, recapitalisation or otherwise) or combination (by share consolidation, exchange, reclassification, recapitalisation or otherwise), bonus share issue or similar reclassification or recapitalisation of the Ordinary Shares in issue into a greater or lesser number of shares occurring after the original filing of the Memorandum and Articles without a proportionate and corresponding subdivision, combination or similar reclassification or recapitalisation of the Class A Shares in issue.

3.11. Notwithstanding any other provision of these Articles, each Class A Share shall be automatically converted into an Ordinary Share immediately upon the holders of Class A Shares in aggregate beneficially owning less than 74,400 Class A Shares, which is equivalent to 5% of the total issued and outstanding Class A Shares as of the date of registration of these Memorandum and Articles.

3.12. Upon conversion of any Class A Shares into Ordinary Shares in accordance with Sub Regulations 3.8 to 3.11, such Ordinary Shares:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) shall be credited as fully paid, free from all encumbrances;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) shall rank pari passu in all respects and form one class with the Ordinary Shares then in issue (if any); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) shall entitle the holder of such Ordinary Shares to be paid a pro rata share of all dividends and other distributions declared, made or paid on Ordinary Shares after the date such conversion is entered in the Register of Members of the Company.

**4. MORTGAGES AND CHARGES OF SHARES**

4.1. Subject to any applicable rules of a Recognised Exchange, Shareholders may mortgage or charge their Shares.

**5. FORFEITURE**

5.1. Shares that are not fully paid on issue are subject to the forfeiture provisions set forth in this Regulation and for this purpose Shares issued for a promissory note, other written obligation to contribute money or property or a contract for future services are deemed to be not fully paid.

5.2. A written notice of call specifying the date for payment to be made shall be served on the Shareholder who defaults in making payment in respect of the Shares.

5.3. The written notice of call referred to in Sub-Regulation 5.2 shall name a further date not earlier than the expiration of 14 clear days from the date of service of the notice on or before which the payment required by the notice is to be made and shall contain a statement that in the event of non-payment at or before the time named in the notice the Shares, or any of them, in respect of which payment is not made will be liable to be forfeited.

5.4. Where a written notice of call has been issued pursuant to Sub-Regulation 5.3 and the requirements of the notice have not been complied with, the directors may, at any time before tender of payment, forfeit and cancel the Shares to which the notice relates.

5.5. The Company is under no obligation to refund any moneys to the Shareholder whose Shares have been cancelled pursuant to Sub-Regulation 5.4 and that Shareholder shall be discharged from any further obligation to the Company.

**6. TRANSFER OF SHARES**

6.1. Subject to Sub-Regulation 6.7, Shares may be transferred by a written instrument of transfer signed by the transferor and containing the name and address of the transferee, which shall be sent to the Company for registration.

6.2. Unless a holder of Class A Shares otherwise notifies the Company, any Class A Shares that it transfers to any third party (other than a Permittee Transferee) shall automatically be converted into Ordinary Shares on a one-for-one basis immediately prior to the consummation of the transfer and in accordance with the mechanics set forth in Sub-Regulation 3.9.

6.3. Subject to Sub-Regulation 6.7, the Company shall, on receipt of an instrument of transfer complying with Sub-Regulation 6.1, enter the name of the transferee of Share(s) in the register of members unless the directors resolve to refuse or delay the registration of the transfer for reasons that shall be specified in a Resolution of Directors.

6.4. Subject to Sub-Regulation 6.7, the transfer of a Share is effective when the name of the transferee is entered on the register of members.

6.5. If the directors of the Company are satisfied that an instrument of transfer relating to Shares has been signed but that the instrument has been lost or destroyed, they may resolve by Resolution of Directors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to accept such evidence of the transfer of Shares as they consider appropriate; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) that the transferee's name should be entered in the register of members notwithstanding the absence of the instrument of transfer.

6.6. Subject to the Memorandum, the personal representative of a deceased Shareholder may transfer a Share even though the personal representative is not a Shareholder at the time of the transfer.

6.7. Where shares are listed on a Recognised Exchange, (a) Sub-Regulations 6.1, 6.3 and 6.4 shall not apply and (b) the Shares may be transferred without the need for a written instrument of transfer if the transfer is carried out in accordance with the law, rules, procedures and other requirements applicable to shares listed on the Recognised Exchange.

6.8. Subject to compliance with any applicable period of a Recognised Exchange, the directors may, by Resolution of Directors, elect to suspend the transfer or registration of Share(s), provided however that the registration of transfer shall not be suspended nor the register closed for more than 30 days per calendar year.

**7. MEETINGS AND CONSENTS OF SHAREHOLDERS**

7.1. Any director of the Company may convene meetings of the Shareholders at such times and in such manner and places within or outside the British Virgin Islands as the director considers necessary or desirable, provided that, the directors shall convene an AGM annually at such time and date as shall be determined by the directors.

7.2. Upon the written request of Shareholders entitled to exercise 30 per cent or more of the voting rights in respect of the matter for which the meeting is requested the directors shall convene a meeting of Shareholders.

7.3. The director convening a meeting shall give not less than 10 days' notice of a meeting of Shareholders to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) those Shareholders whose names on the date the notice is given appear as Shareholders in the register of members of the Company and are entitled to vote at the meeting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the other directors.

7.4. The director convening a meeting of Shareholders may fix as the record date for determining those Shareholders that are entitled to vote at the meeting the date notice is given of the meeting, or such other date as may be specified in the notice, being a date not earlier than the date of the notice.

7.5. A meeting of Shareholders held in contravention of the requirement to give notice is valid if Shareholders holding at least 90 per cent of the total voting rights on all the matters to be considered at the meeting have waived notice of the meeting and, for this purpose, the presence of a Shareholder at the meeting shall constitute waiver in relation to all the Shares which that Shareholder holds.

