# EDGAR Filing Document

**Accession Number:** 0001592560
**File Stem:** 0001213900-25-094033
**Filing Date:** 2025-9
**Character Count:** 104338
**Document Hash:** bc359e8a9eefdc311143124812fca610
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-25-094033.hdr.sgml**: 20250930

**ACCESSION NUMBER**: 0001213900-25-094033

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 68

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20250930

**DATE AS OF CHANGE**: 20250930

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** VisionSys AI Inc
- **CENTRAL INDEX KEY:** 0001592560
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-EDUCATIONAL SERVICES [8200]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 000000000
- **STATE OF INCORPORATION:** E9
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-36363
- **FILM NUMBER:** 251361267

**BUSINESS ADDRESS:**
- **STREET 1:** 2 HAMMARSKJOLD PLAZA, ROOM 10B
- **STREET 2:** 2ND AVENUE
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10017
- **BUSINESS PHONE:** 9296870368

**MAIL ADDRESS:**
- **STREET 1:** 2 HAMMARSKJOLD PLAZA, ROOM 10B
- **STREET 2:** 2ND AVENUE
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10017

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** TCTM Kids IT Education Inc.
- **DATE OF NAME CHANGE:** 20240223

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Tarena International, Inc.
- **DATE OF NAME CHANGE:** 20131121

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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 6-K**

**REPORT OF FOREIGN PRIVATE ISSUER**

**PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE**

**SECURITIES EXCHANGE ACT OF 1934**

**For the month of September 2025**

**Commission File Number: 001-36363**

**VISIONSYS AI INC**

**2 Hammarskjold Plaza, Room 10b**

**2nd Avenue**

**New York, NY 10017**

**Tel：+1(929)687-0368**

(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒&nbsp;&nbsp;&nbsp;&nbsp; Form 40-F ☐

**EXPLANATORY NOTE**

The Company is furnishing this Form 6-K to provide six-month interim financial statements and incorporate such financial statements into the Company's registration statements referenced below.

This Form 6-K is hereby incorporated by reference into the registration statement of the Company on [Form F-3](http://www.sec.gov/Archives/edgar/data/1592560/000110465925003808/tm2432199-1_f3.htm) (Registration Number 333-284305), to the extent not superseded by documents or reports subsequently filed or furnished by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

**Financial Statements and Exhibits.**

<u>Exhibits</u>.

---

| | |
|:---|:---|
| Exhibit No. | Description |
| 99.1 | [Management's Discussion and Analysis of Financial Condition and Results of Operations in Connection with the Unaudited Interim Consolidated Financial Statements for the Six Months Ended June 30, 2025 and 2024](ea025902101ex99-1_vision.htm) |
| 99.2 | [Unaudited Interim Consolidated Financial Statements as of June 30, 2025 and for the Six Months Ended June 30, 2025 and 2024](ea025902101ex99-2_vision.htm) |
| 101.INS\* | Inline XBRL Instance Document |
| 101.SCH\* | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL\* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF\* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.LAB\* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 101.PRE\* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 104\* | Cover Page Interactive Data File formatted as Inline XBRL and contained in Exhibit 101 |

---

**SIGNATURE**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | |
|:---|:---|
| **VisionSys AI Inc** | **VisionSys AI Inc** |
| By: | /s/ Heng Wang |
| Name: | Heng Wang |
| Title: | Chief Executive Officer |
| Date: September 30, 2025 | Date: September 30, 2025 |

---

## Exhibit 99.1

**Exhibit 99.1**

**VISIONSYS AI INC. (FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**MANAGEMENT'S DISCUSSION AND ANALYSIS**

**OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

This Management's Discussion and Analysis of Financial Condition and Results of Operations (this "Management's Discussion and Analysis") is designed to provide you with a narrative explanation of the consolidated financial condition and results of operations of VisionSys AI Inc. (formerly known as tctm kids it education inc.) and its consolidated subsidiaries as of and for the six-month period ended June 30, 2025. Unless otherwise indicated or the context otherwise requires, all references in this Management's Discussion and Analysis to "VSA", the "Company", "we", "our", "ours" "us" or similar terms refer to VisionSys AI Inc. (formerly known as tctm kids it education inc.) together with its consolidated subsidiaries.

