Amy Tung
Thank you Caroline and welcome everyone. Good evening to those in America. We appreciate everyone's time. To those of you following along with the presentation, I will begin on Slide 5, which was operating highlights for the fourth quarter of 2019. After completing the acquisition of the remaining 12.54% equity interest in Beijing Huanqiuyimeng Education Consulting Corp., or for short, Huanqiuyimeng, in September 2019, we felt it was appropriate to change our corporate name and ticker symbol as a reflection of the significant changes to our company. We became ATA Creativity Global and our stock ticker stock ticker symbol also changed to AACG with DS commencing trading under the new symbol as of market open on October 17, 2019. In December we completed a private placement with CL-TCC, a company focused on investments in the culture and education, which will result in gross proceeds of approximately US$10 million from the sale off about 5.7 million common shares of the company. We plan to use these proceeds to fund day-to-day operations and our M&A activities. Details of this transaction can be found on the Form 6-K we filed on December 18, 2019. It is important to note that our results for the fourth quarter of 2019 incorporates the full quarter’s results from Huanqiuyimeng while third quarter 2019 results incorporate only about two months of the results. In this regard, we are pleased to report 19.3% year-over-year growth in credit hours delivered for Huanqiuyimeng’s portfolio training programs from approximately 43,750 credit hours in Q4 2018 to approximately 52,200 in Q4 2019. We are pleased to have completed the organizational restructuring and integration of Huanqiuyimeng following the acquisition. We have several enrollment initiatives in place but wanted to take a moment to address concerns surrounding the coronavirus outbreak and how it has affected our operations. Turning to Slide 6. First, we have made the health and safety of our students, faculty, staff and employees our top priority. As a precaution employees have been working remotely since returning from the Lunar New Year holiday. Students with any on-campus coursework have been given the option to fulfill their classes through online format. Quite a few have opted to do this, but some prefer the traditional classroom format and have postponed their coursework. Today we have seen some impact from the coronavirus on the portfolio training programs and are closely monitoring the situation that we are sure to offer all available options to our students. Our first contract pipeline has slowed somewhat as a result of sales and marketing personnel being unable to come to the office. We are relying primarily on online sales channels that we rose during this time and expect to have traditional channels we open once the coronavirus is under control. And of course educational travel. Understandably, we have had some delays and cancellations of tourists during this winter season. However, winter tends to be slow for travel and does not represent a major portion of our revenues. To conclude on this topic, we understand that the situation surrounding coronavirus is constantly changing. We will do our best to keep investors apprised of any changes for our business as things progress. On Slide 7, we provide some operating metrics around Huanqiuyimeng. Credit hours as a standard unit measuring educational credit for Huanqiuyimeng's Portfolio Training Programs. Each credit hour translates into roughly one hour of time committed. Student enrollment takes into account the particular individual that signs up for our programs. If a student enrolls in both portfolio training and educational travel services, the student is counted twice in enrollment as one student in portfolio training and one student in other programs. Huanqiuyimeng achieved 19.3% year-over-year in credit hours delivered during the fourth quarter, delivering a total of 52,202 credit hours. Student enrollment for the period was 1,042, out of which 585 were enrolled in the Portfolio Training Program, Huanqiuyimeng's main line of business that primarily consists of training for students focused in arts and creativity studies. We provide a breakdown of the credit hours delivered during the period compared to the prior year comparable period. The Portfolio Training Program consists of time-based programs and project-based programs. Students who elect the time-based program enroll in a certain number of consulting or training hours, whereas students who elect a project-based program are not limited by the number of consulting or training hours but will be guided through a certain number of projects needed to complete a portfolio. Under project-based programs, the number of credit hours required to complete a project may vary depending on the background and requirements of the students. Revenue is recognized proportionately per credit hour delivered regardless of which type of program a student has chosen to enroll in. However, as the total credit hours of project-based