ATA Creativity Global Holds Revenue Steady at $38.3M Amidst China Regulatory Risks

TL;DR

**AACG's flat revenue and risky VIE structure in China make it a speculative play, avoid until regulatory clarity emerges.**

AI Summary

ATA Creativity Global (AACG) reported net revenues of $38.3 million for the fiscal year ended December 31, 2025, maintaining the same revenue level as 2024, which was RMB268.1 million. This represents a 21.1% increase from RMB221.6 million in 2023. The company enrolled 4,127 students in 2025, with 57% in portfolio training programs. AACG operates as a Cayman Islands holding company, conducting business primarily through its PRC subsidiary Huanqiuyimeng and its Variable Interest Entity (VIE). The VIE structure, which holds 30.96% equity in Huanqiuyimeng and 70% in Beijing Zhenwu (a company with no current operations), introduces significant regulatory risks due to evolving PRC laws. AACG aims to expand its international education services and is actively exploring acquisition opportunities to broaden its service spectrum, while also developing new international education-related products. The company believes it has all requisite PRC government permissions, but acknowledges uncertainties in regulatory interpretations. The company's principal product remains portfolio training services for students seeking overseas art education.

Why It Matters

For investors, AACG's reliance on a VIE structure in China presents substantial regulatory risk, as PRC authorities could disallow it, potentially rendering ADSs worthless. This uncertainty impacts the company's ability to operate and grow, especially in a competitive education market where direct foreign investment is restricted. Employees and customers face potential disruption if regulatory changes force operational shifts or impact service delivery. The broader market watches how such structures are treated, setting precedents for other China-based companies. AACG's consistent revenue and student enrollment suggest operational stability, but the regulatory overhang is a critical factor for future performance and investor confidence.

Risk Assessment

Risk Level: high — The company explicitly states that its variable interest entity (VIE) structure involves 'unique risks to investors' and that 'PRC regulatory authorities could disallow our variable interest entity structure, which may result in a material change in our operations and/or value of our ADSs, including that it could cause the value of our ADSs to significantly decline or become worthless.' This direct admission of potential worthlessness due to regulatory uncertainty in China, coupled with the fact that 'our rights under such contractual arrangements have not been tested in a court of law,' indicates a high level of risk.

Analyst Insight

Investors should exercise extreme caution due to the significant regulatory risks associated with AACG's VIE structure in China. Consider reducing exposure or avoiding new positions until there is greater clarity on PRC regulatory enforcement and the long-term viability of such corporate structures. Monitor for any updates regarding PRC government actions on VIEs.

Financial Highlights

debt To Equity

Not Disclosed

revenue

$38.3 million

operating Margin

Not Disclosed

total Assets

Not Disclosed

total Debt

Not Disclosed

net Income

Not Disclosed

eps

Not Disclosed

gross Margin

Not Disclosed

cash Position

Not Disclosed

revenue Growth

0.0%

Revenue Breakdown

Key Numbers

• $38.3 million — Net Revenues (For fiscal year ended December 31, 2025, flat compared to 2024)
• RMB268.1 million — Net Revenues (For fiscal year ended December 31, 2024 and 2025, showing no growth in local currency)
• RMB221.6 million — Net Revenues (For fiscal year ended December 31, 2023, representing a 21.1% increase to 2024/2025)
• 4,127 — Students Enrolled (In fiscal year 2025, indicating operational scale)
• 57% — Students in Portfolio Training (Percentage of total students enrolled in AACG's core service in 2025)
• 63,912,442 — Common Shares Outstanding (As of December 31, 2025)
• 69.04% — Equity Interest (Percentage of Huanqiuyimeng owned by ATA Creativity Global through ACGIGL)
• 30.96% — Equity Interest (Percentage of Huanqiuyimeng owned by the VIE)
• 70% — Equity Interest (Percentage of Beijing Zhenwu owned by the VIE)
• RMB 6.9931 to US$1.00 — Exchange Rate (Noon buying rate as of December 31, 2025, used for currency conversions)