You should read this Management's Discussion and Analysis in conjunction with our summary of unaudited condensed consolidated interim financial statements information as of and for the six-month period ended June 30, 2025. You should also read this Management's Discussion and Analysis in conjunction with (i) our audited consolidated financial statements of 2024, including the notes thereto, and the section titled "Risk Factors" included in the Company's Annual Report on Form 20-F for the fiscal year ended December 31, 2024 filed with the United States Securities and Exchange Commission ("SEC") on May 15, 2025.

Our unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). All amounts in the unaudited interim condensed consolidated financial statements and notes and in this Management's Discussion and Analysis are expressed in Renminbi ("RMB"). Amounts in United States dollars ("US$") are presented solely for the convenience of readers and use an exchange rate of US$1.00 = RMB7.1636, representing the exchange rate as set forth in the H.10 statistical release of the U.S. Federal Reserve Board as of June 30, 2025. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate.

**Cautionary Note Regarding Forward-Looking Statements**

This Management's Discussion and Analysis contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify some of these forward-looking statements by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the business outlook and quotations from management in this Management's Discussion and Analysis, as well as the Company's strategic and operational plans, contain forward-looking statements. VSA may also make written or oral forward-looking statements in its reports filed with or furnished to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. Any statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements.

Many factors, risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements. In light of the Company's plan to focus on AI business in the future, with its business focus to be gradually shifted from STEM education business to AI business related to brain-computer interface services, but also plan to divest the STEM education business, such factors and risks include, but are not limited to the following: VSA's goals and strategies, especially those related to the transition to AI business and the divestiture of STEM education business; its future business development, including the progress of deploying the AI business related to brain-computer interface services and the advancement of the divestiture of the STEM education business, in the process of divesting the STEM education business, the Company's ability to smoothly advance the divestiture, including but not limited to completing transaction negotiations, meeting regulatory requirements, etc., properly handle assets and liabilities transition period to protect the rights; with respect to the AI business related to brain-computer interface services, the Company's ability to advance the R&D progress of core algorithms and related software and hardware systems, recruit and retain technical talents with expertise in the AI and brain-computer interface fields, promote the commercialization and implementation of brain-computer interface services, establish and enhance its brand influence in the AI and healthcare/biotech industries, and maintain cooperative relationships with partners in the industrial chain.

Further information regarding these and other risks is included in the Company's annual report on Form 20-F and current report on Form 6-K and other documents filed with the SEC. All information provided in this Management's Discussion and Analysis is as of the date of furnishing of this Management's Discussion and Analysis, and the Company does not undertake any obligation to update any forward-looking statement, except as required under applicable laws.

**Overview**

VSA is an emerging technology services company that develops brain-computer interface systems and STEM education services, with a specialized focus on brain-computer interface businesses that utilize core algorithms along with related software and hardware systems. We are committed to transforming industries, including healthcare, biotech, through AI-powered innovations, empowering people and organizations with intelligent tools to shape a smarter, more connected world.

