ATA Inc. ("ATA" or the "Company", Nasdaq: ATAI), a
company focused on providing students with quality educational
experiences and services in China and abroad, today announced
preliminary unaudited financial results for the three months ended
March 31, 2019.
2019 First Quarter and Subsequent
Operating Highlights
- On April 9, 2019, the Company
announced that it entered into non-binding framework agreements and
certain related conditional share purchase agreement and deposit
agreement with Beijing Huanqiuyimeng Education Consultation Corp.
(“ACG”) and certain of its shareholders for a proposed acquisition
of ACG. ACG is a leading provider of educational services for
students in China who are interested in applying for overseas art
study. Details on the proposed acquisition of ACG can be found in
the Form 6-K filed by ATA on April 9, 2019.
- In the first quarter of 2019, the
Company continued to expand its project based learning business, or
“PBL”, providing project-based learning educational experiences
complementary to classroom-based learning for students in
China.
- On March 6, 2019, the Company
announced that it terminated the acquisition of Beijing Biztour
International Travel Service Co., Ltd. and its affiliates (“Beijing
Biztour”) because Beijing Biztour and its shareholders did not
satisfy certain closing conditions for such acquisition. Additional
information can be found in the Form 6-K filed by ATA on March 6,
2019.
- RMB168.7 million (US$25.1 million)
in cash and cash equivalents as of March 31, 2019
Management CommentaryMr. Kevin
Ma, Chairman and CEO, stated, “We have been working diligently on
creating fully integrated, subject-based PBL-driven programs for
students while simultaneously seeking further acquisitions that
would enhance these programs. The combination of technology and
‘first-hand’ overseas educational experience is where ATA can best
leverage its experience and relationships to identify the best
possibilities for growth. While we are still in the initial stages
of reviewing a potential acquisition of ACG, we do believe it
represents a unique opportunity to carve a leading position in the
rapidly growing overseas art study market. We are excited by the
potential of integrating our existing operations with that of ACG
and continue exploring additional investment opportunities in the
international education sector consistent with our investment
criteria.”
2019 First Quarter Financial Highlights
Note: Certain Adjustments to the Company’s
Financial StatementsCertain line items in the condensed
consolidated statements of comprehensive income (loss) for the
three months ended March 31, 2018, in this press release have been
revised as a result of adjustments made in ATA’s annual report for
the fiscal year ended December 31, 2018. These revisions were
mainly made pursuant to the accounting treatment of discontinued
operations, under which ATA accounted for the sale of business of
ATA Online (Beijing) Education Technology Co., Ltd, or ATA Online,
a former subsidiary of ATA.
ATA’s total net revenues for the three months
ended March 31, 2019, were RMB1.6 million (US$0.2 million),
compared to RMB0.1 million in the prior-year period. This increase
was primarily due to the development and expansion of ATA’s K-12
education assessment services into other regions of China, such as
the Heping district of Tianjin.
Loss from continuing operations, net of income
taxes, for the three months ended March 31, 2019, was RMB14.3
million (US$2.1 million), compared to RMB15.0 million in the
prior-year period, primarily due to RMB1.3 million in higher
consulting fees associated with investing activities recorded in
the prior-year period, partially offset by an RMB0.8 million
increase in share-based compensation expense recorded in the three
months ended March 31, 2019, which were mainly related to new
shares and options issued in the fourth quarter of 2018.
Net loss from continuing operations attributable
to ATA Inc. for the three months ended March 31, 2019, was RMB12.9
million (US$1.9 million), compared to a net loss of RMB14.6 million
in the prior-year period.
Balance Sheet HighlightsAs of
March 31, 2019, ATA’s cash and cash equivalents were RMB168.7
million (US$25.1 million), working capital was RMB172.2 million
(US$25.7 million), and total shareholders’ equity was RMB262.0
million (US$39.0 million); compared to RMB190.6 million, RMB193.6
million, and RMB276.2 million, respectively, as of December 31,
2018.
Conference Call and Webcast Information
(With Accompanying Presentation)ATA will host a conference
call at 9 p.m. Eastern Time on Monday, May 13, 2019, during which
management will discuss the results of the quarter ended March 31,
2019. Investors are welcome to send any questions in advance of the
conference call either through the webcast portal or via email to
the Company’s contacts listed below.
To participate in the conference call, please
use the following dial-in numbers about 10 minutes prior to the
scheduled conference call time:
U.S. & Canada (Toll-Free): |
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+1 (888) 339-2688 |
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International (Toll): |
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+1 (617) 847-3007 |
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Toll-Free |
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Local Access |
China:Hong Kong: |
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(800) 990 1344 |
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(400) 881 16303002 1672 |
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Participant Passcode: |
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675 060 67 |
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A live webcast of the conference call can be
accessed at the investor relations section of ATA’s website at
www.atai.net.cn or by clicking the following link:
https://www.webcaster4.com/Webcast/Page/274/30476.