7.6. The inadvertent failure of a director who convenes a meeting to give notice of a meeting to a Shareholder or another director, or the fact that a Shareholder or another director has not received notice, does not invalidate the meeting.

7.7. A Shareholder may be represented at a meeting of Shareholders by a proxy who may speak and vote on behalf of the Shareholder.

7.8. The instrument appointing a proxy shall be produced at the place designated for the meeting before the time for holding the meeting at which the person named in such instrument proposes to vote. The notice of the meeting may specify an alternative or additional place or time at which the proxy shall be presented.

7.9. The instrument appointing a proxy shall be in such form as the Chairman of the meeting shall accept as properly evidencing the wishes of the Shareholder appointing the proxy.

7.10. The following applies where Shares are jointly owned:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) if two or more persons hold Shares jointly each of them may be present in person or by proxy at a meeting of Shareholders and may speak as a Shareholder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) if only one of the joint owners is present in person or by proxy he may vote on behalf of all joint owners; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) if two or more of the joint owners are present in person or by proxy they must vote as one.

7.11. A Shareholder shall be deemed to be present at a meeting of Shareholders if he participates by telephone or other electronic means and all Shareholders participating in the meeting are able to hear each other.

7.12. A meeting of Shareholders is duly constituted if, at the commencement of the meeting, there are present in person or by proxy at least two Shareholders who in aggregate hold at least one-half of the votes of the Shares entitled to vote on Resolutions of Shareholders to be considered at the meeting.

7.13. If within two hours from the time appointed for the meeting a quorum is not present, the meeting, at the discretion of the Chairman shall either be dissolved or stand adjourned to the next business day in the jurisdiction in which the meeting was to have been held at the same time and place or to such other time and place as the Chairman may determine, and if at the adjourned meeting there are present within one hour from the time appointed for the meeting in person or by proxy not less than one third of the votes of the Shares or each class or series of Shares entitled to vote on the matters to be considered by the meeting, those present shall constitute a quorum but otherwise the meeting shall be dissolved or stand further adjourned at the discretion of the Chairman.

7.14. At every meeting of Shareholders, the Chairman of the Board shall preside as chairman of the meeting. If there is no Chairman of the Board or if the Chairman of the Board is not present at the meeting, the Shareholders present shall choose one of their number to be the Chairman. If the Shareholders are unable to choose a Chairman for any reason, then the person representing the greatest number of voting Shares present in person or by proxy at the meeting shall preside as Chairman failing which the oldest individual Shareholder or representative of a Shareholder present shall take the Chairman.

7.15. The Chairman may, at his discretion, adjourn any meeting from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. For the avoidance of doubt, a meeting can be adjourned for as many times as may be deemed necessary by the Chairman.

7.16. At any meeting of the Shareholders the Chairman is responsible for deciding in such manner as he considers appropriate whether any resolution proposed has been carried or not and the result of his decision shall be announced to the meeting and recorded in the minutes of the meeting. If the Chairman has any doubt as to the outcome of the vote on a proposed resolution, he shall cause a poll to be taken of all votes cast upon such resolution. If the Chairman fails to take a poll then any Shareholder present in person or by proxy who disputes the announcement by the chairman of the result of any vote may immediately following such announcement demand that a poll be taken and the Chairman shall cause a poll to be taken. If a poll is taken at any meeting, the result shall be announced to the meeting and recorded in the minutes of the meeting.

7.17. Subject to the specific provisions contained in this Regulation for the appointment of representatives of Eligible Persons other than individuals the right of any individual to speak for or represent a Shareholder shall be determined by the law of the jurisdiction where, and by the documents by which, the Eligible Person is constituted or derives its existence. In case of doubt, the directors may in good faith seek legal advice from any qualified person and unless and until a court of competent jurisdiction shall otherwise rule, the directors may rely and act upon such advice without incurring any liability to any Shareholder or the Company.

7.18. Any Eligible Person other than an individual which is a Shareholder may by resolution of its directors or other governing body authorise such individual as it thinks fit to act as its representative at any meeting of Shareholders or of any class of Shareholders, and the individual so authorised shall be entitled to exercise the same rights on behalf of the Eligible Person which he represents as that Eligible Person could exercise if it were an individual.

7.19. The Chairman of any meeting at which a vote is cast by proxy or on behalf of any Eligible Person other than an individual may call for a notarially certified copy of such proxy or authority which shall be produced within 7 days of being so requested or the votes cast by such proxy or on behalf of such Eligible Person shall be disregarded.

7.20. Directors of the Company may attend and speak at any meeting of Shareholders and at any separate meeting of the holders of any class or series of Shares.

7.21. No action that may be taken by the Shareholders by way of written consent.

**8. DIRECTORS**

8.1. Subject to the rules of any applicable Recognised Exchange, the directors shall be elected by Resolution of Shareholders or by Resolution of Directors.

8.2. No person shall be appointed as a director, or alternate director, or nominated as a reserve director, of the Company unless he has consented in writing to be a director or alternate director, or to be nominated as a reserve director.

8.3. Subject to Sub-Regulation 8.1 minimum number of directors shall be one and there shall be no maximum number.

8.4. Each director holds office until the next AGM, or for such shorter term, if any, fixed by the Resolution of Shareholders or Resolution of Directors appointing him, or until his earlier death, resignation or removal. If no term is fixed on the appointment of a director, the director serves indefinitely until his earlier death, resignation or removal.

8.5. A director may be removed from office,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) with or without cause, by Resolution of Shareholders passed at a meeting of Shareholders called for the purposes of removing the director or for purposes including the removal of the director; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) with cause, by a Resolution of Directors passed at a meeting of directors called for the purpose of removing the director or for purposes including the removal of the director.