 ****

***The Six Months Ended June 30, 2025, Compared to the Six Months Ended June 30, 2024***

**Results of Operations**

The following table sets forth a summary of our condensed consolidated results of operations for the periods indicated, both in absolute amounts and as percentages of our net revenues. This information should be read together with our condensed consolidated financial statements filed separately with the SEC. The operating results in any period are not necessarily of the results that may be expected for any future period.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** |
|  | **2024** | **2024** | **2025** | **2025** | **2025** |
|  |<br>**RMB** | **% of Net**<br>**revenues** |<br>**RMB** |<br>**US$** | **% of Net**<br>**revenues** |
|  | **(Unaudited)** | | **(Unaudited)** | **(Unaudited)** | |
|  | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** | **(in thousands, except percentages)** |
| Net revenues | 604051 | 100.0 | 93610 | 13067 | 100.0 |
| Cost of revenues | (372720) | (61.7) | (18852) | (2632) | (20.1) |
| **Gross profit** | 231331 | 38.3 | 74758 | 10435 | 79.9 |
| Operating expenses: |  |  |  |  |  |
| Selling and marketing | (122422) | (20.3) | (3996) | (558) | (4.3) |
| General and administrative | (144100) | (23.9) | (54279) | (7577) | (58.0) |
| Research and development | (6923) | (1.1) |  |  | 0.0 |
| **Operating (loss)/income** | (42114) | (7.0) | 16483 | 2300 | 17.6 |
| Interest income/(expenses), net | 244 | 0.0 | (4249) | (593) | (4.5) |
| Other income, net | 337 | 0.1 | (1306) | (182) | (1.4) |
| Foreign currency exchange (loss)/income, net | (84) | (0.0) | 142 | 20 | 0.2 |
| **(Loss)/income before income taxes** | (41617) | (6.9) | 11070 | 1545 | 11.8 |
| Income tax expense | (21544) | (3.6) | (270) | (38) | (0.3) |
| **Net (loss)/income from continuing operations** | (63161) | (10.5) | 10800 | 1507 | 11.5 |
| Net loss from discontinued operations, net of tax | (51673) | (8.6) |  |  | 0.0 |
| **Net (loss)/income** | (114834) | (19.0) | 10800 | 1507 | 11.5 |

---

*Net Revenues*

Total net revenues from continuing operations decreased 84.5% to RMB93.6 million (US$13.1 million) for the six months ended June 30, 2025, from RMB604.1 million in the same period of 2024. The decrease was primarily attributable to the Company's strategic adjustment of service scale since January 2025, which led to a temporary reduction of revenue contribution from core service operations

 

*Cost of Revenues*

Cost of revenues from continuing operations decreased 94.9% to RMB18.9 million (US$2.6 million) for the six months ended June 30, 2025, from RMB372.7 million in the same period of 2024. The decrease in cost of revenues from continuing operations was mainly driven by the Company's resource optimization efforts aligned with its service scale adjustment since January 2025. The Company streamlined allocation of resources for core service support, resulting in a significant reduction in employee-related expenses and routine operating costs.

 

*Gross Profit and Gross Margin*

Gross profit from continuing operations decreased 67.7% to RMB74.8 million (US$10.4 million) for the six months ended June 30, 2025, from RMB231.3 million in the same period of 2024. Gross margin was 79.9% for the six months ended June 30, 2025, compared with 38.3% in the same period of 2024.The decrease in gross profit from continuing operations was primarily a result of the temporary reduction in revenue contribution from core services amid the Company's service scale adjustment since January 2025, coupled with a corresponding adjustment in costs. The notable increase in gross margin was driven by a larger percentage decrease in cost of revenues (-94.9%) compared to the decrease in net revenues (-84.5%), reflecting the efficiency of the Company's resource optimization efforts during the service scale adjustment.

 

*Operating Expenses*

Total operating expenses from continuing operations decreased by 78.7% to RMB58.3 million (US$8.1 million) in the six months of 2025, from RMB273.4 million in the same period of 2024. Total non-GAAP operating expenses, which excluded share-based compensation expenses, decreased by 78.7% to RMB58.0 million (US$8.1 million) in the six months of 2025, from RMB272.9 million in the same period of 2024. Total share-based compensation expenses allocated to the related operating expenses decreased by 54.0% to RMB0.3 million (US$0.0 million) in the six months of 2025, from RMB0.6 million in the same period of 2024.