An accompanying slide presentation in PDF format
will also be made available 30 minutes prior to the conference call
on the same investor relations section of ATA’s website. To listen
to the webcast, please visit ATA’s website a few minutes prior to
the start of the call to register, download, and install any
necessary audio software.
A replay will be available shortly after the
call on the investor relations section of ATA's website and will
remain available for 90 days.
About ATA Inc.ATA is focused on
providing quality educational experiences and services for students
throughout China and abroad. ATA aims to offer online, on-campus,
and other education programs through a network of global education
partners. For more information, please visit ATA’s website at
www.atai.net.cn.
Cautionary Note Regarding
Forward-looking StatementsThis announcement contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and as defined in the
Private Securities Litigation Reform Act of 1995.
These forward-looking statements can be
identified by terms such as "anticipate," "believe," "could,"
"estimate," "expect," "forecast," "future," "intend," "look forward
to," "outlook," "plan," "should," "will," and similar terms and
include, among other things, statements regarding ATA’s future
growth and results of operations; ATA’s plans for mergers and
acquisitions generally; ATA’s plan and anticipated benefits to
develop international education services, carry out new business,
and launch PBL and new programs; ATA’s proposed acquisition of ACG;
and ATA’s subsequent business activities.
The factors that could cause the Company’s
actual financial and operating results to differ from what the
Company currently anticipates may include its ability to leverage
its existing competency-focused assessment and education service
capabilities, its ability to identify and execute on M&A
opportunities within the education sector, the economy of China,
uncertainties with respect to China’s legal and regulatory
environments, and other factors stated in the Company’s filings
with the U.S. Securities and Exchange Commission (“SEC”).
The financial information contained in this
release should be read in conjunction with the consolidated
financial statements and related notes included in the Company’s
annual report on Form 20-F for its fiscal year ended December 31,
2018, and other filings that ATA has made with the SEC. The filings
are available on the SEC’s website at www.sec.gov and at ATA’s
website at www.atai.net.cn. For additional information on the risk
factors that could adversely affect the Company’s business,
financial conditions, results of operations, and prospects, please
see the "Risk Factors" section of the Company's Form 20-F for the
fiscal year ended December 31, 2018.
The forward-looking statements in this release
involve known and unknown risks and uncertainties and are based on
current expectations, assumptions, estimates, and projections about
ATA and the markets in which it operates. The Company undertakes no
obligation to update forward-looking statements, which speak only
as of the date of this release, to reflect subsequent events or
circumstances, or changes in its expectations, except as may be
required by law. Although the Company believes that its
expectations and assumptions expressed in these forward-looking
statements are reasonable, the Company cannot assure you that its
expectations and assumptions will turn out to be correct, and
investors are cautioned that actual results may differ materially
from the anticipated results.
Currency Convenience
TranslationThe Company's financial information is stated
in Renminbi (“RMB”), the currency of the People’s Republic of
China. The translations of RMB amounts for the quarter ended March
31, 2019, into U.S. dollars are included solely for the convenience
of readers and have been made at the rate of RMB6.7112 to US$1.00,
the noon buying rate as of March 31, 2019, in New York for cable
transfers in RMB per U.S. dollar as set forth in the H.10 weekly
statistical release of the Federal Reserve Board. Such translations
should not be construed as representations that RMB amounts could
be converted into U.S. dollars at that rate or any other rate, or
to be the amounts that would have been reported under U.S.
generally accepted accounting principles ("GAAP").
About Non-GAAP Financial
MeasuresTo supplement ATA's consolidated financial
information presented in accordance with U.S. GAAP, ATA uses the
following non-GAAP financial measures: net income (loss) excluding
share-based compensation expense and foreign currency exchange gain
or loss, and basic and diluted earnings (losses) per common share
and ADS excluding share-based compensation expense and foreign
currency exchange gain or loss.
The presentation of these non-GAAP financial
measures is not intended to be considered in isolation or as a
substitute for the financial information prepared and presented in
accordance with GAAP. ATA believes these non-GAAP financial
measures provide meaningful supplemental information about its
performance by excluding share-based compensation expense and
foreign currency exchange gain or loss, which may not be indicative
of its operating performance.
