 Conference Call on Wednesday, August 12, 2020, at 9 p.m. ET with Accompanying Investor PresentationBEIJING, China, Aug. 12, 2020 GLOBE NEWSWIRE -- ATA Creativity Global ACG or the Company, Nasdaq: AACG, an international educational services company focused on providing quality learning experiences that cultivate and enhance students creativity, today announced preliminary unaudited financial results for the quarter and six months ended June 30, 2020 Second Quarter 2020 and First Half 2020, respectively. Second Quarter 2020 Highlights During Second Quarter 2020, student enrollment was 772, of which 444 were enrolled in the Portfolio Training Program as defined below. Approximately 27,933 credit hours i.e., the standard unit measuring educational credit for the Portfolio Training Program; each credit hour roughly equals to one hour of time committed were delivered during Second Quarter 2020. Second Quarter 2020 net revenues of RMB26.4 million US3.7 million, primarily driven by revenues from portfolio training services Student enrollments and net revenues continued to be impacted by the coronavirus disease COVID-19 during Second Quarter 2020. Second Quarter 2020 net loss from continuing operations attributable to ACG of RMB32.1 million US4.5 million, compared to net loss from continuing operations attributable to ACG of RMB18.2 million in the prior-year period First Half 2020 net revenues of RMB59.1 million US8.4 million First Half 2020 net loss from continuing operations attributable to ACG of RMB52.5 million US7.4 million, compared to net loss from continuing operations attributable to ACG of RMB31.1 million in the prior-year period RMB119.7 million US16.9 million in cash and cash equivalents as of June 30, 2020Management CommentaryMr. Kevin Ma, Chairman and CEO of ACG, stated, ATA Creativity Global continues to see stable enrollment rates and favorable trends in student engagement as we manage the challenges created by the COVID-19 pandemic. We have prioritized the health and well-being of our students and employees by providing students with the option of continuing their studies online and implementing remote working protocols for our employees. We are pleased that the public health situation in China has improved to where almost all of our employees are able to report to work in the office, and as a result of our sales team being able to operate at capacity, our sales pipeline is seeing a resurgence. Having navigated these first few months of the pandemic, we certainly realize the need for and benefits of the flexibility that the online delivery method provides from both a teaching and learning perspective, as well as a business perspective. We continue to support our students via online platform and are encouraging students to continue pursuing their studies remotely while in-person teaching remains unavailable in certain areas. With the increased flexibility that these technologies present us, we are exploring additional academic offerings and marketing initiatives to drive future enrollment growth.OutlookImpact of COVID-19Mr. Jun Zhang, President of ACG, stated, We were pleased that many students in our portfolio training programs chose to continue their studies during Second Quarter 2020. Learning any subject, especially in areas like art and creativity, requires a level of personal interaction, between student and teacher and between student and peers. While some students have decided to put their studies on hold, many are finding the online delivery method effective and perhaps even preferable for certain coursework. ACG has been fortunate in its ability to leverage its operating flexibility in this environment, and we are adapting our business model accordingly. We continue to closely monitor the global situation, particularly as it relates to our educational travel programs. As many of our partner institutions cancelled their regular summer programs, this business was significantly impacted during the second and third quarters of 2020. As an alternative to the traditional educational travel programs, we are pleased to be partnering with some renowned overseas art schools and institutions in offering shorter online summer school programs where students who complete these courses can obtain completion certificates, as well as other short-term online bootcamps led by recognized teachers invited from these overseas institutions to cooperate with ACGs own teachers. These summer programs generated approximately RMB1.3 million in revenues in Second Quarter 2020. With the majority of online summer programs and domestic educational tours having occurred in JulyAugust, we expect more contributions from these businesses in the current quarter.Operating Review Enrollment UpdateACGs main line of business primarily consists of training for students focused on arts and creative