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What changed in ATA Creativity Global's 20-F — 2024 vs 2025

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Paragraph-level year-over-year comparison of ATA Creativity Global's 2024 and 2025 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+455 added−477 removedSource: 20-F (2026-03-31) vs 20-F (2025-04-10)

Top changes in ATA Creativity Global's 2025 20-F

455 paragraphs added · 477 removed · 386 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

187 edited+20 added−39 removed564 unchanged
Biggest changeRisk Factors — Risks Relating to Our Corporate Structure.” 20 Table of Contents VIE Consolidation Schedule The following tables present the Company’s condensed consolidating schedule depicting the consolidated statements of comprehensive income (loss) for the fiscal years ended December 31, 2022, 2023 and 2024 of the Company, its subsidiaries, the VIE, and the corresponding eliminating adjustments separately. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 ​ ​ ​ ​ Subsidiaries ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ of the ​ ​ ​ Elimination ​ ​ ​ ​ The Company ​ Company ​ VIE ​ adjustments ​ Consolidated ​ RMB RMB RMB RMB RMB Net revenues — 268,055,926 4,236 — 268,060,162 Cost and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenues 146,109 126,649,100 — — 126,795,209 Operating expenses 6,750,893 176,165,735 1,567,412 — 184,484,040 Total cost and expenses 6,897,002 302,814,835 1,567,412 — 311,279,249 Other operating income, net — 174,931 — — 174,931 Loss from operations (6,897,002) (34,583,978) (1,563,176) — (43,044,156) Other income 33,082 949,333 331 — 982,746 Investment loss (29,233,857) (438,153) (6,465,269) 35,699,126 (1) (438,153) Loss before income taxes (36,097,777) (34,072,798) (8,028,114) 35,699,126 (42,499,563) Income tax benefit — (6,401,691) — — (6,401,691) Net loss (36,097,777) (27,671,107) (8,028,114) 35,699,126 (36,097,872) Net loss attributable to non-controlling interests — (6,465,269) (95) 6,465,269 (1) (95) Net loss attributable to ATA Creativity Global (36,097,777) (21,205,838) (8,028,019) 29,233,857 (36,097,777) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ ​ ​ ​ Subsidiaries ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ of the ​ ​ ​ Elimination ​ ​ ​ ​ The Company ​ Company ​ VIE ​ adjustments ​ Consolidated ​ RMB RMB RMB RMB RMB Net revenues — 221,618,968 — — 221,618,968 Cost and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenues 74,827 106,886,932 — — 106,961,759 Operating expenses 5,141,980 150,202,984 839,014 — 156,183,978 Total cost and expenses 5,216,807 257,089,916 839,014 — 263,145,737 Other operating income, net — 30,865 — — 30,865 Loss from operations (5,216,807) (35,440,083) (839,014) — (41,495,904) Other income 25,797 947,489 368 — 973,654 Investment loss (28,469,235) — (6,776,600) 35,245,835 (1) — Loss before income taxes (33,660,245) (34,492,594) (7,615,246) 35,245,835 (40,522,250) Income tax benefit — (6,811,709) — — (6,811,709) Net loss (33,660,245) (27,680,885) (7,615,246) 35,245,835 (33,710,541) Net loss attributable to non-controlling interests — (6,825,164) (1,732) 6,776,600 (1) (50,296) Net loss attributable to ATA Creativity Global (33,660,245) (20,855,721) (7,613,514) 28,469,235 (33,660,245) ​ ​ 21 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 ​ ​ ​ ​ Subsidiaries ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ of the ​ ​ ​ Elimination ​ ​ ​ ​ The Company ​ Company ​ VIE ​ adjustments ​ Consolidated ​ RMB RMB RMB RMB RMB Net revenues ​ — ​ 206,820,874 ​ — ​ — ​ 206,820,874 Cost and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenues 88,930 104,226,926 — — 104,315,856 Operating expenses 6,175,519 152,050,480 882,098 — ​ 159,108,097 Total cost and expenses 6,264,449 256,277,406 882,098 — 263,423,953 Other operating income, net — 16,515 — — ​ 16,515 Loss from operations (6,264,449) (49,440,017) (882,098) — (56,586,564) Other income 6,857 754,982 483 — 762,322 Investment loss (41,635,317) — (6,942,500) 48,577,817 (1) — Gain on deconsolidation of subsidiaries and others, net — 1,308,627 — — 1,308,627 Loss before income taxes (47,892,909) (47,376,408) (7,824,115) 48,577,817 (54,515,615) Income tax benefit — (5,921,384) — — (5,921,384) Net loss (47,892,909) (41,455,024) (7,824,115) 48,577,817 (48,594,231) Net loss attributable to non-controlling interests — (7,636,896) (6,926) 6,942,500 (1) (701,322) Net loss attributable to ATA Creativity Global (47,892,909) (33,818,128) (7,817,189) 41,635,317 (47,892,909) (1) To eliminate the investment income or loss recognized in the Company derived from earnings or losses picked up from its subsidiaries and the VIE, as well as the investment loss recorded in the VIE with the net loss attributable to the VIE as non-controlling interests recorded in the subsidiaries of the Company. ​ 22 Table of Contents The following tables present the Company’s condensed consolidating schedule depicting the consolidated balance sheets as of December 31, 2023 and 2024 of the Company, its subsidiaries, the VIE and corresponding eliminating adjustments separately. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ ​ ​ ​ Subsidiaries ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ of the ​ ​ ​ Elimination ​ ​ ​ ​ The Company ​ Company ​ VIE ​ adjustments ​ Consolidated ​ RMB RMB RMB RMB RMB ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ 4,608,462 ​ 31,554,745 ​ 360,788 ​ — ​ 36,523,995 Accounts receivable, net — 2,712,845 — — 2,712,845 Prepaid expenses and other current assets 4,336 27,398,498 — — 27,402,834 Inter-company receivables — 66,217,253 (1) — (66,217,253) (1) — Amounts due from nominee shareholders for the VIE — 50,000,000 (2) — (50,000,000) (2) — Total current assets 4,612,798 177,883,341 360,788 (116,217,253) 66,639,674 Non-current assets: ​ ​ ​ ​ ​ Other non-current assets — 155,988,099 10,000 — 155,998,099 Goodwill — 196,289,492 — — 196,289,492 Long-term investments 78,329,251 38,000,000 42,537,827 (120,867,078) (3) 38,000,000 Total non-current assets 78,329,251 390,277,591 42,547,827 (120,867,078) 390,287,591 Total assets 82,942,049 568,160,932 42,908,615 (237,084,331) 456,927,265 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ Accrued expenses and other payables 3,231,601 53,023,439 117,920 — 56,372,960 Deferred revenues and other current liabilities — 298,122,449 — — 298,122,449 Inter-company payables — — 66,217,253 (1) (66,217,253) (1) — Total current liabilities 3,231,601 351,145,888 66,335,173 (66,217,253) 354,495,409 Total non-current liabilities — 22,785,664 — — 22,785,664 Total liabilities 3,231,601 373,931,552 66,335,173 (66,217,253) 377,281,073 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shareholders’ equity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common shares ​ 4,755,623 ​ — ​ — ​ — ​ 4,755,623 Paid-in capital ​ — ​ 15,984,800 ​ 50,000,000 (2) (65,984,800) (2)(3) — Treasury shares ​ (8,201,046) ​ — ​ — ​ — (3) (8,201,046) Additional paid-in capital ​ 547,915,003 ​ (120,348,733) ​ — ​ 120,348,733 (3) 547,915,003 Accumulated other comprehensive loss ​ (36,952,183) ​ 58,457,737 ​ — ​ (58,457,737) (3) (36,952,183) Retained earnings (accumulated deficits) ​ (427,806,949) ​ 197,597,748 ​ (73,362,302) ​ (124,235,446) (3) (427,806,949) Non-controlling interests ​ — ​ 42,537,828 ​ (64,256) ​ (42,537,828) (3) (64,256) Total shareholders’ equity ​ 79,710,448 ​ 194,229,380 ​ (23,426,558) ​ (170,867,078) ​ 79,646,192 Total liabilities and shareholders’ equity ​ 82,942,049 ​ 568,160,932 ​ 42,908,615 ​ (237,084,331) ​ 456,927,265 ​ ​ 23 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ ​ Subsidiaries ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ of the ​ ​ ​ Elimination ​ ​ ​ ​ The Company ​ Company ​ VIE ​ adjustments ​ Consolidated ​ RMB RMB RMB RMB RMB ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ 1,068,177 ​ 58,841,837 ​ 257,218 ​ — ​ 60,167,232 Accounts receivable, net — 2,235,490 — — 2,235,490 Prepaid expenses and other current assets 4,272 8,031,305 6,592 — 8,042,169 Inter-company receivables — 64,617,353 (1) — (64,617,353) (1) — Amounts due from nominee shareholders for the VIE — 50,000,000 (2) — (50,000,000) (2) — Total current assets 1,072,449 183,725,985 263,810 (114,617,353) 70,444,891 Non-current assets: ​ ​ ​ ​ ​ Other non-current assets — 144,192,170 12,590 — 144,204,760 Goodwill — 196,289,492 — — 196,289,492 Long-term investments 115,087,677 38,000,000 49,003,096 (164,090,773) (3) 38,000,000 Total non-current assets 115,087,677 378,481,662 49,015,686 (164,090,773) 378,494,252 Total assets 116,160,126 562,207,647 49,279,496 (278,708,126) 448,939,143 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ Accrued expenses and other payables 3,122,258 45,963,258 60,587 — 49,146,103 Deferred revenues and other current liabilities — 265,256,398 — — 265,256,398 Inter-company payables — — 64,617,353 (1) (64,617,353) (1) — Total current liabilities 3,122,258 311,219,656 64,677,940 (64,617,353) 314,402,501 Total non-current liabilities — 21,562,935 — — 21,562,935 Total liabilities 3,122,258 332,782,591 64,677,940 (64,617,353) 335,965,436 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shareholders’ equity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common shares ​ 4,730,128 ​ — ​ — ​ — ​ 4,730,128 Paid-in capital ​ — ​ 15,984,800 ​ 50,000,000 (2) (65,984,800) (2)(3) — Treasury shares ​ (8,201,046) ​ — ​ — ​ — (3) (8,201,046) Additional paid-in capital ​ 545,222,465 ​ (120,348,733) ​ — ​ 120,348,733 (3) 545,222,465 Accumulated other comprehensive loss ​ (37,004,507) ​ 45,917,853 ​ — ​ (45,917,853) (3) (37,004,507) Retained earnings (accumulated deficits) ​ (391,709,172) ​ 238,868,040 ​ (65,334,283) ​ (173,533,757) (3) (391,709,172) Non-controlling interests ​ — ​ 49,003,096 ​ (64,161) ​ (49,003,096) (3) (64,161) Total shareholders’ equity ​ 113,037,868 ​ 229,425,056 ​ (15,398,444) ​ (214,090,773) ​ 112,973,707 Total liabilities and shareholders’ equity ​ 116,160,126 ​ 562,207,647 ​ 49,279,496 ​ (278,708,126) ​ 448,939,143 (1) To eliminate the amounts related to the loans provided by subsidiaries of the Company to the VIE.
Biggest changeRisk Factors — Risks Relating to Our Corporate Structure.” VIE Consolidation Schedule The following tables present the Company’s condensed consolidating schedule depicting the consolidated statements of comprehensive income (loss) for the fiscal years ended December 31, 2023, 2024 and 2025 of the Company, its subsidiaries, the VIE, and the corresponding eliminating adjustments separately. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 ​ ​ ​ ​ Subsidiaries ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ of the ​ ​ ​ Elimination ​ ​ ​ ​ The Company ​ Company ​ VIE ​ adjustments ​ Consolidated ​ ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB Net revenues — 268,112,876 — — 268,112,876 Cost and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenues 70,406 137,731,120 — — 137,801,526 Reversal of provision for loan receivable and other receivables ​ (2,485,349) ​ (1,296,313) ​ — ​ — ​ (3,781,662) Goodwill impairment ​ — ​ 33,908,719 ​ — ​ — ​ 33,908,719 Operating expenses 4,904,148 158,245,103 1,321,640 — 164,470,891 Total cost and expenses 2,489,205 328,588,629 1,321,640 — 332,399,474 Other operating income, net — 175,898 — — 175,898 Loss from operations (2,489,205) ​ (60,299,855) (1,321,640) — (64,110,700) Other income 24,414 ​ 579,687 171 — 604,272 Investment gain(loss) (45,582,703) ​ 11,880,702 (4,784,626) 50,367,329 (1) 11,880,702 Loss before income taxes (48,047,494) (47,839,466) (6,106,095) 50,367,329 (51,625,726) Income tax benefit — (3,578,203) — — (3,578,203) Net loss (48,047,494) ​ (44,261,263) (6,106,095) 50,367,329 (48,047,523) Net loss attributable to non-controlling interests — (4,784,626) (29) 4,784,626 (1) (29) Net loss attributable to ATA Creativity Global (48,047,494) (39,476,637) (6,106,066) 45,582,703 (48,047,494) ​ ​ 20 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 ​ ​ ​ ​ Subsidiaries ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ of the ​ ​ ​ Elimination ​ ​ ​ ​ The Company ​ Company ​ VIE ​ adjustments ​ Consolidated ​ ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB Net revenues — 268,055,926 4,236 — 268,060,162 Cost and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenues 146,109 126,649,100 — — 126,795,209 Operating expenses 6,750,893 176,165,735 1,567,412 — 184,484,040 Total cost and expenses 6,897,002 302,814,835 1,567,412 — 311,279,249 Other operating income, net — 174,931 — — 174,931 Loss from operations (6,897,002) (34,583,978) (1,563,176) — (43,044,156) Other income 33,082 949,333 331 — 982,746 Investment gain(loss) (29,233,857) (438,153) (6,465,269) 35,699,126 (1) (438,153) Loss before income taxes (36,097,777) (34,072,798) (8,028,114) 35,699,126 (42,499,563) Income tax benefit — (6,401,691) — — (6,401,691) Net loss (36,097,777) (27,671,107) (8,028,114) 35,699,126 (36,097,872) Net loss attributable to non-controlling interests — (6,465,269) (95) 6,465,269 (1) (95) Net loss attributable to ATA Creativity Global (36,097,777) (21,205,838) (8,028,019) 29,233,857 (36,097,777) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ ​ ​ ​ Subsidiaries ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ of the ​ ​ ​ Elimination ​ ​ ​ ​ The Company ​ Company ​ VIE ​ adjustments ​ Consolidated ​ ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB Net revenues ​ — ​ 221,618,968 ​ — ​ — ​ 221,618,968 Cost and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenues 74,827 106,886,932 — — 106,961,759 Operating expenses 5,141,980 150,202,984 839,014 — ​ 156,183,978 Total cost and expenses 5,216,807 257,089,916 839,014 — 263,145,737 Other operating income, net — 30,865 — — ​ 30,865 Loss from operations (5,216,807) (35,440,083) (839,014) — (41,495,904) Other income 25,797 947,489 368 — 973,654 Investment loss (28,469,235) — (6,776,600) 35,245,835 (1) — Loss before income taxes (33,660,245) (34,492,594) (7,615,246) 35,245,835 (40,522,250) Income tax benefit — (6,811,709) — — (6,811,709) Net loss (33,660,245) (27,680,885) (7,615,246) 35,245,835 (33,710,541) Net loss attributable to non-controlling interests — (6,825,164) (1,732) 6,776,600 (1) (50,296) Net loss attributable to ATA Creativity Global (33,660,245) (20,855,721) (7,613,514) 28,469,235 (33,660,245) (1) To eliminate the investment income or loss recognized in the Company derived from earnings or losses picked up from its subsidiaries and the VIE, as well as the investment loss recorded in the VIE with the net loss attributable to the VIE as non-controlling interests recorded in the subsidiaries of the Company. ​ 21 Table of Contents The following tables present the Company’s condensed consolidating schedule depicting the consolidated balance sheets as of December 31, 2024 and 2025 of the Company, its subsidiaries, the VIE and corresponding eliminating adjustments separately. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2025 ​ ​ ​ ​ Subsidiaries ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ of the ​ ​ ​ Elimination ​ ​ ​ ​ The Company ​ Company ​ VIE ​ adjustments ​ Consolidated ​ ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ 1,057,465 ​ 84,007,574 ​ 171,249 ​ — ​ 85,236,288 Accounts receivable, net — 298,377 — — 298,377 Prepaid expenses and other current assets 4,240 25,821,157 7,062 — 25,832,459 Inter-company receivables — 67,411,670 (1) — (67,411,670) (1) — Amounts due from nominee shareholders for the VIE — 50,000,000 (2) — (50,000,000) (2) — Total current assets 1,061,705 227,538,778 178,311 (117,411,670) 111,367,124 Non-current assets: ​ ​ ​ ​ ​ Other non-current assets — 134,540,098 10,000 — 134,550,098 Goodwill — 162,380,773 — — 162,380,773 Long-term investments 33,544,606 — 37,753,202 (71,297,808) (3) — Total non-current assets 33,544,606 296,920,871 37,763,202 (71,297,808) 296,930,871 Total assets 34,606,311 524,459,649 37,941,513 (188,709,478) 408,297,995 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ Accrued expenses and other payables 2,559,166 53,872,129 62,496 ​ — ​ 56,493,791 Short-term loan ​ — ​ 1,000,000 ​ — ​ — ​ 1,000,000 Deferred revenues and other current liabilities — 287,085,706 — — 287,085,706 Inter-company payables — — 67,411,670 (1) (67,411,670) (1) — Total current liabilities 2,559,166 341,957,835 67,474,166 (67,411,670) 344,579,497 Lease liabilities-non current ​ — ​ 14,617,119 ​ — ​ — ​ 14,617,119 Long-term loan ​ — ​ 15,031,900 ​ — ​ — ​ 15,031,900 Deferred tax liabilities ​ — ​ 2,086,619 ​ — ​ — ​ 2,086,619 Total non-current liabilities — 31,735,638 — — 31,735,638 Total liabilities 2,559,166 373,693,473 67,474,166 (67,411,670) 376,315,135 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shareholders’ equity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common shares ​ 4,780,117 ​ — ​ — ​ — ​ 4,780,117 Paid-in capital ​ — ​ 15,984,800 ​ 50,000,000 (2) (65,984,800) (2)(3) — Treasury shares ​ (8,201,046) ​ — ​ — ​ — (3) (8,201,046) Additional paid-in capital ​ 548,769,331 ​ (120,348,733) ​ — ​ 120,348,733 (3) 548,769,331 Accumulated other comprehensive income(loss) ​ (37,446,814) ​ 39,101,537 ​ — ​ (39,101,537) (3) (37,446,814) Retained earnings (accumulated deficits) ​ (475,854,443) ​ 178,275,370 ​ (79,468,368) ​ (98,807,002) (3) (475,854,443) Non-controlling interests ​ — ​ 37,753,202 ​ (64,285) ​ (37,753,202) (3) (64,285) Total shareholders’ equity ​ 32,047,145 ​ 150,766,176 ​ (29,532,653) ​ (121,297,808) ​ 31,982,860 Total liabilities and shareholders’ equity ​ 34,606,311 ​ 524,459,649 ​ 37,941,513 ​ (188,709,478) ​ 408,297,995 ​ ​ 22 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ ​ ​ ​ Subsidiaries ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ of the ​ ​ ​ Elimination ​ ​ ​ ​ The Company ​ Company ​ VIE ​ adjustments ​ Consolidated ​ ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ 4,608,462 ​ 31,554,745 ​ 360,788 ​ — ​ 36,523,995 Accounts receivable, net — 2,712,845 — — 2,712,845 Prepaid expenses and other current assets 4,336 27,398,498 — — 27,402,834 Inter-company receivables — 66,217,253 (1) — (66,217,253) (1) — Amounts due from nominee shareholders for the VIE — 50,000,000 (2) — (50,000,000) (2) — Total current assets 4,612,798 177,883,341 360,788 (116,217,253) 66,639,674 Non-current assets: ​ ​ ​ ​ ​ Other non-current assets — 155,988,099 10,000 — 155,998,099 Goodwill — 196,289,492 — — 196,289,492 Long-term investments 78,329,251 38,000,000 42,537,827 (120,867,078) (3) 38,000,000 Total non-current assets 78,329,251 390,277,591 42,547,827 (120,867,078) 390,287,591 Total assets 82,942,049 568,160,932 42,908,615 (237,084,331) 456,927,265 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ Accrued expenses and other payables 3,231,601 53,023,439 117,920 — 56,372,960 Deferred revenues and other current liabilities — 298,122,449 — — 298,122,449 Inter-company payables — — 66,217,253 (1) (66,217,253) (1) — Total current liabilities 3,231,601 351,145,888 66,335,173 (66,217,253) 354,495,409 Total non-current liabilities — 22,785,664 — — 22,785,664 Total liabilities 3,231,601 373,931,552 66,335,173 (66,217,253) 377,281,073 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shareholders’ equity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common shares ​ 4,755,623 ​ — ​ — ​ — ​ 4,755,623 Paid-in capital ​ — ​ 15,984,800 ​ 50,000,000 (2) (65,984,800) (2)(3) — Treasury shares ​ (8,201,046) ​ — ​ — ​ — (3) (8,201,046) Additional paid-in capital ​ 547,915,003 ​ (120,348,733) ​ — ​ 120,348,733 (3) 547,915,003 Accumulated other comprehensive income(loss) ​ (36,952,183) ​ 58,457,737 ​ — ​ (58,457,737) (3) (36,952,183) Retained earnings (accumulated deficits) ​ (427,806,949) ​ 197,597,748 ​ (73,362,302) ​ (124,235,446) (3) (427,806,949) Non-controlling interests ​ — ​ 42,537,828 ​ (64,256) ​ (42,537,828) (3) (64,256) Total shareholders’ equity ​ 79,710,448 ​ 194,229,380 ​ (23,426,558) ​ (170,867,078) ​ 79,646,192 Total liabilities and shareholders’ equity ​ 82,942,049 ​ 568,160,932 ​ 42,908,615 ​ (237,084,331) ​ 456,927,265 (1) To eliminate the amounts related to the loans provided by subsidiaries of the Company to the VIE.
If this occurs, our business, results of operations, financial condition and the value of our ADSs could be materially and adversely affected. See “Item 3.D.
If this occurs, our business, results of operations, financial condition and the value of our ADSs could be materially and adversely affected. See “Item 3.D.
Risk Factors — Risks Relating to Regulations of Our Business — Failure to comply with regulations relating to information security and privacy protection, breaches or perceived breaches of our security measures relating to our service offerings, unauthorized disclosure or misuse of personal data through breaches of our computer systems or otherwise, could result in negative publicity and loss of students, expose us to protracted and costly litigation, and harm our business and results of operations.
Risk Factors — Risks Relating to Regulations of Our Business — Failure to comply with regulations relating to information security and privacy protection, breaches or perceived breaches of our security measures relating to our service offerings, unauthorized disclosure or misuse of personal data through breaches of our computer systems or otherwise, could result in negative publicity and loss of students, expose us to protracted and costly litigation, and harm our business and results of operations.
The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.
The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.
As the Company is a Cayman Islands holding company with nearly all of business operations conducted within the territory of mainland China, we understand the Company’s listing and issuance of securities on Nasdaq constitutes indirect issuance of securities overseas by a Chinese domestic company under the Overseas Offering and Listing Measures.
As the Company is a Cayman Islands holding company with nearly all of business operations conducted within the territory of mainland China, we understand the Company’s listing and issuance of securities on Nasdaq constitutes indirect issuance of securities overseas by a Chinese domestic company under the Overseas Offering and Listing Measures.
In addition, since the regulatory regime of the PRC for securities activities continues to rapidly evolve, we cannot assure you that we will not be required in the future to make filings with or obtain approvals from the CSRC or potentially other regulatory authorities in order to maintain the listing status of our ADSs on Nasdaq due to changes or passing of applicable laws, regulations, or interpretations in the future.
In addition, since the regulatory regime of the PRC for securities activities continues to rapidly evolve, we cannot assure you that we will not be required in the future to make filings with or obtain approvals from the CSRC or potentially other regulatory authorities in order to maintain the listing status of our ADSs on Nasdaq due to changes or passing of applicable laws, regulations, or interpretations in the future.
In the event that it is determined that the Company, its subsidiaries and the VIE are required to make filings with or obtain approval from the CSRC or any other regulatory authority but fail to make such filings or obtain such approvals timely or at all, the PRC subsidiaries of the Company or the VIE may be subject to a non-compliance rectification order, warning letters or fines, which could materially and adversely affect our business, financial condition, and results of operations, and/or the value of our ADSs, or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.
In the event that it is determined that the Company, its subsidiaries and the VIE are required to make filings with or obtain approval from the CSRC or any other regulatory authority but fail to make such filings or obtain such approvals timely or at all, the PRC subsidiaries of the Company or the VIE may be subject to a non-compliance rectification order, warning letters or fines, which could materially and adversely affect our business, financial condition, and results of operations, and/or the value of our ADSs, or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.
The Network Data Security Regulations stipulates that where a network data processor carries out network data processing activities that affect or may affect national security, it shall undergo a national security review in accordance with relevant national regulations.
The Network Data Security Regulations stipulates that where a network data processor carries out network data processing activities that affect or may affect national security, it shall undergo a national security review in accordance with relevant national regulations.
We believe the Company, its subsidiaries and the VIE would not be subject to the cybersecurity review by the CAC, given that the Company, its subsidiaries and the VIE do not possess a large amount of personal information in our business operations, and 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.