8.6. A director may resign his office by giving written notice of his resignation to the Company and the resignation has effect from the date the notice is received by the Company or from such later date as may be specified in the notice. A director shall resign forthwith as a director if he is, or becomes, disqualified from acting as a director under the Act.

8.7. The directors may at any time appoint any person to be a director either to fill a vacancy or as an addition to the existing directors. Where the directors appoint a person as director to fill a vacancy, the term shall not exceed the term that remained when the person who has ceased to be a director ceased to hold office.

8.8. A vacancy in relation to directors occurs if a director dies or otherwise ceases to hold office prior to the expiration of his term of office.

8.9. The Company shall keep a register of directors maintained in accordance with the Act.

8.10. The directors may, by Resolution of Directors, fix the emoluments of directors or officers of the Company with respect to services to be rendered in any capacity to the Company.

8.11. A director is not required to hold a Share as a qualification to office.

**9. POWERS OF DIRECTORS**

9.1. The business and affairs of the Company shall be managed by, or under the direction or supervision of, the directors of the Company. The directors of the Company have all the powers necessary for managing, and for directing and supervising, the business and affairs of the Company. The directors may pay all expenses incurred preliminary to and in connection with the incorporation of the Company and may exercise all such powers of the Company as are not by the Act or any relevant Recognised Exchange or by the Memorandum or the Articles required to be exercised by the Shareholders.

9.2. Each director shall exercise his powers for a proper purpose and shall not act or agree to the Company acting in a manner that contravenes the Memorandum, the Articles or the Act. Each director, in exercising his powers or performing his duties, shall act honestly and in good faith in what the director believes to be the best interests of the Company.

9.3. Any director which is a body corporate may appoint any individual as its duly authorised representative for the purpose of representing it at meetings of the directors, with respect to the signing of consents or otherwise.

9.4. The continuing directors may act notwithstanding any vacancy in their body.

9.5. The directors may by Resolution of Directors exercise all the powers of the Company to incur indebtedness, liabilities or obligations and to secure indebtedness, liabilities or obligations whether of the Company or of any third party.

9.6. All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for moneys paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in such manner as shall from time to time be determined by Resolution of Directors.

9.7. Section 175 (*Disposition of assets*) of the Act shall not apply to the Company.

**10. PROCEEDINGS OF DIRECTORS**

10.1. Any one director of the Company may call a meeting of the directors by sending a written notice to each other director.

10.2. The directors of the Company or any committee thereof may meet at such times and in such manner and places within or outside the British Virgin Islands as the directors may determine to be necessary or desirable.

10.3. A director is deemed to be present at a meeting of directors if he participates by telephone or other electronic means and all directors participating in the meeting are able to hear each other.

10.4. A director shall be given not less than 3 days' notice of meetings of directors, but a meeting of directors held without 3 days' notice having been given to all directors shall be valid if all the directors entitled to vote at the meeting who do not attend waive notice of the meeting, and for this purpose the presence of a director at a meeting shall constitute waiver by that director. The inadvertent failure to give notice of a meeting to a director, or the fact that a director has not received the notice, does not invalidate the meeting.

10.5. A director of the company (the "**appointing director**") may appoint any other director or any other person who is not disqualified for appointment as his alternate to exercise the appointing director's powers and carry out the appointing director's responsibilities in relation to the taking of decisions by the directors in the absence of the appointing director.

10.6. The appointment and termination of an alternate director must be in writing, and written notice of the appointment and termination must be given by the appointing director to the Company as soon as reasonably practicable.

10.7. An alternate director has the same rights as the appointing director in relation to any directors' meeting and any written resolution circulated for written consent. An alternate director has no power to appoint a further alternate, whether of the appointing director or of the alternate director, and the alternate does not act as an agent of or for the appointing director.

10.8. The appointing director may, at any time, voluntarily terminate the alternate director's appointment. The voluntary termination of the appointment of an alternate shall take effect from the time when written notice of the termination is given to the Company. The rights of an alternate shall automatically terminate if the appointing director dies or otherwise ceases to hold office.

10.9. A meeting of directors is duly constituted for all purposes if at the commencement of the meeting there are present in person or by alternate not less than a majority of the directors, unless there are only 2 directors in which case the quorum is 2.

10.10. If the Company has only one director the provisions herein contained for meetings of directors do not apply and such sole director has full power to represent and act for the Company in all matters as are not by the Act, the Memorandum or the Articles required to be exercised by the Shareholders. In lieu of minutes of a meeting the sole director shall record in writing and sign a note or memorandum of all matters requiring a Resolution of Directors. Such a note or memorandum constitutes sufficient evidence of such resolution for all purposes.

10.11. At meetings of directors at which the Chairman of the Board is present, he shall preside as Chairman of the meeting. If there is no Chairman of the Board or if the Chairman of the Board is not present, the directors present shall choose one of their number to be Chairman of the meeting.

10.12. An action that may be taken by the directors or a committee of directors at a meeting may also be taken by a Resolution of Directors or a resolution of a committee of directors consented to in writing by a majority of directors or a majority of members of the committee, as the case may be, without the need for any notice. The consent may be in the form of counterparts each counterpart being signed by one or more directors. If the consent is in one or more counterparts, and the counterparts bear different dates, then the resolution shall take effect on the date upon which the last director has consented to the resolution by signed counterparts.

**11. COMMITTEES**

11.1. The directors may, by Resolution of Directors, designate one or more committees, each consisting of one or more directors, and delegate one or more of their powers, including the power to affix the Seal, to the committee.