Key Players & Entities

• ATA Creativity Global (company) — Registrant and international educational services provider
• Huanqiuyimeng (company) — PRC subsidiary, primary operational entity
• ATA Intelligent Learning (Beijing) Technology Limited (company) — Variable Interest Entity (VIE) of ATA Creativity Global
• Beijing Zhenwu Technology Development Co., Ltd. (company) — PRC company, 70% owned by VIE, no substantive business operations
• Ruobai Sima (person) — Chief Financial Officer of ATA Creativity Global
• Nasdaq Capital Market (regulator) — Exchange where AACG ADSs are listed
• Securities and Exchange Commission (regulator) — U.S. financial regulator
• Jincheng Tongda & Neal Law Firm (company) — PRC legal counsel for ATA Creativity Global
• ACG International Group Limited (company) — Wholly owned subsidiary of ATA Creativity Global, holds 69.04% of Huanqiuyimeng
• ATA Education Technology (Beijing) Limited (company) — Wholly Foreign Owned Enterprise (WFOE) used in VIE structure

FAQ

Risk Factors

• PRC VIE Structure Uncertainty [high — regulatory]: AACG operates through a Variable Interest Entity (VIE) structure, which holds significant equity in its PRC subsidiary Huanqiuyimeng. This structure is subject to evolving PRC laws and interpretations, posing regulatory risks. The VIE holds 30.96% equity in Huanqiuyimeng and 70% in Beijing Zhenwu, a company with no current operations.
• Evolving PRC Education Regulations [high — regulatory]: The Chinese government's regulations on the education sector, particularly for overseas study, are subject to change. While AACG believes it has necessary permissions, uncertainties in regulatory interpretations could impact its operations and business model.
• Competition in Overseas Art Education [medium — market]: The market for overseas art education services is competitive. AACG's principal product is portfolio training, and it faces competition from other domestic and international providers.
• Dependence on Key Services [medium — operational]: The company's revenue is heavily reliant on its portfolio training services, with 57% of its 4,127 enrolled students in 2025 participating in these programs. A downturn in demand or increased competition for this specific service could significantly impact revenue.
• Currency Fluctuation Risk [low — financial]: As a Cayman Islands holding company with PRC operations, AACG is exposed to currency fluctuations between the RMB and USD. The reported revenue of $38.3 million for 2025 is based on an exchange rate of RMB 6.9931 to US$1.00 as of December 31, 2025.

Industry Context

The overseas art education market is a niche but growing sector driven by students seeking specialized training abroad. AACG operates in a competitive landscape with both domestic Chinese institutions and international art schools vying for students. The industry is sensitive to global economic conditions, student visa policies, and evolving trends in art and design education.

Regulatory Implications

The company's reliance on a VIE structure in China presents substantial regulatory risks. Changes in PRC laws regarding VIEs or foreign investment in education could materially impact AACG's ability to consolidate its subsidiary's financial results or even its operational viability.

What Investors Should Do

1. Monitor PRC regulatory developments closely.
2. Evaluate the company's international expansion strategy.
3. Assess revenue diversification and growth drivers.

Key Dates

• 2025-12-31: Fiscal Year End — Reported net revenues of $38.3 million, flat compared to 2024. Enrolled 4,127 students, with 57% in portfolio training.
• 2024-12-31: Fiscal Year End — Reported net revenues of RMB268.1 million, a 21.1% increase from 2023. This revenue level was maintained in 2025.
• 2023-12-31: Fiscal Year End — Reported net revenues of RMB221.6 million, showing a 21.1% increase to reach RMB268.1 million in 2024.

Glossary

VIE

Variable Interest Entity. A structure used by Chinese companies to circumvent foreign ownership restrictions in certain industries by establishing contractual control over a domestic operating company. (AACG uses a VIE structure to operate its business in China, which introduces significant regulatory risks due to evolving PRC laws.)

Huanqiuyimeng

The primary PRC subsidiary of ATA Creativity Global. (AACG's operations are conducted through this subsidiary, with a significant portion of equity held by the VIE.)

Portfolio Training Services

Educational services focused on helping students build a portfolio of work, typically for applications to art and design schools. (This is AACG's principal product, accounting for 57% of its enrolled students in 2025.)

20-F

An annual report required by the U.S. Securities and Exchange Commission (SEC) from foreign private issuers that are listed on a U.S. stock exchange. (This document provides a comprehensive overview of AACG's business, financial condition, and risks.)