Selling and marketing expenses decreased by 96.7% to RMB4.0 million (US$0.6 million) in the six months of 2025 from RMB122.4 million in the same period of 2024. The drastic reduction in selling and marketing expenses was primarily attributable to the optimization of marketing resource allocation aligned with the Company's service scale adjustment since January 2025, including targeted cuts to non-essential marketing and promotion spending and streamlined personnel allocation for marketing support.

General and administrative expenses decreased by 62.3% to RMB54.3 million (US$7.6 million) in the six months of 2025, from RMB144.1 million in the same period of 2024. The decrease was mainly due to the streamlining of administrative resource allocation amid the Company's service scale adjustment, which reduced non-essential administrative-related costs in the current period.

Research and development expenses decreased by 100% to nil in the six months of 2025, from RMB6.9 million in the same period of 2024. The decrease was primarily due to the prioritization of R&D resource allocation to core initiatives amid the Company's service scale adjustment, leading to the temporary pause of non-critical R&D projects and no further costs incurred for such projects.

 

*Operating Income*

Operating income was RMB16.5 million (US$2.3 million) in the six months of 2025, compared to an operation loss of RMB42.1 million in the same period of 2024. Non-GAAP operating income, which excluded share-based compensation expenses, was RMB16.8 million (US$2.3 million) in the six months of 2025, compared to a non-GAAP operating loss of RMB41.5 million in the same period of 2024.

 

*Income Tax Expense*

The Company recorded an income tax expense of RMB0.3 million (US$0.0million) in the six months of 2025, compared to RMB21.5 million in the same period of 2024.

 

*Net income from Continuing Operations*

As a result of the foregoing, net income from continuing operations was RMB10.8 million (US$1.5 million) in the six months of 2025, compared to a net loss from continuing operations of RMB63.2 million in the same period of 2024. Non-GAAP net income from continuing operations, which excluded share-based compensation expenses, was RMB11.1 million (US$1.5 million) in the first months of 2025, compared to non-GAAP net loss of RMB62.6 million in the same period of 2024.

 

*Basic and diluted loss per ADS*

Basic net income from continuing operations per ADS was RMB0.50 (US$0.07) in the first half of 2025. Diluted net income from continuing operations per ADS was RMB0.50 (US$0.07) in the first half of 2025. Non-GAAP basic income per ADS, which excluded share-based compensation expenses, was RMB0.52 (US$0.07) in the first half of 2025. Non-GAAP diluted income per ADS, which excluded share-based compensation expenses, was RMB0.51 (US$0.07) in the first half of 2025.

 

*Cash and cash equivalents*

The total balance of cash, cash equivalents, and restricted cash decreased by RMB44.0 million from RMB46.5 million as of December 31, 2024 to RMB2.5 million (US$0.3 million) as of June 30, 2025.

**Liquidity and Capital Resources**

Our principal sources of liquidity have been cash generated from operating activities. As of December 31, 2024, we had cash and cash equivalents of RMB46.5 million. As of June 30, 2025, we had cash of RMB2.5 million (US$0.3 million). All cash is held in bank. The variable interest entities (the "VIEs") held no cash as of June 30, 2025.

The Company has incurred recurring losses from operations, and as of June 30, 2024 and June 30, 2025, had an accumulated deficit of RMB2,542.5 million and RMB3,003.7 million (US$419.3 million), respectively. The aforementioned raises substantial doubt about the Company's ability to continue as a going concern. The Company's continuation as a going concern is dependent on the Company's ability to meet obligations as they become due and to obtain sufficient recurring revenue required to fund operations.

We believe that our current cash on hand, bank deposits, and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs, including those for working capital, for at least the next 12 months.