We believe the Company, its subsidiaries and the VIE would not be subject to the cybersecurity review by the CAC, given that the Company, its subsidiaries and the VIE do not possess a large amount of personal information in our business operations, and 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, there remains uncertainty as to how the Cybersecurity Review Measures will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Cybersecurity Review Measures.
However, there remains uncertainty as to how the Cybersecurity Review Measures will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Cybersecurity Review Measures.
If the relevant laws, regulations or interpretations change in the future and the Company, its subsidiaries and the VIE are subject to mandatory cybersecurity review and other specific actions required by the CAC, we will face uncertainty as to whether any clearance or other required actions can be timely completed, or at all.
If the relevant laws, regulations or interpretations change in the future and the Company, its subsidiaries and the VIE are subject to mandatory cybersecurity review and other specific actions required by the CAC, we will face uncertainty as to whether any clearance or other required actions can be timely completed, or at all.
Domestic enterprises that provide or publicly disclose files and documents that contain state secrets and work secrets of the authorities to relevant securities companies, securities service agencies, foreign regulatory agencies and other institutions and individuals or do so through its overseas listing entities, shall obtain the approval of the competent authorities, and file with the competent confidentiality administrative authorities.
Domestic enterprises that provide or publicly disclose files and documents that contain state secrets and work secrets of the authorities to relevant securities companies, securities service agencies, foreign regulatory agencies and other institutions and individuals or do so through its overseas listing entities, shall obtain the approval of the competent authorities, and file with the competent confidentiality administrative authorities.
Although the interpretation and implementation of the Confidentiality Provisions remain substantially uncertain, we tend to believe the Company, its subsidiaries and the VIE would not be subject to clearance under the Confidentiality Provisions as the Company, its subsidiaries and the VIE do not possess any document or file that involves state secrets or work secrets of the authorities.
Although the interpretation and implementation of the Confidentiality Provisions remain substantially uncertain, we tend to believe the Company, its subsidiaries and the VIE would not be subject to clearance under the Confidentiality Provisions as the Company, its subsidiaries and the VIE do not possess any document or file that involves state secrets or work secrets of the authorities.
As of the date of this annual report, the Company, its subsidiaries and the VIE have not received any notice from regulatory authorities requiring them to obtain the foregoing approval or complete any of the foregoing procedures.
As of the date of this annual report, the Company, its subsidiaries and the VIE have not received any notice from regulatory authorities requiring them to obtain the foregoing approval or complete any of the foregoing procedures.
However, if the relevant laws, regulations or interpretations change in the future, and the Company, its subsidiaries and the VIE are subject to such clearance, we will face uncertainty as to whether any required approval can be timely obtained and any actions can be timely completed, or at all.
However, if the relevant laws, regulations or interpretations change in the future, and the Company, its subsidiaries and the VIE are subject to such clearance, we will face uncertainty as to whether any required approval can be timely obtained and any actions can be timely completed, or at all.
Although the Amended Private Education Law generally states that private education institutions are also included in the category of “private schools,” as of the date of this annual report, relevant implementing rules only require private education institutions providing tutoring services on academic subjects for K-12 students and certain vocational skill education services to obtain private school operating permits.
Although the Amended Private Education Law generally states that private education institutions are also included in the category of “private schools,” as of the date of this annual report, relevant implementing rules only require private education institutions providing tutoring services on academic subjects for K-12 students and certain vocational skill education services to obtain private school operating permits.
As of the date of this annual report, one of our subsidiaries Qingdao Haili has obtained an operating permit for private school, but Qingdao Haili does not operate any of our training centers, and none of our training centers have obtained an operating permit or approvals for non-academic after-school tutoring institutions from local competent authorities.
As of the date of this annual report, one of our subsidiaries Qingdao Haili has obtained an operating permit for private school, but Qingdao Haili does not operate any of our training centers, and none of our training centers have obtained an operating permit or approvals for non-academic after-school tutoring institutions from local competent authorities.
If we inadvertently conclude that such permissions are not required, but the regulators do not take the same view as we do, our training centers may be subject to various penalties, including fines, orders to promptly rectify the non-compliance, return course and service fees collected, pay a multiple of the amount of returned course and/or service fees to regulators as a penalty, and/or cease operations.
If we inadvertently conclude that such permissions are not required, but the regulators do not take the same view as we do, our training centers may be subject to various penalties, including fines, orders to promptly rectify the non-compliance, return course and service fees collected, pay a multiple of the amount of returned course and/or service fees to regulators as a penalty, and/or cease operations.
According to the Regulations on Travel Agencies and its implementation rules, any tourism agency that engages in domestic and outbound tourism shall apply for corresponding permits to engage in such tourism activities from the administrative department of tourism under the State Council, the governments of provinces, autonomous regions, or municipalities.
According to the Regulations on Travel Agencies and its implementation rules, any tourism agency that engages in domestic and outbound tourism shall apply for corresponding permits to engage in such tourism activities from the administrative department of tourism under the State Council, the governments of provinces, autonomous regions, or municipalities.
On November 19, 2024, the General Office of the Ministry of Culture and Tourism issued the Notice on Promoting the Healthy Development of Travel Agency Research-based Tourism Business, providing that travel agencies shall choose qualified suppliers and partners and shall evaluate the service capabilities of the partners, which does not require our PRC subsidiaries to obtain travel agency permits.
On November 19, 2024, the General Office of the Ministry of Culture and Tourism issued the Notice on Promoting the Healthy Development of Travel Agency Research-based Tourism Business, providing that travel agencies shall choose qualified suppliers and partners and shall evaluate the service capabilities of the partners, which does not require our PRC subsidiaries to obtain travel agency permits.
With respect to our research-based learning services, our PRC subsidiaries cooperate with third-party travel agencies which have travel agency permits for our educational travel activities, such as accommodation and tour guiding.
With respect to our research-based learning services, our PRC subsidiaries cooperate with third-party travel agencies which have travel agency permits for our educational travel activities, such as accommodation and tour guiding.
We don’t think our PRC subsidiaries engaged in such travel-related activities under their cooperation with third-party travel are also required to obtain travel agency permits under the current law rules, and such PRC subsidiaries have not received any notifications which require them to obtain a travel agency permit.
We don’t think our PRC subsidiaries engaged in such travel-related activities under their cooperation with third-party travel are also required to obtain travel agency permits under the current law rules, and such PRC subsidiaries have not received any notifications which require them to obtain a travel agency permit.
If we inadvertently conclude that such permissions are not required but the regulators do not take the same view as we do, the relevant regulators may order such PRC subsidiaries to rectify the non-compliance, confiscate the illegal income from such business and impose fines on such PRC subsidiaries.
If we inadvertently conclude that such permissions are not required but the regulators do not take the same view as we do, the relevant regulators may order such PRC subsidiaries to rectify the non-compliance, confiscate the illegal income from such business and impose fines on such PRC subsidiaries.
However, since the enforcement of relevant regulations and rules involve uncertainties, we cannot assure you that the regulators will take the same view as we do.
However, since the enforcement of relevant regulations and rules involve uncertainties, we cannot assure you that the regulators will take the same view as we do.
If we inadvertently conclude that the ICP license is not required for our PRC subsidiaries, our PRC subsidiaries delivering online courses services may be subject to a non-compliance rectification order, confiscation of illegal proceeds, or fines; or if the non-compliance is deemed serious by the regulators, may be ordered to suspend business for rectification.
If we inadvertently conclude that the ICP license is not required for our PRC subsidiaries, our PRC subsidiaries delivering online courses services may be subject to a non-compliance rectification order, confiscation of illegal proceeds, or fines; or if the non-compliance is deemed serious by the regulators, may be ordered to suspend business for rectification.
The personal information processors shall take necessary measures to ensure that the activities of the overseas recipients handling personal information meet the standards of personal information protection stipulated in the Personal Information Protection Law.
The personal information processors shall take necessary measures to ensure that the activities of the overseas recipients handling personal information meet the standards of personal information protection stipulated in the Personal Information Protection Law.
If a personal information processor provides personal information across the border of mainland China, it shall inform the information owners of the name and contact information of the overseas recipients, the purpose and manner of information processing, the type of personal information, and the manner and procedure for the information owners to exercise their rights under the Personal Information Protection Law over the overseas recipients, and obtain consent of the information owners.
If a personal information processor provides personal information across the border of mainland China, it shall inform the information owners of the name and contact information of the overseas recipients, the purpose and manner of information processing, the type of personal information, and the manner and procedure for the information owners to exercise their rights under the Personal Information Protection Law over the overseas recipients, and obtain consent of the information owners.
In accordance with the Security Assessment Measures and the Cross-border Data Flow Provisions, the following cross-border transfers of important data or personal information generated from or collected in mainland China should be subject to a security assessment, which includes (i) a critical information infrastructure operator to transfer personal information or important data; (ii) a data processor other than a critical information infrastructure operator to transfer important data overseas; (iii) a data processor other than a critical information infrastructure operator who has, since January 1 of the current year, transferred personal information of more than 1 million individuals overseas cumulatively, or transferred sensitive personal information of more than 10,000 individuals overseas cumulatively; or (iv) other circumstances under which security assessment of data cross-border transfer is required as prescribed by the national cyberspace administration.
In accordance with the Security Assessment Measures and the Cross-border Data Flow Provisions, the following cross-border transfers of important data or personal information generated from or collected in mainland China should be subject to a security assessment, which includes (i) a critical information infrastructure operator to transfer personal information or important data; (ii) a data processor other than a critical information infrastructure operator to transfer important data overseas; (iii) a data processor other than a critical information infrastructure operator who has, since January 1 of the current year, transferred personal information of more than 1 million individuals overseas cumulatively, or transferred sensitive personal information of more than 10,000 individuals overseas cumulatively; or (iv) other circumstances under which security assessment of data cross-border transfer is required as prescribed by the national cyberspace administration.
As of the date of this annual report, the amount of personal information (including sensitive personal information) transmitted by the Company, its subsidiaries and the VIE across the border is relatively small. The 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.
As of the date of this annual report, the amount of personal information (including sensitive personal information) transmitted by the Company, its subsidiaries and the VIE across the border is relatively small. The 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.
The Cross-border Data Flow Provisions provides exemptions, under which a data processor that transfers personal information overseas can be exempted from applying for a security assessment, completing personal information protection certification or entering into a standard contract for the outbound transfer of personal information.
The Cross-border Data Flow Provisions provides exemptions, under which a data processor that transfers personal information overseas can be exempted from applying for a security assessment, completing personal information protection certification or entering into a standard contract for the outbound transfer of personal information.
That said, a data processor that transfers personal information overseas shall fulfill its legal obligations, such as notifying the relevant individuals, obtaining the individuals’ separate consent, and completing a personal information protection impact assessment.
That said, a data processor that transfers personal information overseas shall fulfill its legal obligations, such as notifying the relevant individuals, obtaining the individuals’ separate consent, and completing a personal information protection impact assessment.
As of the date of this annual report, we have not received any inquiries, notices, warnings, sanctions, denials, or regulatory objections from the CAC or any other regulatory authority in relation to the foregoing issues.
As of the date of this annual report, we have not received any inquiries, notices, warnings, sanctions, denials, or regulatory objections from the CAC or any other regulatory authority in relation to the foregoing issues.
In the event of any failure to comply with the Personal Information Protection Law, the Company, its subsidiaries and the VIE may be subject to non-compliance rectification, warning, confiscation of illegal income or fines, or if the non-compliance is deemed serious by the regulators, suspension of relevant business and revocation of relevant business operation permissions or business licenses, which could materially and adversely affect our business, financial condition, and results of operations, and/or the value of our ADSs.
In the event of any failure to comply with the Personal Information Protection Law, the Company, its subsidiaries and the VIE may be subject to non-compliance rectification, warning, confiscation of illegal income or fines, or if the non-compliance is deemed serious by the regulators, suspension of relevant business and revocation of relevant business operation permissions or business licenses, which could materially and adversely affect our business, financial condition, and results of operations, and/or the value of our ADSs.
The Network Data Security Regulations stipulates that where a network data processor carries out network data processing activities that affect or may affect national security, it shall undergo a national security review in accordance with relevant national regulations.
The Network Data Security Regulations stipulates that where a network data processor carries out network data processing activities that affect or may affect national security, it shall undergo a national security review in accordance with relevant national regulations.
For example, on July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Crackdown Opinions, which emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies, and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection.
For example, on July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Crackdown Opinions, which emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies, and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection.
On December 28, 2021, the CAC published the Cybersecurity Review Measures, which, among others, require that any internet platform operator applying for listing on a foreign exchange must go through cybersecurity review if it possesses personal information of more than one million users.
On December 28, 2021, the CAC published the Cybersecurity Review Measures, which, among others, require that any internet platform operator applying for listing on a foreign exchange must go through cybersecurity review if it possesses personal information of more than one million users.
On February 17, 2023, the CSRC issued the Overseas Offering and Listing Measures, which provides principles and guidelines for direct and indirect issuance of securities overseas by a Chinese domestic company.
On February 17, 2023, the CSRC issued the Overseas Offering and Listing Measures, which provides principles and guidelines for direct and indirect issuance of securities overseas by a Chinese domestic company.
On December 16, 2021, the PCAOB issued a report on its determination that the PCAOB was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China or Hong Kong because of positions taken by PRC authorities in those jurisdictions.
On December 16, 2021, the PCAOB issued a report on its determination that the PCAOB was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China or Hong Kong because of positions taken by PRC authorities in those jurisdictions.
The SEC also indicated in its fact sheet regarding the Protocol that the PCAOB may transfer information to the SEC for all SEC purposes, including administrative or civil enforcement actions.
The SEC also indicated in its fact sheet regarding the Protocol that the PCAOB may transfer information to the SEC for all SEC purposes, including administrative or civil enforcement actions.
The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations under the HFCAA, if necessary.
The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations under the HFCAA, if necessary.
Key Information — Restrictions on Foreign Exchange and Our Ability to Transfer Cash Between Entities, Across Borders, and to U.S.
Key Information — Restrictions on Foreign Exchange and Our Ability to Transfer Cash Between Entities, Across Borders, and to U.S.
The shareholders of the VIE may breach, or cause the VIE to breach, or refuse to renew, the existing contractual arrangements we have with them and the VIE, which would have a material adverse effect on our ability to effectively direct activities of the VIE and receive economic benefits from the VIE.
The shareholders of the VIE may breach, or cause the VIE to breach, or refuse to renew, the existing contractual arrangements we have with them and the VIE, which would have a material adverse effect on our ability to effectively direct activities of the VIE and receive economic benefits from the VIE.
Even if the abovementioned stockholders’ equity deficiency is cured, there can be no assurance that we will maintain our compliance with the minimum bid price requirement, or the stockholders’ equity requirement, or any other listing standards of Nasdaq in the future.
Even if the abovementioned stockholders’ equity deficiency is cured, there can be no assurance that we will maintain our compliance with the stockholders’ equity requirement, or the minimum bid price requirement, or any other listing standards of Nasdaq in the future.
A substantial portion of the assets of these individuals are located outside the United States.
A substantial portion of the assets of these individuals are located outside the United States.
Risks Relating to Our ADSs ● Our ADS prices and the ADS or stock prices of other educational services providers with business operations primarily in China have fluctuated widely in recent years, which fluctuations could result in substantial losses to investors. ● The sale or availability for sale of substantial amounts of our ADSs could adversely affect their market price. ● Our ADSs may be delisted as a result of our failure to meet the Nasdaq continued listing requirements. ● The voting rights of holders of ADSs must be exercised in accordance with the terms of the deposit agreement, the American Depositary Receipts, or ADRs, and the procedures established by the depositary. 31 Table of Contents ● The Company is not a Chinese operating company but a Cayman Islands company, and because judicial precedent regarding the rights of shareholders is more limited under Cayman Islands law than under U.S. federal or state laws, you may have less protection of your shareholder rights than you would under U.S. federal or state laws. ● Certain judgments obtained against us, the VIE or our directors and executive officers by our shareholders may not be enforceable.
Risks Relating to Our ADSs ● Our ADS prices and the ADS or stock prices of other educational services providers with business operations primarily in China have fluctuated widely in recent years, which fluctuations could result in substantial losses to investors. ● The sale or availability for sale of substantial amounts of our ADSs could adversely affect their market price. ● Our ADSs may be delisted as a result of our failure to meet the Nasdaq continued listing requirements. ● The voting rights of holders of ADSs must be exercised in accordance with the terms of the deposit agreement, the American Depositary Receipts, or ADRs, and the procedures established by the depositary. 30 Table of Contents ● The Company is not a Chinese operating company but a Cayman Islands company, and because judicial precedent regarding the rights of shareholders is more limited under Cayman Islands law than under U.S. federal or state laws, you may have less protection of your shareholder rights than you would under U.S. federal or state laws. ● Certain judgments obtained against us, the VIE or our directors and executive officers by our shareholders may not be enforceable.
As of the date of this annual report, we believe the permission and approval of the CSRC or the CAC is not required for our operations, but as these rules and regulations were newly issued or are still in the process of being formulated, official guidance and interpretation of such rules and regulations remain unclear in several respects at this time, we cannot assure you that we will remain fully compliant with all new regulatory requirements of such rules and regulations or any future implementation rules on a timely basis, or at all. 57 Table of Contents PRC government may exert substantial influence over our operations, and may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers like us, and any actions by Chinese government, including any decision to intervene or influence our operations or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes to our operation, may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless.
As of the date of this annual report, we believe the permission and approval of the CSRC or the CAC is not required for our operations, but as these rules and regulations were newly issued or are still in the process of being formulated, official guidance and interpretation of such rules and regulations remain unclear in several respects at this time, we cannot assure you that we will remain fully compliant with all new regulatory requirements of such rules and regulations or any future implementation rules on a timely basis, or at all. 56 Table of Contents PRC government may exert substantial influence over our operations, and may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers like us, and any actions by Chinese government, including any decision to intervene or influence our operations or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes to our operation, may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless.
Risk Factors — Risks Relating to Regulations of Our Business — As PRC laws and regulations with respect to certain licenses and permissions are unclear and are subject to interpretations and enforcement of local governmental authorities, the Company, its subsidiaries and the VIE may be required to obtain additional licenses.” ​ 11 Table of Contents Security Assessment of Cross-border Transfer of Personal Information/Personal Information Protection Certification On August 20, 2021, the Standing Committee of the NPC promulgated the Personal Information Protection Law, which took effect on November 1, 2021, pursuant to which, personal information processors, who need to transfer personal information out of mainland China for business and other needs, shall satisfy one of the following conditions: (i) passing the security assessment by the national cyberspace authorities; (ii) being certified by professional organizations for personal information protection; (iii) entering into contracts providing the rights and obligations of both parties with overseas recipients in accordance with the standard contract formulated by the national cyberspace authorities; and (iv) other conditions specified by laws, administration regulations and the national cyberspace authorities.
Risk Factors — Risks Relating to Regulations of Our Business — As PRC laws and regulations with respect to certain licenses and permissions are unclear and are subject to interpretations and enforcement of local governmental authorities, the Company, its subsidiaries and the VIE may be required to obtain additional licenses.” ​ 10 Table of Contents Security Assessment of Cross-border Transfer of Personal Information/Personal Information Protection Certification On August 20, 2021, the Standing Committee of the NPC promulgated the Personal Information Protection Law, which took effect on November 1, 2021, pursuant to which, personal information processors, who need to transfer personal information out of mainland China for business and other needs, shall satisfy one of the following conditions: (i) passing the security assessment by the national cyberspace authorities; (ii) being certified by professional organizations for personal information protection; (iii) entering into contracts providing the rights and obligations of both parties with overseas recipients in accordance with the standard contract formulated by the national cyberspace authorities; and (iv) other conditions specified by laws, administration regulations and the national cyberspace authorities.
A data processor that transfers personal information overseas can be exempted when (i) it is necessary to provide personal information overseas to enter into or perform a contract to which the individual is a party, such as cross-border shopping, cross-border delivery, cross-border remittance, cross-border payment, cross-border account opening, flight and hotel booking, visa processing, examination services, etc.; (ii) it is necessary to provide personal information overseas for cross-border human resource management under the labor rules and regulations and any collective contract executed in accordance with the law; (iii) it is necessary to provide personal information overseas to protect the life, health, or property safety of natural persons under emergency circumstances; and (iv) a data processor, other than a 52 Table of Contents critical information infrastructure operator, has cumulatively provided the personal information (excluding sensitive personal information) of less than 100,000 individuals overseas since January 1 of the current year.
A data processor that transfers personal information overseas can be exempted when (i) it is necessary to provide personal information overseas to enter into or perform a contract to which the individual is a party, such as cross-border shopping, cross-border delivery, cross-border remittance, cross-border payment, cross-border account opening, flight and hotel booking, visa processing, examination services, etc.; (ii) it is necessary to provide personal information overseas for cross-border human resource management under the labor rules and regulations and any collective contract executed in accordance with the law; (iii) it is necessary to provide personal information overseas to protect the life, health, or property safety of natural persons under emergency circumstances; and (iv) a data processor, other than a 51 Table of Contents critical information infrastructure operator, has cumulatively provided the personal information (excluding sensitive personal information) of less than 100,000 individuals overseas since January 1 of the current year.
Risk Factors — Risks Relating to Regulations of Our Business — As PRC laws and regulations with respect to certain licenses and permissions are unclear and are subject to interpretations and enforcement of local governmental authorities, the Company, its subsidiaries and the VIE may be required to obtain additional licenses.” Operating Permit for Travel-related Activity The Tourism Law of the PRC, which was promulgated by the Standing Committee of the NPC and most recently amended on October 26, 2018, provides that, among other things, to engage in the businesses of outbound tourism, a travel agency shall obtain the corresponding business permit, and the specific conditions shall be provided for by the State Council and that when organizing an outbound touring group, or organizing or receiving an inbound touring group, a travel agency shall, in accordance with the relevant provisions, arrange for a tour leader or tour guide to accompany the touring group throughout the whole tour.
Risk Factors — Risks Relating to Regulations of Our Business — As PRC laws and regulations with respect to certain licenses and permissions are unclear and are subject to interpretations and enforcement of local governmental authorities, the Company, its subsidiaries and the VIE may be required to obtain additional licenses.” Operating Permit for Travel-related Activity The Tourism Law of the PRC, which was promulgated by the Standing Committee of the NPC and amended on October 26, 2018, provides that, among other things, to engage in the businesses of outbound tourism, a travel agency shall obtain the corresponding business permit, and the specific conditions shall be provided for by the State Council and that when organizing an outbound touring group, or organizing or receiving an inbound touring group, a travel agency shall, in accordance with the relevant provisions, arrange for a tour leader or tour guide to accompany the touring group throughout the whole tour.
Risk Factors — Risks Relating to Regulations of Our Business — The approval, filing or other requirements of the CSRC or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas.” ​ 14 Table of Contents Cybersecurity Review On December 28, 2021, the CAC published the Measures for Cybersecurity Review (the “Cybersecurity Review Measures”), which became effective on February 15, 2022, pursuant to which, (i) critical information infrastructure operators purchasing network products and services that affect or may affect national security, (ii) internet platform operators engaging in data processing activities that affect or may affect national security, and (iii) any internet platform operator possessing personal information of more than one million users and applying for listing on a foreign exchange shall be subject to the cybersecurity review by the CAC.
Risk Factors — Risks Relating to Regulations of Our Business — The approval, filing or other requirements of the CSRC or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas.” ​ 13 Table of Contents Cybersecurity Review On December 28, 2021, the CAC published the Measures for Cybersecurity Review (the “Cybersecurity Review Measures”), which became effective on February 15, 2022, pursuant to which, (i) critical information infrastructure operators purchasing network products and services that affect or may affect national security, (ii) internet platform operators engaging in data processing activities that affect or may affect national security, and (iii) any internet platform operator possessing personal information of more than one million users and applying for listing on a foreign exchange shall be subject to the cybersecurity review by the CAC.
Any such negative publicity, liability or regulatory penalties could cause us to lose students, expose us to costly litigation and have a material adverse impact on our business and results of operations. 51 Table of Contents On the other hand, pursuant to the Personal Information Protection Law, personal information processors, who need to transfer personal information out of mainland China for business and other needs, shall satisfy one of the following conditions: (i) passing the security assessment by the national cyberspace authorities; (ii) being certified by professional organizations for personal information protection; (iii) entering into contracts providing the rights and obligations of both parties with overseas recipients in accordance with the standard contract formulated by the national cyberspace authorities; and (iv) other conditions specified by laws, administration regulations and the national cyberspace authorities.
Any such negative publicity, liability or regulatory penalties could cause us to lose students, expose us to costly litigation and have a material adverse impact on our business and results of operations. 50 Table of Contents On the other hand, pursuant to the Personal Information Protection Law, personal information processors, who need to transfer personal information out of mainland China for business and other needs, shall satisfy one of the following conditions: (i) passing the security assessment by the national cyberspace authorities; (ii) being certified by professional organizations for personal information protection; (iii) entering into contracts providing the rights and obligations of both parties with overseas recipients in accordance with the standard contract formulated by the national cyberspace authorities; and (iv) other conditions specified by laws, administration regulations and the national cyberspace authorities.
If our current ownership structure and contractual arrangements with the VIE are found to be in violation of any existing or future PRC laws and regulations, the PRC government could: · revoke our and the VIE’s business and operating licenses; · levy fines on us and the VIE; · confiscate any of our and the VIE’s income that they deem to be obtained through illegal operations; · shut down a portion or all of our or the VIE’s servers or block a portion or all of our or the VIE’s websites; · discontinue or restrict our and the VIE’s operations in China; · impose conditions or requirements with which we and the VIE may not be able to comply; · require us and the VIE to restructure its corporate and contractual structure; and · take other regulatory or enforcement actions that could be harmful to our and the VIE’s business. 63 Table of Contents In addition, these contractual arrangements may not be as effective as direct ownership in providing us with operational control over the VIE.
