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FAIR VALUE
 12 Months Ended
Feb. 28, 2013
FAIR VALUE  
FAIR VALUE

12.                               FAIR VALUE

 

(a)                                 Assets and liabilities measured at fair value on a recurring basis

 

The Group measured available-for-sale securities and long-term investments at fair value on a recurring basis as of February 29, 2012 and February 28, 2013.

 

Available-for-sale securities

 

In August 2007 and December 2009, the Group bought two securities in mutual funds named Wan Jia He Xie Financing Fund and Guo Du No. 1 An Xin Shou Yi, respectively. The available-for-sale securities have no contractual maturity dates and the Group can sell the investments at any time at the Group’s decision.

 

The available-for-sale securities measured and recorded at fair value for which there are quoted prices in active markets on a recurring basis were as follows:

 

Balance as of February 28, 2010

 

$

1,918,156

 

Disposed

 

(1,470,660

)

Changes in fair value

 

2,850

 

Foreign exchange difference

 

15,363

 

 

 

 

 

Balance as of February 28, 2011

 

$

465,709

 

 

 

 

 

Changes in fair value

 

(121,895

)

Foreign exchange difference

 

17,989

 

 

 

 

 

Balance as of February 29, 2012

 

$

361,803

 

 

 

 

 

Changes in fair value

 

34,331

 

Foreign exchange difference

 

3,821

 

 

 

 

 

Balance as of February 28, 2013

 

$

399,955

 

 

The following provides additional information concerning the Group’s available-for-sale securities:

 

 

 

As of February 29, 2012

 

As of February 28, 2013

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

 

 

unrealized

 

unrealized

 

 

 

 

 

unrealized

 

unrealized

 

 

 

 

 

Cost

 

gains

 

(losses)

 

Fair value

 

Cost

 

gains

 

(losses)

 

Fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual fund

 

$

374,569

 

$

—

 

$

(12,766

)

$

361,803

 

$

378,390

 

21,565

 

$

—

 

$

399,955

 

 

Long-term investments

 

The Group accounted for its investments in Century Mingde and a third-party online education platform using the fair value option which is how management assesses the return on these investments. Changes in fair value are reflected in the consolidated statement of operations and there were no material changes in fair value for the period ended February 28, 2013.

 

 

 

As of

 

As of

 

 

 

February 29,

 

February 28,

 

 

 

2012

 

2013

 

 

 

 

 

 

 

Long-term investment in Century Mingde (1)

 

$

—

 

$

2,411,073

 

Long-term investment in a third-party online platform (2)

 

—

 

3,080,000

 

 

 

 

 

 

 

 

 

$

—

 

$

5,491,073

 

 

 

(1)                                 In March 2012, the Group acquired 6% equity interest in Century Mingde, a private company that engages in providing summer and winter camp training service in China with a cash consideration of $2,411,073.

 

At the end of each reporting period, the Group calculates the fair value of these investments by using income approach discounted cash flow method. The discounted cash flow analysis requires the use of significant unobservable inputs (Level 3 inputs), including projected revenue, operating expenses, capital expenditures and a discount rate calculated based on the weighted average cost of capital. As of February 28, 2013, the net present value derived from such discounted cash flow model based on a discount rate of 19% approximated the initial purchase price.

 

(2)                                 In February 2013, the Group acquired 16.85% equity interest in a third-party online education platform, a private company incorporated in the Cayman Islands, by purchasing 2,200,000 Series A preferred shares for a total cash consideration of $3,080,000. As the transaction date was close to the fiscal year end, the initial purchase price is considered the fair value of this investment.

 

For the year ended February 28, 2013, the Group did not recognize any changes in fair value of long-term investments in the consolidated statements of operation.

 

As of February 29, 2012 and February 28, 2013, information about inputs for the fair value measurements of the Group’s assets that are measured at fair value on a recurring basis in periods subsequent to their initial recognition is as follows:

 

 

 

Fair Value Measurement at Reporting Date Using

 

 

 

 

 

Quoted Prices in

 

Significant Other

 

Significant

 

 

 

February 29,

 

Active Market for

 

Observable

 

Unobservable

 

Description

 

2012

 

Identical Assets

 

Inputs

 

Inputs

 

 

 

 

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

 

 

 

 

 

 

 

 

 

 

Available for sale securities

 

$

361,803

 

$

361,803

 

—

 

—

 

Long-term investments

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

361,803

 

$

361,803

 

—

 

—

 

 

 

 

Fair Value Measurement at Reporting Date Using

 

 

 

 

 

Quoted Prices in

 

Significant Other

 

Significant

 

 

 

February 28,

 

Active Market for

 

Observable

 

Unobservable

 

Description

 

2013

 

Identical Assets

 

Inputs

 

Inputs

 

 

 

 

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

 

 

 

 

 

 

 

 

 

 

Available for sale securities

 

$

399,955

 

$

399,955

 

—

 

—

 

Long-term investments

 

$

5,491,073

 

—

 

—

 

$

5,491,073

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

5,891,028

 

$

399,955

 

—

 

$

5,491,073

 

 

(b)           Assets and liabilities measured at fair value on a nonrecurring basis - continued

 

The Group measured the goodwill at fair value on a nonrecurring basis when it is annually evaluated or whenever events or changes in circumstances indicate that carrying amount of a reporting unit exceeds its fair value as a result of the impairment assessments. The Group has recognized impairment loss related to goodwill for the year ended February 29, 2012, as set out in Note 9. The fair value was determined using models with significant unobservable inputs (Level 3 inputs), primarily the management projection of discounted future cash flow and the discount rate