ATA believes that both management and investors
benefit from these non-GAAP financial measures in assessing its
performance and when planning and forecasting future periods. These
non-GAAP financial measures also facilitate management's internal
comparisons to ATA's historical performance. ATA computes its
non-GAAP financial measures using a consistent method from period
to period. ATA believes these non-GAAP financial measures are
useful to investors in allowing for greater transparency with
respect to supplemental information used by management in its
financial and operational decision making. A limitation of using
non-GAAP net income (loss) excluding share-based compensation
expense and foreign currency exchange gain or loss and basic and
diluted earnings (losses) per common share and per ADS excluding
share-based compensation expense and foreign currency exchange gain
or loss is that share-based compensation charges and foreign
currency exchange gain or loss have been, and are expected to
continue to be for the foreseeable future, a significant recurring
expense in ATA's business.
Management compensates for these limitations by
providing specific information regarding the GAAP amounts excluded
from each non-GAAP measure. The table captioned "Reconciliations of
Non-GAAP Measures to the Most Comparable GAAP Measures" shown at
the end of this news release has more details on the
reconciliations between GAAP financial measures that are most
directly comparable to the non-GAAP financial measures used by
ATA.
For more information on our company, please contact the
following individuals:
At the CompanyATA Inc.Amy Tung, CFO+86 10 6518 1133 x
5518amytung@atai.net.cn |
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Investor Relations The Equity Group Inc.Adam Prior,
Senior Vice President212-836-9606aprior@equityny.com |
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Katherine Yao, Senior Associate+86 10 6587
6435kyao@equityny.com |
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ATA INC. AND
SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS
|
December 31, |
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|
March 31, |
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March 31, |
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|
2018 |
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2019 |
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2019 |
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RMB |
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|
RMB |
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|
USD |
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ASSETS |
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Current assets: |
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|
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Cash and cash equivalents |
190,586,342 |
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|
168,673,077 |
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|
25,133,073 |
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Accounts receivable, net |
439,783 |
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|
1,277,303 |
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|
190,324 |
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Prepaid expenses and other current assets |
7,836,092 |
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|
13,227,202 |
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|
1,970,914 |
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Loan receivable |
14,532,685 |
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|
14,523,698 |
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|
2,164,099 |
|
Total current assets |
213,394,902 |
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|
197,701,280 |
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|
29,458,410 |
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Long-term investments |
66,390,898 |
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72,390,898 |
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|
10,786,580 |
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Property and equipment, net |
37,430,741 |
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|
36,841,094 |
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5,489,494 |
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Intangible assets, net |
17,122,578 |
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16,116,682 |
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2,401,461 |
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Other non-current assets |
799,652 |
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4,381,890 |
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|
652,922 |
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Total assets |
335,138,771 |
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|
327,431,844 |
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48,788,867 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Accrued expenses and other payables |
18,111,939 |
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23,925,158 |
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|
3,564,959 |
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Deferred revenues |
1,633,976 |
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|
1,533,976 |
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|
228,570 |
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Total current liabilities |
19,745,915 |
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25,459,134 |
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|
3,793,529 |
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Total liabilities |
19,745,915 |
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25,459,134 |
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|
3,793,529 |
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Mezzanine equity-redeemable
non-controlling
interests |
39,208,619 |
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39,959,774 |
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|
5,954,192 |
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Shareholders’ equity: |
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|
|
|
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Common shares |
3,534,871 |
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|
3,633,817 |
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|
541,456 |
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Treasury shares |
(27,737,073 |
) |
|
(27,737,073 |
) |
|
(4,132,953 |
) |
Additional paid-in capital |
410,195,990 |
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|
412,043,197 |
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|
61,396,352 |
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Accumulated other comprehensive loss |