If our current ownership structure and contractual arrangements with the VIE are found to be in violation of any existing or future PRC laws and regulations, the PRC government could: · revoke our and the VIE’s business and operating licenses; · levy fines on us and the VIE; · confiscate any of our and the VIE’s income that they deem to be obtained through illegal operations; · shut down a portion or all of our or the VIE’s servers or block a portion or all of our or the VIE’s websites; · discontinue or restrict our and the VIE’s operations in China; · impose conditions or requirements with which we and the VIE may not be able to comply; · require us and the VIE to restructure its corporate and contractual structure; and · take other regulatory or enforcement actions that could be harmful to our and the VIE’s business. ​ 61 Table of Contents In addition, these contractual arrangements may not be as effective as direct ownership in providing us with operational control over the VIE.
Our independent registered public accounting firm that issues the audit reports included in our annual reports filed with the SEC, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is required by the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. 58 Table of Contents On December 18, 2020, the HFCAA was enacted, according to which, among others, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years, the SEC shall prohibit our common shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
Our independent registered public accounting firm that issues the audit reports included in our annual reports filed with the SEC, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is required by the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. 57 Table of Contents On December 18, 2020, the HFCAA was enacted, according to which, among others, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years, the SEC shall prohibit our common shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
As of the date of this annual report, we have not received any notice from such authorities requiring us to go through cybersecurity review by the CAC. 53 Table of Contents Although we do not anticipate our business to be materially impacted by the Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education, certain types of our ancillary services may fall under the coverage of the Opinion and its local implementing measures, which may adversely affect our business, financial condition and results of operations, and we cannot assure you that any future development, interpretation and enforcement of Opinion and relevant regulations would not materially and adversely impact our business and financial outlook.
As of the date of this annual report, we have not received any notice from such authorities requiring us to go through cybersecurity review by the CAC. 52 Table of Contents Although we do not anticipate our business to be materially impacted by the Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education, certain types of our ancillary services may fall under the coverage of the Opinion and its local implementing measures, which may adversely affect our business, financial condition and results of operations, and we cannot assure you that any future development, interpretation and enforcement of Opinion and relevant regulations would not materially and adversely impact our business and financial outlook.
Since the related regulatory regime of education industry in the PRC continues to rapidly evolve, the interpretations of relevant regulations and rules are not always uniform, and the enforcement of relevant regulations and rules involve uncertainties, we cannot assure you that our training centers will not be classified as “private schools” and thus be required to obtain the private school operating permits or other relevant approval from local competent authorities by the regulators due to any future and further development, interpretation and enforcement of relevant regulations and rules. 9 Table of Contents To date, our PRC subsidiaries operating our training centers have not received any notifications which require them to obtain private school operating permits or approvals for non-academic after-school tutoring institutions from local competent authorities.
Since the related regulatory regime of education industry in the PRC continues to rapidly evolve, the interpretations of relevant regulations and rules are not always uniform, and the enforcement of relevant regulations and rules involve uncertainties, we cannot assure you that our training centers will not be classified as “private schools” and thus be required to obtain the private school operating permits or other relevant approval from local competent authorities by the regulators due to any future and further development, interpretation and enforcement of relevant regulations and rules. 8 Table of Contents To date, our PRC subsidiaries operating our training centers have not received any notifications which require them to obtain private school operating permits or approvals for non-academic after-school tutoring institutions from local competent authorities.
Risk Factors — Risks Relating to Regulations of Our Business — The approval, filing or other requirements of the CSRC or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas.” 15 Table of Contents Transfer of Cash within Our Organization We adopt a holding company structure, and our holding companies may rely on dividends and other distributions on equity paid by our current and future PRC subsidiaries or cash paid by the VIE under the VIE arrangement for their cash requirements, including the funds necessary to service any debt we may incur or financing we may need for operations not carried through our PRC subsidiaries or the VIE.
Risk Factors — Risks Relating to Regulations of Our Business — The approval, filing or other requirements of the CSRC or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas.” 14 Table of Contents Transfer of Cash within Our Organization We adopt a holding company structure, and our holding companies may rely on dividends and other distributions on equity paid by our current and future PRC subsidiaries or cash paid by the VIE under the VIE arrangement for their cash requirements, including the funds necessary to service any debt we may incur or financing we may need for operations not carried through our PRC subsidiaries or the VIE.
See “— Risks Relating to Regulations of Our Business — Because we may rely on dividends and other distributions on equity paid by our current and future PRC subsidiaries for our cash requirements, restrictions under PRC law on their ability to make such payments could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct our businesses.” 29 Table of Contents ● We may be classified as a “resident enterprise” of China, which may result in unfavorable tax consequences to us and the investors.
See “— Risks Relating to Regulations of Our Business — Because we may rely on dividends and other distributions on equity paid by our current and future PRC subsidiaries for our cash requirements, restrictions under PRC law on their ability to make such payments could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct our businesses.” 28 Table of Contents ● We may be classified as a “resident enterprise” of China, which may result in unfavorable tax consequences to us and the investors.
Under the Personal Information Protection Law, the Company, its subsidiaries and the VIE may meet the requirements by either completing personal information protection certification or entering into the standard contract formulated by the national cyberspace authorities, as the amount of personal information we or the VIE transfer across the border is relatively small. 12 Table of Contents On November 4, 2022, the CAC and the State Administration for Market Regulation jointly issued the Announcement in relation to the Implementation of Personal Information Protection Certification with an exhibit of Implementation Rules for Personal Information Protection Certification, according to which, the professional organizations authorized to conduct personal information protection certification shall comply with the Implementation Rules for Personal Information Protection Certification.
Under the Personal Information Protection Law, the Company, its subsidiaries and the VIE may meet the requirements by either completing personal information protection certification or entering into the standard contract formulated by the national cyberspace authorities, as the amount of personal information we or the VIE transfer across the border is relatively small. 11 Table of Contents On November 4, 2022, the CAC and the State Administration for Market Regulation jointly issued the Announcement in relation to the Implementation of Personal Information Protection Certification with an exhibit of Implementation Rules for Personal Information Protection Certification, according to which, the professional organizations authorized to conduct personal information protection certification shall comply with the Implementation Rules for Personal Information Protection Certification.
If we fail to find a suitable replacement site in a timely manner or on terms acceptable to us, our business and results of operations could be materially and adversely affected. 35 Table of Contents We may face challenges and risks in connection with our strategic investments and acquisitions as well as forming joint ventures, including producing the intended benefits or synergies, identifying suitable opportunities and integrating acquired or new businesses and assets with our existing operations, which could interrupt our business operations or adversely affect our results of operations.
If we fail to find a suitable replacement site in a timely manner or on terms acceptable to us, our business and results of operations could be materially and adversely affected. 34 Table of Contents We may face challenges and risks in connection with our strategic investments and acquisitions as well as forming joint ventures, including producing the intended benefits or synergies, identifying suitable opportunities and integrating acquired or new businesses and assets with our existing operations, which could interrupt our business operations or adversely affect our results of operations.
Investors, and Restrictions and Limitations on Our Ability to Distribute Earnings from Our Businesses” for a more detailed analysis on the restrictions on our ability to transfer cash between entities. 46 Table of Contents A failure by our shareholders who are Chinese citizens or residents in China to comply with regulations issued by SAFE could restrict our ability to distribute profits, restrict our overseas and cross-border investment activities or subject us to liabilities under PRC laws, which could adversely affect our business and prospects.
Investors, and Restrictions and Limitations on Our Ability to Distribute Earnings from Our Businesses” for a more detailed analysis on the restrictions on our ability to transfer cash between entities. 45 Table of Contents A failure by our shareholders who are Chinese citizens or residents in China to comply with regulations issued by SAFE could restrict our ability to distribute profits, restrict our overseas and cross-border investment activities or subject us to liabilities under PRC laws, which could adversely affect our business and prospects.
Accordingly, for so long as our company, ATA Creativity Global, is a “pure equity holding company,” it is only subject to the minimum substance requirements, which require us to (i) comply with all applicable filing requirements under the Companies Act, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands, or the Companies Act; and (ii) where necessary, have adequate human resources and adequate premises in the Cayman Islands for holding and managing equity participations in other entities.
Accordingly, for so long as our company, ATA Creativity Global, is a “pure equity holding company,” it is only subject to reduced substance requirements, which require us to (i) comply with all applicable filing requirements under the Companies Act, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands, or the Companies Act; and (ii) where necessary, have adequate human resources and adequate premises in the Cayman Islands for holding and managing equity participations in other entities.
Although currently we do not believe the Opinion and relevant regulations would have a material adverse impact on our business, since the interpretations of these regulations and rules are not always uniform, and the enforcement of these regulations and rules involve uncertainties, we cannot assure you that any future development, interpretation and enforcement of the Opinion and relevant regulations would not materially and adversely impact our business and financial outlook. 55 Table of Contents In addition, the PRC government authorities are also enhancing regulation on the non-academic after school tutoring institutions.
Although currently we do not believe the Opinion and relevant regulations would have a material adverse impact on our business, since the interpretations of these regulations and rules are not always uniform, and the enforcement of these regulations and rules involve uncertainties, we cannot assure you that any future development, interpretation and enforcement of the Opinion and relevant regulations would not materially and adversely impact our business and financial outlook. 54 Table of Contents In addition, the PRC government authorities are also enhancing regulation on the non-academic after school tutoring institutions.
If the Company, its subsidiaries and the VIE are unable to obtain such permission or approval if required in the future, our securities may be delisted from Nasdaq and/or the value of our ADSs may significantly decline or become worthless. 42 Table of Contents On February 17, 2023, the CSRC issued the Overseas Offering and Listing Measures, which provides principles and guidelines for direct and indirect issuance of securities overseas by a Chinese domestic company.
If the Company, its subsidiaries and the VIE are unable to obtain such permission or approval if required in the future, our securities may be delisted from Nasdaq and/or the value of our ADSs may significantly decline or become worthless. 41 Table of Contents On February 17, 2023, the CSRC issued the Overseas Offering and Listing Measures, which provides principles and guidelines for direct and indirect issuance of securities overseas by a Chinese domestic company.
If any such deliberations or policies were to materialize, there might also be a material adverse effect on the stock performance of China-based companies listed in the United States. ​ 62 Table of Contents Risks Relating to Our Corporate Structure The Company is not a Chinese operating company but a Cayman Islands holding company primarily operating in China through its PRC subsidiaries and may conduct business through the VIE in the future.
If any such deliberations or policies were to materialize, there might also be a material adverse effect on the stock performance of China-based companies listed in the United States. ​ 60 Table of Contents Risks Relating to Our Corporate Structure The Company is not a Chinese operating company but a Cayman Islands holding company primarily operating in China through its PRC subsidiaries and may conduct business through the VIE in the future.
However, as PRC laws and regulations with respect to certain licenses and permissions are unclear and are subject to interpretations and enforcement of local governmental authorities, we may inadvertently conclude that certain permissions are not required but the regulators do not take the same view as we do. 48 Table of Contents According to the Amended Private Education Law and the Amended Implementation Rules, private schools are required to obtain operating permits from relevant PRC authorities for carrying out educational activities.
However, as PRC laws and regulations with respect to certain licenses and permissions are unclear and are subject to interpretations and enforcement of local governmental authorities, we may inadvertently conclude that certain permissions are not required but the regulators do not take the same view as we do. ​ 47 Table of Contents According to the Amended Private Education Law and the Amended Implementation Rules, private schools are required to obtain operating permits from relevant PRC authorities for carrying out educational activities.
In addition, if the PCAOB is unable to conduct full inspections over our auditor in the future, the PCAOB will not be able to fully evaluate the audits and quality control procedures of our auditor, and, as a result, we and investors in our ADSs or common shares will be deprived of the benefits of such PCAOB inspections. 59 Table of Contents Moreover, the SEC may also propose additional rules or guidance that could impact us if our auditor is not subject to PCAOB inspection.
In addition, if the PCAOB is unable to conduct full inspections over our auditor in the future, the PCAOB will not be able to fully evaluate the audits and quality control procedures of our auditor, and, as a result, we and investors in our ADSs or common shares will be deprived of the benefits of such PCAOB inspections. 58 Table of Contents Moreover, the SEC may also propose additional rules or guidance that could impact us if our auditor is not subject to PCAOB inspection.
Additionally, it is unclear whether we will be subject to the oversight of the CAC and how such oversight may impact us.” 13 Table of Contents Potential Permissions and Approvals for Offering Securities to Foreign Investors The Crackdown Opinion On July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Severe and Lawful Crackdown on Illegal Securities Activities, or the Crackdown Opinions.
Additionally, it is unclear whether we will be subject to the oversight of the CAC and how such oversight may impact us.” 12 Table of Contents Potential Permissions and Approvals for Offering Securities to Foreign Investors The Crackdown Opinion On July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Severe and Lawful Crackdown on Illegal Securities Activities, or the Crackdown Opinions.
If we are unable to continue to attract students to enroll in our portfolio training services without a significant decrease in course fees, our revenue may decline, and we may not be able to maintain profitability. 32 Table of Contents We depend on our dedicated and capable teachers, and if we are not able to continue to hire and retain qualified teachers, or if our teachers fail to deliver quality services, we may not be able to maintain consistent teaching quality, and our brand, business and results of operation may be materially and adversely affected.
If we are unable to continue to attract students to enroll in our portfolio training services without a significant decrease in course fees, our revenue may decline, and we may not be able to maintain profitability. 31 Table of Contents We depend on our dedicated and capable teachers, and if we are not able to continue to hire and retain qualified teachers, or if our teachers fail to deliver quality services, we may not be able to maintain consistent teaching quality, and our brand, business and results of operation may be materially and adversely affected.
Any one or a combination of the above risks could interrupt our business operations and adversely affect our results of operations. 36 Table of Contents Because we do not have any business liability, disruption or litigation insurance coverage for our operations in China and have limited insurance coverage with respect to our research-based learning services, any business disruption or litigation we experience might result in our incurring substantial costs and diverting significant resources to handle such disruption or litigation.
Any one or a combination of the above risks could interrupt our business operations and adversely affect our results of operations. 35 Table of Contents Because we do not have any business liability, disruption or litigation insurance coverage for our operations in China and have limited insurance coverage with respect to our research-based learning services, any business disruption or litigation we experience might result in our incurring substantial costs and diverting significant resources to handle such disruption or litigation.
After-school tutoring institutions shall publicly make a written commitment that the recruitment of practitioners complies with the provisions of relevant measures. 54 Table of Contents Based on our understanding of the Opinion, the Notice and relevant local implementing measures for the Opinion, our major business, including portfolio training services and other art-related services, is not academic subjects tutoring for students in compulsory education, and thus is not subject to the Opinion, the Notice and relevant local implementing measures.
After-school tutoring institutions shall publicly make a written commitment that the recruitment of practitioners complies with the provisions of relevant measures. 53 Table of Contents Based on our understanding of the Opinion, the Notice and relevant local implementing measures for the Opinion, our major business, including portfolio training services and other art-related services, is not academic subjects tutoring for students in compulsory education, and thus is not subject to the Opinion, the Notice and relevant local implementing measures.
As of the date of this annual report, the Company, its subsidiaries and the VIE have not received any notice from regulatory authorities requiring us to go through the cybersecurity review by the CAC. 43 Table of Contents On February 24, 2023, the CSRC and other PRC governmental authorities issued the Confidentiality Provisions, which came into effect on March 31, 2023.
As of the date of this annual report, the Company, its subsidiaries and the VIE have not received any notice from regulatory authorities requiring us to go through the cybersecurity review by the CAC. 42 Table of Contents On February 24, 2023, the CSRC and other PRC governmental authorities issued the Confidentiality Provisions, which came into effect on March 31, 2023.
Accordingly, our business, financial condition, results of operations and prospects are subject, to a significant extent, to economic, political and social developments in China. 56 Table of Contents The Chinese economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange, and allocation of resources.
Accordingly, our business, financial condition, results of operations and prospects are subject, to a significant extent, to economic, political and social developments in China. 55 Table of Contents The Chinese economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange, and allocation of resources.
Investors, and Restrictions and Limitations on Our Ability to Distribute Earnings from Our Businesses” for a more detailed analysis on the restrictions on our ability to transfer cash across borders, and to U.S. investors. 45 Table of Contents PRC regulations of loans and direct investments by offshore holding companies to their PRC subsidiaries and consolidated variable interest entity may restrict our ability to execute our business strategy.
Investors, and Restrictions and Limitations on Our Ability to Distribute Earnings from Our Businesses” for a more detailed analysis on the restrictions on our ability to transfer cash across borders, and to U.S. investors. 44 Table of Contents PRC regulations of loans and direct investments by offshore holding companies to their PRC subsidiaries and consolidated variable interest entity may restrict our ability to execute our business strategy.
This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects. 47 Table of Contents We may be subject to fines and legal sanctions imposed by SAFE or other Chinese government authorities if we or our Chinese employees fail to comply with Chinese regulations relating to employee share options granted by offshore listed companies to Chinese citizens.
This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects. 46 Table of Contents We may be subject to fines and legal sanctions imposed by SAFE or other Chinese government authorities if we or our Chinese employees fail to comply with Chinese regulations relating to employee share options granted by offshore listed companies to Chinese citizens.
The transactions of nominee shareholder loan repayment and issuance were reclassified as financing activities in the Company’s consolidated financial statements. ​ 26 Table of Contents Effect of Holding Foreign Companies Accountable Act and Related SEC Rules On December 18, 2020, the Holding Foreign Companies Accountable Act, or HFCAA, was enacted, according to which, among others, if the U.S.
The transactions of nominee shareholder loan repayment and issuance were reclassified as financing activities in the Company’s consolidated financial statements. ​ 25 Table of Contents Effect of Holding Foreign Companies Accountable Act and Related SEC Rules On December 18, 2020, the Holding Foreign Companies Accountable Act, or HFCAA, was enacted, according to which, among others, if the U.S.
If we fail to build, maintain and enhance the value of our brand, or if we incur excessive sales and marketing expenses, our ability to attract new students could be adversely impacted, and our business and results of operations may be materially and adversely affected. 33 Table of Contents Failure to effectively and efficiently manage the expansion of our training center network may materially and adversely affect our brand, business and operating results.
If we fail to build, maintain and enhance the value of our brand, or if we incur excessive sales and marketing expenses, our ability to attract new students could be adversely impacted, and our business and results of operations may be materially and adversely affected. 32 Table of Contents Failure to effectively and efficiently manage the expansion of our training center network may materially and adversely affect our brand, business and operating results.
If any of our PRC subsidiaries or the VIE is unable to receive all or the majority of the revenues from their operations, we may be unable to pay dividends on our ADSs or common shares. ● Due to restrictions on foreign exchange placed on our PRC subsidiaries and the VIE by the PRC government under PRC laws and regulations, to the extent cash is located in mainland China or within an entity domiciled in mainland China and may need to be used to fund our operations outside of mainland China, the funds may not be available due to such limitations unless and until related approvals and registrations are obtained.
If any of our PRC subsidiaries or the VIE is unable to receive all or the majority of the revenues from their operations, we may be unable to pay dividends on our ADSs or common shares. 18 Table of Contents ● Due to restrictions on foreign exchange placed on our PRC subsidiaries and the VIE by the PRC government under PRC laws and regulations, to the extent cash is located in mainland China or within an entity domiciled in mainland China and may need to be used to fund our operations outside of mainland China, the funds may not be available due to such limitations unless and until related approvals and registrations are obtained.
Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including: ● investors’ perception of, and demand for, securities of international education companies; ● regulatory requirements or restrictions related to and the conditions of the U.S., PRC and other capital markets in which we may seek to raise funds; ● our future results of operations and financial condition; ● Chinese government regulation of foreign investment in mainland China; ● economic, political and other conditions in mainland China; and ● Chinese government policies relating to the borrowing and remittance of foreign currency outside mainland China.
Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including: ● investors’ perception of, and demand for, securities of international education companies; 37 Table of Contents ● regulatory requirements or restrictions related to and the conditions of the U.S., PRC and other capital markets in which we may seek to raise funds; ● our future results of operations and financial condition; ● Chinese government regulation of foreign investment in mainland China; ● economic, political and other conditions in mainland China; and ● Chinese government policies relating to the borrowing and remittance of foreign currency outside mainland China.
If the development and expansion of our online courses and the related technology are delayed, result in system interruptions or are not aligned with market expectations or preferences, we may lose market share and our business could be adversely affected. 34 Table of Contents Any deterioration in our relationships with overseas schools and institutions may adversely affect our business.
If the development and expansion of our online courses and the related technology are delayed, result in system interruptions or are not aligned with market expectations or preferences, we may lose market share and our business could be adversely affected. 33 Table of Contents Any deterioration in our relationships with overseas schools and institutions may adversely affect our business.
If this occurs, our business, results of operations, financial condition and the value of our ADSs could be materially and adversely affected. 49 Table of Contents The Tourism Law of the PRC provides that, among other things, to engage in the businesses of outbound tourism, a travel agency shall obtain the corresponding business permit.
If this occurs, our business, results of operations, financial condition and the value of our ADSs could be materially and adversely affected. ​ 48 Table of Contents The Tourism Law of the PRC provides that, among other things, to engage in the businesses of outbound tourism, a travel agency shall obtain the corresponding business permit.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

83 edited+9 added−27 removed309 unchanged
Biggest changeOn September 13, 2019, we changed the name of our Cayman holding company from “ATA Inc.” to “ATA Creativity Global” in connection with the acquisition of Huanqiuyimeng.
Biggest changeIn 2019, we completed the acquisition of 100% equity interests of Huanqiuyimeng, a leading provider of educational services for students in China interested in applying for overseas art study, and in connection with such acquisition, we changed the name of our Cayman holding company from “ATA Inc.” to “ATA Creativity Global” and the trading symbol for our ADSs listed on Nasdaq from “ATAI” to “AACG.” In May 2025, we transferred the listing of our ADSs from the Nasdaq Global Market to the Nasdaq Capital Market.
The Cybersecurity Review Measures further requires that any internet platform operator applying for listing on a foreign exchange must go through cybersecurity review if it possesses personal information of more than one million users.
The Cybersecurity Review Measures further requires that any internet platform operator applying for listing on a foreign exchange must go through cybersecurity review if it possesses personal information of more than one million users.
On February 17, 2023, the CSRC issued the Overseas Offering and Listing Measures, which provides principles and guidelines for direct and indirect issuance of securities overseas by a Chinese domestic company. 101 Table of Contents Under the Overseas Offering and Listing Measures, the substance rather than the form of issuance will govern when determining whether an issuance constitutes “indirect issuance of securities overseas by a Chinese domestic company,” and an issuance meeting the following two conditions simultaneously will be deemed as an “indirect issuance of securities overseas by a Chinese domestic company”: (i) the income, total profits, total assets or net assets of the domestic company in the latest financial year accounts for more than 50% of the total financials of the issuer in such year on a consolidated basis; and (ii) the principal business is conducted or the principal business place is within the territory of mainland China, or the majority of senior management in charge of business operations are Chinese citizens or have habitual residence within the territory of mainland China.
On February 17, 2023, the CSRC issued the Overseas Offering and Listing Measures, which provides principles and guidelines for direct and indirect issuance of securities overseas by a Chinese domestic company. 97 Table of Contents Under the Overseas Offering and Listing Measures, the substance rather than the form of issuance will govern when determining whether an issuance constitutes “indirect issuance of securities overseas by a Chinese domestic company,” and an issuance meeting the following two conditions simultaneously will be deemed as an “indirect issuance of securities overseas by a Chinese domestic company”: (i) the income, total profits, total assets or net assets of the domestic company in the latest financial year accounts for more than 50% of the total financials of the issuer in such year on a consolidated basis; and (ii) the principal business is conducted or the principal business place is within the territory of mainland China, or the majority of senior management in charge of business operations are Chinese citizens or have habitual residence within the territory of mainland China.
Our significant shareholder, Xiaofeng Ma, has previously completed his registration with SAFE and has submitted relevant materials to update his registration, and we have urged our other Chinese resident shareholders to register under SAFE Circular 37, and they are preparing for such application. However, we cannot assure you that the application will be accepted by SAFE.
Our Chinese resident shareholder, Xiaofeng Ma, has previously completed his registration with SAFE and has submitted relevant materials to update his registration, and we have urged our other Chinese resident shareholders to register under SAFE Circular 37, and they are preparing for such application. However, we cannot assure you that the application will be accepted by SAFE.
Risk Factors — Risks Relating to Regulations of Our Business — Although we do not anticipate our business to be materially impacted by the Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education, certain types of our ancillary services may fall under the coverage of the Opinion and its local implementing measures, which may adversely affect our business, financial condition and results of operations, and we cannot assure you that any future development, interpretation and enforcement of Opinion and relevant regulations would not materially and adversely impact our business and financial outlook.” 92 Table of Contents Guidelines for Overseas Educational Travel Participated by Primary and Middle School Students (Trial) On July 15, 2014, the MOE promulgated the Guidelines for Overseas Educational Travel Participated by Primary and Middle School Students (Trial), or the Guidelines, which became effective on July 15, 2014.
Risk Factors — Risks Relating to Regulations of Our Business — Although we do not anticipate our business to be materially impacted by the Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education, certain types of our ancillary services may fall under the coverage of the Opinion and its local implementing measures, which may adversely affect our business, financial condition and results of operations, and we cannot assure you that any future development, interpretation and enforcement of Opinion and relevant regulations would not materially and adversely impact our business and financial outlook.” 88 Table of Contents Guidelines for Overseas Educational Travel Participated by Primary and Middle School Students (Trial) On July 15, 2014, the MOE promulgated the Guidelines for Overseas Educational Travel Participated by Primary and Middle School Students (Trial), or the Guidelines, which became effective on July 15, 2014.