11.2. The directors have no power to delegate to a committee of directors any of the following powers:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to amend the Memorandum or the Articles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) to designate committees of directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) to delegate powers to a committee of directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) to appoint or remove directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) to appoint or remove an agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) to approve a plan of merger, consolidation or arrangement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) to make a declaration of solvency or to approve a liquidation plan; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) to make a determination that immediately after a proposed distribution the value of the Company's assets will exceed its liabilities and the Company will be able to pay its debts as they fall due.

11.3. Sub-Regulation (b) and (c) do not prevent a committee of directors, where authorised by the Resolution of Directors appointing such committee or by a subsequent Resolution of Directors, from appointing a sub-committee and delegating powers exercisable by the committee to the sub-committee.

11.4. The meetings and proceedings of each committee of directors consisting of 2 or more directors shall be governed *mutatis mutandis* by the provisions of the Articles regulating the proceedings of directors so far as the same are not superseded by any provisions in the Resolution of Directors establishing the committee or other appropriate charter for the committee approved by the directors by way of Resolution of Directors.

11.5. Where the directors delegate their powers to a committee of directors they remain responsible for the exercise of that power by the committee, unless they believed on reasonable grounds at all times before the exercise of the power that the committee would exercise the power in conformity with the duties imposed on directors of the Company under the Act.

**12. OFFICERS AND AGENTS**

12.1. The Company may by Resolution of Directors appoint officers of the Company at such times as may be considered necessary or expedient. Such officers may consist of a Chairman of the Board of Directors, a president and one or more vice-presidents, secretaries and treasurers and such other officers as may from time to time be considered necessary or expedient. Any number of offices may be held by the same person.

12.2. The officers shall perform such duties as are prescribed at the time of their appointment subject to any modification in such duties as may be prescribed thereafter by Resolution of Directors. In the absence of any specific prescription of duties it shall be the responsibility of the Chairman of the Board to preside at meetings of directors and Shareholders, the president to manage the day to day affairs of the Company, the vice-presidents to act in order of seniority in the absence of the president but otherwise to perform such duties as may be delegated to them by the president, the secretaries to maintain the register of members, minute books and records (other than financial records) of the Company and to ensure compliance with all procedural requirements imposed on the Company by applicable law, and the treasurer to be responsible for the financial affairs of the Company.

12.3. The emoluments of all officers shall be fixed by Resolution of Directors.

12.4. The officers of the Company shall hold office until their successors are duly appointed, but any officer elected or appointed by the directors may be removed at any time, with or without cause, by Resolution of Directors. Any vacancy occurring in any office of the Company may be filled by Resolution of Directors.

12.5. The directors may, by Resolution of Directors, appoint any person, including a person who is a director, to be an agent of the Company.

12.6. An agent of the Company shall have such powers and authority of the directors, including the power and authority to affix the Seal, as are set forth in the Articles or in the Resolution of Directors appointing the agent, except that no agent has any power or authority with respect to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to amend the Memorandum or the Articles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) to change the registered office or agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) to designate committees of directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) to delegate powers to a committee of directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) to appoint or remove directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) to appoint or remove an agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) to fix emoluments of directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) to approve a plan of merger, consolidation or arrangement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) to make a declaration of solvency or to approve a liquidation plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) to make a determination that the company will, immediately after a proposed distribution, satisfy the solvency test; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) to authorise the Company to continue as a company incorporated under the laws of a jurisdiction outside the British Virgin Islands.

12.7. The resolution of Directors appointing an agent may authorise the agent to appoint one or more substitutes or delegates to exercise some or all of the powers conferred on the agent by the Company.

12.8. The directors may remove an agent appointed by the Company and may revoke or vary a power conferred on him.

**13. CONFLICT OF INTERESTS**

13.1. A director of the Company shall, forthwith after becoming aware of the fact that he is interested in a transaction entered into or to be entered into by the Company, disclose the interest to all other directors of the Company.

13.2. For the purposes of Sub-Regulation 13.1, a disclosure to all other directors to the effect that a director is a member, director or officer of another named entity or has a fiduciary relationship with respect to the entity or a named individual and is to be regarded as interested in any transaction which may, after the date of the entry into the transaction or disclosure, of the interest, be entered into with that entity or individual, is a sufficient disclosure of interest in relation to that transaction.

13.3. A director of the Company who is interested in a transaction entered into or to be entered into by the Company may:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) vote on a matter relating to the transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) attend a meeting of directors at which a matter relating to the transaction arises and be included among the directors present at the meeting for the purposes of a quorum; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) sign a document on behalf of the Company, or do any other thing in his capacity as a director, that relates to the transaction,

and, subject to compliance with the Act shall not, by reason of his office be accountable to the Company for any benefit which he derives from such transaction and no such transaction shall be liable to be avoided on the grounds of any such interest or benefit.

**14. INDEMNIFICATION**

14.1. Subject to the limitations hereinafter provided the Company shall indemnify against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings any person who:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) is or was a party or is threatened to be made a party to any threatened, pending or completed proceedings, whether civil, criminal, administrative or investigative, by reason of the fact that the person is or was a director of the Company; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) is or was, at the request of the Company, serving as a director of, or in any other capacity is or was acting for, another body corporate or a partnership, joint venture, trust or other enterprise.

14.2. The indemnity in Sub-Regulation 14.1 only applies if the person acted honestly and in good faith with a view to the best interests of the Company and, in the case of criminal proceedings, the person had no reasonable cause to believe that their conduct was unlawful.

14.3. The decision of the directors as to whether the person acted honestly and in good faith and with a view to the best interests of the Company and as to whether the person had no reasonable cause to believe that his conduct was unlawful is, in the absence of fraud, sufficient for the purposes of the Articles, unless a question of law is involved.

14.4. The termination of any proceedings by any judgment, order, settlement, conviction or the entering of a *nolle prosequi* does not, by itself, create a presumption that the person did not act honestly and in good faith and with a view to the best interests of the Company or that the person had reasonable cause to believe that his conduct was unlawful.