Year-Over-Year Comparison

Revenue for the fiscal year ended December 31, 2025, was $38.3 million, which is flat compared to the prior year's RMB268.1 million. This indicates a lack of revenue growth in local currency from 2024 to 2025, although 2024 represented a 21.1% increase from 2023. The company continues to rely heavily on its portfolio training services, with 57% of its 4,127 enrolled students in 2025 participating in these programs. No new significant risks appear to have been introduced, but the existing regulatory risks associated with the VIE structure remain a primary concern.

Key Financial Figures

• $0.01 — resenting two common shares, par value $0.01 per share AACG Nasdaq Capital Marke
• $1 — t are made at a rate of RMB 6.9931 to US$1.00, the noon buying rate in effect as o
• $38.3 million — RMB268.1 million and RMB268.1 million ($38.3 million) in the fiscal years ended December 31,

Filing Documents

• aacg-20251231x20f.htm (20-F) — 4349KB
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• aacg-20251231x20f007.jpg (GRAPHIC) — 109KB
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• 0001104659-26-037267.txt ( ) — 17749KB
• aacg-20251231.xsd (EX-101.SCH) — 108KB
• aacg-20251231_cal.xml (EX-101.CAL) — 89KB
• aacg-20251231_def.xml (EX-101.DEF) — 464KB
• aacg-20251231_lab.xml (EX-101.LAB) — 771KB
• aacg-20251231_pre.xml (EX-101.PRE) — 695KB
• aacg-20251231x20f_htm.xml (XML) — 3014KB

Item 18

Item 17 Item 18 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No Table of Contents TABLE OF CONTENTS Page Introduction 1

Forward-looking Statements

Forward-looking Statements 2 Part I. 3

Identity of Directors, Senior Management and Advisers

Item 1. Identity of Directors, Senior Management and Advisers 3

Offer Statistics and Expected Timetable

Item 2. Offer Statistics and Expected Timetable 3

Key Information

Item 3. Key Information 3

Information on the Company

Item 4. Information on the Company 69

Unresolved Staff Comments

Item 4A. Unresolved Staff Comments 99

Operating and Financial Review and Prospects

Item 5. Operating and Financial Review and Prospects 99

Directors, Senior Management and Employees

Item 6. Directors, Senior Management and Employees 116

Major Shareholders and Related Party Transactions

Item 7. Major Shareholders and Related Party Transactions 125

Financial Information

Item 8. Financial Information 125

The Offer and Listing

Item 9. The Offer and Listing 127

Additional Information

Item 10. Additional Information 128

Quantitative and Qualitative Disclosures About Market Risk

Item 11. Quantitative and Qualitative Disclosures About Market Risk 134

Description of Securities Other Than Equity Securities

Item 12. Description of Securities Other Than Equity Securities 135 Part II. 137

Defaults, Dividend Arrearages and Delinquencies

Item 13. Defaults, Dividend Arrearages and Delinquencies 137

Material Modifications to the Rights of Security Holders and Use of Proceeds

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 137

Controls and Procedures

Item 15. Controls and Procedures 137

Reserved

Item 16. Reserved 138

Audit Committee Financial Expert

Item 16A. Audit Committee Financial Expert 138

Code of Ethics

Item 16B. Code of Ethics 138

Principal Accountant Fee and Services

Item 16C. Principal Accountant Fee and Services 138

Exemptions from the Listing Standards for Audit Committees

Item 16D. Exemptions from the Listing Standards for Audit Committees 138

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 138

Change in Registrant's Certifying Accountant

Item 16F. Change in Registrant's Certifying Accountant 139

Corporate Governance

Item 16G. Corporate Governance 139

Mine Safety Disclosure

Item 16H. Mine Safety Disclosure 139

Disclosure regarding Foreign Jurisdictions that Prevent Inspections

Item 16I. Disclosure regarding Foreign Jurisdictions that Prevent Inspections 139