As for penalties, violators may face warnings, fines, and disclosure to the public and, in most severe cases, criminal liability under the order. 95 Table of Contents Pursuant to the Ninth Amendment to the Criminal Law issued by the Standing Committee of the NPC in August 2015, which became effective in November 2015, any internet service provider that fails to fulfill the obligations related to the internet information security administration as required by applicable laws and refuses to rectify upon orders, shall be subject to a criminal penalty for the result of (i) any dissemination of illegal information in large scale; (ii) any severe effect due to the leakage of the client’s information; (iii) any serious loss of criminal evidence; or (iv) other severe situation.
As for penalties, violators may face warnings, fines, and disclosure to the public and, in most severe cases, criminal liability under the order. 91 Table of Contents Pursuant to the Ninth Amendment to the Criminal Law issued by the Standing Committee of the NPC in August 2015, which became effective in November 2015, any internet service provider that fails to fulfill the obligations related to the internet information security administration as required by applicable laws and refuses to rectify upon orders, shall be subject to a criminal penalty for the result of (i) any dissemination of illegal information in large scale; (ii) any severe effect due to the leakage of the client’s information; (iii) any serious loss of criminal evidence; or (iv) other severe situation.
However, our competitors may establish brands that have wider recognition than us, develop marketing and sales methods that are more effective than ours, introduce new products and services that have better performance and hence gain broader acceptance, hire and retain more qualified teachers, offer more satisfactory training center environments or lower prices to students, which may cause us to lose our market share. 86 Table of Contents Seasonality We have experienced and expect to continue to experience slight seasonal fluctuations in our revenues and results of operations, with the quarter ending March 31 typically having relatively lower revenues compared with the other quarters primarily for our portfolio training services.
However, our competitors may establish brands that have wider recognition than us, develop marketing and sales methods that are more effective than ours, introduce new products and services that have better performance and hence gain broader acceptance, hire and retain more qualified teachers, offer more satisfactory training center environments or lower prices to students, which may cause us to lose our market share. 82 Table of Contents Seasonality We have experienced and expect to continue to experience slight seasonal fluctuations in our revenues and results of operations, with the quarter ending March 31 typically having relatively lower revenues compared with the other quarters primarily for our portfolio training services.
In addition, we also seek to partner with domestic universities to carry out joint art education programs with overseas universities or colleges for undergraduate students, where we are typically responsible for student admission, program application and filing with governmental authority in mainland China, and establishment of connection with overseas art universities or colleges. Junior Art Education .
In addition, we also seek to partner with domestic universities to carry out joint art education programs with overseas universities or colleges for undergraduate students, where we are typically responsible for student admission, program application and filing with governmental authority in mainland China, and establishment of connection with overseas art universities or colleges.
In addition, SAFE 2019 Circular 28 stipulates that qualified enterprises in certain pilot areas may use their capital income from registered capital, foreign debt and overseas listing, for the purpose of domestic payments without providing authenticity certifications to the relevant banks in advance for those domestic payments. 99 Table of Contents On April 10, 2020, SAFE promulgated the Circular on Optimizing Administration of Foreign Exchange to Support the Development of Foreign-related Business, under which eligible enterprises are allowed to make domestic payments by using their capital funds, foreign loans and the income under capital accounts of overseas listing without providing the evidentiary materials concerning the authenticity of each expenditure in advance, provided that their capital use shall be authentic and conforms to the prevailing administrative regulations on the use of income under capital accounts.
In addition, SAFE 2019 Circular 28 stipulates that qualified enterprises in certain pilot areas may use their capital income from registered capital, foreign debt and overseas listing, for the purpose of domestic payments without providing authenticity certifications to the relevant banks in advance for those domestic payments. 95 Table of Contents On April 10, 2020, SAFE promulgated the Circular on Optimizing Administration of Foreign Exchange to Support the Development of Foreign-related Business, under which eligible enterprises are allowed to make domestic payments by using their capital funds, foreign loans and the income under capital accounts of overseas listing without providing the evidentiary materials concerning the authenticity of each expenditure in advance, provided that their capital use shall be authentic and conforms to the prevailing administrative regulations on the use of income under capital accounts.
A fashion & jewelry portfolio typically includes fashion illustration, design sketches, pattern cutting & tailoring, textiles design, metalsmithing, jewelry design, accessory design and a final photo shoot. 79 Table of Contents Undergraduate Foundation Course Programs As most students applying for undergraduate studies at art universities and colleges in the U.K. and other European countries need to take foundation courses offered by such universities and colleges before formal admission, to provide students with flexibility and convenience, and as an extension to our portfolio training services, since 2021, we have developed foundation courses recognized by certain overseas art universities and colleges that allow students to fulfill such requirements locally in China.
A fashion & jewelry portfolio typically includes fashion illustration, design sketches, pattern cutting & tailoring, textiles design, metalsmithing, jewelry design, accessory design and a final photo shoot. 76 Table of Contents Undergraduate Foundation Course Programs As most students applying for undergraduate studies at art universities and colleges in the U.K. and other European countries need to take foundation courses offered by such universities and colleges before formal admission, to provide students with flexibility and convenience, and as an extension to our portfolio training services, since 2021, we have developed foundation courses recognized by certain overseas art universities and colleges that allow students to fulfill such requirements locally in China.
On the other hand, pursuant to the Personal Information Protection Law, personal information processors who transfer personal information out of mainland China for business and other needs shall satisfy one of the following conditions: (i) passing the security assessment by the national cyberspace authorities; (ii) being certified by professional organizations for personal information protection; (iii) entering into contracts providing the rights and obligations of both parties with overseas recipients in accordance with the standard contract formulated by the national cyberspace authorities; and (iv) other conditions specified by laws, administration regulations and the national cyberspace authorities. 96 Table of Contents On July 7, 2022, the CAC issued the Security Assessment Measures, which took effect on September 1, 2022.
On the other hand, pursuant to the Personal Information Protection Law, personal information processors who transfer personal information out of mainland China for business and other needs shall satisfy one of the following conditions: (i) passing the security assessment by the national cyberspace authorities; (ii) being certified by professional organizations for personal information protection; (iii) entering into contracts providing the rights and obligations of both parties with overseas recipients in accordance with the standard contract formulated by the national cyberspace authorities; and (iv) other conditions specified by laws, administration regulations and the national cyberspace authorities. 92 Table of Contents On July 7, 2022, the CAC issued the Security Assessment Measures, which took effect on September 1, 2022.
On March 15, 2024, the Beijing Municipal Bureau of Culture and Tourism and the Beijing Municipal Commission of Education issued the Standards for the Establishment of Cultural and Artistic After School Tutoring Institutions in Beijing (Trial), which provides that, a cultural and artistic after school tutoring institutions that targets to provide training to primary and secondary middle school students and pre-school children aged three to six shall obtain the administrative license from the district level education administrative department for the establishment of offline cultural and artistic after school institutions. 91 Table of Contents In addition, the PRC government authorities are also enhancing regulation on the non-academic after school tutoring institutions.
On March 15, 2024, the Beijing Municipal Bureau of Culture and Tourism and the Beijing Municipal Commission of Education issued the Standards for the Establishment of Cultural and Artistic After School Tutoring Institutions in Beijing (Trial), which provides that, a cultural and artistic after school tutoring institutions that targets to provide training to primary and secondary middle school students and pre-school children aged three to six shall obtain the administrative license from the district level education administrative department for the establishment of offline cultural and artistic after school institutions. 87 Table of Contents In addition, the PRC government authorities are also enhancing regulation on the non-academic after school tutoring institutions.
Additionally, it is unclear whether we will be subject to the oversight of the CAC and how such oversight may impact us.” 94 Table of Contents On January 8, 2021, the CAC published the Amended Measures for the Administration of Internet Information Services (Draft for Comments), which requires that any organization or individual within the territory of the People’s Republic of China that provides internet information services to users in China using network resources at home and abroad shall abide by the provisions of these measures.
Additionally, it is unclear whether we will be subject to the oversight of the CAC and how such oversight may impact us.” 90 Table of Contents On January 8, 2021, the CAC published the Amended Measures for the Administration of Internet Information Services (Draft for Comments), which requires that any organization or individual within the territory of the People’s Republic of China that provides internet information services to users in China using network resources at home and abroad shall abide by the provisions of these measures.
According to the Amendment, the key features of the aforesaid new classification system for private schools include the following: ● 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; ● sponsors of non-profit private schools are not entitled to the distribution of profits or proceeds from the non-profit schools, and all operation surplus of non-profit schools shall be used for the operation of the schools; 88 Table of Contents ● 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.
According to the Amendment, the key features of the aforesaid new classification system for private schools include the following: ● 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; ● sponsors of non-profit private schools are not entitled to the distribution of profits or proceeds from the non-profit schools, and all operation surplus of non-profit schools shall be used for the operation of the schools; 84 Table of Contents ● 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.
Nevertheless, schools and other education institutions sponsored wholly or partially by government financial funds and donated assets remain prohibited from being established as for-profit organizations. 87 Table of Contents The Law for Promoting Private Education and the Implementation Rules for the Law for Promoting Private Education The Law for Promoting Private Education of the PRC became effective on September 1, 2003 and was respectively amended on June 29, 2013, November 7, 2016 and December 29, 2018, and the Implementation Rules for the Law for Promoting Private Education of the PRC became effective on April 1, 2004 and was amended on April 7, 2021.
Nevertheless, schools and other education institutions sponsored wholly or partially by government financial funds and donated assets remain prohibited from being established as for-profit organizations. 83 Table of Contents The Law for Promoting Private Education and the Implementation Rules for the Law for Promoting Private Education The Law for Promoting Private Education of the PRC became effective on September 1, 2003 and was respectively amended on June 29, 2013, November 7, 2016 and December 29, 2018, and the Implementation Rules for the Law for Promoting Private Education of the PRC became effective on April 1, 2004 and was amended on April 7, 2021.
The circular clarifies that Renminbi converted from foreign exchange capital contributions can only be used for the activities within the approved business scope of such foreign invested enterprise and cannot be used for domestic equity investments unless otherwise permitted. 98 Table of Contents In addition, SAFE also strengthened its oversight over the flow and use of Renminbi converted from the foreign currency denominated capital of a foreign-invested company.
The circular clarifies that Renminbi converted from foreign exchange capital contributions can only be used for the activities within the approved business scope of such foreign invested enterprise and cannot be used for domestic equity investments unless otherwise permitted. 94 Table of Contents In addition, SAFE also strengthened its oversight over the flow and use of Renminbi converted from the foreign currency denominated capital of a foreign-invested company.
The training materials used for academic subjects shall be reviewed through dual review by combining internal review by the after-school tutoring institutions and the external review by the education administrative authorities. 90 Table of Contents On September 9, 2021, the MOE and the Ministry of Human Resources and Social Security jointly formulated the Administrative Measures for Employees of After-School Tutoring Institutions (Trial Implementation).
The training materials used for academic subjects shall be reviewed through dual review by combining internal review by the after-school tutoring institutions and the external review by the education administrative authorities. 86 Table of Contents On September 9, 2021, the MOE and the Ministry of Human Resources and Social Security jointly formulated the Administrative Measures for Employees of After-School Tutoring Institutions (Trial Implementation).
If our employees fail to pay and we fail to withhold their income taxes, we may face sanctions imposed by tax authorities or other PRC government authorities. 102 Table of Contents C. Organizational Structure For an organizational structure of the Company, its subsidiaries and the VIE and a detailed description of the Company’s significant subsidiaries, see “Item 3.
If our employees fail to pay and we fail to withhold their income taxes, we may face sanctions imposed by tax authorities or other PRC government authorities. 98 Table of Contents C. Organizational Structure For an organizational structure of the Company, its subsidiaries and the VIE and a detailed description of the Company’s significant subsidiaries, see “Item 3.
Our total net revenues for the fiscal year ended December 31, 2024 were RMB268.1 million ($36.7 million). Net revenues from our portfolio training services, research-based learning services, overseas study counselling services, and other educational services accounted for 74.4%, 5.6%, 12.0% and 8.0%, respectively, of our total net revenues in the fiscal year ended December 31, 2024.
Our total net revenues for the fiscal year ended December 31, 2024 were RMB268.1 million. Net revenues from our portfolio training services, research-based learning services, overseas study counselling services, and other educational services accounted for 74.4%, 5.6%, 12.0% and 8.0%, respectively, of our total net revenues in the fiscal year ended December 31, 2024.
We intend to expand our research-based learning services to serve a broader range of students who are interested in art going forward. 80 Table of Contents The types of research-based learning services provided by us mainly include academic educational learning, workshop experience, themed educational travel and other research-based learning programs.
We intend to expand our research-based learning services to serve a broader range of students who are interested in art going forward. 77 Table of Contents The types of research-based learning services provided by us mainly include academic educational learning, workshop experience, themed educational travel and other research-based learning programs.
The 2024 Negative List remains unchanged with respect to the education industry. 97 Table of Contents On March 15, 2019, Second Session of the 13th National People’s Congress adopted the Foreign Investment Law of the People’s Republic of China, and came into effect as of January 1, 2020.
The 2024 Negative List remains unchanged with respect to the education industry. 93 Table of Contents On March 15, 2019, Second Session of the 13th National People’s Congress adopted the Foreign Investment Law of the People’s Republic of China, and came into effect as of January 1, 2020.
We also provide online certificate programs where students attend courses jointly delivered by us and overseas prestigious art schools we have partnered with, and at the end of which, students will receive certificates from these art schools indicating their completion of the online certificate programs.
We also provide online certificate programs where students attend courses jointly delivered by us and overseas prestigious art schools we have partnered with, and at the end of which, students will receive certificates from these art schools indicating their completion of the online certificate programs. Workshop Experience.
These minor adjustments do not materially affect our business and operations. 89 Table of Contents On April 7, 2021, the State Council promulgated the Amended Implementation Rules for the Private Education Law, or the Amended Implementation Rules, which became effective on September 1, 2021.
These minor adjustments do not materially affect our business and operations. 85 Table of Contents On April 7, 2021, the State Council promulgated the Amended Implementation Rules for the Private Education Law, or the Amended Implementation Rules, which became effective on September 1, 2021.
If any prohibited content is found, they must remove the offending content immediately, keep a record of it and report it to the relevant authorities. 93 Table of Contents Internet information in China is also regulated and restricted from a national security standpoint.
If any prohibited content is found, they must remove the offending content immediately, keep a record of it and report it to the relevant authorities. 89 Table of Contents Internet information in China is also regulated and restricted from a national security standpoint.
Themed educational travel is suitable for students at all ages, and especially attractive to lower age groups where the primary goals are to broaden their horizons, cultivate their interest in art and help them acquire art-related knowledge and appreciations. 81 Table of Contents Overseas Study Counselling Services We primarily offer art-related overseas study counselling services to students as part of our comprehensive service package.
Themed educational travel is suitable for students at all ages, and especially attractive to lower age groups where the primary goals are to broaden their horizons, cultivate their interest in art and help them acquire art-related knowledge and appreciations. Overseas Study Counselling Services We primarily offer art-related overseas study counselling services to students as part of our comprehensive service package.
Liquidity and Capital Resources—Capital Expenditures.” 72 Table of Contents Our Consolidated Variable Interest Entity The VIE was established in March 2018 to preserve our flexibility to operate, invest in or hold businesses that are restricted from receiving foreign investments. As of the date of this annual report, the VIE is not engaged in any business operations itself.
Liquidity and Capital Resources—Capital Expenditures.” Our Consolidated Variable Interest Entity The VIE was established in March 2018 to preserve our flexibility to operate, invest in or hold businesses that are restricted from receiving foreign investments. As of the date of this annual report, the VIE is not engaged in any business operations itself.
For example, in July 2024, we organized students to conduct field research in Dunhuang, Gansu Province, visiting Mogao Caves, studying the skillful sculpture and mural paintings, and creating painted sculptures and mineral ore paintings.
For example, in July 2025, we organized students to conduct field research in Dunhuang, Gansu Province, visiting Mogao Caves, studying the skillful sculpture and mural paintings, and creating painted sculptures and mineral ore paintings.
We offer guidance on university and program selection based on the individual academic background, personality, career goal and other factors of each student. ● Paper Writing . We help students develop professional content and logical layout of their personal statements, resume, recommendation letters and other paperwork for art school applications. ● Interview Simulation.
We offer guidance on university and program selection based on the individual academic background, personality, career goal and other factors of each student. 78 Table of Contents ● Paper Writing . We help students develop professional content and logical layout of their personal statements, resume, recommendation letters and other paperwork for art school applications. ● Interview Simulation.
As a result, while they still rely on our services, resources and guidance to improve their applications for overseas art programs, they tend to care more about the cost-effectiveness of our services and products and usually only purchase the types of our services they need instead of purchasing for the full package. Other Customers.
As a result, while they still rely on our services, resources and guidance to improve their applications for overseas art programs, they tend to care more about the cost-effectiveness of our services and products and usually only purchase the types of our services they need instead of purchasing for the full package. 80 Table of Contents Other Customers.
Generally, our programs are structured to include fundamental courses, creativity courses and professional courses. Credit hours needed to finish each type of course may vary by student due to differences in their educational background, art-related skills, creativity and level of innovation as well as class performance. Fundamental courses .
Generally, our programs are structured to include fundamental courses, creativity courses and professional courses. Credit hours needed to finish each type of course may vary by student due to differences in their educational background, art-related skills, creativity and level of innovation as well as class performance. 74 Table of Contents Fundamental courses .
An architectural space portfolio typically includes evidence of creativity using a range of media, such as 3D composition, installations, models of buildings, 3D modeling, spatial plans, design blueprints and strong observational drawing skills showing a student’s ability to represent space, perspective and 3D form. Visual Communication .
An architectural space portfolio typically includes evidence of creativity using a range of media, such as 3D composition, installations, models of buildings, 3D modeling, spatial plans, design blueprints and strong observational drawing skills showing a student’s ability to represent space, perspective and 3D form. 75 Table of Contents Visual Communication .
Service providers who do not comply with the Cyber Security Law may be subject to fines, suspension of their businesses, shutdown of their websites, and revocation of their business licenses.
Service providers who do not comply with the Cyber Security Law may be subject to significantly increased fines, suspension of their businesses, shutdown of their websites, and revocation of their business licenses.
Internet and Mobile Advertisement. We advertise on the mainstream online search engines to promote our services to potential students and to those who actively search keywords relevant to portfolio training, art study, etc. We also advertise through social media platforms to potential students, including, without limitation, Dianping, TikTok and Little Red Book.
We advertise on the mainstream online search engines to promote our services to potential students and to those who actively search keywords relevant to portfolio training, art study, etc. We also advertise through social media platforms to potential students, including, without limitation, Dianping, TikTok and Little Red Book.
The new call option and cooperation agreement was effective upon the execution date and remain effective thereafter. 74 Table of Contents Loan Agreements . On March 15, 2018, Xiaofeng Ma and Haichang Xiong, both of which were the then shareholders of the VIE, respectively entered into a loan agreement with the WFOE.
The new call option and cooperation agreement was effective upon the execution date and remain effective thereafter. Loan Agreements . On March 15, 2018, Xiaofeng Ma and Haichang Xiong, both of which were the then shareholders of the VIE, respectively entered into a loan agreement with the WFOE.
Currently, we rank our full-time teachers of portfolio training services in 10 levels, classified by educational background, social experience, teaching completion efficiency and teaching quality, and we offer different salary and compensation for teachers at different levels. The top five levels constitute around 80% of our full-time teachers.
Currently, we rank our full-time teachers of portfolio training services in 10 levels, classified by educational background, social experience, teaching completion efficiency and teaching quality, and we offer different salary and compensation for teachers at different levels. The top five levels constitute around 86.7% of our full-time teachers.
For an organizational structure of the Company, its subsidiaries and the VIE and a detailed description of the Company’s significant subsidiaries, see “Item 3. Key Information — Our Corporate Structure.” Corporate Information The Company is a Cayman Islands exempted company limited by shares, operating under the Companies Act of the Cayman Islands.
For an organizational structure of the Company, its subsidiaries and the VIE and a detailed description of the Company’s significant subsidiaries, see “Item 3. Key Information — Our Corporate Structure.” 69 Table of Contents Corporate Information The Company is a Cayman Islands exempted company limited by shares, operating under the Companies Act of the Cayman Islands.
In the same month, we also organized students for a field trip in west Sichuan Province, learning from inheritors of intangible cultural heritage about Thangka painting, admiring the murals and sculptures of ethnic minority group, and experiencing stone carving and coloring. Students also had the chance to talk to sky burial masters and learn about different views of life.
In August 2025, we also organized students for a field trip in west Sichuan Province, learning from inheritors of intangible cultural heritage about Thangka painting, admiring the murals and sculptures of ethnic minority group, and experiencing stone carving and coloring. Students also had the chance to talk to sky burial masters and learn about different views of life.
The term of the equity interest pledge agreements entered into by Jun Zhang commenced on August 12, 2020 and shall expire on the earlier of the Expiration Conditions. The VIE has registered the equity interest pledge agreement entered into by Jun Zhang with SAMR on February 26, 2021. 75 Table of Contents B.
The term of the equity interest pledge agreements entered into by Jun Zhang commenced on August 12, 2020 and shall expire on the earlier of the Expiration Conditions. The VIE has registered the equity interest pledge agreement entered into by Jun Zhang with SAMR on February 26, 2021. B.
Risk Factors — Risks Relating to our Corporate Structure.” 73 Table of Contents Contractual Arrangements with the VIE The following is a summary of the currently effective VIE Agreements. Agreements that Allow Us to Exclusively Exercise All Rights of Shareholders of the VIE Powers of Attorney .
Risk Factors — Risks Relating to our Corporate Structure.” Contractual Arrangements with the VIE The following is a summary of the currently effective VIE Agreements. Agreements that Allow Us to Exclusively Exercise All Rights of Shareholders of the VIE Powers of Attorney .
Our total net loss for the fiscal year ended December 31, 2024 was RMB36.1 million ($4.9 million). Our total net revenues for the fiscal year ended December 31, 2023 were RMB221.6 million.
Our total net loss for the fiscal year ended December 31, 2024 was RMB36.1 million. Our total net revenues for the fiscal year ended December 31, 2023 were RMB221.6 million.
Our teachers will guide students through the selection of materials and media to work on their artwork. 77 Table of Contents Professional Courses . In professional courses, students will learn how to create a portfolio step by step under the guidance and supervision of our teachers.
Our teachers will guide students through the selection of materials and media to work on their artwork. Professional Courses . In professional courses, students will learn how to create a portfolio step by step under the guidance and supervision of our teachers.
Our visual communication portfolio training mainly includes training in the areas of graphic design, brand visual identity design, user interface design and illustration. A visual communication portfolio typically includes visual identity design, web/user interface design, font design, package design, illustration design, logo design, book design and poster design. 78 Table of Contents Industrial & Interaction Design .
Our visual communication portfolio training mainly includes training in the areas of graphic design, brand visual identity design, user interface design and illustration. A visual communication portfolio typically includes visual identity design, web/user interface design, font design, package design, illustration design, logo design, book design and poster design. Industrial & Interaction Design .
We have successfully helped approximately ten thousand students in China gain entry into art universities and colleges in the U.S., UK, Europe, Japan, Australia and other countries as of December 31, 2024, among which quite a few gained entry into top art universities and colleges in these countries.
We have successfully helped around ten thousand students in China gain entry into art universities and colleges in the U.S., UK, Europe, Japan, Australia and other countries as of December 31, 2025, among which quite a few gained entry into top art universities and colleges in these countries.
We occupy and operate through our training center network with an aggregate of approximately 17,659 square meters of space in various cities in China; major ones include, Beijing, Shanghai, Chengdu, Wuhan and Nanjing, all of which are leased.
We occupy and operate through our training center network with an aggregate of approximately 16,620 square meters of space in various cities in China; major ones include, Beijing, Shanghai, Chengdu, Wuhan and Nanjing, all of which are leased.
As of April 3, 2025, we and the VIE have also registered 40 domain names relating to our websites, including www.atai.net.cn, www.acgedu.cn and www.acgorg.com, the primary URLs for our three main websites, with the Internet Corporation for Assigned Names and Numbers and the China Internet Network Information Center, a domain name registration service provider in China.
As of March 20, 2026, we and the VIE have also registered 40 domain names relating to our websites, including www.atai.net.cn , www.acgedu.cn and www.acgorg.com , the primary URLs for our three main websites, with the Internet Corporation for Assigned Names and Numbers and the China Internet Network Information Center, a domain name registration service provider in China.
As of April 3, 2025, we have registered 40 domain names relating to our websites, including www.atai.net.cn, www.acgedu.cn and www.acgorg.com, the primary URL for our website, with the Internet Corporation for Assigned Names and Numbers and the China Internet Network Information Center, a domain name registration service provider in China.
As of March 20, 2026, we have registered 40 domain names relating to our websites, including www.atai.net.cn , www.acgedu.cn and www.acgorg.com , the primary URL for our website, with the Internet Corporation for Assigned Names and Numbers and the China Internet Network Information Center, a domain name registration service provider in China.
We deliver our educational services to students primarily through our training center network, and we may further expand our training center network in China and abroad to increase our market penetration and market share depending on the operation needs in the future. * Domestic business footprint of ACG as of April 3, 2025 Our training center network covers 19 major cities, 15 provinces and municipalities in China, including: Northern China : Beijing, Tianjin, Jinan, Qingdao, Dalian and Shenyang, accounting for 34% of our total student enrollment.
