20-F: Jianzhi Education Technology Group Details Securities Rights and Financials in 20-F Filing

Jianzhi Education Technology Group's 20-F filing outlines the rights of security holders and provides financial details for the year ended December 31, 2023.

Summary

• Jianzhi Education Technology Group, a Cayman Islands holding company, operates in China through PRC subsidiaries and VIEs.
• The company's operations are conducted through Jianzhi Beijing (WFOE) and variable interest entities (VIEs), namely Beijing Sentu.
• Investors are purchasing equity interests in Jianzhi Education, the Cayman holding company, and may never directly hold equity interests in the VIEs.
• The WFOE entered into contractual arrangements with Beijing Sentu and its shareholders to receive economic benefits and control over the VIE.
• The company faces risks associated with the interpretation and application of PRC laws relating to VIE structures.
• The company's ordinary shares have a par value of US$0.0001, and as of December 31, 2023, 121,110,000 shares were outstanding.
• Shareholders do not have preemptive rights.
• The company may declare dividends from profits or share premium, but not if it impairs the company's ability to pay debts.
• Voting at shareholder meetings is by show of hands unless a poll is demanded, with ordinary resolutions requiring a simple majority and special resolutions requiring two-thirds majority.
• The company is not obliged to hold annual general meetings.
• Shareholders holding at least one-third of the votes can requisition an extraordinary general meeting.
• The board of directors may decline to register share transfers under certain conditions.
• On liquidation, assets are distributed in proportion to the par value of shares held.
• The company may redeem or repurchase shares under terms approved by the board or shareholders.
• The rights of shareholders can only be varied with the consent of two-thirds of the affected class.
• The company's memorandum and articles of association may discourage a change of control.
• The company's ADSs, each representing two ordinary shares, are registered and delivered by The Bank of New York Mellon.
• ADS holders do not have shareholder rights and are subject to a deposit agreement governed by New York law.
• The depositary will pay dividends and distribute rights to purchase additional shares to ADS holders after deducting fees and expenses.
• ADS holders may instruct the depositary how to vote their shares.
• The deposit agreement can be amended or terminated, potentially affecting ADS holder rights.
• The company and the depositary have limited obligations and liability to ADS holders.
• ADS holders have the right to cancel their ADSs and withdraw the underlying shares, subject to certain limitations.
• The deposit agreement acknowledges the Direct Registration System (DRS) and Profile Modification System (Profile) apply to the ADSs.
• ADS holders waive the right to a jury trial in claims against the company or the depositary.
• The company's financial statements for the year ended December 31, 2023, reflect a net loss of RMB 382.8 million (US$53.9 million).

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While it details the company's structure and operations, the financial results indicate a significant net loss and a decrease in revenue, suggesting potential challenges. The regulatory risks associated with the VIE structure further contribute to a cautious sentiment.

Positives

• The company has established contractual arrangements to exert control over the VIE, Beijing Sentu.
• The company's ADSs are listed on the Nasdaq Stock Market.
• The depositary will distribute dividends and rights to purchase additional shares to ADS holders after deducting fees and expenses.

Negatives

• The company's financial statements for the year ended December 31, 2023, reflect a net loss of RMB 382.8 million (US$53.9 million).
• ADS holders have limited shareholder rights and are subject to the terms of a deposit agreement.
• The company faces risks associated with the interpretation and application of PRC laws relating to VIE structures.

Risks

• The company faces risks associated with the interpretation and application of PRC laws relating to VIE structures.
• The company's memorandum and articles of association may discourage a change of control.
• The deposit agreement can be amended or terminated, potentially affecting ADS holder rights.
• The company and the depositary have limited obligations and liability to ADS holders.
• ADS holders waive the right to a jury trial in claims against the company or the depositary.

Future Outlook

The document does not provide specific forward-looking statements beyond general statements about the company's business strategy and potential risks.

Industry Context

The document provides information about the company's operations within the context of PRC regulations affecting the education and telecommunications industries.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards or benchmarks.
• The document does not mention specific comparable companies, projects, or results.

Related Party Transactions

• During the year ended December 31, 2021, our chairwomen of board of directors, Peixuan Wang, paid off professional fees on behalf of the Company in the amount of RMB 2,485,486 and the Company repaid the payment in the same year.
• In addition, the Company, its wholly-owned subsidiaries, the VIE and the VIEs subsidiaries advanced RMB 2.5 million to Peixuan Wang for payments of professional fees.
• During the year ended December 31, 2022, Peixuan Wang returned RMB 1.4 million to the Company.
• As of December 31, 2022 and 2023, the Company had a balance of due from a related party of RMB 1.1 million and RMB 1.0 million (US$142 thousand).
• As of December 31, 2021 and December 31, 2022, the Company, its wholly-owned subsidiaries, VIE and VIEs subsidiaries had balance due to Xinyutong Kezhiyong Enterprise Management Center in the amount of approximately RMB 24.7 million and RMB 24.7 million (US$3.6 million), respectively, representing the outstanding payables to Xinyutong Kezhiyong Enterprise Management Center for the purchase of 51% equity interest of Xingzhiqiao on September 30, 2017 and 49% equity interest of Xingzhiqiao on August 31, 2018.
• On May 18, 2021 and July 26, 2021, the Companys subsidiary and Rongde entered into two loan agreements, pursuant to which the Companys subsidiary borrowed an aggregation of approximately RMB 47.2 million from Rongde.
• The borrowings are interest free.
• The proceeds from borrowings are for the working capital needs in operations.
• During the year ended December 31, 2022, the Company and its wholly-owned subsidiaries repaid approximately RMB 20.0 million to Rongde, with remaining balance of approximately RMB 28.0 million (US$3.9 million) extended to April 7, 2023.
• On August 24, 2022, the Companys subsidiary and Rongde entered into an additional loan agreement, pursuant to which the Companys subsidiary borrowed approximately RMB 13.7 million (HKD 16 million) from Rongde.
• The borrowing is interest free and is due in August 2023.
• The proceeds from borrowings are for the working capital needs in operations.
• As of the date of this report, the Companys subsidiary did not pay the outstanding loans payables of RMB 28.0 million to Rongde.
• On September 26, 2023, the Companys subsidiary and Rongde entered into a loan extension agreement, pursuant to which Rong extended the loan for one year.
• The loans payable of RMB 28.0 million (US$3.9 million) would be due in September 2024.
• The Company calculated the present value of the loan to be RMB 13.9 million and RMB 14.9 million (US$2.1 million) by using its incremental rate of 3.45%, respectively.
• The difference between the present value and the cash received was RMB 0.5 million and RMB 0.5 million (US$0.1 million), respectively, which was considered as a contribution from the principal shareholder and recorded as additional paid-in capital since the transaction was occurred between entities under common control.

Stakeholder Impact

• Shareholders face potential dilution and limited control due to the company's structure and potential issuance of preference shares.
• Employees may be affected by changes in labor laws and the company's ability to provide benefits.
• Customers may experience changes in service quality and pricing due to competition and regulatory factors.
• Suppliers may be impacted by the company's financial performance and ability to meet contractual obligations.
• Creditors face risks related to the company's financial performance and ability to repay debts.

Key Dates

Keywords

ADS, ordinary shares, VIE, deposit agreement, shareholders, dividends, Cayman Islands, Jianzhi Education