Thank you, operator, and greetings, investors and friends. Welcome to the First High-School Education Group third quarter 2023 earnings conference call.

This is Tommy speaking, the Chief Financial Officer of the company, and I will lead today's conference call. We released our most recent earning results earlier today prior to market open.

The press release is available on the company's IR website at ir.diyi.top, as well as from AccessWire and OTC services. A replay of this call will also be available the next day on via the replay number provided in the earnings release.

Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Security Litigation Reform Act of 1995.

Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today.

Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statement except as required under applicable law.

Also, please note that on this otherwise stated, all figures mentioned during the conference call are in Chinese Renminbi. With that, thank you all again for joining us.

I will briefly spend the next 15 to 20 minutes updating our third quarter 2023 unaudited financial results for the nine months ended September 30, 2023. For today's early release all of our financial data will be dated to September 30 of 2023, and our operating data, including the total number of students enrolled and the total number of school programs will be dated October 31, 2023.

In comparison to the corresponding period last year, the company witnessed a decrease in both revenue and net income. The factors contributing to this decline remains consistent with those previously disclosed.

The persisting challenges tied to discontinued schools and reduced student-related services such as catering services and auxiliary materials continue to exert a negative impact on our financial performance. In addition, in communication with our auditor, we incurred a non-cash charge of asset impairment loss of RMB50.2 million or $6.9 million.

We have recognized a write-off for certain accounts receivable pertaining to overdue payments from local governments and collaborators, which are deemed unlikely to be collected. This non-cash charge has been accounted for and as such, it will not impact our cash flow or day-to-day operation.

It is merely an accounting adjustment. The third quarter period from July ending September is commonly known as the quiet period in our business.

It's quiet because there are no school activities conducted during the summer months of July and August, meaning two-thirds of the three-month period, the company will have no revenue recognition. During the quiet period, the company did extensive preparation work for school opening and experienced steady operation for the first month of our newly school year.

We welcomed three new schools for which we started to provide management services. Currently, there are a total of 25 school programs under our management.

For the enrollment information, I have disclosed more detailed numbers during my last disclosure. For the 17 school programs that we operate independently, we hired 220 new teachers for this new semester.

Our recruitment efforts targeted both [Technical Difficulty] educators and promising junior…

Yes, hi. Hi, Jenny, thank you so much.

I have no idea why I got disconnected. Okay.

Carry on. Okay.

So as I was saying, you know, our recruitment efforts targeted both seasoned educators and promising junior teachers nationwide. Following our model, senior teachers are overseeing and mentoring these less experienced and younger colleagues.

This approach is designed to facilitate a swift adaption and growth process, aligning them with our established teaching model. During the summer, we also did thorough inspections and repairs of our school facility to ensure our students are safe and enjoyable study environment.

For the eight school programs that we provide management services, we provide consulting services for improving teaching quality, enrollment, and campus management. So the company will stay focused on this path of providing premium education services for our students and looks forward to the profound development of our school programs.

That briefly concludes the highlight section of this quiet period. And now I will go through our line-by-line financial highlights for the third quarter of 2023.

Please again note that all numbers presented are in RMB unless otherwise stated. All percentage changes are on a year-over-year basis unless otherwise specified.

Detailed analysis is contained in our earning press release, which is available on our IR website already. So the financial results for the nine months ended September 30, 2023 for continuing operation only.

Total revenues were RMB194 million, a decrease of 29.2% from RMB274 million for the nine months ended September 30, 2022. The decrease was primarily due to a mixed factors, including reduced sales of education materials and income from meal catering services and the discontinued and limited operation of some schools in our network.

Revenues from customers were RMB167 million, a decrease of 32% from RMB246 million for the nine months ended September 30. The decrease was primarily due to mixed factors, including reduced sales of education materials and income from meal catering and the discontinued limited operation of some schools in the network.

Revenues on government cooperative agreements were RMB26.6 million, a decrease of 5.4% from RMB28 million for the nine months in September 30, 2022. The decrease was primarily due to the tightening of various local governments' budgets.

Cost of revenues were RMB142 million, a decrease of 4.8% from RMB149.5 million for the nine months ended September 30 2022. The decrease was primarily due to a reduction in rental expenses for schools of discontinued operation, and decreased staff compensation.

Gross profit was RMB51.7 million, a decrease of 58.6% from RMB124 million for the first nine months ended September 30, 2022. Our gross margin was 26.6%, compared to 45.5% for the nine months ended September 30, 2022.

The decrease was primarily due to the decrease in total revenue at sales of education materials and income from new catering services reduced substantially, as well as the loss of revenue due to discontinued and limited operations in schools. Total operating incomes, sorry, total operating expenses were RMB36.4 million, a decrease of 32% from $53.6 million for the nine months ended September 30, which is a good effect.

Selling and marketing expense was RMB2.2 million, an increase of 18.6% from RMB1.9 million for the same period last year. The increase was primarily due to the increased expense in brand promotion and marketing activities for our three newly managed school programs.

General and administrative expense were RMB34 million, a decrease of 33.9% from RMB51.7 million for the nine months ended September 30, 2022, the decrease was primarily due to our improved expense control. Income from operations was RMB15.2 million, a decrease of 78.6% from RMB71 million for the nine months ended September 30, 2022.

Such decrease was primarily incurred by the non-cash charge of asset impairment loss previously mentioned. Net loss from continuing operation was RMB41.0 million, compared with a net income of RMB61 million for the nine months ended September 30, 2022.

Net loss from discontinued operation were RMB9.2 million, compared with a net loss of RMB10.1 million for the nine months ended September 30. Net loss overall was RMB50.2 million, compared with a net income of RMB51.0 million for the nine months ended September 30.

Adjusted income, adjusted net income of non-GAAP measure was RMB1.9 million, a decrease of 96.2% from RMB51 million for the nine months ended September 30, 2022. And the above is my financial highlight briefing.

Both CEO Mr. Zhang and myself wish to thank everyone for your time in participating today.

And now let's open the call for questions. Operator, please go ahead and proceed the Q&A.

Okay, no problem.

Okay, so I guess there won't be any questions, right? No?

Okay, well, I guess I'll just deliver my ending speech. Thank you.

If anyone have further questions, feel free to email us. Our contact information is displayed in the bottom part of every early release.

And thank you so much again, operator, for reconnecting me to the call. We thank you all for participating today's call and for your further support.

We appreciate everyone's interest in the company and greatly look forward to reporting to you again next quarter on our progress.