We deliver our educational services to students primarily through our training center network, and we may further expand our training center network in China and abroad to increase our market penetration and market share depending on the operation needs in the future. ​ * Domestic business footprint of ACG as of March 20, 2026 Our training center network covers 19 major cities, 15 provinces and municipalities in China, including: Northern China : Beijing, Tianjin, Jinan, Qingdao, Dalian and Shenyang, accounting for 35.0% of our total student enrollment.
Most of our teachers have graduated from reputable domestic or overseas universities with master’s degrees in China, the United Kingdom, the United States, Japan or other countries. Around 44% of our full-time teachers have over five years of related experience in the art industry, while around 16% of our full-time teachers have over three years of related experience.
Most of our teachers have graduated from reputable domestic or overseas universities with master’s degrees in China, the United Kingdom, the United States, Japan or other countries. Around 47.2% of our full-time teachers have over five years of related experience in the art industry, while around 57.8% of our full-time teachers have over three years of related experience.
We intend to continue leveraging our teaching resources within our nationwide network to ensure consistency in teaching quality. Research and Curriculum Development We have devoted significant resources to continuous research and curriculum development.
We intend to continue leveraging our teaching resources within our nationwide network to ensure consistency in teaching quality. 79 Table of Contents Research and Curriculum Development We have devoted significant resources to continuous research and curriculum development.
As the interpretations and implementation of Overseas Offering and Listing Measures involve uncertainties, we cannot assure you that the Company, its subsidiaries and the VIE can complete the filings with the CSRC if the Company intends to conduct new overseas offerings of securities after March 31, 2023.
As the interpretations and implementation of Overseas Offering and Listing Measures involve uncertainties, we cannot assure you that the Company, its subsidiaries and the VIE can complete the filings with the CSRC if the Company intends to conduct new overseas offerings of securities in the future.
We also conduct online courses for certain portfolio training programs through third-party platforms; as an example, we provide online courses for students applying for art schools in Japan.
We also conduct online courses for certain portfolio training programs through third-party platforms when offline courses are less accessible; as an example, we provide online courses for students applying for art schools in Japan.
On September 21, 2006, the CSRC, pursuant to the M&A Rule, published on its official website procedures specifying documents and materials required to be submitted to it by offshore companies seeking CSRC approval of their overseas listings. 100 Table of Contents We believe CSRC approval was not required for our initial public offering in February 2008 because the CSRC approval required under the M&A Rule only applies to an offshore company that has acquired a domestic PRC company for the purpose of listing the domestic PRC company’s equity interest on an overseas stock exchange, while (i) we obtained our equity interest in each of our PRC subsidiaries by means of direct investment other than by acquisition of the equity or assets of a PRC domestic company in 2008, (ii) our former contractual arrangements with ATA Online do not constitute the acquisition of ATA Online, (iii) the M&A Rule does not apply to the acquisition by ATA Learning, which had been a wholly foreign owned enterprise since incorporation until it was reformed into a PRC domestic company in 2018, and (iv) although Article 11 of M&A Rule prohibits the circumvention of the M&A Rule through establishing FIEs, ATA Learning was established in 2003 before the M&A Rule was promulgated, which makes this acquisition not a circumvention of the M&A Rule.
We believe CSRC approval was not required for our initial public offering in February 2008 because the CSRC approval required under the M&A Rule only applies to an offshore company that has acquired a domestic PRC company for the purpose of listing the domestic PRC company’s equity interest on an overseas stock exchange, while (i) we obtained our equity interest in each of our PRC subsidiaries by means of direct investment other than by acquisition of the equity or assets of a PRC domestic company in 2008, (ii) our former contractual arrangements with ATA Online do not constitute the acquisition of ATA Online, (iii) the M&A Rule does not apply to the acquisition by ATA Learning, which had been a wholly foreign owned enterprise since incorporation until it was reformed into a PRC domestic company in 2018, and (iv) although Article 11 of M&A Rule prohibits the circumvention of the M&A Rule through establishing FIEs, ATA Learning was established in 2003 before the M&A Rule was promulgated, which makes this acquisition not a circumvention of the M&A Rule.
Despite our efforts, it may be possible for third parties to obtain and use our intellectual property without authorization. As of April 3, 2025, we and the VIE have registered 162 trademarks for our products and services with the Trademark Office of the SAMR in China.
Despite our efforts, it may be possible for third parties to obtain and use our intellectual property without authorization. As of March 20, 2026, we and the VIE have registered 152 trademarks for our products and services with the Trademark Office of the SAMR in China.
Agreements that Guarantee the Performance of the VIE and Its Shareholders’ Obligations Equity Interest Pledge Agreements . On March 15, 2018, Xiaofeng Ma and Haichang Xiong, both of which were the then shareholders of the VIE, respectively entered into an equity interest pledge agreement with the WFOE and the VIE.
On March 15, 2018, Xiaofeng Ma and Haichang Xiong, both of which were the then shareholders of the VIE, respectively entered into an equity interest pledge agreement with the WFOE and the VIE.
In addition, the Standing Committee of the NPC promulgated the Cyber Security Law, which took effect on June 1, 2017, to protect cyberspace security and order.
In addition, the Standing Committee of the NPC promulgated the Cyber Security Law, which originally took effect on June 1, 2017 and was amended on October 28, 2025, to protect cyberspace security and order.
As of December 31, 2024, we have a total of 1,136 teachers, including 169 full-time employees and 967 part-time teachers who are academics from universities and colleges or designers with private studios within their respective specializations.
As of December 31, 2025, we have a total of 1130 teachers, including 142 full-time employees and 988 part-time teachers who are academics from universities and colleges or designers with private studios within their respective specializations.
On November 7, 2016, the Standing Committee of the NPC issued the Cyber Security Law of the People’s Republic of China, or the Cyber Security Law, which took effect on June 1, 2017.
On November 7, 2016, the Standing Committee of the NPC issued the Cyber Security Law of the People’s Republic of China, or the Cyber Security Law, which originally took effect on June 1, 2017 and was amended on October 28, 2025.
Beijing has two training centers representing 26% of our total student enrollment in fiscal year ended December 31, 2024. Southern China : Shenzhen, Wuhan, Changsha and Guangzhou, accounting for 21% of our total student enrollment in fiscal year ended December 31, 2024.
Beijing has two training centers representing 25.3% of our total student enrollment in fiscal year ended December 31, 2025. Southern China : Shenzhen, Wuhan, Changsha and Guangzhou, accounting for 19.1% of our total student enrollment in fiscal year ended December 31, 2025.
On August 12, 2020, Jun Zhang, as the new shareholder of the VIE, entered into a new loan agreement with the WFOE on the same terms as the loan agreement and the two supplementary agreements previously entered by Haichang Xiong and borrowed RMB5.0 million from the WFOE on August 17, 2020 pursuant to the aforementioned loan agreement.
On August 12, 2020, Jun Zhang, as the new shareholder of the VIE, entered into a new loan agreement with the WFOE on the same terms as the loan agreement and the two supplementary agreements previously entered by Haichang Xiong and borrowed RMB5.0 million from the WFOE on August 17, 2020 pursuant to the aforementioned loan agreement. ​ 72 Table of Contents Agreements that Guarantee the Performance of the VIE and Its Shareholders’ Obligations Equity Interest Pledge Agreements .
We plan to extend our service life-cycle and expand our customer range, through adjusting our products and introducing new services, such as internships, opportunities or employment referrals for job-hunting candidates, interest-based learning courses for the younger market, etc. 83 Table of Contents High School Student Customers.
For junior art education, our primary customers are junior students from ages three to 12. We plan to extend our service life-cycle and expand our customer range, through adjusting our products and introducing new services, such as internships, opportunities or employment referrals for job-hunting candidates, interest-based learning courses for the younger market, etc. High School Student Customers.
We employ a variety of marketing and student recruiting methods to attract prospective students, including: Partnership with Sales Channels . We acquire potential student leads through our partnership with overseas study counselling, foreign language training service, or other education related service providers. Currently, our partnerships with such sales channels are an essential marketing method to acquire new students.
We acquire potential student leads through our partnership with overseas study counselling, foreign language training service, or other education related service providers. Currently, our partnerships with such sales channels are an essential marketing method to acquire new students. Internet and Mobile Advertisement.
Regulation of Overseas Listings On August 8, 2006, six PRC regulatory agencies, including the CSRC, promulgated the M&A Rule, which became effective on September 8, 2006 without retroactive effect and was amended by the PRC Ministry of Commerce on June 22, 2009.
These risks may have a material adverse effect on our business, financial condition and results of operations. ​ 96 Table of Contents Regulation of Overseas Listings On August 8, 2006, six PRC regulatory agencies, including the CSRC, promulgated the M&A Rule, which became effective on September 8, 2006 without retroactive effect and was amended by the PRC Ministry of Commerce on June 22, 2009.
As of April 3, 2025, we have registered 61 software copyrights and five work copyrights relevant to our product and service offerings with the National Copyright Administration of the People’s Republic of China.
As of March 20, 2026, we have registered 66 software copyrights and 5 work copyrights relevant to our product and service offerings with the National Copyright Administration of the People’s Republic of China.
In the opinion of Jincheng Tongda & Neal Law Firm, our PRC legal counsel: ● the ownership structures of the VIE and our wholly owned subsidiaries in China are in compliance with existing published PRC laws and regulations; ● our contractual arrangements among our wholly owned subsidiaries in China and the VIE and its shareholders, are valid and binding, will not result in any material violation of published PRC laws or regulations currently in effect, and are enforceable in accordance with their terms and conditions; and ● the business operations of our Company and all of our PRC subsidiaries, as described in this annual report, are in compliance with existing published PRC laws and regulations in all material aspects.
In the opinion of Jincheng Tongda & Neal Law Firm, our PRC legal counsel: ● the ownership structures of the VIE and our wholly owned subsidiaries in China are in compliance with existing published PRC laws and regulations; ● our contractual arrangements among our wholly owned subsidiaries in China and the VIE and its shareholders, are valid and binding, will not result in any material violation of published PRC laws or regulations currently in effect, and are enforceable in accordance with their terms and conditions; and ● the business operations of our Company and all of our PRC subsidiaries, as described in this annual report, are in compliance with existing published PRC laws and regulations in all material aspects. 70 Table of Contents However, operational control through these contractual arrangements may be less effective than direct ownership as the VIE’s shareholders may fail to perform their obligations under the contractual arrangements, and we could incur substantial costs in enforcing these contractual arrangements if we are able to enforce these contractual arrangements at all.
Typically, the duration of the services is from one to four weeks. The main destinations of our overseas travel-related services are the United States, the United Kingdom, Japan, Italy and other European countries.
Typically, the duration of the services is from one to four weeks. Our overseas travel‑related services focus on destinations such as the United States, the United Kingdom, Japan, Italy and other European countries, while we also offer domestic educational travel services within China.
As such, we and the VIE are not required to make filings with CSRC under the Overseas Offering and Listing Measures unless we conduct new overseas offerings of securities in the future.
As such, we and the VIE are not required to make filings with CSRC under the Overseas Offering and Listing Measures unless we conduct new overseas offerings of securities in the future. In January 2026, the Company completed a registered direct offering of 11,067,547 ADS to three purchasers, and we have completed the relevant filing with the CSRC.
Failure to register or comply with relevant requirements may also limit our ability to contribute additional capital to our PRC subsidiaries and limit our PRC subsidiaries’ ability to distribute dividends to our company. These risks may have a material adverse effect on our business, financial condition and results of operations.
Failure to register or comply with relevant requirements may also limit our ability to contribute additional capital to our PRC subsidiaries and limit our PRC subsidiaries’ ability to distribute dividends to our company.
This agreement shall continue for a period of 30 years from March 15, 2018 and shall be automatically extended for another 10 years unless the WFOE gives written notice terminating this agreement three months before the expiration of this agreement.
This agreement shall continue for a period of 30 years from March 15, 2018 and shall be automatically extended for another 10 years unless the WFOE gives written notice terminating this agreement three months before the expiration of this agreement. ​ 71 Table of Contents Agreements that Provide Us with the Option to Purchase the Equity Interest in or the Assets of the VIE Call Option and Cooperation Agreement .
Our total net revenues for the fiscal year ended December 31, 2022 were RMB206.8 million. Net revenues from our portfolio training services, research-based learning services, overseas study counselling services, and other educational services accounted for 74.0%, 1.8%, 12.1% and 12.1%, respectively, of our total net revenues in the fiscal year ended December 31, 2022.
Net revenues from our portfolio training services, research-based learning services, overseas study counselling services, and other educational services accounted for 70.1%, 7.3%, 13.4% and 9.2%, respectively, of our total net revenues in the fiscal year ended December 31, 2025. Our total net loss for the fiscal year ended December 31, 2025 was RMB 48.0 million ($6.87 million).
In November 2024, we mortgaged the 16 th floor of Gongyuan Real Estate Property to Shanghai Pudong Development Bank Co., Ltd. Beijing Branch for the general credit line of RMB17.0 million, and as of April 3, 2025, we have drawn down credit line of RMB13.0 million.
In September 2025, we mortgaged the 8 th floor of Gongyuan Real Estate Property to Huaxia Bank Co., Ltd. Beijing Shilipu Sub-branch for the general credit line of RMB22.0 million, and as of March 20, 2026, we have drawn down credit line of RMB22.0 million.
Eastern China : Shanghai, Hangzhou, Nanjing, Hefei and Suzhou, accounting for 26% of our total student enrollment in fiscal year ended December 31, 2024. 85 Table of Contents Western China : Xi’an, Kunming, Chongqing and Chengdu, accounting for 19% of our total student enrollment in fiscal year ended December 31, 2024.
Eastern China : Shanghai, Hangzhou, Nanjing, Hefei and Suzhou, accounting for 28.7% of our total student enrollment in fiscal year ended December 31, 2025.
The program included various short courses for students to choose from, and tours to prestigious universities and well-known museums and art galleries. Apart from the UAL Summer School Program, we also held two campus tours in the United States in late January and August 2024 respectively.
In 2025, we held various overseas programs, destinations of which included the United States, Japan, and the United Kingdom. Similar to 2024, we held the University of the Arts London (UAL) Summer School Program. The program included various short courses for students to choose from, and tours to prestigious universities and well-known museums and art galleries.
Other than holding 30.96% equity interests in Huanqiuyimeng and 70% equity interests in Beijing Zhenwu, the VIE also holds minority investments in two other PRC companies.
Other than holding 30.96% equity interests in Huanqiuyimeng and 70% equity interests in Beijing Zhenwu, the VIE also holds minority investments in two other PRC companies. We, through the WFOE, entered into a series of contractual arrangements with the VIE and the shareholders of the VIE, which we refer to as the VIE Agreements.
Most of our part-time teachers are experts in the relevant industries or teachers from prestige art schools and institutions who are familiar with the latest development in the relevant industries. 82 Table of Contents We have adopted a quantitative approach to comprehensively assess our teacher candidates on a wide set of criteria, including, among others, educational background, professional abilities, teaching skills, previous teaching experience and communication skills.
We have adopted a quantitative approach to comprehensively assess our teacher candidates on a wide set of criteria, including, among others, educational background, professional abilities, teaching skills, previous teaching experience and communication skills.
For the fiscal year ended December 31, 2024, we also had enrollments from other students and non-student customers besides high school and undergraduate students.
For the fiscal year ended December 31, 2025, we also had enrollments from other students and non-student customers besides high school and undergraduate students. These customers covered a wide range in age and primarily enrolled in our research-based learning and junior art education programs.
Our part-time teachers are generally experienced and have been working in the art industry for years.
Our part-time teachers are generally experienced and have been working in the art industry for years. Most of our part-time teachers are experts in the relevant industries or teachers from prestige art schools and institutions who are familiar with the latest development in the relevant industries.
We update and expand our service offerings frequently in response to the evolving market needs and the relationship between China and the U.S. or other countries related to our services and business. 76 Table of Contents Portfolio Training Services In addition to meeting the academic and language proficiency requirements, overseas art universities and colleges typically require a practical art portfolio as part of the application process.
We update and expand our service offerings frequently in response to the evolving market needs and the relationship between China and the U.S. or other countries related to our services and business.
Our total net loss for the fiscal year ended December 31, 2022 was RMB48.6 million. Our Programs, Services and Products We provide a wide variety of creative arts-related international educational services to our students. Our services include portfolio training services, research-based learning services, overseas study counselling services and other educational services.
Our Programs, Services and Products We provide a wide variety of creative arts-related international educational services to our students. Our services include portfolio training services, research-based learning services, overseas study counselling services and other educational services. Catering to the different needs of our customers, these services can be offered in a bundle setting or separately.
For the fiscal year ended December 31, 2024, we had 4,781 students enrolled, of which 58.7% were enrolled in our portfolio training programs and the remainder were enrolled in our other programs. We deliver educational services to students primarily through our extensive network of training centers in China.
We deliver educational services to students primarily through our extensive network of training centers in China. 73 Table of Contents Our total net revenues for the fiscal year ended December 31, 2025 were RMB 268.11 million ($38.3 million).
Research-Based Learning Services We have offered research-based learning, mainly including overseas educational travel services, to our portfolio training students and other students since 2014. After the outbreak of COVID-19 in January 2020, we adjusted our products and began offering domestic educational travel services and other research-based learning services to students, and also developed programs with services rendered online.
Research-Based Learning Services We have offered research-based learning, mainly including overseas educational travel services, to our portfolio training students and other students since 2014. Over time, we have expanded our offerings to include domestic educational travel services and other research‑based learning programs, as well as online components for certain programs.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur historical results presented below are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the fiscal year ​ ​ ended December 31, ​ ​ 2022 ​ 2023 ​ 2024 ​ ​ % of net ​ % of net ​ ​ % of net ​ ​ RMB ​ revenues ​ RMB ​ revenues ​ RMB ​ US$ ​ revenues ​ ​ (In thousands, except for percentages) Net revenues 206,821 100.0 % 221,619 100.0 % 268,060 36,724 100.0 % Cost of revenues 104,316 50.4 % 106,962 48.3 % 126,795 17,371 47.3 % Gross profit 102,505 49.6 % 114,657 51.7 % 141,265 19,353 52.7 % Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ Research and development 6,791 3.3 % 4,630 2.1 % 3,703 507 1.4 % Sales and marketing 75,266 36.4 % 78,737 35.5 % 99,893 13,685 37.3 % General and administrative 77,051 37.3 % 72,817 32.9 % 80,888 11,082 30.2 % Total operating expenses 159,108 76.9 % 156,184 70.5 % 184,484 25,274 68.9 % Other operating income, net 16 0.0 % 31 0.0 % 175 24 0.1 % Loss from operations (56,587) (27.4) % (41,496) (18.7) % (43,044) (5,897) (16.1) % Gain (loss) on disposal of subsidiaries and others 1,309 0.6 % — — ​ (438) (60) (0.2) % Interest income, net of interest expenses 757 0.4 % 979 0.4 % 1,001 138 0.4 % Foreign currency exchange gains (losses), net 5 0.0 % (5) 0.0 % (19) (3) 0.0 % Loss before income taxes (54,516) (26.4) % (40,522) (18.3) % (42,500) (5,822) (15.9) % Income tax benefit (5,922) (2.9) % (6,811) (3.1) % (6,402) (877) (2.4) % Net loss (48,594) (23.5) % (33,711) (15.2) % (36,098) (4,945) (13.5) % Net loss attributable to ATA Creativity Global (47,893) (23.2) % (33,660) (15.2) % (36,098) (4,945) (13.5) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the fiscal year ​ ​ ended December 31, ​ ​ 2022 ​ 2023 ​ 2024 ​ RMB RMB RMB US$ Basic and diluted loss per common share (0.76) (0.54) (0.57) (0.08) ​ Fiscal Year Ended December 31, 2024 Compared to Fiscal Year Ended December 31, 2023 Net Revenues Our total net revenues increased by RMB46.5 million, or 21.0%, to RMB268.1 million ($36.7 million) in the fiscal year ended December 31, 2024 from RMB221.6 million in the fiscal year ended December 31, 2023.
Biggest changeOur historical results presented below are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the fiscal year ​ ​ ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ ​ ​ ​ ​ % of net ​ ​ ​ ​ ​ ​ ​ % of net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of net ​ ​ RMB ​ revenues ​ RMB ​ revenues ​ RMB ​ US$ ​ revenues ​ ​ (In thousands, except for percentages) Net revenues 221,619 100.0 % 268,060 100.0 % 268,113 38,340 100.0 % Cost of revenues 106,962 48.3 % 126,795 47.3 % 137,802 19,705 51.4 % Gross profit 114,657 51.7 % 141,265 52.7 % 130,311 18,635 48.6 % Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ Research and development 4,630 2.1 % 3,703 1.4 % 3,072 439 1.2 % Sales and marketing 78,737 35.5 % 99,893 37.3 % 82,632 11,816 30.8 % General and administrative 72,817 32.9 % 80,888 30.2 % 78,767 11,264 29.4 % Reversal of provision for loan receivable and other receivables — — % — — % (3,782) (541) (1.4) % Goodwill impairment ​ — — % — — % 33,909 ​ 4,849 ​ 12.6 % Total operating expenses 156,184 70.5 % 184,484 68.9 % 194,598 27,827 72.6 % Other operating income, net 31 0.0 % 175 0.1 % 176 25 0.1 % Loss from operations (41,496) (18.7) % (43,044) (16.1) % (64,111) (9,167) (23.9) % Gain (loss) on disposal of subsidiaries and others — — % (438) (0.2) % 11,881 1,699 4.4 % Interest income, net of interest expenses 979 0.4 % 1,001 0.4 % 623 90 0.2 % Foreign currency exchange gains, net (5) 0.0 % (19) 0.0 % (19) (3) 0.0 % Loss before income taxes (40,522) (18.3) % (42,500) (15.9) % (51,626) (7,381) (19.3) % Income tax benefit (6,811) (3.1) % (6,402) (2.4) % (3,578) (512) (1.3) % Net loss (33,711) (15.2) % (36,098) (13.5) % (48,048) (6,869) (17.9) % Net loss attributable to ATA Creativity Global (33,660) (15.2) % (36,098) (13.5) % (48,048) (6,869) (17.9) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the fiscal year ​ ​ ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ US$ Basic and diluted loss per common share (0.54) (0.57) (0.20) ​ (0.00) ​ Fiscal Year Ended December 31, 2025 Compared to Fiscal Year Ended December 31, 2024 Net Revenues Our total net revenues remained RMB268.1 million ($38.3 million) in the fiscal year ended December 31, 2025, the same as in the fiscal year ended December 31, 2024.
Our general and administrative expenses increased by RMB8.1 million, or 11.1%, to RMB80.9 million ($11.1 million) in the fiscal year ended December 31, 2024 from RMB72.8 million in the fiscal year ended December 31, 2023, mainly as a result of higher professional fees and business expansion related expenses. Sales and Marketing Expenses.
Our general and administrative expenses increased by RMB8.1 million, or 11.1%, to RMB80.9 million in the fiscal year ended December 31, 2024 from RMB72.8 million in the fiscal year ended December 31, 2023, mainly as a result of higher professional fees and business expansion related expenses. Sales and Marketing Expenses.
Factors Affecting Our Results of Operations The key factors affecting our results of operations presented in this annual report are: ● overall economic growth and rising income levels in China contributing to the increasing spending on education and related services; ● potential changes in regulations and policies that may directly or indirectly impact the scope and credibility of services we could deliver; ● our capability to develop and create content that can accommodate needs of potential students, in the classroom, online and in hybrid settings; 103 Table of Contents ● our ability to provide effective creative arts-related international education services and control sales and marketing expenses; ● recognition in the marketplace for services we deliver and branding we have established; and ● competition from both established brands and new entrants, and our ability to maintain our market share in the face of increasing competition.
Factors Affecting Our Results of Operations The key factors affecting our results of operations presented in this annual report are: ● overall economic growth and rising income levels in China contributing to the increasing spending on education and related services; ● potential changes in regulations and policies that may directly or indirectly impact the scope and credibility of services we could deliver; ● our capability to develop and create content that can accommodate needs of potential students, in the classroom, online and in hybrid settings; 99 Table of Contents ● our ability to provide effective creative arts-related international education services and control sales and marketing expenses; ● recognition in the marketplace for services we deliver and branding we have established; and ● competition from both established brands and new entrants, and our ability to maintain our market share in the face of increasing competition.
Income Tax Benefit Income tax benefit decreased by RMB0.4 million, or 5.9%, to RMB6.4 million ($0.9 million) in the fiscal year ended December 31, 2024 from RMB6.8 million in the fiscal year ended December 31, 2023, primarily due to the increase in valuation allowance.
Income Tax Benefit Income tax benefit decreased by RMB0.4 million, or 5.9%, to RMB6.4 million in the fiscal year ended December 31, 2024 from RMB6.8 million in the fiscal year ended December 31, 2023, primarily due to the increase in valuation allowance.
We have a dedicated and experienced research and curriculum development team based at our headquarters consisting of 10 permanent staff and supplemented by professional art teachers as subject experts to analyze market demand, study cutting-edge developments and techniques, and develop the most appropriate curriculum and teaching methods that can help us achieve our goals for providing up-to-date and high quality international educational services.
We have a dedicated and experienced research and curriculum development team based at our headquarters consisting of 7 permanent staff and supplemented by professional art teachers as subject experts to analyze market demand, study cutting-edge developments and techniques, and develop the most appropriate curriculum and teaching methods that can help us achieve our goals for providing up-to-date and high quality international educational services.