14.5. Expenses, including legal fees, incurred by a director in defending any legal, administrative or investigative proceedings maybe paid by the Company in advance of the final disposition of such proceedings upon receipt of an undertaking by or on behalf of the director to repay the amount if it shall ultimately be determined that the director is not entitled to be indemnified by the Company in accordance with Sub-Regulation 14.1.

14.6. Expenses, including legal fees, incurred by a former director in defending any legal, administrative or investigative proceedings may be paid by the Company in advance of the final disposition of such proceedings upon receipt of an undertaking by or on behalf of the former director to repay the amount if it shall ultimately be determined that the former director is not entitled to be indemnified by the Company in accordance with Sub-Regulation 14.1 and upon such terms and conditions, if any, as the Company deems appropriate.

14.7. The indemnification and advancement of expenses provided by, or granted pursuant to, this section is not exclusive of any other rights to which the person seeking indemnification or advancement of expenses may be entitled under any agreement, Resolution of Shareholders, resolution of disinterested directors or otherwise, both as acting in the person's official capacity and as to acting in another capacity while serving as a director of the Company

14.8. If a person referred to in Sub-Regulation 14.1 has been successful in defence of any proceedings referred to in sub-Regulation 14.1, the person is entitled to be indemnified against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred by the person in connection with the proceedings.

14.9. The Company may purchase and maintain insurance in relation to any person who is or was a director, officer or liquidator of the Company, or who at the request of the Company is or was serving as a director, officer or liquidator of, or in any other capacity is or was acting for, another company or a partnership, joint venture, trust or other enterprise, against any liability asserted against the person and incurred by the person in that capacity, whether or not the Company has or would have had the power to indemnify the person against the liability as provided in the Articles.

**15. RECORDS**

15.1. The Company shall keep the following documents at the office of its registered agent:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the Memorandum and the Articles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the register of members, or a copy of the register of members;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the register of directors, or a copy of the register of directors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) copies of all notices and other documents filed by the Company with the Registrar of Corporate Affairs in the previous 10 years.

15.2. If the Company maintains only a copy of the register of members or a copy of the register of directors at the office of its registered agent, it shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) within 15 days of any change in either register, notify the registered agent in writing of the change; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) provide the registered agent with a written record of the physical address of the place or places at which the original register of members or the original register of directors is kept.

15.3. The Company shall keep the following records at the office of its registered agent or at such other place or places, within or outside the British Virgin Islands, as the directors may determine:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) minutes of meetings and Resolutions of Shareholders and classes of Shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) minutes of meetings and Resolutions of Directors and committees of directors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) an impression of the Seal.

15.4. Where any original records referred to in this Regulation are maintained other than at the office of the registered agent of the Company, and the place at which the original records is changed, the Company shall provide the registered agent with the physical address of the new location of the records of the Company within 14 days of the change of location.

15.5. The records kept by the Company under this Regulation shall be in written form or either wholly or partly as electronic records complying with the requirements of the Electronic Transactions Act (No. 5 of 2001) as from time to time amended or re-enacted.

**16. REGISTER OF CHARGES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the date of creation of the charge;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a short description of the liability secured by the charge;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) a short description of the property charged;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the name and address of the trustee for the security or, if there is no such trustee, the name and address of the chargee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) unless the charge is a security to bearer, the name and address of the holder of the charge; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) details of any prohibition or restriction contained in the instrument creating the charge on the power of the Company to create any future charge ranking in priority to or equally with the charge.

**17. SEAL**

The Company shall have a seal. The Company may have more than one Seal and references herein to the Seal shall be references to every Seal which shall have been duly adopted by Resolution of Directors. The directors shall provide for the safe custody of the Seal and for an imprint thereof to be kept at the registered office. Except as otherwise expressly provided herein the Seal when affixed to any written instrument shall be witnessed and attested to by the signature of any one director or other person so authorised from time to time by Resolution of Directors. Such authorisation may be before or after the Seal is affixed, may be general or specific and may refer to any number of sealings. The directors may provide for a facsimile of the Seal and of the signature of any director or authorised person which may be reproduced by printing or other means on any instrument and it shall have the same force and validity as if the Seal had been affixed to such instrument and the same had been attested to as hereinbefore described.

**18. DISTRIBUTIONS BY WAY OF DIVIDEND**

18.1. The directors of the Company may, by Resolution of Directors, authorise a Distribution by way of dividend at a time and of an amount they think fit if they are satisfied, on reasonable grounds, that, immediately after the Distribution, the value of the Company's assets will exceed its liabilities and the Company will be able to pay its debts as they fall due.

18.2. Dividends may be paid in money, shares, or other property.

18.3. Notice of any dividend that may have been declared shall be given to each Shareholder as specified in Sub-Regulation 20.1 and all dividends unclaimed for 3 years after having been declared may be forfeited by Resolution of Directors for the benefit of the Company.

18.4. No dividend shall bear interest as against the Company and no dividend shall be paid on Treasury Shares.

**19. ACCOUNTS AND AUDIT**

19.1. The Company shall keep records that are sufficient to show and explain the Company's transactions and that will, at any time, enable the financial position of the Company to be determined with reasonable accuracy.

19.2. The Company may by Resolution of Shareholders call for the directors to prepare periodically and make available a profit and loss account and a balance sheet. The profit and loss account and balance sheet shall be drawn up so as to give respectively a true and fair view of the profit and loss of the Company for a financial period and a true and fair view of the assets and liabilities of the Company as at the end of a financial period.

19.3. The Company may by Resolution of Shareholders call for the accounts to be examined by auditors.

19.4. The first auditors shall be appointed by Resolution of Directors; subsequent auditors shall be appointed by a Resolution of Shareholders or by Resolution of Directors.