The following summarizes the key components of our cash flows for the six months ended June 30, 2024 and 2025:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** | **June 30,** |
|  | | **2025** | **2025** |
|  | **2024**<br>**(Unaudited)** | **(Unaudited)** | **(Unaudited)** |
|  | **RMB** | **RMB** | **US$** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| Net cash used in operating activities from continuing operations | (87272) | (110084) | (15367) |
| Net cash used in operating activities from discontinued operation | (16514) |  |  |
| Net cash used in investing activities from continuing operations | (30010) | (189) | (26) |
| Net cash used in investing activities from discontinued operation | (1835) |  |  |
| Net cash provided by financing activities from continuing operations | 3403 | 66238 | 9247 |
| Net cash used in financing activities from discontinued operation | (7792) |  |  |
| Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash | 180 | (13) | (3) |
| Net change in cash and cash equivalents and restricted cash | (139840) | (44048) | (6149) |
| Cash, cash equivalents and restricted cash at the beginning of the year | 289852 | 46519 | 6494 |
| Cash, cash equivalents and restricted cash at end of the year | 150012 | 2471 | 345 |
| Less: Cash, cash equivalents and restricted cash of discontinued operation | 41768 |  |  |
| Cash, cash equivalents and restricted cash at the end of the year from continuing operations | 108244 | 2471 | 345 |

---

***Operating activities***

Net cash used in operating activities from continuing operations for the six months ended June 30, 2025 was RMB110.1 million (US$15.4 million), which was primarily due to (a) a net income from continuing operations of RMB10.8 million (US$1.5 million), partially offset by the decrease in accrued expenses and other current liabilities of RMB91.3 million (US$12.7 million), the decrease in operating lease liabilities of RMB65.5 million (US$9.1 million) and decrease in amounts due to related parties of RMB40.8 million (US$5.7 million); (b) an increase of deferred revenue of RMB71.9 million (US$10.0 million).

Net cash used in operating activities from continuing operations for the six months ended June 30, 2024 was RMB87.3 million, which was primarily due to (a) a net loss from continuing operations of RMB63.2 million, partially offset by depreciation and amortization of RMB17.9 million, amortization of right-of-use asset of RMB56.9 million, and share based compensation expense of RMB0.6 million; (b) a decrease in operating lease liabilities of RMB62.9 million; and (c) an increase in amounts due from related parties of RMB35.8 million.

 ****

***Investing activities***

Net cash used in investing activities from continuing operations for the six months ended June 30, 2025 amounted to RMB0.2 million (US$0.0 million), attributable to capital expenditures incurred in the period.

Net cash used in investing activities from continuing operations for the six months ended June 30, 2024 amounted to RMB30.0 million consisting of the loan collected from related party of RMB21.8 million, partially offset by the purchase of property and equipment, including computers and servers, of RMB19.4 million for the replacement of obsolete items and the two loans provided to related parties of RMB19.2 million in May of 2024 and RMB 14.2 million in June of 2024, both of which were repaid in December, 2024.

 ****

***Financing activities***

Net cash provided by financing activities from continuing operations for the six months ended June 30, 2025 amounted to RMB66.2 million (US$9.2 million), this was primarily driven by cash inflows of RMB78.2 million (US$10.9 million) from the issuance of Class A ordinary shares in connection with the exercise of share options, partially offset by cash outflows of RMB12.0 million (US$1.7 million) from the repayment of bank borrowing.

Net cash provided by financing activities from continuing operations for the six months ended June 30, 2024 amounted to RMB3.4 million, was primarily due to the proceeds from bank borrowing of RMB11.0 million , partially offset by the repurchase of treasury stocks of RMB7.3 million.

**Material Cash Requirements**

 ****

***Capital expenditures***

Our capital expenditures are primarily related to purchase of leasehold improvements and investments in computers, network equipment and software. Our capital expenditures were RMB 19.4 million and RMB0.2 million (US$0.0 million) for the six months ended June 30, 2024 and 2025, respectively. The significant decrease in capital expenditures in 2025 was primarily due to the Company's strategic adjustment to temporarily close offline learning centers, which led to a reduction in investments related to leasehold improvements and equipment.