The net revenues (i.e., VAT excluded) generated from services provided by our PRC subsidiaries are generally subject to VAT at a rate of 6%, with some of our small-scale taxpaying subsidiaries subject to VAT at a rate of 3%. 108 Table of Contents Results of Operations The following table and period to period comparison and discussion set forth a summary, for the periods presented, of our consolidated results of operations and with each item expressed as a percentage of our total net revenues.
The net revenues (i.e., VAT excluded) generated from services provided by our PRC subsidiaries are generally subject to VAT at a rate of 6%, with some of our small-scale taxpaying subsidiaries subject to VAT at a rate of 3%. 104 Table of Contents Results of Operations The following table and period to period comparison and discussion set forth a summary, for the periods presented, of our consolidated results of operations and with each item expressed as a percentage of our total net revenues.
The discounted cash flows were projected based on financial forecasts developed by management for planning purposes. Cash flows beyond the forecast periods were estimated using a terminal value calculation, which incorporated historical and forecasted financial trends for each reporting unit. Specifically, the income approach valuation included a cash flow discount rate at 19.0% and a terminal growth rate at 3.0%.
The discounted cash flows were projected based on financial forecasts developed by management for planning purposes. Cash flows beyond the forecast periods were estimated using a terminal value calculation, which incorporated historical and forecasted financial trends for each reporting unit. Specifically, the income approach valuation included a cash flow discount rate at 20.0% and a terminal growth rate at 3.0%.
In addition, upon any payments of dividends by the Company, ATA BVI or ACGIGL, no Cayman Islands or British Virgin Islands withholding tax is imposed. Hong Kong ACG HK did not derive any income that is subject to Hong Kong profits tax for the fiscal years ended December 31, 2022, 2023 and 2024.
In addition, upon any payments of dividends by the Company, ATA BVI or ACGIGL, no Cayman Islands or British Virgin Islands withholding tax is imposed. Hong Kong ACG HK did not derive any income that is subject to Hong Kong profits tax for the fiscal years ended December 31, 2023, 2024 and 2025.
Cost of revenues Our cost of revenues increased by RMB19.8 million, or 18.5%, to RMB126.8 million ($17.4 million) in the fiscal year ended December 31, 2024 from RMB107.0 million in the fiscal year ended December 31, 2023, primarily due to an increase in the number of teaching staff and outsourcing costs mainly attributable to research-based learning services.
Cost of revenues Our cost of revenues increased by RMB19.8 million, or 18.5%, to RMB126.8 million in the fiscal year ended December 31, 2024 from RMB107.0 million in the fiscal year ended December 31, 2023, primarily due to an increase in the number of teaching staff and outsourcing costs mainly attributable to research-based learning services.
Accordingly, no provision for Hong Kong profits tax was required. The payment of dividends by Hong Kong companies is not subject to any Hong Kong withholding tax. 107 Table of Contents People’s Republic of China Our subsidiaries operating in China are subject to PRC taxes as described below: Enterprise Income Tax.
Accordingly, no provision for Hong Kong profits tax was required. The payment of dividends by Hong Kong companies is not subject to any Hong Kong withholding tax. 103 Table of Contents People’s Republic of China Our subsidiaries operating in China are subject to PRC taxes as described below: Enterprise Income Tax.
Research and Development Expenses . Our research and development expenses decreased by RMB0.9 million, or 19.6%, to RMB3.7 million ($0.5 million) in the fiscal year ended December 31, 2024 from RMB4.6 million in the fiscal year ended December 31, 2023, primarily due to the decrease in system development fee, which development was completed in the second quarter of 2024.
Our research and development expenses decreased by RMB0.9 million, or 19.6%, to RMB3.7 million in the fiscal year ended December 31, 2024 from RMB4.6 million in the fiscal year ended December 31, 2023, primarily due to the decrease in system development fee, which development was completed in the second quarter of 2024.
In view of the accumulated losses of certain of our PRC subsidiaries, as of December 31, 2024, we provided the full valuation allowance for their deferred income tax assets after consideration of the future reversal of existing taxable temporary differences.
In view of the accumulated losses of certain of our PRC subsidiaries, as of December 31, 2025, we provided the full valuation allowance for their deferred income tax assets after consideration of the future reversal of existing taxable temporary differences.
Risk Factors,” we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material adverse effect on our revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions. E.
Risk Factors,” we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material adverse effect on our revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions. 111 Table of Contents E.
Our sales and marketing expenses increased by RMB21.2 million, or 26.9%, to RMB99.9 million ($13.7 million) in the fiscal year ended December 31, 2024 from RMB78.7 million in the fiscal year ended December 31, 2023, primarily driven by the expansion of our sales team, which contributed to higher sales, as well as an increase in marketing events.
Our sales and marketing expenses increased by RMB21.2 million, or 26.9%, to RMB99.9 million in the fiscal year ended December 31, 2024 from RMB78.7 million in the fiscal year ended December 31, 2023, primarily driven by the expansion of our sales team, which contributed to higher sales, as well as an increase in marketing events. Research and Development Expenses .
Net Loss As a result of the above factors, we had a net loss of RMB36.1 million ($4.9 million) in the fiscal year ended December 31, 2024, compared to a net loss of RMB33.7 million in the fiscal year ended December 31, 2023.
Net Loss As a result of the above factors, we had a net loss of RMB36.1 million in the fiscal year ended December 31, 2024, compared to a net loss of RMB33.7 million in the fiscal year ended December 31, 2023.
We recorded a net foreign currency exchange loss of RMB18,989 ($2,601) in the fiscal year ended December 31, 2024, compared to a net loss of RMB4,876 in the fiscal year ended December 31, 2023.
We recorded a net foreign currency exchange loss of RMB18,989 in the fiscal year ended December 31, 2024, compared to a net loss of RMB4,876 in the fiscal year ended December 31, 2023.
We had basic and diluted loss per common share of RMB0.57 ($0.08) in the fiscal year ended December 31, 2024 compared to basic and diluted loss per common share of RMB0.54 in the fiscal year ended December 31, 2023.
We had basic and diluted loss per common share of RMB0.57 in the fiscal year ended December 31, 2024 compared to basic and diluted loss per common share of RMB0.54 in the fiscal year ended December 31, 2023.
For the year ended December 31, 2024, we elected to bypass the qualitative assessment and proceed directly to performing the quantitative goodwill impairment testing.
For the year ended December 31, 2025, we elected to bypass the qualitative assessment and proceed directly to performing the quantitative goodwill impairment testing.
In addition, our results of operations have been, and may continue to be, significantly affected by the following factors: ● our share-based compensation; ● the impacts of PRC tax policies, including certain preferential tax rates; ● the relative proportion of our net revenues derived from higher- and lower-gross margin service offerings; ● the impacts of strategic investments and acquisitions; ● our ability to maintain similar margins, locate students, etc.; ● the impact of political tensions between the United States and China; ● the impact of international tensions and conflicts generally; and ● the impact of the COVID-19 pandemic or other similar pandemics or natural disasters.
In addition, our results of operations have been, and may continue to be, significantly affected by the following factors: ● our share-based compensation; ● the impacts of PRC tax policies, including certain preferential tax rates; ● the relative proportion of our net revenues derived from higher- and lower-gross margin service offerings; ● the impacts of strategic investments and acquisitions; ● our ability to maintain similar margins, locate students, etc.; ● the impact of political tensions between the United States and China; ● the impact of international tensions and conflicts generally; and ● the impact of any public health epidemic or pandemics or natural disasters.
We do not expect our short-term and long-term cash requirements to be materially different. We do, however, expect to spend money on strategic acquisition and investment opportunities in the international education industry. If any future projects would require additional funding, outside financing might be pursued as needed.
Our current operation plans do not require significant capital commitments. We do not expect our short-term and long-term cash requirements to be materially different. We do, however, expect to spend money on strategic acquisition and investment opportunities in the international education industry. If any future projects would require additional funding, outside financing might be pursued as needed.
Actual future capital expenditures may differ from the amounts presented below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the fiscal year ended December 31, ​ ​ 2022 ​ 2023 ​ 2024 ​ RMB RMB RMB US$ ​ ​ (In thousands) Total capital expenditures 1,618 2,240 20,025 2,743 ​ Historically, our capital expenditures have been made primarily for leasehold improvements, computers and office equipment.
Actual future capital expenditures may differ from the amounts presented below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the fiscal year ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ US$ ​ ​ (In thousands) Total capital expenditures 2,240 20,025 1,281 ​ 183 ​ Historically, our capital expenditures have been made primarily for leasehold improvements, computers and office equipment.
Gross Profit Our gross profit increased by RMB26.7 million, or 23.3%, to RMB141.3 million ($19.3 million) in the fiscal year ended December 31, 2024 from RMB114.6 million in the fiscal year ended December 31, 2023. 109 Table of Contents Operating Expenses General and Administrative Expenses .
Gross Profit Our gross profit increased by RMB26.7 million, or 23.3%, to RMB141.3 million in the fiscal year ended December 31, 2024 from RMB114.6 million in the fiscal year ended December 31, 2023. Operating Expenses General and Administrative Expenses .
As of April 3, 2025, other than the foregoing mortgage, we do not have any outstanding debt securities, contingent liabilities, mortgages, or liens. Capital Expenditures The following table sets forth our historical capital expenditures for the periods presented.
As of March 20, 2026, other than the foregoing mortgage, we do not have any outstanding debt securities, contingent liabilities, mortgages, or liens. Capital Expenditures The following table sets forth our historical capital expenditures for the periods presented.
Liquidity and Capital Resources Cash Flows for the Fiscal Years Ended December 31, 2024, 2023, and 2022 Our working capital and capital expenditure were primarily from cash generated from operating activities and proceeds received from a private placement in 2019 and 2020. As of December 31, 2024, we had RMB36.5 million ($5.0 million) in cash.
Liquidity and Capital Resources Cash Flows for the Fiscal Years Ended December 31, 2025, 2024, and 2023 Our working capital and capital expenditure were primarily from cash generated from operating activities and proceeds received from a private placement in 2019 and 2020. As of December 31, 2025, we had RMB85.2 million ($12.2 million) in cash.
The following table shows our cost of revenues and gross profit from our continuing operations for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the fiscal year ended December 31, ​ ​ 2022 2023 ​ 2024 ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentages) Net Revenues ​ 206,821 ​ 100.0 % 221,619 ​ 100.0 % 268,060 ​ 36,724 ​ 100.0 % Cost of Revenues 104,316 50.4 % 106,962 48.3 % 126,795 17,371 47.3 % Gross Profit 102,505 49.6 % 114,657 51.7 % 141,265 19,353 52.7 % ​ Cost of revenues primarily consists of (1) teaching fees, payroll and compensation to teaching support staff and administrative staff from training centers, performance-linked bonuses paid to teachers and rental payments for training centers as well as costs of course materials and teaching aids for portfolio training services, (2) payroll compensation, outsourcing service costs, lodging and transportation expenses, overseas expenses, and other related costs which are directly attributable to the provision of research-based learning services and overseas study counselling services, and (3) teaching fees, payroll compensation, content development costs, and other related costs, which are directly attributable to the rendering of other educational services and other services.
The following table shows our cost of revenues and gross profit from our continuing operations for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the fiscal year ended December 31, ​ ​ 2023 ​ ​ ​ 2024 ​ 2025 ​ ​ ​ ​ RMB ​ ​ ​ % ​ ​ ​ RMB ​ ​ ​ % ​ ​ ​ RMB ​ ​ ​ US$ ​ ​ ​ % ​ ​ (in thousands, except for percentages) Net Revenues ​ 221,619 ​ 100.0 % 268,060 ​ 100.0 % 268,113 ​ 38,340 ​ 100.0 % Cost of Revenues 106,962 48.3 % 126,795 47.3 % 137,802 19,705 51.4 % Gross Profit 114,657 51.7 % 141,265 52.7 % 130,311 18,635 48.6 % ​ Cost of revenues primarily consists of (1) teaching fees, payroll and compensation to teaching support staff and administrative staff from training centers, performance-linked bonuses paid to teachers and rental payments for training centers as well as costs of course materials and teaching aids for portfolio training services, (2) payroll compensation, outsourcing service costs, lodging and transportation expenses, overseas expenses, and other related costs which are directly attributable to the provision of research-based learning services and overseas study counselling services, and (3) teaching fees, payroll compensation, content development costs, and other related costs, which are directly attributable to the rendering of other educational services.
Junior art education services are designed to provide art-related tutoring courses for junior students from ages three to 12. We disposed of most of the foreign language training business and all of the junior art education business in July 2022 and October 2024 respectively, to focus on growing our core art-related international education services business.
Junior art education services are designed to provide art-related tutoring courses for junior students from ages three to 12. We disposed of all of the junior art education business in October 2024 to focus on growing our core art-related international education services business.
A quantitative assessment for the determination of impairment is made by comparing the carrying amount of the reporting unit with its fair value, which is generally calculated using the discounted cash flow method. Our goodwill of RMB196,289,492 as of December 31, 2024 was related to the overseas art study services reporting unit and other educational services reporting unit.
A quantitative assessment for the determination of impairment is made by comparing the carrying amount of the reporting unit with its fair value, which is generally calculated using the discounted cash flow method. ​ 112 Table of Contents Our goodwill of RMB162,380,773 as of December 31, 2025 was related to the overseas art study services reporting unit and other educational services reporting unit.
Net cash used in investing activities in the fiscal year ended December 31, 2023 of RMB4.0 million was primarily attributable to payments of RMB2.2 million in connection with renovation in various training centers, and RMB1.7 million paid in connection with portfolio training and junior art related business acquisitions and minority investment.
Net cash used in investing activities in the fiscal year ended December 31, 2024 of RMB20.3 million was primarily attributable to payments of RMB10.7 million in connection with renovation in various training centers, and RMB8.7 million paid in connection with acquiring property and equipment. 109 Table of Contents Net cash used in investing activities in the fiscal year ended December 31, 2023 of RMB4.0 million was primarily attributable to payments of RMB2.2 million in connection with renovation in various training centers, and RMB1.7 million paid in connection with portfolio training and junior art related business acquisitions and minority investment.
Net Revenues We derived revenues primarily from our portfolio training services, research-based learning services, overseas study counselling services and other educational services in the fiscal year ended December 31, 2024. Our net revenues are presented net of PRC VAT. The following table sets forth our net revenues from our continuing operations for the periods presented.
Net Revenues We derived revenues primarily from our portfolio training services, research-based learning services, overseas study counselling services and other educational services in the fiscal year ended December 31, 2025. Our net revenues are presented net of PRC VAT.
Revenue is recognized based on the nature of the services. 117 Table of Contents Business Combination Business combinations are recorded using the acquisition method of accounting in accordance with ASC topic 805 (“ASC 805”): Business Combinations .
Revenue is recognized proportionately when the services are delivered. Business Combination Business combinations are recorded using the acquisition method of accounting in accordance with ASC topic 805 (“ASC 805”): Business Combinations .
We recorded nil rental income for the fiscal years ended December 31, 2023 and 2024. Taxation Cayman Islands and British Virgin Islands Under the current laws of Cayman Islands and British Virgin Islands, the Company, ATA BVI and ACGIGL are not subject to income tax.
Other Operating Income, Net Lease guidance ASC 842 was adopted, effective January 1, 2019. We recorded nil rental income for the fiscal years ended December 31, 2023, 2024 and 2025. Taxation Cayman Islands and British Virgin Islands Under the current laws of Cayman Islands and British Virgin Islands, the Company, ATA BVI and ACGIGL are not subject to income tax.
Net cash used in operating activities was RMB14.6 million in the fiscal year ended December 31, 2022, mainly attributable to cash collection from sales of RMB238.0 million, partially offset by cash paid for payroll and compensation expenses of RMB151.6 million and cash paid for other cost and operating expenses of RMB101.0 million.
Net cash used in operating activities was RMB3.3 million in the fiscal year ended December 31, 2024, mainly attributable to cash collection from sales of RMB314.7 million, partially offset by cash paid for payroll and compensation expenses of RMB176.4 million and cash paid for other cost and operating expenses of RMB141.6 million.
The following table sets forth our contractual obligations as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payment Due ​ ​ Within ​ ​ More than ​ ​ Total ​ 1 Year ​ 1-3 Years ​ 3-5 Years ​ 5 Years ​ ​ (In thousands of RMB) Operating Lease Obligations (1) ​ 38,673 ​ 19,097 ​ 16,960 ​ 2,616 ​ — (1) Our operating lease obligations comprise office and training center lease obligations for our offices and training centers in China.
The following table sets forth our contractual obligations as of December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payment Due ​ ​ ​ ​ ​ ​ ​ ​ Within ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ More than ​ ​ Total ​ 1 Year ​ 1-3 Years ​ 3-5 Years ​ 5 Years ​ ​ (In thousands of RMB) Operating Lease Obligations (1) ​ 32,151 ​ 15,707 ​ 16,444 ​ — ​ — Term Loan (2) ​ 16,032 ​ 1,000 ​ 15,032 ​ — ​ — (1) Our operating lease obligations comprise office and training center lease obligations for our offices and training centers in China.
Our net revenues were RMB206.8 million, RMB221.6 million and RMB268.1 million ($36.7 million) in the fiscal years ended December 31, 2022, 2023 and 2024, respectively. We had net loss of RMB48.6 million, RMB33.7 million and RMB36.1 million ($4.9 million) in the fiscal years ended December 31, 2022, 2023 and 2024, respectively.
We had net loss of RMB33.7 million, RMB36.1 million and RMB48.1 million ($6.7 million) in the fiscal years ended December 31, 2023, 2024 and 2025, respectively.
Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates as a result of changes in our estimates or changes in the facts or circumstances underlying our estimates and assumptions. 115 Table of Contents An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such estimate is made, if different accounting estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.
An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such estimate is made, if different accounting estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.
General and Administrative Expenses Our general and administrative expenses consist primarily of salaries and benefits, traveling expenses, administration and share-based compensation expenses for our administrative, management and finance personnel, as well as other expenses including professional fees, office expenses and rental costs. 106 Table of Contents Sales and Marketing Expenses Our sales and marketing expenses consist primarily of salaries and benefits and share-based compensation expenses for our sales and marketing personnel, as well as other expenses including meeting and conference expenses, advertising and promotional expenses, commissions for sales channels, online channel platform expenses, traveling and entertainment expenses and other sales and marketing expenses.
General and Administrative Expenses Our general and administrative expenses consist primarily of salaries and benefits, traveling expenses, administration and share-based compensation expenses for our administrative, management and finance personnel, as well as other expenses including professional fees, office expenses and rental costs.
Under project-based programs, the number of hours of trainings required to complete a project is not pre-determined and varies depending on the background and requirements of individual students. We reassess the total hours of training pursuant to each contract of project-based program with individual students on a quarterly basis.
Revenue is recognized over a period of time based on the number of training hours expended and total hours of training under the contracts with the students. Under project-based programs, the number of hours of trainings required to complete a project is not pre-determined and varies depending on the background and requirements of individual students.
Indebtedness In November 2024, we mortgaged the 16 th floor of Gongyuan Real Estate Property to Shanghai Pudong Development Bank Co., Ltd. Beijing Branch for the general credit line of RMB17.0 million, and as of April 3, 2025, we have drawn down credit line of RMB13.0 million.
Indebtedness In September 2025, we mortgaged the 16 th floor of Gongyuan Real Estate Property to Huaxia Bank Co., Ltd. Beijing Shilipu Sub - branch for the general credit line of RMB22.0 million, and as of March 20, 2026, we have drawn down credit line of RMB22.0 million.
Interest Income, Net of Interest Expense Our interest income, net of interest expenses, increased to RMB1.0 million in the fiscal year ended December 31, 2023 from RMB0.8 million in the fiscal year ended December 31, 2022, primarily due to increased interest income derived from higher average cash balance compared with prior year.
Interest Income, Net of Interest Expense Our interest income, net of interest expenses, decreased by RMB0.4 million, or 37.7% to RMB0.6 million ($0.09million) in the fiscal year ended December 31, 2025 from RMB1 million in the fiscal year ended December 31, 2024, primarily due to decreased interest income derived from lower average cash balance compared with prior year.
The Company is currently evaluating the impact the adoption of ASU 2024-03 will have on its consolidated financial statements and related disclosures.
The Company is currently evaluating the timing and method of adoption, as well as the impact of adoption on its consolidated financial statements and related disclosures.
Net cash provided by financing activities in the fiscal year ended December 31, 2022 of RMB0.2 million was primarily attributable to cash received for exercise of share options and cash paid for employee individual income tax for net settlement of vested shares.
Net cash used in financing activities in the fiscal year ended December 31, 2024 of RMB93,699 was primarily attributable to cash paid for employee individual income tax for net settlement of vested shares.
Fiscal Year Ended December 31, 2023 Compared to Fiscal Year Ended December 31, 2022 Net Revenues Our total net revenues increased by RMB14.8 million, or 7.2%, to RMB221.6 million in the fiscal year ended December 31, 2023 from RMB206.8 million in the fiscal year ended December 31, 2022.
Fiscal Year Ended December 31, 2024 Compared to Fiscal Year Ended December 31, 2023 Net Revenues Our total net revenues increased by RMB46.5 million, or 21.0%, to RMB268.1 million in the fiscal year ended December 31, 2024 from RMB221.6 million in the fiscal year ended December 31, 2023.
Research and development cost incurred over software developed was primarily for internal use. Impairment Loss of Long-term Investments For equity method investments, we recognize an impairment loss when there is a decline in value below the carrying value of the equity method investment that is considered to be other than temporary.
Impairment Loss of Long-term Investments For equity method investments, we recognize an impairment loss when there is a decline in value below the carrying value of the equity method investment that is considered to be other than temporary. The process of assessing and determining whether impairment on an investment is other than temporary requires significant amount of judgment.
We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. 112 Table of Contents The following table summarizes our net cash flows with respect to operating activities, investing activities and financing activities in the fiscal years ended December 31, 2022, 2023 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the fiscal year ended December 31, ​ ​ 2022 ​ 2023 ​ 2024 ​ RMB RMB RMB US$ ​ ​ (In thousands) Net cash provided by (used in) operating activities (14,614) 8,751 (3,345) (458) Net cash used in investing activities (2,490) (3,966) (20,257) (2,775) Net cash provided by (used in) financing activities 188 403 (94) (13) Effect of foreign exchange rate changes on cash 557 (1) 53 7 Net increase (decrease) in cash (16,359) 5,187 (23,643) (3,239) Cash and cash equivalents at beginning of the year 71,339 54,980 60,167 8,243 Cash and cash equivalents at end of the year 54,980 60,167 36,524 5,004 ​ Operating Activities Net cash used in operating activities was RMB3.3 million ($0.5 million) in the fiscal year ended December 31, 2024, mainly attributable to cash collection from sales of RMB314.7 million, partially offset by cash paid for payroll and compensation expenses of RMB176.4 million and cash paid for other cost and operating expenses of RMB141.6 million.
The following table summarizes our net cash flows with respect to operating activities, investing activities and financing activities in the fiscal years ended December 31, 2023, 2024 and 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the fiscal year ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ US$ ​ ​ (In thousands) Net cash provided by (used in) operating activities 8,751 (3,345) (15,839) (2,265) Net cash used in investing activities (3,966) (20,257) 48,705 6,965 Net cash provided by (used in) financing activities 403 (94) 16,341 2,337 Effect of foreign exchange rate changes on cash (1) 53 (494) (71) Net increase (decrease) in cash 5,187 (23,643) 48,712 6,966 Cash and cash equivalents at beginning of the year 54,980 60,167 36,524 5,223 Cash and cash equivalents at end of the year 60,167 36,524 85,236 12,189 ​ Operating Activities Net cash used in operating activities was RMB15.8 million ($2.3 million) in the fiscal year ended December 31, 2025, mainly attributable to cash collection from sales of RMB277.2 million, partially offset by cash paid for payroll and compensation expenses of RMB165.1 million and cash paid for other cost and operating expenses of RMB127.9 million.
Net Loss As a result of the above factors, we had net loss of RMB33.7 million in the fiscal year ended December 31, 2023, compared to a net loss of RMB48.6 million in the fiscal year ended December 31, 2022.
The effective income tax rate was 7% in the fiscal year ended December 31, 2025 compared to 15% in the fiscal year ended December 31, 2024. 106 Table of Contents Net Loss As a result of the above factors, we had a net loss of RMB48.1 million ($6.7 million) in the fiscal year ended December 31, 2025, compared to a net loss of RMB36.1 million in the fiscal year ended December 31, 2024.
Foreign Currency Exchange Losses, Net Our net foreign currency exchange gains or losses primarily reflect the foreign exchange fluctuation effects of exchanging between U.S. dollar and Renminbi. We recorded a net foreign currency exchange loss of RMB4,876 in the fiscal year ended December 31, 2023, compared to a net gain of RMB5,436 in the fiscal year ended December 31, 2022.
Interest Income, Net of Interest Expense Our interest income, net of interest expenses, remained RMB1.0 million in the fiscal year ended December 31, 2024, compared to RMB1.0 million in the fiscal year ended December 31, 2023. 107 Table of Contents Foreign Currency Exchange Losses, Net Our net foreign currency exchange gains or losses primarily reflect the foreign exchange fluctuation effects of exchanging between U.S. dollar and Renminbi.
Operating Expenses Our operating expenses consist of general and administrative expenses, sales and marketing expenses and research and development expenses.
Operating Expenses Our operating expenses consist of general and administrative expenses, sales and marketing expenses, research and development expenses, reversal of provision for loan receivable and other receivables, and goodwill impairment.
The FASB decided that the amendments should be effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted. The adoption of this guidance did not have a material impact on the Company’s financial position, results of operations and cash flows.
The FASB decided that the amendments should be effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted.