19.5. The remuneration of the auditors of the Company may be fixed by Resolution of Directors.

19.6. The auditors shall examine each profit and loss account and balance sheet required to be laid before a meeting of the Shareholders or otherwise given to Shareholders and shall state in a written report whether or not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) in their opinion the profit and loss account and balance sheet give a true and fair view respectively of the profit and loss for the period covered by the accounts, and of the assets and liabilities of the Company at the end of that period; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) all the information and explanations required by the auditors have been obtained.

19.7. The report of the auditors shall be annexed to the accounts and shall be read at the meeting of Shareholders at which the accounts are laid before the Company or shall be otherwise given to the Shareholders.

19.8. Every auditor of the Company shall have a right of access at all times to the books of account and vouchers of the Company, and shall be entitled to require from the directors and officers of the Company such information and explanations as he thinks necessary for the performance of the duties of the auditors.

19.9. The auditors of the Company shall be entitled to receive notice of, and to attend any meetings of Shareholders at which the Company's profit and loss account and balance sheet are to be presented.

**20. NOTICES**

20.1. Notices shall be in writing and may be given by the Company to any Shareholder either personally or by sending it by courier, post, fax or email to him/her or to his/her address as shown in the Register of Members (or where the notice is given by email by sending it to the email address provided by such Shareholder). Any notice, if posted from one country to another, is to be sent by airmail. Notice may also be served by Electronic Communication in accordance with the rules and regulations of the Recognised Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or by placing it on the Company's Website.

20.2. Where a notice is sent by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) courier; service of the notice shall be deemed to be effected by delivery of the notice to a courier company, and shall be deemed to have been received on the third day (not including Saturdays or Sundays or public holidays) following the day on which the notice was delivered to the courier;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) post; service of the notice shall be deemed to be effected by properly addressing, pre paying and posting a letter containing the notice, and shall be deemed to have been received on the fifth day (not including Saturdays or Sundays or public holidays in the British Virgin Islands) following the day on which the notice was posted;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) fax; service of the notice shall be deemed to be effected by properly addressing and sending such notice and shall be deemed to have been received on the same day that it was transmitted;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) email or other Electronic Communication service; shall be deemed to be effected by transmitting the email to the email address provided by the intended recipient and shall be deemed to have been received on the same day that it was sent, and it shall not be necessary for the receipt of the email to be acknowledged by the recipient; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) placing it on the Company's Website; service of the notice shall be deemed to have been effected one hour after the notice or document was placed on the Company's Website.

20.3. A notice may be given by the Company to the person or persons which the Company has been advised are entitled to a Share or Shares in consequence of the death or bankruptcy of a Shareholder in the same manner as other notices which are required to be given under the Articles and shall be addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt, or by any like description at the address supplied for that purpose by the persons claiming to be so entitled, or at the option of the Company by giving the notice in any manner in which the same might have been given if the death or bankruptcy had not occurred.

20.4. Notice of every general meeting shall be given in any manner authorised by the Articles to every holder of Shares carrying an entitlement to receive such notice on the date such notice is given except that in the case of joint holders the notice shall be sufficient if given to the joint holder first named in the Register of Members and every person upon whom the ownership of a Share devolves because they are a legal personal representative or a trustee in bankruptcy of a Shareholder where the Shareholder but for their death or bankruptcy would be entitled to receive notice of the meeting, and no other person shall be entitled to receive notices of general meetings.

20.5. Where a law or the Articles requires information to be delivered or sent to, or to be served on, a person, section 10(1) of the Electronic Transactions Act shall be varied such that: (i) the originator of any electronic communication shall not be required to state that the receipt of the electronic communication is to be acknowledged; and (ii) unless the originator expressly requires an acknowledgment of receipt, the addressee shall not be required to acknowledge receipt.

20.6. Any summons, notice, order, document, process, information or written statement to be served on the Company may be served by leaving it, or by sending it by registered mail addressed to the Company, at its registered office, or by leaving it with, or by sending it by registered mail to, the registered agent of the Company.

20.7. Service of any summons, notice, order, document, process, information or written statement to be served on the Company may be proved by showing that the summons, notice, order, document, process, information or written statement was delivered to the registered office or the registered agent of the Company or that it was mailed in such time as to admit to its being delivered to the registered office or the registered agent of the Company in the normal course of delivery within the period prescribed for service and was correctly addressed and the postage was prepaid.

**21. VOLUNTARY LIQUIDATION**

The Company may by Resolution of Shareholders or by a Resolution of Directors appoint an individual, considered as eligible according the provisions of the Act, as voluntary liquidator alone or jointly with one or more other voluntary liquidators.

**22. CONTINUATION**

The Company may by Resolution of Shareholders or by a Resolution of Directors passed unanimously by all directors of the Company continue as a company incorporated under the laws of a jurisdiction outside the British Virgin Islands in the manner provided under those laws.

We, MOSSACK FONSECA & CO. (B.V.I.) LTD., of P.O. Box 3136, Road Town, Tortola, British Virgin Islands for the purpose of incorporating a BVI Business Company under the laws of the British Virgin Islands hereby sign these Articles of Association the 23<sup>rd</sup> day of July, 2012.

Incorporator

Sgd. Dawnalee Hodge

………………………….………………......<br>Dawnalee Hodge<br>Authorised Signatory<br>MOSSACK FONSECA & CO. (B.V.I.) LTD.

## Exhibit 2.1

**Exhibit 2.1**

**DESCRIPTION OF SHARE CAPITAL**

We are a British Virgin Islands company limited by shares and our affairs are governed by our memorandum and articles of association and the Act (as amended or modified from time to time).