**Holding Company Structure**

We are a holding company with no material operations of our own. We conduct our operations primarily through our subsidiaries and the VIEs in mainland China. As a result, our ability to pay dividends depends upon dividends paid by our mainland China subsidiaries and service fees paid by the VIEs in mainland China. If our wholly owned subsidiaries or any newly formed subsidiaries incur any debt in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our mainland China subsidiaries and the VIEs are required to make appropriations to certain statutory reserve funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies.

Our subsidiaries in mainland China, being foreign-invested enterprises established in mainland China, are required to make appropriations to certain statutory reserves, such as a general reserve fund, which is appropriated from net profit as reported in their PRC statutory accounts. Each of our mainland China subsidiaries is required to allocate at least 10% of its after-tax profits to a general reserve fund until such fund has reached 50% of such subsidiary's respective registered capital.

The VIEs must make appropriations from their after-tax profits as reported in their PRC statutory accounts to non-distributable reserve funds, namely a statutory surplus fund and a discretionary surplus fund. Each of the VIEs is required to allocate at least 10% of its after-tax profits to the statutory surplus fund until such fund has reached 50% of such VIE's respective registered capital. Appropriations to the discretionary surplus fund are at the discretion of the VIEs.

 ****

***Contingencies***

From time to time, we may become party to certain legal proceedings, as well as certain asserted and un-asserted claims. Amounts accrued, as well as the total amount of reasonably possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the consolidated financial statements.

**Research and Development, Patents and Licenses, etc.**

**Research and Development**

Building a reliable, scalable and secure technology infrastructure is crucial to our ability to support our live lecture broadcasts, online TTS, *61it.cn* and the various services that we provide to our students. We manage our lecture delivery system, TTS and *61it.cn* using a combination of commercially available software, hardware systems and proprietary technology. Since 2006, we have established a powerful online platform that enables thousands of students to simultaneously log onto our TTS and participate in activities online.

Our research and development expenses primarily consist of a portion of the personnel costs of our instructors as determined based on the amount of time that they devote to research and development-related activities, as well as the personnel costs of our software engineers. Our research and development expenses were RMB 6.9 million for the six months ended June 30, 2024, and nil for the same period in 2025.

**Intellectual Property**

Our trademarks, copyrights, domain names, trade secrets and other intellectual property rights distinguish our courses and services from those of our competitors and contribute to our ability to compete in our target markets. We rely on a combination of copyright and trademark law, trade secret protection and confidentiality agreements with senior executive officers and most other employees, to protect our intellectual property rights. In addition, we require certain of our senior executive officers and other employees to enter into agreements with us under which they acknowledge that all inventions, utility models, designs, know-how, copyrights and other forms of intellectual property made by them within the scope of their employment with us, pursuant to job assignments or using our materials and technology, or during the one year after their employment that relates to their employment with us, are our property and they should assign the same to us if we so require. We also regularly monitor any infringement or misappropriation of our intellectual property rights.

As of June 30, 2025, we had registered 34 domain names relating to our continuing operations, including our *www.tctm.cn, www.it61.cn* and *www.61it.cn* websites, with the Internet Corporation for Assigned Names and Numbers and China Internet Network Information Center and held 3 software copyrights and 116 trademarks related to our continuing operations.

Pursuant to the share purchase agreement signed on July 22, 2025, the Company has arranged for the disposal of the intellectual property rights related to the STEM business. These assets, which include domain names, software copyrights, and trademarks, will be transferred to First Winner Management Limited. This divestiture represents a key strategic step for the Company, enabling it to sharpen its focus and reallocate resources toward its future transition into the Artificial Intelligence (AI) sector.