The most significant factors that affect our other educational services revenues include the unit price level of the various other educational services that we charge our customers, the amount of credit hours we deliver to our customers and the measurement of progress for various services delivered during reporting periods. 105 Table of Contents Other Services Other services primarily include offerings outside of our educational services.
The most significant factors that affect our other educational services revenues include the unit price level of the various other educational services that we charge our customers, the amount of credit hours we deliver to our customers and the measurement of progress for various services delivered during reporting periods. ​ 101 Table of Contents Seasonality We have experienced and expect to continue to experience slight seasonal fluctuations in our revenues and results of operations, with the quarter ending March 31 typically having relatively lower revenues compared with the other quarters.
For contracts with variable consideration, we determine that variable consideration is allocated according to the method as described above, because variable consideration is attributable to all of the performance obligations in a contract.
For contracts with variable consideration, we determine that variable consideration is allocated according to the method as described above, because variable consideration is attributable to all of the performance obligations in a contract. 113 Table of Contents For each performance obligation satisfied over time, revenues were recognized over time by measuring the progress toward complete satisfaction of that performance obligation, including: ● Portfolio training services.
The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2024. Early application of the amendments in this Update is permitted for any fiscal year or interim period for which financial statements have not yet been issued (or made available for issuance).
Early application of the amendments in this Update is permitted for any fiscal year or interim period for which financial statements have not yet been issued (or made available for issuance). The Company believes the future adoption of this ASU is not expected to have a material impact on its financial statements.
As of December 31, 2024, the estimated fair value of overseas art study services reporting unit is RMB157.2 million, which exceeds its carrying value of RMB27.8 million, and the estimated fair value of the other educational services reporting unit is RMB17.9 million, which exceeds its carrying value of RMB7.6 million.
As of December 31, 2025, the estimated fair value of overseas art study services reporting unit is RMB -36.5 million, which is less than its carrying value of RMB-6.6 million, and the estimated fair value of the other educational services reporting unit is RMB0.3 million, which is less than its carrying value of RMB3.7 million.
Research and Development Expenses Our research and development expenses consist primarily of salaries and benefits for our research and development personnel, outsourcing services costs and other costs relating to the design, development, testing and enhancement of the technology systems in support for the rendering of our products and services. Research and development costs are expensed as incurred.
Sales and Marketing Expenses Our sales and marketing expenses consist primarily of salaries and benefits and share-based compensation expenses for our sales and marketing personnel, as well as other expenses including meeting and conference expenses, advertising and promotional expenses, commissions for sales channels, online channel platform expenses, traveling and entertainment expenses and other sales and marketing expenses. 102 Table of Contents Research and Development Expenses Our research and development expenses consist primarily of salaries and benefits for our research and development personnel, outsourcing services costs and other costs relating to the design, development, testing and enhancement of the technology systems in support for the rendering of our products and services.
Any adjustments arising from the changes of estimated training hours are applied prospectively. ● Research-based learning services. Revenue is recognized when control of promised services is transferred to the customers in an amount of consideration to which we expect to be entitled in exchange for those services. ● Overseas study counselling services.
Revenue is recognized when control of promised services is transferred to the customers in an amount of consideration to which we expect to be entitled in exchange for those services. ● Overseas study counselling services. Revenue is recognized over the service period on the basis of costs incurred to date to the total estimated costs. ● Other educational services.
In March 2024, the FASB issued ASU 2024-02, “Codification Improvements — Amendments to Remove References to the Concepts Statements.” This update contains amendments to the Codification that remove references to various FASB Concepts Statements. These changes remove references to various Concepts Statements, and the amendments apply to all reporting entities within the scope of the affected accounting guidance.
These changes remove references to various Concepts Statements, and the amendments apply to all reporting entities within the scope of the affected accounting guidance. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2024.
We disposed of our K-12 education assessment business in June 2021 and most of the foreign language training business and all junior art education business, which were classified under the category of the other educational services, in July 2022 and October 2024, respectively, to focus our efforts on growing our core art-related international education services business.
In October 2024, we disposed of all junior art education business, which was classified under the category of the other educational services to focus our efforts on growing our core art-related international education services business. Our net revenues were RMB221.6 million, RMB268.1 million and RMB268.1 million ($38.3 million) in the fiscal years ended December 31, 2023, 2024 and 2025, respectively.
The incurrence of indebtedness would result in debt service obligations and could result in operating and financial covenants that would restrict our operations.
The incurrence of indebtedness would result in debt service obligations and could result in operating and financial covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
Any changes in key assumptions, including unanticipated events and circumstances, may affect the accuracy or validity of such estimates and could potentially result in impairment charges. 116 Table of Contents Revenue Recognition We generated revenue primarily from our portfolio training services, research-based learning services, overseas study counselling services, and other educational services through our training center network mainly in China.
Revenue Recognition We generated revenue primarily from our portfolio training services, research-based learning services, overseas study counselling services, and other educational services through our training center network mainly in China.
We believe our expected future cash flows from our operating activities, which are mainly generated from the Huanqiuyimeng business, are sufficient to meet our working capital requirements for at least the next 12 months from the date of this filing. Our current operation plans do not require significant capital commitments.
We intend to finance our future working capital and capital expenditure needs principally from cash generated from future operating activities and possible plans of financings from outside sources including public offerings or private placements. ​ 108 Table of Contents We believe our expected future cash flows from our operating and financing activities, which are mainly generated from the Huanqiuyimeng business and proceeds received from a registered direct offering in 2026, are sufficient to meet our working capital requirements for at least the next 12 months from the date of this filing.
Risk Factors — Risks Relating to Doing Business in the People’s Republic of China — The outbreak of COVID-19 and any future outbreak of severe acute respiratory syndrome, avian flu or coronavirus in China, or similar adverse public health developments, may disrupt our business and operations and adversely affect our financial results.” ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the fiscal year ended ​ ​ December 31, ​ ​ 2022 ​ 2023 ​ 2024 ​ RMB RMB RMB US$ ​ ​ (in thousands) Net Revenues Portfolio training services 153,136 166,449 199,326 27,308 Research-based learning services 3,722 6,513 14,949 2,048 Overseas study counselling services 24,975 28,993 32,287 4,423 Other educational services 24,658 19,664 21,498 2,945 Other services 330 — — — Total net revenues 206,821 221,619 268,060 36,724 ​ 104 Table of Contents Portfolio Training Services We derive portfolio training services revenues primarily from fees charged to our students, mainly high school and undergraduate students, in the form of delivering training programs.
The following table sets forth our net revenues from our continuing operations for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the fiscal year ended ​ ​ December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ US$ ​ ​ (in thousands) Net Revenues ​ ​ ​ ​ Portfolio training services 166,449 199,326 187,915 26,871 Research-based learning services 6,513 14,949 19,636 2,808 Overseas study counselling services 28,993 32,287 35,867 5,129 Other educational services 19,664 21,498 24,695 3,531 Total net revenues 221,619 268,060 268,113 ​ 38,339 ​ ​ 100 Table of Contents Portfolio Training Services We derive portfolio training services revenues primarily from fees charged to our students, mainly high school and undergraduate students, in the form of delivering training programs.
We had basic and diluted loss per common share of RMB0.54 in the fiscal year ended December 31, 2023 compared to basic and diluted loss per common share of RMB0.76 in the fiscal year ended December 31, 2022. 111 Table of Contents Foreign Currency Exchange The functional currency of our offshore entities and subsidiaries, including ATA Creativity Global, ATA BVI, ACG HK and ACGIGL, is the U.S. dollar.
Foreign Currency Exchange The functional currency of our offshore entities and subsidiaries, including ATA Creativity Global, ATA BVI, ACG HK and ACGIGL, is the U.S. dollar. The functional currency of our PRC subsidiaries and the VIE is Renminbi. As of December 31, 2025, we had RMB85.2 million ($12.2 million) in cash and cash equivalents.
We will evaluate the need to renew each lease on a case-by-case basis prior to its expiration. ​ 114 Table of Contents Off-Balance Sheet Arrangements In August 2021, Huanqiuyimeng entered into an agreement with two third parties to invest in a new company, pursuant to which Huanqiuyimeng shall invest RMB110.0 million in cash representing 55% equity interests of the new company.
Consequently, this portion is presented as a short-term liability, while the remaining balance of RMB 15,031,900, which is repayable after one year, is presented as a long-term liability. ​ Off-Balance Sheet Arrangements In August 2021, Huanqiuyimeng entered into an agreement with two third parties to invest in a new company, pursuant to which Huanqiuyimeng shall invest RMB110.0 million in cash representing 55% equity interests of the new company.
This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted.
The ASU will be effective for annual reporting periods (including interim periods within annual reporting periods) beginning after December 15, 2026, for all entities. Early adoption is permitted for both interim and annual financial statements that have not yet been issued. The Company is evaluating the impact of the adoption of this guidance.
Income Tax Benefit Income tax benefit increased by RMB0.9 million, or 15.3% to RMB6.8 million in the fiscal year ended December 31, 2023 from RMB5.9 million in the fiscal year ended December 31, 2022, primarily due to a decrease in valuation allowance as a result of the expiration of tax loss carried forward.
Income Tax Benefit Income tax benefit decreased by RMB2.8 million, or 43.8%, to RMB3.6 million ($0.5 million) in the fiscal year ended December 31, 2025 from RMB6.4 million in the fiscal year ended December 31, 2024, primarily due to the decrease in valuation allowance, the reduction of entities not subject to income tax and the increased goodwill impairment.
Our general and administrative expenses decreased by RMB4.3 million, or 5.6%, to RMB72.8 million in the fiscal year ended December 31, 2023 from RMB77.1 million in the fiscal year ended December 31, 2022, primarily due to a decrease in professional fees and expenses. Sales and Marketing Expenses.
Sales and Marketing Expenses. Our sales and marketing expenses decreased by RMB17.3 million, or 17.3%, to RMB82.6 million ($11.8 million) in the fiscal year ended December 31, 2025 from RMB99.9 million in the fiscal year ended December 31, 2024, primarily driven by lower headcount in sales personnel and decreased sales incentives. Research and Development Expenses.
Investing Activities Net cash used in investing activities in the fiscal year ended December 31, 2024 of RMB20.3 million ($2.8 million) was primarily attributable to payments of RMB10.7 million in connection with renovation in various training centers, and RMB8.7 million paid in connection with acquiring property and equipment.
Investing Activities Net cash used in investing activities in the fiscal year ended December 31, 2025 of RMB48.7 million ($7.0 million) was primarily attributable to proceeds from disposal of affiliates and partial business.
Gross Profit Our gross profit increased by RMB12.1 million, or 11.8%, to RMB114.6 million in the fiscal year ended December 31, 2023 from RMB102.5 million in the fiscal year ended December 31, 2022. Operating Expenses General and Administrative Expenses .
Operating Expenses General and Administrative Expenses. Our general and administrative expenses decreased by RMB2.1 million, or 2.6%, to RMB78.8 million ($11.3 million) in the fiscal year ended December 31, 2025 from RMB80.9 million in the fiscal year ended December 31, 2024, mainly as a result of accounting impact of purchase price allocation from the previously completed acquisition of Huanqiuyimeng.
We did not record any impairment loss for the year ended December 31, 2024, as the fair value of the reporting unit is in excess of its carrying value. The valuations are based on information available as of the impairment review date and are based on expectations and assumptions that have been deemed reasonable by the management.
The valuations are based on information available as of the impairment review date and are based on expectations and assumptions that have been deemed reasonable by the management. Any changes in key assumptions, including unanticipated events and circumstances, may affect the accuracy or validity of such estimates and could potentially result in impairment charges.
Our sales and marketing expenses increased by RMB3.4 million, or 4.5%, to RMB78.7 million in the fiscal year ended December 31, 2023 from RMB75.3 million in the fiscal year ended December 31, 2022, which corresponds to the increase in sales of our services. Research and Development Expenses .
Our research and development expenses decreased by RMB0.6 million, or 17.0%, to RMB3.1 million ($0.4 million) in the fiscal year ended December 31, 2025 from RMB3.7 million in the fiscal year ended December 31, 2024, primarily due to the completion of certain research and development projects in fiscal year 2024. Reversal of provision for loan receivable and other receivables.
The amendments in this Update should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this Update or (2) retrospectively to any or all prior periods presented in the financial statements.
The amendments are effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied prospectively to all applicable periods after the effective date or retrospectively to any or all prior periods presented.
Risk Factors — Risks Relating to Doing Business in the People’s Republic of China — The outbreak of COVID-19 and any future outbreak of severe acute respiratory syndrome, avian flu or coronavirus in China, or similar adverse public health developments, may disrupt our business and operations and adversely affect our financial results” in this annual report for more details.
Please see “Item 3.D. Risk Factors — Risks Relating to Doing Business in the People’s Republic of China — We face risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt our business, financial condition and results of operations” in this annual report for more details.
For interim and annual reporting periods, an entity shall disaggregate, in a tabular format disclosure in the notes to financial statements, all relevant expense captions presented on the face of the income statement in continuing operations into the purchases of inventory, employee compensation, depreciation, amortization, and depletion.
The amendments require public business entities to disclose, in tabular format within the notes to consolidated financial statements, disaggregated information for certain expense categories included in income from continuing operations—specifically inventory purchases, employee compensation, depreciation, amortization, and depletion—as well as qualitative descriptions of remaining expense amounts.
This was primarily due to an RMB13.3 million increase in revenue contributions from portfolio training services, an RMB2.8 million increase in revenue contributions from research-based learning services mainly due to the resumption of overseas and domestic education travel programs, and an RMB4.0 million increase in revenue contributions from overseas study counselling services, which were partially offset by the decrease in revenue from other educational services, including the foreign language training services disposed by us during the third quarter of 2022. 110 Table of Contents Cost of Revenues Our cost of revenues increased by RMB2.7 million, or 2.6%, to RMB107.0 million in the fiscal year ended December 31, 2023 from RMB104.3 million in the fiscal year ended December 31, 2022, which corresponds to the increase of net revenues achieved during the fiscal year ended December 31, 2023.
Cost of revenues Our cost of revenues increased by RMB11 million, or 8.7%, to RMB137.8 million ($19.7 million) in the fiscal year ended December 31, 2025 from RMB126.8 million in the fiscal year ended December 31, 2024, primarily due to an increase in teaching costs and outsourcing costs mainly attributable to research-based learning services. 105 Table of Contents Gross Profit Our gross profit decreased by RMB11 million, or 7.8%, to RMB130.3 million ($18.6 million) in the fiscal year ended December 31, 2025 from RMB141.3 million in the fiscal year ended December 31, 2024.
The Company believes the future adoption of this ASU is not expected to have a material impact on its financial statements. 118 Table of Contents In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” The amendments in this ASU are intended to improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements for interim and annual reporting periods.
In January 2025, the FASB issued ASU 2025-01, “Income Statement – Comprehensive Income – Expense Disaggregation Disclosure (Subtopic 220-40): Clarifying the Effective Date.” This pronouncement revises the effective date of ASU 2024-03 and clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.
Our cash and cash equivalents were primarily deposited with reputable banks in China and Hong Kong. We intend to finance our future working capital and capital expenditure needs principally from cash generated from future operating activities and possible plans of financings from outside sources including public offerings or private placements.
Our cash and cash equivalents were primarily deposited with reputable banks in China and Hong Kong.
Removed
The COVID-19 outbreak in China occurred in late January 2020. It had material adverse impacts on our revenues for the fiscal year ended December 31, 2022. See “Item 3.D.
Added
Research and development costs are expensed as incurred. Research and development cost incurred over software developed was primarily for internal use.
Removed
In the fiscal year ended December 31, 2022, our research-based learning services were primarily delivered online because of the impact of the COVID-19 pandemic.
Added
Reversal of provision for Loan Receivable and Other Receivables We recorded reversal of provision for loan receivable and other receivables in the fiscal year ended December 31,2025, which relates to receivables collected from enforcement proceeds associated with our prior investment in study abroad project.
Removed
However, since late 2022, the Chinese government has relaxed COVID-19 control policies and our business returned to normal, and thus we have resumed to develop and provide offline research-based learning services to our students including overseas and domestic educational travel services.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

40 edited+8 added−8 removed40 unchanged
Biggest changeShare Ownership The following table sets forth information with respect to the beneficial ownership, within the meaning of Section 13(d)(3) of the Exchange Act, of our common shares as of April 3, 2025 by: ● each person known to us to own beneficially more than 5% of common shares, and ● each of our directors and executive officers. ​ ​ ​ ​ ​ ​ ​ ​ Common shares beneficially ​ ​ owned ​ Number (1) Percentage (2) Directors and Executive Officers: ​ Xiaofeng Ma(3) 25,160,508 39.4 % Andrew Y Yan * * ​ Hope Ni * * ​ Alec Tsui * * ​ Zhilei Tong(4) * * ​ Ruobai Sima * * ​ Jun Zhang(5) 10,634,092 16.7 % Directors and Executive Officers Combined 37,495,362 58.7 % Principal Shareholders: ​ Joingear Limited(6) 18,427,074 28.9 % HSBC International Trustee Limited(7) 9,804,588 15.4 % Able Knight Development Limited(3) 4,998,988 7.8 % Alpha Advantage Global Limited(8) 4,717,100 7.4 % Jiangong Zhao(8) 4,717,100 7.4 % Arts Consulting Limited(9) 9,360,000 14.7 % CL-TCC(10) 5,662,634 8.9 % Pengjian Shi(10) 5,662,634 8.9 % TCC Management Limited(10) 5,662,634 8.9 % * Beneficially owns less than 1% of our common shares.
Biggest changeShare Ownership The following table sets forth information with respect to the beneficial ownership, within the meaning of Section 13(d)(3) of the Exchange Act, of our common shares as of March 20, 2026 by: ● each person known to us to own beneficially more than 5% of common shares, and ● each of our directors and executive officers. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common shares beneficially ​ ​ owned ​ ​ ​ ​ Number (1) ​ ​ ​ Percentage (2) Directors and Executive Officers: ​ ​ ​ Xiaofeng Ma(3) 25,160,508 29.2 % Andrew Y Yan * * ​ Haoyu Wang * * ​ Zhiping Feng * * ​ Ruobai Sima * * ​ Jun Zhang(4) 10,634,092 12.4 % Directors and Executive Officers Combined 36,544,256 42.5 % Principal Shareholders: ​ ​ ​ Joingear Limited(5) 18,427,074 21.4 % HSBC International Trustee Limited(6) 9,804,588 11.4 % Able Knight Development Limited(3) 4,998,988 5.8 % Alpha Advantage Global Limited(7) 4,717,100 5.5 % Jiangong Zhao(7) 4,717,100 5.5 % Arts Consulting Limited(8) 9,360,000 10.9 % CL-TCC(9) 5,662,634 6.6 % Pengjian Shi(9) 5,662,634 6.6 % TCC Management Limited(9) ​ 5,662,634 ​ 6.6 % Empire Fortune Management Limited (10) ​ 8,559,434 ​ 9.9 % Apollo Wise Investment Limited (11) ​ 8,559,434 ​ 9.9 % Water River Capital Limited (12) 5,016,226 5.8 % * Beneficially owns less than 1% of our common shares.
Our audit committee is responsible for, among other things: ● appointing the independent auditor; ● pre-approving all auditing and non-auditing services permitted to be performed by the independent auditor; ● annually reviewing the independent auditor’s report describing the auditing firm’s internal quality-control procedures, any material issues raised by the most recent internal quality-control review, or peer review, of the independent auditor and all relationships between the independent auditor and our company; ● setting clear hiring policies for employees and former employees of the independent auditor; ● reviewing with the independent auditor any audit problems or difficulties and management’s responses; ● reviewing and approving all related party transactions on an ongoing basis; ● reviewing and discussing the annual audited financial statements with management and the independent auditor; ● reviewing and discussing with management and the independent auditor major issues regarding accounting principles and financial statement presentations; ● reviewing reports prepared by management or the independent auditor relating to significant financial reporting issues and judgments; ● discussing earnings press releases with management, as well as financial information and earnings guidance provided to analysts and rating agencies; 123 Table of Contents ● reviewing with management and the independent auditor the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on our financial statements; ● discussing policies with respect to risk assessment and risk management with management, internal auditors and the independent auditor; ● timely reviewing reports from the independent auditor regarding all critical accounting policies and practices to be used by our company, all alternative treatments of financial information within U.S.
Our audit committee is responsible for, among other things: ● appointing the independent auditor; ● pre-approving all auditing and non-auditing services permitted to be performed by the independent auditor; ● annually reviewing the independent auditor’s report describing the auditing firm’s internal quality-control procedures, any material issues raised by the most recent internal quality-control review, or peer review, of the independent auditor and all relationships between the independent auditor and our company; ● setting clear hiring policies for employees and former employees of the independent auditor; ● reviewing with the independent auditor any audit problems or difficulties and management’s responses; ● reviewing and approving all related party transactions on an ongoing basis; ● reviewing and discussing the annual audited financial statements with management and the independent auditor; ● reviewing and discussing with management and the independent auditor major issues regarding accounting principles and financial statement presentations; ● reviewing reports prepared by management or the independent auditor relating to significant financial reporting issues and judgments; ● discussing earnings press releases with management, as well as financial information and earnings guidance provided to analysts and rating agencies; ● reviewing with management and the independent auditor the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on our financial statements; ● discussing policies with respect to risk assessment and risk management with management, internal auditors and the independent auditor; ● timely reviewing reports from the independent auditor regarding all critical accounting policies and practices to be used by our company, all alternative treatments of financial information within U.S.
Sima served as the vice director of the finance department at Toyota Motor Finance (CHINA) Co., LTD, primarily focused in the areas of risk management and corporate finance. Mr. Sima served as a senior auditor at PricewaterhouseCoopers Beijing from 2004 to 2008. Mr.
From 2008 to 2015, Mr. Sima served as the vice director of the finance department at Toyota Motor Finance (CHINA) Co., LTD, primarily focused in the areas of risk management and corporate finance. Mr. Sima served as a senior auditor at PricewaterhouseCoopers Beijing from 2004 to 2008. Mr.
(7) Based on a Schedule 13G Amendment No. 7 filed by HSBC International Trustee Limited on February 7, 2018. The registered address of HSBC International Trustee Limited is 21 Collyer Quay, #19-01 HSBC Building, Singapore 049320.
(6) Based on a Schedule 13G Amendment No. 7 filed by HSBC International Trustee Limited on February 7, 2018. The registered address of HSBC International Trustee Limited is 21 Collyer Quay, #19-01 HSBC Building, Singapore 049320.
One third of our directors for the time being (or, if their number is not a multiple of three, the number nearest to but not greater than one third) shall retire from office every year at our annual general meeting of shareholders on a rotating basis and each director (except for Xiaofeng Ma) shall be subject to retirement at least once every three years.
In addition, one third of our directors for the time being (or, if their number is not a multiple of three, the number nearest to but not greater than one third) shall retire from office every year at our annual general meeting of shareholders on a rotating basis and each director (except for Xiaofeng Ma) shall be subject to retirement at least once every three years.
The business address of Alpha Advantage Global Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands and the business address of Dynamic Fame Limited is Office 1601, 16/F, 31 Queen’s Road Central, Hong Kong. (9) Based on a Schedule 13D/A filed jointly by Jun Zhang and ArtsCL on May 21, 2020.
The business address of Alpha Advantage Global Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands and the business address of Dynamic Fame Limited is Office 1601, 16/F, 31 Queen’s Road Central, Hong Kong. (8) Based on a Schedule 13D/A filed jointly by Jun Zhang and ArtsCL on May 21, 2020.
GAAP that have been discussed with management and all other material written communications between the independent auditor and management; ● establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; ● annually reviewing and reassessing the adequacy of our audit committee charter; ● such other matters that are specifically delegated to our audit committee by our board of directors from time to time; ● meeting separately, periodically, with management, internal auditors and the independent auditor; and ● reporting regularly to the full board of directors.
GAAP that have been discussed with management and all other material written communications between the independent auditor and management; ● establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; ● annually reviewing and reassessing the adequacy of our audit committee charter; 120 Table of Contents ● such other matters that are specifically delegated to our audit committee by our board of directors from time to time; ● meeting separately, periodically, with management, internal auditors and the independent auditor; and ● reporting regularly to the full board of directors.
Our employees have not entered into any collective bargaining agreements. 125 Table of Contents According to our contracts with our and the VIE’s employees, our and the VIE’s employees are generally prohibited from engaging in any activities that compete with our business during the period of their employment and for two years after termination of their employment with us.
Our employees have not entered into any collective bargaining agreements. 122 Table of Contents According to our contracts with our and the VIE’s employees, our and the VIE’s employees are generally prohibited from engaging in any activities that compete with our business during the period of their employment and for two years after termination of their employment with us.
We do not pay or set aside any amounts for pension, retirement or other benefits for our officers and directors. 120 Table of Contents Share Incentives We adopted a share incentive plan, or the 2005 Plan, in April 2005, which was terminated in 2015. We adopted our 2008 Employee Share Incentive Plan, or the 2008 Plan, in January 2008.
We do not pay or set aside any amounts for pension, retirement or other benefits for our officers and directors. 117 Table of Contents Share Incentives We adopted a share incentive plan, or the 2005 Plan, in April 2005, which was terminated in 2015. We adopted our 2008 Employee Share Incentive Plan, or the 2008 Plan, in January 2008.
ArtsCL is a British Virgin Islands company. Jun Zhang is the sole director of ArtsCL. (10) Based on a Schedule 13G filed jointly by CL-TCC, TCC Management Limited and Pengjian Shi on February 18, 2020. Includes 5,662,634 common shares held of record by CL-TCC.