studies the Portfolio Training Program. Teachers guide students in preparing a collection of artwork that demonstrates how a students skills and ideas have developed over time and helps universities and colleges evaluate the students potential. These courses are delivered either in person through ACGs nationwide training center network or via online platform. The Portfolio Training Program consists of time-based programs and project-based programs.ACG student enrollment for Second Quarter 2020 was 772, of which 444 were enrolled in the Portfolio Training Program.A total of 27,933 credit hours were delivered during Second Quarter 2020, of which 16,191 credit hours were delivered for time-based programs and 11,742 credit hours were delivered for project-based programs.The following is a summary of the credit hours delivered for the Portfolio Training Program, for the period beginning April 1, 2020, to June 30, 2020, compared to those for the prior-year period: Apr. 1 June 30, 2020 Apr. 1 June 30, 2019 Change No. of Credit Hours No. of Credit Hours Time-based Program 16,191 20,925 22.6 Project-based Program 11,742 9,240 27.1 Total 27,933 30,165 7.4 During Second Quarter 2020, 328 students were enrolled in ACGs other programs, which consists of overseas study counseling and foreign language training services enrollments as well as enrollments for other educational services such as short-term online summer school and bootcamp programs currently being held online.GAAP ResultsNote: Impact of Huanqiuyimeng Acquisition on and Certain Adjustments to the Companys Financial StatementsFollowing the completion of the Beijing Huanqiuyimeng Education Consultation Corp. Huanqiuyimeng business acquisition whereby Huanqiuyimeng became a wholly owned subsidiary of the Company in 2019, the financial results presented in this press release incorporate financial contributions from Huanqiuyimeng for Second Quarter 2020 and First Half 2020. In addition, the Company has applied acquisition accounting and made purchase price allocation PPA adjustments to various assets acquired and liabilities assumed from the Huanqiuyimeng business acquisition.Second Quarter 2020 Financial ReviewACGs total net revenues for Second Quarter 2020 were RMB26.4 million US3.7 million, compared to RMB1.4 million in the prior-year period, driven primarily by revenue from the Huanqiuyimeng business. Net revenues for this quarter include a negative adjustment of RMB6.0 million resulting from amortization of the difference between the carrying value of deferred revenues in Huanqiuyimengs book and the fair value of deferred revenues assessed from the PPA process applied to the Huanqiuyimeng business acquisition PPA Adjustment to Net Revenues. Revenues from portfolio training programs were RMB19.4 million, or 73.7 of total net revenues, during the period. Revenues from overseas study counselling services, other educational services and the K-12 business were RMB7.0 million, or 26.3 of total net revenues during the period.Gross profit for Second Quarter 2020 was RMB6.6 million US0.9 million, compared to gross loss of RMB24,731 in the prior-year period. Gross margin was 25.1 during the period, compared to negative gross margin of 1.8 in the prior-year period, prior to the Huanqiuyimeng business acquisition. Excluding the PPA Adjustment to Net Revenues stated above, gross margin for Second Quarter 2020 would have been 39.0.Total operating expenses for Second Quarter 2020 were RMB45.2 million US6.4 million, compared to RMB19.9 million in the prior-year period, primarily due to increased selling, general and administrative SGA expenses of RMB24.7 million related to the acquired Huanqiuyimeng operations.Loss from continuing operations for Second Quarter 2020 was RMB38.5 million US5.4 million, compared to RMB20.2 million in the prior-year period as a result of the increased operating expenses mentioned above.Net loss from continuing operations attributable to ACG for Second Quarter 2020 was RMB32.1 million US4.5 million, compared to RMB18.2 million in the prior-year period.For Second Quarter 2020, basic and diluted losses from continuing operations per common share attributable to ACG were both RMB0.54 US0.08, compared to RMB0.41 for the prior-year period. Basic and diluted losses from continuing operations per ADS attributable to ACG were both RMB1.08 US0.16, compared to RMB0.82 in the prior-year period.First Half 2020 Financial ReviewACGs total net revenues for First Half 2020 were RMB59.1 million US8.4 million, compared to RMB3.0 million in the prior-year period, driven primarily by revenue from the Huanqiuyimeng business. Net revenues for the period include a negative adjustment of RMB12.0 million resulting from the PPA Adjustment to Net Revenues, as noted above. Revenues from portfolio training programs were RMB38.1 million, or 64. 