**Trend Information**

Other than as disclosed elsewhere in this Management's Discussion and Analysis, we are not aware of any trends, uncertainties, demands, commitments or events for the period beginning on January 1, 2025 and ending on the date of this Management's Discussion and Analysis that are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

**Critical Accounting Estimates**

We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect (i) the reported amounts of our assets and liabilities; (ii) the disclosure of our contingent assets and liabilities at the end of each reporting period; and (iii) the reported amounts of revenues and expenses during each reporting period. We continually evaluate these judgments, estimates and assumptions based on our own historical experience, knowledge and assessment of current business and other conditions and our expectations regarding the future based on available information, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.

When reading our consolidated financial statements, you should consider our selection of critical accounting policies, the judgment and other uncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions. Our critical accounting policies and practices include the following: (i) use of estimates; (ii) discontinued operations; (iii) revenue recognition; and (iv) recently issued accounting standards. See "Summary of Significant Accounting Policies" under Note 2 to our unaudited condensed consolidated financial statements included in our Report of Foreign Private Issuer on Form 6-K filed with the SEC on September 30, 2025, for the disclosure of these accounting policies. We believe the following accounting estimates involve the most significant judgments used in the preparation of our financial statements.

**Impairment of Long-Lived Assets**

We periodically review our long-lived assets for impairment indicators to identify any events that may lead the carrying value to be irrecoverable. Such events include a historical or projected trend of net cash outflow or a future expectation that we will sell or dispose of an asset significantly before the end of its previously estimated useful life. In reviewing for impairment, we group all our long-lived assets into one asset group, which is the lowest possible level that identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgment and estimates, which could be material to our financial position and results of operations.

There was no indications of impairment as of June 30, 2025.

No impairment of long-lived assets was recognized for the six months ended June 30, 2024 and 2025.

**Allowance for credit losses**

We maintain an allowance for credit losses by estimating the expected credit and collectability trend of our customers. Accounts receivable is considered past due based on its contractual terms. In estimating the allowance for credit losses, we consider various factors, including historical experience, credit-worthiness of customers, current and reasonable forecasted future economic conditions, aging of the accounts receivable balances, payment patterns, and the forecasted information in pooling basis upon the use of the Current Expected Credit Loss Model, or the CECL Model, in accordance with ASC topic 326—Financial Instruments—Credit Losses. We also consider to provide specific allowance for credit losses for those accounts receivable balances when facts and circumstances have emerged to indicate that these receivables are unlikely to be collected. Changes in these estimates and assumptions could materially affect the quantity of credit losses, which could be material to our financial position and results of operations.

Prepaid expenses and other current assets primarily represent prepaid advertising deposits, professional fee, prepaid rental expenses and so on. Prepaid expenses and other current assets which are due over one year as of the balance sheet date are presented as other non-current assets. The Company maintains an allowance for credit losses for the part that is not expected to be recovered. In establishing the allowance, management considers overdue employee loan upon the use of the CECL Model in accordance with ASC topic 326. Prepaid expenses and other current assets that are deemed to be uncollectible are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. There is a time lag between when the Company estimates a portion of or the entire account balances to be uncollectible and when a write off of the account balances is taken. The Company takes a write off of the account balances when the Company can demonstrate all means of collection on the outstanding balances have been exhausted.

There was no allowance of credit losses for accounts receivable as of December 31, 2024 and June 30, 2025. The allowance of credit losses for prepaid expenses and other current assets associated with continuing operations totaled approximately RMB49.7 million and RMB54.3 million (US$7.6 million) as of December 31, 2024 and June 30, 2025, respectively.

**Taxation**

We are required to make estimates and apply our judgements in determining the provision for income tax expenses for financial reporting purposes based on tax laws in various jurisdictions in which we operate. In calculating the effective income tax rate, we make estimates and judgements, including the calculation of tax credits and the timing differences of recognition of revenues and expenses between financial reporting and tax reporting. These estimates and judgements may result in adjustments to pre-tax income amount filed with local tax authorities in accordance with the local tax rules and regulations in various tax jurisdictions. Although we believe that our estimates and judgments are reasonable, actual results may be materially different from the estimated amounts. Changes in these estimates and judgements may result in material increases or decreases in our provision for income tax expenses, which could be material to our financial position and results of operations.