ArtsCL is a British Virgin Islands company. Jun Zhang is the sole director of ArtsCL. (9) Based on a Schedule 13G filed jointly by CL-TCC, TCC Management Limited and Pengjian Shi on February 18, 2020. Includes 5,662,634 common shares held of record by CL-TCC.
(8) Based on a Schedule 13G Amendment No. 1 filed jointly by Jiangong Zhao, Dynamic Fame Limited and Alpha Advantage Global Limited on January 22, 2018. Includes 188,000 common shares held of record by Dynamic Fame Limited and 4,529,100 common shares held of record by Alpha Advantage Global Limited.
(7) Based on a Schedule 13G Amendment No. 1 filed jointly by Jiangong Zhao, Dynamic Fame Limited and Alpha Advantage Global Limited on January 22, 2018. Includes 188,000 common shares held of record by Dynamic Fame Limited and 4,529,100 common shares held of record by Alpha Advantage Global Limited.
Our nominations committee is responsible for, among other things: ● seeking and evaluating qualified individuals to become new directors as needed; ​ ● reviewing and making recommendations to the board of directors regarding the independence and suitability of each board member for continued service; and ​ ● evaluating the nature, structure and composition of other board committees. ​ Corporate Governance Our board of directors has adopted a code of ethics, which is applicable to our senior executive and financial officers.
Our nominations committee is responsible for, among other things: ● seeking and evaluating qualified individuals to become new directors as needed; ​ ● reviewing and making recommendations to the board of directors regarding the independence and suitability of each board member for continued service; and ​ ● evaluating the nature, structure and composition of other board committees. ​ ​ 121 Table of Contents Corporate Governance Our board of directors has adopted a code of ethics, which is applicable to our senior executive and financial officers.
(2) Percentage of beneficial ownership for each of the persons listed above is determined by dividing (i) the number of common shares beneficially owned by such person by (ii) the total number of common shares outstanding, plus the number of common shares such person has the right to acquire within 60 days after April 3, 2025.
(2) Percentage of beneficial ownership for each of the persons listed above is determined by dividing (i) the number of common shares beneficially owned by such person by (ii) the total number of common shares outstanding, plus the number of common shares such person has the right to acquire within 60 days after March 20, 2026.
Our board of directors has determined that Hope Ni and Alec Tsui 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. Hope Ni meets the criteria of an audit committee financial expert as set forth under the applicable rules of the SEC.
Our board of directors has determined that Haoyu Wang and Zhiping FENG 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. Haoyu Wang meets the criteria of an audit committee financial expert as set forth under the applicable rules of the SEC.
The total number of our common shares outstanding as of April 3, 2025 is 63,822,774. 126 Table of Contents (3) Includes (i) 1,734,446 common shares held by Xiaofeng Ma; (ii) 4,998,988 common shares held by Able Knight Development Limited, which is a British Virgin Islands company wholly-owned by Precious Time Holdings Limited and ultimately wholly owned by HSBC International Trustee Limited as trustee of an irrevocable trust constituted under the laws of the Cayman Islands with Xiaofeng Ma as the settlor and certain family members of Xiaofeng Ma as the beneficiaries; and (iii) 18,427,074 common shares held by Joingear Limited, which is a British Virgin Islands company with 100% of its issued and outstanding share capital owned by Xiaofeng Ma.
The total number of our common shares outstanding as of March 20, 2026 is 86,059,994. 123 Table of Contents (3) Includes (i) 1,734,446 common shares held by Xiaofeng Ma; (ii) 4,998,988 common shares held by Able Knight Development Limited, which is a British Virgin Islands company wholly-owned by Precious Time Holdings Limited and ultimately wholly owned by HSBC International Trustee Limited as trustee of an irrevocable trust constituted under the laws of the Cayman Islands with Xiaofeng Ma as the settlor and certain family members of Xiaofeng Ma as the beneficiaries; and (iii) 18,427,074 common shares held by Joingear Limited, which is a British Virgin Islands company with 100% of its issued and outstanding share capital owned by Xiaofeng Ma.
Our compensation committee is responsible for: ● reviewing and approving our overall compensation policies; ● reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer, evaluating our chief executive officer’s performance in light of those goals and objectives, reporting the results of such evaluation to the board of directors, and determining our chief executive officer’s compensation level based on this evaluation; ● determining the compensation level of our other executive officers; ● making recommendations to the board of directors with respect to our incentive-compensation plans and equity-based compensation plans; ● administering our equity-based compensation plans in accordance with the terms thereof; and ● such other matters that are specifically delegated to the compensation committee by our board of directors from time to time. 124 Table of Contents Nominations Committee Our nominations committee consists of Xiaofeng Ma, Andrew Y Yan and Alec Tsui.
Our compensation committee is responsible for: ● reviewing and approving our overall compensation policies; ● reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer, evaluating our chief executive officer’s performance in light of those goals and objectives, reporting the results of such evaluation to the board of directors, and determining our chief executive officer’s compensation level based on this evaluation; ● determining the compensation level of our other executive officers; ● making recommendations to the board of directors with respect to our incentive-compensation plans and equity-based compensation plans; ● administering our equity-based compensation plans in accordance with the terms thereof; and ● such other matters that are specifically delegated to the compensation committee by our board of directors from time to time.
(6) Includes 18,427,074 common shares held by Joingear Limited, based on Schedule 13D/A Amendment No. 8 filed jointly by Xiaofeng Ma, Able Knight Development Limited, Precious Time Holdings Limited, Ma Family Trust and Joingear Limited on May 21, 2020. Joingear Limited is a British Virgin Islands company. Xiaofeng Ma and Zhilei Tong are directors of Joingear Limited.
(5) Includes 18,427,074 common shares held by Joingear Limited, based on Schedule 13D/A Amendment No. 8 filed jointly by Xiaofeng Ma, Able Knight Development Limited, Precious Time Holdings Limited, Ma Family Trust and Joingear Limited on May 21, 2020. Joingear Limited is a British Virgin Islands company. Xiaofeng Ma is the sole director of Joingear Limited.
The functions and powers of our board of directors include, among others: ● convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; ● issuing authorized but unissued shares; ● declaring dividends and distributions; ● exercising the borrowing powers of our company and mortgaging the property of our company; ● approving the transfer of shares of our company, including the registering of such shares in our share register; and ● exercising any other powers conferred by the shareholders’ meetings or under our fourth amended and restated memorandum and articles of association. 122 Table of Contents Terms of Directors We have a board of five directors divided into class A, class B and class C directors.
The functions and powers of our board of directors include, among others: ● convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; ● issuing authorized but unissued shares; ● declaring dividends and distributions; ● exercising the borrowing powers of our company and mortgaging the property of our company; ● approving the transfer of shares of our company, including the registering of such shares in our share register; and ● exercising any other powers conferred by the shareholders’ meetings or under our fourth amended and restated memorandum and articles of association.
Xiaofeng Ma is the sole director of Able Knight Development Limited. The business address of Able Knight Development Limited is Portcullis Chambers, 4th Floor, Ellen Skelton Building, 3076 Sir Francis Drake Highway, Road Town, Tortola, British Virgin Islands. Xiaofeng Ma and Zhilei Tong are directors of Joingear Limited.
Xiaofeng Ma is the sole director of Able Knight Development Limited and Joingear Limited. The business address of Able Knight Development Limited is Portcullis Chambers, 4th Floor, Ellen Skelton Building, 3076 Sir Francis Drake Highway, Road Town, Tortola, British Virgin Islands. The business address of Joingear Limited is OMC Chambers, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands.
As of December 31, 2024, 10,558,411 shares were authorized for issuance under the Second Amended and Restated 2008 Plan. We have issued share options and restricted shares under the 2005 Plan, the 2008 Plan, the Amended and Restated 2008 Plan and the Second Amended and Restated 2008 Plan to selected directors, officers, employees and individual consultants and advisors.
As of December 31, 2025, 11,190,90 shares were authorized for issuance under the Second Amended and Restated 2008 Plan. We have issued share options and restricted shares under the 2005 Plan, the 2008 Plan, the Amended and Restated 2008 Plan and the Second Amended and Restated 2008 Plan to selected directors, officers, employees and individual consultants and advisors.
(1) The number of common shares beneficially owned by each of the listed persons includes common shares that such person has the right to acquire within 60 days after April 3, 2025.
(1) The number of common shares beneficially owned by each of the listed persons includes common shares that such person has the right to acquire within 60 days after March 20, 2026.
Compensation For the fiscal year ended December 31, 2024, we and our subsidiaries paid aggregate cash compensation of RMB6.4 million ($0.9 million) to our directors and executive officers as a group.
Compensation For the fiscal year ended December 31, 2025, we and our subsidiaries paid aggregate cash compensation of RMB5.1 million ($0.7 million) to our directors and executive officers as a group.
Employees We had 536, 581 and 599 employees as of December 31, 2022, 2023 and 2024 in China, respectively, including five employees of the VIE as of December 31, 2024.
Employees We had 581, 599 and 489 employees as of December 31, 2023, 2024 and 2025 in China, respectively, including 3 employees of the VIE as of December 31, 2025.
The business address of each of our directors and executive officers is Room 3105, Suite A of East District, Jian Wai Soho, No. 39 Dong San Huan Zhong Road, Chao Yang District, Beijing 100022, China. ​ ​ ​ ​ ​ Name Age Position Xiaofeng Ma ​ 61 ​ Chairman of the Board of Directors and Chief Executive Officer Jun Zhang ​ 52 ​ President and Director Andrew Y Yan ​ 67 ​ Director Hope Ni ​ 52 ​ Director Alec Tsui ​ 75 ​ Director Ruobai Sima ​ 43 ​ Chief Financial Officer ​ Xiaofeng Ma is co-founder, chairman of the board and chief executive officer of our company.
The business address of each of our directors and executive officers is Room 3105, Suite A of East District, Jian Wai Soho, No. 39 Dong San Huan Zhong Road, Chao Yang District, Beijing 100022, China. ​ ​ ​ ​ ​ Name ​ ​ ​ Age ​ ​ ​ Position Xiaofeng Ma ​ 63 ​ Chairman of the Board of Directors and Chief Executive Officer Jun Zhang ​ 54 ​ President and Director Andrew Y Yan ​ 68 ​ Independent Director Haoyu Wang ​ 31 ​ Independent Director Zhiping Feng ​ 28 ​ Independent Director Ruobai Sima ​ 44 ​ Chief Financial Officer ​ Xiaofeng Ma is co-founder, chairman of the board and chief executive officer of our company.
Box 1990, 3rd Floor, FirstCaribbean House, George Town Grand Cayman KY1-1104, Cayman Islands and the business address of CL-TCC is Harbour Place, 2nd Floor, 103 South Church Street, P.O. Box 472, George Town, Grand Cayman KY1-1106, Cayman Islands. ​ 127 Table of Contents None of our shareholders have different voting rights from other shareholders.
Box 1990, 3rd Floor, FirstCaribbean House, George Town Grand Cayman KY1-1104, Cayman Islands and the business address of CL-TCC is Harbour Place, 2nd Floor, 103 South Church Street, P.O. Box 472, George Town, Grand Cayman KY1-1106, Cayman Islands.
Compensation Committee Our compensation committee consists of Andrew Y Yan, Hope Ni and Alec Tsui. Andrew Y Yan is the chairman of our compensation committee. Our board of directors has determined that all of our compensation committee members are “independent directors” within the meaning of Nasdaq Stock Market Rule 5605(a)(2).
Compensation Committee Our compensation committee consists of Zhiping Feng and Haoyu Wang. Zhiping Feng is the chairman of our compensation committee. Our board of directors has determined that all of our compensation committee members are “independent directors” within the meaning of Nasdaq Stock Market Rule 5605(a)(2).
As of December 31, 2024, we had 169 employees in teaching, 147 employees in teaching administration and affairs (among which there are 10 permanent employees focusing on research and curriculum development who are supplemented by professional art teachers), 193 employees in sales and marketing, five in research and development and 85 in general and administrative functions.
As of December 31, 2025, we had 188 employees in teaching, 92 employees in teaching administration and affairs (among which there are 7 permanent employees focusing on research and curriculum development who are supplemented by professional art teachers), 134 employees in sales and marketing, 5 in research and development and 70 in general and administrative functions.
Our class C directors Hope Ni and Alec Tsui will retire from office and will be eligible for re-election at our 2025 annual general meeting as they will have held their offices for three years by then.
Our class B directors Andrew Y Yan and Jun Zhang will retire from office and will be eligible for re-election at our 2026 annual general meeting as they will have held their offices for three years by then.
Employees” for a discussion of our use of share incentive plans to incentivize our employees. To our knowledge, as of April 3, 2025, 100 of our common shares were held by holders of record in the United States. However, 25,873,068 common shares were registered in the name of a nominee of Citibank, N.A., the depositary of our ADSs.
To our knowledge, as of March 20, 2026, 100 of our common shares were held by holders of record in the United States. However, 25,873,068 common shares were registered in the name of a nominee of Citibank, N.A., the depositary of our ADSs.
Jun Zhang is the sole director and holds 75% of the issued and outstanding share capital of ArtsCL. The business address of ArtsCL is CCS Trustees Limited, Mandar House, 3 rd Floor, Johnson’s Ghut, Tortola, British Virgin Islands.
The business address of ArtsCL is CCS Trustees Limited, Mandar House, 3 rd Floor, Johnson’s Ghut, Tortola, British Virgin Islands.
Sima served as the financial director for Bitauto Holdings, a leading auto internet company focused on providing Internet information, shopping guide services and Internet marketing solutions in China. From 2008 to 2015, Mr.
Sima served as CFO at various automotive services companies from 2016 to 2022, including Beijing Aiyihang Auto Service Group and Beijing Shouqi Zhixing Technology Co., Ltd. From 2015 to 2016, Mr. Sima served as the financial director for Bitauto Holdings, a leading auto internet company focused on providing Internet information, shopping guide services and Internet marketing solutions in China.
Board Practices Our board of directors has established an audit committee, a compensation committee and a nominations committee. Audit Committee Our audit committee consists of Hope Ni and Alec Tsui. Hope Ni is the chairman of our audit committee.
Board Practices Our board of directors has established an audit committee, a compensation committee and a nominations committee. 119 Table of Contents Audit Committee Our audit committee consists of Haoyu Wang and Zhiping FENG. Haoyu Wang is the chairman of our audit committee.
Xiaofeng Ma is the chairman of the nominations committee.
Nominations Committee Our nominations committee consists of Xiaofeng Ma, Zhiping Feng and Haoyu Wang. Xiaofeng Ma is the chairman of the nominations committee.
Our directors also have a duty to exercise the care, diligence and skills that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our fourth amended and restated memorandum and articles of association.
In fulfilling their duty of care to us, our directors must ensure compliance with our fourth amended and restated memorandum and articles of association. A shareholder has the right to seek damages if a duty owed by our directors is breached.
Zhilei Tong ceased to be a director of the Company on February 12, 2025. C. Board Practices Duties of Directors Under the Companies Act, our directors have a statutory duty of loyalty to act honestly in good faith with a view to our best interests.
Board Practices Duties of Directors Under the Companies Act, our directors have a statutory duty of loyalty to act honestly in good faith with a view to our best interests. Our directors also have a duty to exercise the care, diligence and skills that a reasonably prudent person would exercise in comparable circumstances.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. See “Item 6.B. Directors, Senior Management and Employees — Compensation — Share Incentives” for information on options granted to our current directors and executive officers and “Item 6.D.
Directors, Senior Management and Employees — Compensation — Share Incentives” for information on options granted to our current directors and executive officers and “Item 6.D. Employees” for a discussion of our use of share incentive plans to incentivize our employees.
As of the date of this annual report, the class A director is Xiaofeng Ma, the class B directors are Andrew Y Yan and Jun Zhang, and the class C directors are Hope Ni and Alec Tsui.
Terms of Directors As of the date of this annual report, we have a board of five directors, among which, Xiaofeng Ma has been designated as class A director, Andrew Y Yan and Jun Zhang have been designated as class B directors, and Haoyu Wang and Zhiping Feng have not been designated as specific class directors.
Yan received a master of arts degree from Princeton University, and a bachelor’s degree in engineering from the Nanjing Aeronautic Institute. 119 Table of Contents Hope Ni is an independent director of ATA Creativity Global. Ms. Ni currently serves on the boards of Zhihu Inc. (NASDAQ: ZH), Ucloudlink Group Inc. (NASDAQ: UCL) and Acotec Scientific Holdings Limited (HKEX: 6699).
Yan received a master of arts degree from Princeton University, and a bachelor’s degree in engineering from the Nanjing Aeronautic Institute. 116 Table of Contents Haoyu Wang is a director of our company and is an independent director pursuant to Nasdaq Stock Market Rule 5605(a)(2).
The business address of Joingear Limited is OMC Chambers, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands. (4) Mr. Zhilei Tong ceased to be a director of the Company on February 12, 2025. (5) Includes 9,360,000 common shares held by Arts Consulting Limited, or ArtsCL, which is a British Virgin Islands company.
(4) Includes (i) 1,274,092 common shares issuable upon exercise of the options granted to Jun Zhang, (ii) 9,360,000 common shares held by Arts Consulting Limited, or ArtsCL, which is a British Virgin Islands company. Jun Zhang is the sole director and holds 75% of the issued and outstanding share capital of ArtsCL.
Ruobai Sima is our Chief Financial Officer, having assumed such role on May 12, 2022. Prior to joining ACG, Mr. Sima served as CFO at various automotive services companies from 2016 to 2022, including Beijing Aiyihang Auto Service Group and Beijing Shouqi Zhixing Technology Co., Ltd. From 2015 to 2016, Mr.
She received a master’s degree in finance from the University of Rochezxster and a bachelor’s degree in quantitative economics from the University of California, Irvine. Ruobai Sima is our Chief Financial Officer, having assumed such role on May 12, 2022. Prior to joining ACG, Mr.
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From 2004 to 2007, Ms. Ni was the chief financial officer and director of Viewtran Group, Inc. (NASDAQ: VIEW), during which time, Viewtran Group increased market capitalization approximately seven times. In 2008, Ms. Ni served as the vice chairman of Viewtran Group, Inc. Prior to that, Ms.
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He currently serves as the investment director of Shenzhen Mingsheng Private Equity Fund Management Co., Ltd. and is engaged in professional investment focusing on hard-tech sectors such as new energy, semiconductors, artificial intelligence, and life sciences. Before that, he worked as an investment manager in Shenzhen Mingsheng Private Equity Fund Management Co., Ltd from 2021 to 2025.
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Ni spent six years as a practicing attorney at Skadden, Arps, Slate, Meagher & Flom LLP in New York and Hong Kong. Earlier in her career, Ms. Ni worked at Merrill Lynch’s investment banking division in New York. Ms.
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From 2015 to 2021, he worked as an auditor of BDO Shu Lun Pan Certified Public Accountants LLP. Mr. Wang is a certified accountant and received a bachelor’s degree in financial management from Guangdong Polytechnic Normal University. Zhiping Feng is a director of our company and is an independent director pursuant to Nasdaq Stock Market Rule 5605(a)(2).
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Ni received her J.D. degree from the University of Pennsylvania Law School and her B.S. degree in applied economics and business management from Cornell University. Alec Tsui is an independent director on our board and has also served as director on the board of directors of ATA Online from July 2015 to August 2018. Mr.
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She is currently the corporate finance manager of ETHK Labs Inc. (formerly known as IVD Medical Holding Limited) (HKEX: 01931) where she is responsible for listed company compliance and capital market matters. Before joining ETHK Labs Inc. in 2025, she worked as an assurance associate of PricewaterhouseCoopers Zhong Tian LLP from 2022 to 2024.
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Tsui is currently an independent non-executive director of a number of companies listed in Hong Kong and on Nasdaq, including, COSCO Shipping International (Hong Kong) Co Ltd., Pacific Online Limited, Melco Resorts & Entertainment Limited, Hua Medicine and Brii Biosciences Limited. He was the chairman of the Hong Kong Securities Institute from 2001 to 2004.
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We did not grant any share option or restricted share to our directors or executive officers pursuant to our share incentive plans in the year ended December 31, 2025. ​ 118 Table of Contents C.
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He was an advisor and a council member of the Shenzhen Stock Exchange from 2001 to 2002. He joined the Hong Kong Stock Exchange in 1994 as an executive director of the finance and operations services division and became its chief executive in 1997. Prior to that, Mr.
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In February 2026, Haoyu Wang and Zhiping Feng were appointed as new directors and will hold office until the first general meeting after the appointment and be subject to re-election at such meeting. The shareholders shall then designate each of them as a specific class director if they were elected at such meeting.
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Tsui served at the Securities and Futures Commission of Hong Kong from 1989 to 1993. Mr. Tsui graduated from the University of Tennessee with a B.S. degree and a master’s degree in industrial engineering. He completed a program for senior managers in government at the John F. Kennedy School of Government of Harvard University.
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(10) Includes 8,559,434 common shares in the form of ADSs held of record by Empire Fortune Management Limited, which were acquired by Empire Fortune Management Limited through the registered direct offering of the Company in January 2026.
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The tables below set forth the share options issued and restricted share grants made to our current directors and executive officers pursuant to our share incentive plans: Share Options ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ ​ ​ ​ ​ Common ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares to be ​ Exercise ​ ​ ​ ​ ​ ​ ​ ​ Issued ​ Price per ​ ​ ​ ​ ​ ​ ​ ​ Upon Exercise ​ Common ​ ​ ​ ​ ​ Date of Name of Options ​ Share ​ Date of Issuance ​ Vesting Start Date ​ Expiration Jun Zhang 1,274,092 ​ $ 1.2611 ​ August 6, 2019 ​ See note below ​ August 5, 2029 Ruobai Sima 200,000 ​ $ 0.7900 ​ February 7, 2022 ​ February 7, 2022 ​ February 6, 2032 * One third of the total number of common shares of the Company subject to the option of Jun Zhang vested on April 1, 2022, April 1, 2023 and April 1, 2024, respectively. ​ 121 Table of Contents Restricted Shares ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Vesting Start Name ​ Restricted Shares ​ Date of Grant Date Xiaofeng Ma 200,000 ​ May 30, 2011 ​ June 1, 2011 ​ 90,000 ​ February 10, 2015 ​ February 10, 2015 ​ 133,000 ​ January 17, 2017 ​ January 17, 2017 ​ 1,469,460 ​ December 19, 2018 ​ December 19, 2018 Andrew Y Yan 100,000 ​ May 30, 2011 ​ June 1, 2011 ​ 133,000 ​ January 17, 2017 ​ January 17, 2017 ​ 200,000 ​ November 6, 2018 ​ November 6, 2018 ​ ​ 200,000 ​ November 6, 2023 ​ November 6, 2023 Hope Ni 60,000 ​ February 16, 2012 ​ February 17, 2012 ​ 133,000 ​ January 17, 2017 ​ January 17, 2017 ​ 200,000 ​ November 6, 2018 ​ November 6, 2018 ​ ​ 200,000 ​ November 6, 2023 ​ November 6, 2023 Alec Tsui 60,000 ​ February 16, 2012 ​ February 17, 2012 ​ 133,000 ​ January 17, 2017 ​ January 17, 2017 ​ 200,000 ​ November 6, 2018 ​ November 6, 2018 ​ ​ 200,000 ​ November 6, 2023 ​ November 6, 2023 Zhilei Tong* 200,000 ​ November 6, 2018 ​ November 6, 2018 ​ 200,000 ​ November 6, 2023 ​ November 6, 2023 * Mr.
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(11) Includes 8,559,434 common shares in the form of ADSs held of record by Apollo Wise Investment Limited, which were acquired by Apollo Wise Investment Limited through the registered direct offering of the Company in January 2026. 124 Table of Contents (12) Includes 5,016,226 common shares in the form of ADSs held of record by Water River Capital Limited, which were acquired by Water River Capital Limited through the registered direct offering of the Company in January 2026.
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A shareholder has the right to seek damages if a duty owed by our directors is breached.
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None of our shareholders have different voting rights from other shareholders. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. See “Item 6.B.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDue to these restrictions, we set up contractual arrangements with the VIE to preserve our flexibility to operate, invest in or hold businesses that are restricted from receiving foreign investments in mainland China. For a description of these contractual arrangements, see “Item 4.A.
Biggest changeDue to these restrictions, we once set up contractual arrangements with the VIE to preserve our flexibility to operate, invest in or hold businesses that are restricted from receiving foreign investments in mainland China.
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Information on the Company — History and Development of the Company — Contractual Arrangements with the VIE.” Purchase of System Development and Data Services from an Affiliate Company In January 2022, Huanqiuyimeng entered into an agreement with Applysquare, pursuant to which ApplySquare shall develop system platforms and provide related data services to support Huanqiuyimeng’s operations and service delivery.
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To date, the ICP license obtained by the VIE has expired and the VIE did not apply for the renewal as we believe that, neither the Company and its subsidiaries nor the VIE conducts the businesses where the ICP license is required. For a description of these contractual arrangements, see “Item 4.A.
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The total amount of the agreement was RMB6.5 million, which includes a one-year charge of data and system maintenance services. In March 2023, Huanqiuyimeng entered into a supplementary agreement with Applysquare, under which the contract amount was reduced to RMB6.3 million due to cost optimization.
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Information on the Company — History and Development of the Company — Contractual Arrangements with the VIE.” C. Interests of Experts and Counsel Not applicable.
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RMB0.6 million expense was recorded for the year ended December 31, 2024 in accordance with the development progress. As of December 31, 2024, the system development has been completed. Purchase of outsourcing services from an Affiliate Company Huanqiuyimeng recorded an expense of RMB259,083 for the year ended December 31, 2024 for outsourcing services purchased from ATA Learning Inc.
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The services were mainly in relation to master classes. C. Interests of Experts and Counsel Not applicable.