In respect of all of our ordinary shares we have power insofar as is permitted by law, to redeem or purchase any of our shares and to increase or reduce the said capital subject to the provisions of the Act and the articles of association and to issue any part of our capital, whether original, redeemed or increased with or without any preference, priority or special privilege or subject to any postponement of rights or to any conditions or restrictions, subject to the provisions of our memorandum and articles of association from time to time in force.

Defined terms used herein and not defined herein shall have the meaning ascribed to such terms in the Company's Annual Report on Form 20-F.

The Company is authorised to issue a maximum of 600,000,000 shares divided into two classes as follows:

(a) 500,000,000 Ordinary Shares with a par value of US$0.01 each;
and

(b) 100,000,000 Class A Shares with a par value of US$0.01 each.

As of March 31, 2025, 4,410,559 of our shares were outstanding, consisting of 2,922,559 ordinary shares and 1,488,000 Class A shares.

**Ordinary Shares**

***General.*** The maximum number of shares that the Company is authorized to issue was increased from 30,000,000 ordinary shares of US$0.01 par value each to 600,000,000 shares divided into 500,000,000 ordinary shares with a par value of US$0.01 each and 100,000,000 Class A shares with a par value of US$0.01 each.

***Dividends.*** The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors. Our amended and restated articles of association provide that dividends may be declared and paid at such time, and in such an amount, as the directors determine subject to their being satisfied that the Company will meet the statutory solvency test immediately after the dividend. Holders of ordinary shares will be entitled to the same amount of dividends, if declared.

***Voting Rights.*** In respect of all matters subject to a shareholders' vote, each Class A Share entitles the holder to fifteen (15) votes per share, while each Ordinary Share entitles the holder to one (1) vote per share. Holders of ordinary shares shall at all times vote together on all resolutions submitted to a vote of the members. Voting at any meeting of shareholders is by show of hands unless a poll is demanded. A poll may be demanded by the chairman of such meeting or any one shareholder.

A quorum required for a meeting of shareholders consists of two or more shareholders who hold at least one-half of all voting power of our share capital in issue at the date of the meeting present in person or by proxy or, if a corporation or other non-natural person, by its duly authorized representative. Shareholders' meetings may be held annually. Each general meeting, other than an annual general meeting, shall be an extraordinary general meeting. Extraordinary general meetings may be called by a majority of our board of directors or our chairman or upon a requisition of shareholders holding at the date of deposit of the requisition not less than 30% of the aggregate voting power of our company. Advance notice of at least 10 days is required for the convening of our annual general meeting and other general meetings unless such notice is waived in accordance with our articles of association.

 ****

***Transfer of Ordinary Shares.*** Under the Act the transfer of a registered share which is not listed on a recognized exchange is by a written instrument of transfer signed by the transferor and containing the name of the transferee. However, the instrument must also be signed by the transferee if registration would impose a liability on the transferee to the company. The instrument of transfer must be sent to the company for registration. Subject to the company's memorandum or articles of association the company shall on receipt of an instrument of transfer enter the name of the transferee of the share in the register of members unless the directors resolve to refuse or delay registration of the transfer for reasons that should be specified in a resolution of directors. The transfer of a registered share is effective when the name of the transferee is entered in the register of members. The entry of the name of a person in the company's register of members is prima facie evidence that legal title in the share vests in that person.

For class A shares transfer unless a holder of Class A Shares otherwise notifies the Company, any Class A Shares that it transfers to any third party (other than a Permittee Transferee) shall automatically be converted into Ordinary Shares on a one-for-one basis immediately.

The procedure is different for the transfer of shares that are listed on a recognized exchange. Such shares may be transferred without the need for a written instrument of transfer if the transfer is carried out in accordance with the laws, rules, procedures and other requirements applicable to shares listed on the recognized exchange and subject to the company's memorandum and articles of association.

The registration of transfers may, after compliance with any notice required of NASDAQ, be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year as our board may determine.

 ****

***Liquidation.*** On a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of ordinary shares), assets available for distribution among the holders of ordinary shares shall be distributed among the holders of the ordinary shares on a pro rata basis. Any distribution of assets or capital to holders of an ordinary share will be the same in any liquidation event.

 ****

***Calls on Ordinary Shares and Forfeiture of Ordinary Shares.*** Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their ordinary shares in a notice served to such shareholders at least 14 clear days prior to the specified time of payment. The ordinary shares that have been called upon and remain unpaid are subject to forfeiture.

 ****

***Redemption of Ordinary Shares.*** The Act and our amended and restated articles of association permit us to purchase our own shares with the prior written consent of the relevant shareholders and resolution of directors and applicable law.

***Variation of Rights of Shares.*** All or any of the special rights attached to any class of shares may, subject to the provisions of the Act, only be varied with the written consent of the holders of a majority of the issued shares of that class or with the sanction of a resolution passed at a general meeting of the holders of the shares of that class. The rights conferred upon the holders of the shares of any class issued shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking *pari passu* with such existing class of shares.

***Inspection of Books and Records.***

A member of a company is entitled, on giving written notice to the company, to inspect (a) the memorandum and articles of association; (b) the register of members; (c) the register of directors; and (d) the minutes of meetings and resolutions of members and of those classes of members of which he is a member; and to make copies of or take extracts from the documents and records. Subject to the memorandum and articles of association, the directors may, if they are satisfied that it would be contrary to the company's interests to allow a member to inspect any document, or part of a document, specified in (b), (c) and (d) above, refuse to permit the member to inspect the document or limit the inspection of the document, including limiting the making of copies or the taking of extracts from the records.

Where a company fails or refuses to permit a member to inspect a document or permits a member to inspect a document subject to limitations, that member may apply to the BVI High Court for an order that he should be permitted to inspect the document or to inspect the document without limitation.