programs are not predetermined, the progress of a project-based program, which is measured by credit hours delivered compared against, say, total credit hours expected to be delivered is being evaluated at each quarterly and annual financial reporting date. As with the partial 2019 third quarter, there was an increase in the number of credit hours delivered under project-based programs and a slight decrease under the time-based category. Students that possess basic skills and are aiming to only complete the portfolio, so for example, a student with a bachelor's degree in the arts applying for the master's will tend to favor the project-based programs as it appears to be the less expensive option for completing a portfolio with a defined cost. Time-based programs are more flexible for students that perhaps want to fine-tune their skill set, say, a high school student applying for a degree. Instead of starting their portfolio right away, they may want additional guidance and mentorship and opportunity to work with the teachers for some basic foundational skills and will choose the time-based program. Either option has its benefits depending on the particular student's needs, which is why they both exist in the market. We are pleased to be serving all types of students, especially in creative studies. Moving to Slide 8 and key financial highlights for the fourth quarter and year-end. As with the enrollment and credit hour information I just shared, the financials shared here include contributions from Huanqiuyimeng for the full fourth quarter of 2019, but the year-end numbers include only about five months of contributions from Huanqiuyimeng as we gained control of the company beginning August 6, 2019. Additionally, we have applied acquisition accounting and made purchase price allocation adjustments, or PPA, to various assets acquired and liabilities assumed from the Huanqiuyimeng acquisition. As a result, certain line items will include adjustments from amortization of the difference between the carrying value in Huanqiuyimeng's book and the fair value assessed from the PPA process applied to the Huanqiuyimeng acquisition. I will highlight where we saw some impact on our financials due to this PPA adjustment for the 2019 fourth quarter and year. Total net revenues for the fourth quarter of 2019 increased to RMB54.1 million compared to RMB0.2 million in the fourth quarter of 2019 as a result of revenue contributions from the recently acquired Huanqiuyimeng, which consisted primarily of revenues from its Portfolio Training Programs. Net revenues for this quarter include the PPA adjustment decrease of RMB9.2 million. Gross margin was 38.6% during the 2019 fourth quarter compared to negative gross margin of 10.5% in the prior year period when the company did not have substantive operations. Excluding the PPA adjustment in net revenues, gross margin for the 2019 fourth quarter would have been 47.5%. Net loss from continuing operations attributable to the ACG was RMB70.8 million for the period compared to a net loss of RMB23.8 million in the prior year period as a result of the increased operating expense incurred related to the organizational restructuring and day-to-day operations of the acquired Huanqiuyimeng business. Moving to financial highlight for the full-year. Total net revenues for 2019 increased to RMB97.8 million compared to RMB1.3 million in the party period, as a result of the Huanqiuyimeng acquisition. Total net revenues for the year include a PPA adjustment decrease of RMB15.3 million. Gross margin was 36.7% for 2019, compared to negative gross margin of 217.6% in the prior year. Excluding the PPA adjustment to net revenues, gross margin for fiscal year 2019 would have been 45.2%. And net loss from continuing operations attributes to ACG with RMB127 million in 2019 compared to net last of RMB63.7 million in 2018; primarily due to increased operating expenses related to Huanqiuyimeng acquisition as mentioned earlier. Lastly, we continued to be in a solid financial position with US$22.1 million in cash and cash equivalence. We provide a more detailed summary of our financial results for the fourth quarter and full year compared with the respective prior year periods on Slides 9 and 10. However, as I mentioned before, the prior year periods reflect financials when the company did not have substantive operations. We provide additional detail in our capital position and balance sheet on Slide 11. The information shown here does take into account the closing of the Huanqiuyimeng acquisition. Working capital deficit was US$11.7 million and total shareholders' equity was US$43.9 million at December 31, 2019 compared to working capital of US$28.2 million and shareholders' equity of US$40.2 million, respectively, as of December 31, 2018. We are pleased to have strengthened the balance sheet even from quarter three and remain well positioned to continue executing on our growth initiatives. I'd now turn it over to Kevin who will expand upon our outlook and growth strategy. Kevin?