(38,288,364 |
) |
|
(39,394,618 |
) |
|
(5,869,981 |
) |
Retained earnings (accumulated deficit) |
(71,888,585 |
) |
|
(86,157,312 |
) |
|
(12,837,840 |
) |
Total shareholders’ equity attributable to ATA
Inc. |
275,816,839 |
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|
262,388,011 |
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|
39,097,034 |
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Non-redeemable non-controlling interests |
367,398 |
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|
(375,075 |
) |
|
(55,888 |
) |
Total shareholders’ equity |
276,184,237 |
|
|
262,012,936 |
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|
39,041,146 |
|
Commitments and contingencies |
|
|
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Total liabilities, mezzanine equity and shareholders’
equity |
335,138,771 |
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|
327,431,844 |
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|
48,788,867 |
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ATA INC. AND
SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(LOSS)
|
Three-month Period Ended |
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March 31, |
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March 31, |
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March 31, |
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2018 |
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2019 |
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2019 |
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RMB |
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RMB |
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USD |
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Net
revenues |
141,423 |
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|
1,616,408 |
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|
240,852 |
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Cost of
revenues |
620,081 |
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|
1,208,098 |
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|
180,012 |
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Gross profit
(loss) |
(478,658 |
) |
|
408,310 |
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|
60,840 |
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Operating expenses: |
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|
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Research and development |
4,109,427 |
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3,008,952 |
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|
448,348 |
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Sales and marketing |
948,148 |
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|
1,835,014 |
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|
273,426 |
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General and administrative |
10,563,001 |
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|
11,702,615 |
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|
1,743,743 |
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Total operating expenses |
15,620,576 |
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|
16,546,581 |
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|
2,465,517 |
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Other
operating income, net |
940,141 |
|
|
704,859 |
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|
105,027 |
|
Loss from continuing
operations |
(15,159,093 |
) |
|
(15,433,412 |
) |
|
(2,299,650 |
) |
Other income (expense): |
|
|
|
|
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Interest income, net of interest expenses |
149,037 |
|
|
1,177,179 |
|
|
175,405 |
|
Foreign currency exchange loss, net |
(33,499 |
) |
|
(3,812 |
) |
|
(568 |
) |
Loss from continuing operations before
income taxes |
(15,043,555 |
) |
|
(14,260,045 |
) |
|
(2,124,813 |
) |
Income tax expense |
— |
|
|
— |
|
|
— |
|
Loss from continuing
operations, net of income taxes |
(15,043,555 |
) |
|
(14,260,045 |
) |
|
(2,124,813 |
) |
Discontinued operations: |
|
|
|
|
|
Loss from discontinued
operations, net of income taxes |
(23,525,871 |
) |
|
— |
|
|
— |
|
Net loss |
(38,569,426 |
) |
|
(14,260,045 |
) |
|
(2,124,813 |
) |
Net loss attributable to redeemable non-controlling
interests from continuing operations |
(462,958 |
) |
|
(618,727 |
) |
|
(92,193 |
) |
Net loss attributable to non-redeemable
non-controlling interests from continuing operations |
— |
|
|
(742,473 |
) |
|
(110,632 |
) |
Net income attributable to non-redeemable
non-controlling interests from discontinued operations |
194 |
|
|
— |
|
|
— |
|
Net loss attributable to ATA
Inc. |
(38,106,662 |
) |
|
(12,898,845 |
) |
|
(1,921,988 |
) |
Net loss from continuing operations
attributable to ATA Inc. |
(14,580,597 |
) |
|
(12,898,845 |
) |
|
(1,921,988 |
) |
Net loss from discontinued operations
attributable to ATA Inc. |
(23,526,065 |
) |
|
— |
|
|
— |
|
|
|
|
|
|
|
Other comprehensive
loss: |
|
|
|
|
|
Foreign
currency translation adjustment, net of nil income taxes |
(216,584 |
) |
|
(1,106,254 |
) |
|
(164,837 |
) |
Comprehensive loss attributable to ATA
Inc. |
(38,323,246 |
) |
|
(14,005,099 |
) |
|
(2,086,825 |
) |
|
|
|
|
|
|
Basic and
diluted losses per common share attributable to ATA Inc. |
(0.86 |
) |
|
(0.31 |
) |
|
(0.05 |
) |
Basic and diluted losses per ADS attributable to ATA
Inc. |
(1.72 |
) |
|
(0.62 |
) |
|
(0.10 |
) |
Basic and
diluted losses from continuing operations per common share
attributable to ATA Inc. |
(0.34 |
) |
|
(0.31 |
) |
|
(0.05 |
) |
Basic and
diluted losses from discontinued operations per common share
attributable to ATA Inc. |
(0.52 |
) |
|
— |
|
|
— |
|
Basic and
diluted losses from continuing operations per ADS attributable to
ATA Inc. |
(0.68 |
) |
|
(0.62 |
) |
|
(0.10 |
) |
Basic and
diluted losses from discontinued operations per ADS attributable to
ATA Inc. |
(1.04 |
) |
|
— |
|
|
— |
|
|
|
|
|
|
|
|
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|
RECONCILIATIONS OF NON-GAAP
MEASURES TO THE MOST COMPARABLE GAAP
MEASURES
|
Three-month Period Ended |
|
March 31, |
|
|
March 31, |
|
|
2018 |
|
|
2019 |
|
|
RMB |
|
|
RMB |
|
|
|
|
|
GAAP net
loss attributable to ATA Inc. |
(38,106,662 |
) |
|
(12,898,845 |
) |
Share-based compensation expenses |
2,944,854 |
|
|
1,990,435 |
|
Foreign
currency exchange loss, net |
33,499 |
|
|
3,812 |
|
Non-GAAP
net loss attributable to ATA Inc. |
(35,128,309 |
) |
|
(10,904,598 |
) |
|
|
|
|
GAAP losses per common share attributable
to ATA Inc. |
|
|
Basic and diluted |
(0.86 |
) |
|
(0.31 |
) |
|
|
|
|
Non-GAAP losses per common share
attributable to ATA Inc. |
Basic and diluted |
(0.79 |
) |
|
(0.27 |
) |
|
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