Insider trading policies

Item 16J. Insider trading policies 140

Cybersecurity

Item 16K. Cybersecurity 140 Part III. 141

Financial Statements

Item 17. Financial Statements 141

Financial Statements

Item 18. Financial Statements 141

Exhibits

Item 19. Exhibits 142 Signature 146 i Table of Contents INTRODUCTION Except where the context otherwise requires and for purposes of this annual report only: unless otherwise noted, all references to years are to the calendar years from January 1 to December 31 and references to our fiscal year or years are to the fiscal year or years ended December 31. the "Company" refers to ATA Creativity Global. "we," "us," "our company," "our" and "ACG" refer to the Company and its subsidiaries, as the context requires. the "VIE" refers to ATA Intelligent Learning (Beijing) Technology Limited, our variable interest entity based in China, and its subsidiary, as the context requires. the "WFOE" refers to ATA Education Technology (Beijing) Limited. "Huanqiuyimeng" refers to Beijing Huanqiuyimeng Education Consultation Corp. "ATA Online" refers to ATA Online (Beijing) Education Technology Co., Ltd., which was a wholly owned subsidiary of us and was disposed of by us on August 16, 2018. "ATA Online Business" refers to, collectively, ATA Online and its subsidiaries, ATA Learning (Beijing) Inc., or ATA Learning, and Zhongxiao Zhixing Education Technology (Beijing) Limited, which were former subsidiaries of the Company incorporated under the laws of mainland China and holding companies of ATA Online, which we disposed of on August 16, 2018. "China," "Chinese" and "PRC" refer to the People's Republic of China. all references to "Renminbi" or "RMB" are to the legal currency of mainland China, and all references to "U.S. dollars," "dollars," "$" or "US$" are to the legal currency of the United States. "U.S. GAAP" refers to generally accepted accounting principles in the United States. "PRC GAAP" refers to generally accepted accounting principles in mainland China. "PRC law(s) and regulation(s)" refers to the laws and regulations of mainland China. "PRC subsidiary" means any direct and indirect subsidiary of the Company incorporated and domiciled in mainland China.

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS This annual report on Form 20-F contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on our current expectations, assumptions, estimates and projections about us and our industry. All statements other than statements of historical facts in this annual report are forward-looking statements. In some cases, these forward-looking statements can be identified by words and phrases such as "may," "should," "intend," "predict," "potential," "continue," "will," "expect," "anticipate," "estimate," "plan," "believe," "aim," "is /are likely to" or the negative form of these words and phrases or other comparable expressions. The forward-looking statements included in this annual report relate to, among others: our goals and strategies; our future prospects and market acceptance of our products and services; our future business development and results of operations; our plans for mergers and acquisitions; projected revenues, profits, earnings and other estimated financial information; our plans to expand and enhance our products and services; the potential market size and growth of our products and services; competition in the market for our products and services; PRC laws, regulations and policies, including those applicable to the education industry, internet content providers, variable interest entity and foreign exchange; the impact of the political tensions between the United States and China or other countries, and the impact of actual or potential international military actions; the impact of any public health epidemic or pandemics or natural disasters; and assumptions underlying or related to any of the foregoing. These forward-looking statements involve various risks, assumptions and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may turn

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not applicable.

OFFER STATISTICS AND EXPECTED TIMETABLE

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE Not applicable.

KEY INFORMATION

ITEM 3. KEY INFORMATION Overview We are an international educational services provider focusing on providing quality international educational experiences related to the cultivation and improvement of students' creativity. Currently, our principal product and service are portfolio training services which we provide to students in China who are interested in studying art overseas. We believe that we are one of the leading players in the portfolio training market in many regards, including geographic coverage, product breadth and student enrollment, among others. To achieve our one-stop service strategy, we also provide research-based learning services, overseas study counselling services, in-school art classes through cooperation with high schools and training organizations, junior art education and other educational services to our students. We have successfully helped thousands of students in China gain entry into art universities and colleges in the U.S., UK, Europe, Japan, Australia and other countries, among which quite some have gained entry into top art universities and colleges in such countries. While working on developing new international education-related products and services, we are also exploring acquisition opportunities in the international education sector to broaden our service spectrum. For the fiscal year ended December 31, 2025, we had 4,127 students enrolled, of which 57% were enrolled in our portfolio training programs and the remainder were enrolled in our other programs. 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 Company is not a Chinese operating company but a Cayman Islands holding company with operations conducted primarily through its PRC subsidiary Huanqiuyimeng and its subsidiaries. The Company, through its wholly owned subsidiary ACG International Group Limited, or ACGIGL, holds 69.04% of the equity int

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