A company is required to keep at the office of its registered agent: the memorandum and articles of association of the company; the register of members or a copy of the register of members; the register of directors or a copy of the register of directors; and copies of all notices and other documents filed by the company in the previous ten years.

***Issuance of Additional Shares.*** Our amended and restated memorandum of association authorizes our board of directors to issue additional ordinary shares from time to time as our board of directors shall determine, to the extent of available authorized but unissued shares.

 ****

***Cumulative Voting.*** There are no prohibitions in relation to cumulative voting under the laws of the British Virgin Islands but our amended and restated articles of association do not provide for cumulative voting.

***Amendment of Governing Documents.*** As permitted by British Virgin Islands law, our amended and restated memorandum and articles of association may be amended with a resolution of our shareholders or, with certain exception by resolutions of directors.

***Rights of Non-resident or Foreign Shareholders.*** There are no limitations imposed by our amended and restated memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our amended and restated memorandum and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.

**Warrants**

In April 2019, we issued non-redeemable warrants to purchase an aggregate of 59,052 ordinary shares to underwriters in our initial public offering and certain of its affiliates. Such warrants are exercisable by the warrant holders, from August 13, 2019 to 5:00 p.m., Eastern time, February 14, 2022, to purchase, in whole or in part, up to 59,052 shares of our ordinary shares at a price of $6.25 per share and have cashless exercise options. In addition, such warrants may not be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities by any person prior to August 13, 2019, except that they may be assigned, in whole or in part, to any member of FINRA participating in our initial public offering and the officers or partners thereof, and that all securities so transferred remain subject to the lock-up restriction for the remainder of the time period. The underwriter warrants may be exercised as to all or a lesser number of shares, will provide for cashless exercise. On April 1, 2021 the underwriter elects to exercise the purchase warrants which the company offering to the underwriter for initial public offering services. The total exercise shares should be 29,526 at a price of $6.25 per share used cashless method. Due to a calculation mistake the company erroneously issued 59,052 shares to the underwriter. Base on the negotiation with the underwriter, the 29,526 shares returned to the Company on June 20, 2023.

**Dividends**

We have not paid any cash dividends on our ordinary shares to date.

**Stock Exchange Listing**

Our ordinary shares are listed on The Nasdaq Capital Market under the symbol "WAFU."

**Transfer Agent**

The transfer agent and registrar for our ordinary shares is VStock Transfer LLC. The transfer agent's address is 18 Lafayette Place, Woodmere, New York 11598, and its telephone number is (212) 828-8436.

## Exhibit 12.1

**Exhibit 12.1**

**CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER PURSUANT TO**

**EXCHANGE ACT RULE 13A-14(A)/15D-14(A)**

**AS ADOPTED PURSUANT TO SECTION 302**

**OF THE SARBANES-OXLEY ACT OF 2002**

I, Yang Yu, certify that:

1. I have reviewed this annual report on Form 20-F of Wah Fu
Education Group Limited for the period ended March 31, 2025;

2. Based on my knowledge, this annual 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 annual report;

3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant's 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 controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;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 registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this
annual report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;c. evaluated the effectiveness of the registrant's 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;

&nbsp;&nbsp;&nbsp;&nbsp;d. disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent function):

&nbsp;&nbsp;&nbsp;&nbsp;a. all significant deficiencies and material weaknesses in the
design or operation of internal controls which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;b. any fraud, whether material, that involves management or
other employees who have a significant role in the registrant's internal controls over financial reporting.

Date: July 31, 2025

---

| | |
|:---|:---|
| */s/ Yang Yu* | */s/ Yang Yu* |
| Name: | Yang Yu |
| Title: | Chairman of the Board and Executive Director |

---

## Exhibit 12.2

**Exhibit 12.2**

**CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO**

**EXCHANGE ACT RULE 13A-14(A)/15D-14(A)**

**AS ADOPTED PURSUANT TO SECTION 302**

**OF THE SARBANES-OXLEY ACT OF 2002**

I, Shuting Ai, certify that:

1. I have reviewed this annual report on Form 20-F of Wah Fu Education
Group Limited for the period ended March 31, 2025;

2. Based on my knowledge, this annual 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 annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant's 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
controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;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 registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this
annual report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;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;

&nbsp;&nbsp;&nbsp;&nbsp;c. evaluated the effectiveness of the registrant's 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;

&nbsp;&nbsp;&nbsp;&nbsp;d. disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors
(or persons performing the equivalent function):

&nbsp;&nbsp;&nbsp;&nbsp;a. all significant deficiencies and material weaknesses in the
design or operation of internal controls which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;b. any fraud, whether material, that involves management or
other employees who have a significant role in the registrant's internal controls over financial reporting.

Date: July 31, 2025

---

| | |
|:---|:---|
| */s/ Shuting Ai* | */s/ Shuting Ai* |
| Name: | Shuting Ai |
| Title: | Chief Financial Officer |
|  | (Principal Financial Officer) |

---

## Exhibit 13.1

**Exhibit 13.1**

**CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER**

**PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906**

**OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report on Form 20-F of Wah Fu Education Group Limited (the "Company") for the period ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;1. The
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;2. The
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.

Date: July 31, 2025

---

| | |
|:---|:---|
| */s/ Yang Yu* | */s/ Yang Yu* |
| Name: | Yang Yu |
| Title: | Chairman of the Board and <br> Executive Director |

---

## Exhibit 13.2

**Exhibit 13.2** 

**CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER**

**PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906**

**OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report on Form 20-F of Wah Fu Education Group Limited (the "Company") for the period ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 31, 2025

---

| | |
|:---|:---|
| */s/ Shuting Ai* | */s/ Shuting Ai* |
| Name: | Shuting Ai |
| Title: | Chief Financial Officer |
|  | (Principal Financial Officer) |

---