Deferred tax assets and liabilities are recognized for expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carry forwards. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. When we determine and quantify the valuation allowances, we consider such factors as projected future taxable income, the availability of tax planning strategies, the historical taxable income/losses in prior years, and future reversals of existing taxable temporary differences. The assumptions used in determining projected future taxable income require significant judgment. Actual operating results in future years could differ from our current assumptions, judgments and estimates. Changes in these estimates and assumptions may materially affect the tax position measurement and financial statement recognition. If, in the future, we determine that we will not be able to realize our recorded deferred tax assets, an increase in the valuation allowance would be required. This allowance pertains to deferred tax assets arising from temporary differences and operating losses, and such an increase would decrease our earnings in the period in which such determination is made. As of December 31, 2024 and June 30, 2025, the Company's deferred tax assets for continuing operations, net of valuation allowance, were nil for both periods, despite having gross deferred tax assets of RMB170.9 million and RMB150.9 million (US$21.1 million), respectively.

## Exhibit 99.2

?xml version='1.0' encoding='ASCII'?

**Exhibit 99.2**

**INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
|  | **Page** |
| **Condensed Consolidated Financial Statements** |  |
| [Unaudited Condensed Consolidated Balance Sheets as of December 31, 2024 and June 30, 2025](#f_001) | F-2 |
| [Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Six Months ended June 30, 2024 and 2025](#f_002) | F-3 |
| [Unaudited Condensed Consolidated Statements of Changes in Deficit for the Six Months ended June 30, 2024 and 2025](#f_003) | F-4 |
| [Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2024 and 2025](#f_004) | F-5 |
| [Notes to Unaudited Consolidated Financial Statements](#f_005) | F-6 |

---

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS**

(Amounts in thousands of Renminbi ("RMB") and US Dollar ("US$"),

except for number of shares and per share data)

---

| | | | |
|:---|:---|:---|:---|
|  | | **June 30,** | **June 30,** |
|  | **December 31,**<br>**2024** | **2025** | **2025** |
|  | **Audited** | **Unaudited** | **Unaudited** |
|  | **RMB** | **RMB** | **US$** |
| **ASSETS** |  |  |  |
| **Current assets:** |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | 15302 | 2471 | 345 |
| &nbsp;&nbsp;&nbsp;Restricted cash | 31217 |  |  |
| &nbsp;&nbsp;&nbsp;Amounts due from related parties, net | 4792 |  |  |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets, net | 4898 | 5698 | 795 |
| **Total current assets** | **56209** | **8169** | **1140** |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | 21591 | 21286 | 2971 |
| &nbsp;&nbsp;&nbsp;Right-of-use assets, net |  | 852 | 119 |
| &nbsp;&nbsp;&nbsp;Long-term investments, net | 22817 | 21320 | 2976 |
| **Total non-current assets** | **44408** | **43458** | **6066** |
| **Total assets** | **100617** | **51627** | **7206** |
| **LIABILITIES AND DEFICIT** |  |  |  |
| **Current liabilities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;Short-term bank loans | 26291 | 14291 | 1995 |
| &nbsp;&nbsp;&nbsp;Accounts payable | 5971 | 5782 | 807 |
| &nbsp;&nbsp;&nbsp;Amounts due to related parties | 41859 | 1064 | 149 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities-current | 105504 | 132239 | 18460 |
| &nbsp;&nbsp;&nbsp;Income taxes payable | 8734 | 9005 | 1257 |
| &nbsp;&nbsp;&nbsp;Deferred revenue-current | 1117713 | 1189591 | 166061 |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | 506733 | 475553 | 66385 |
| **Total current liabilities** | **1812805** | **1827525** | **255114** |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities-non current | 91407 |  |  |
| **Total non-current liabilities** | **91407** | **—** | **—** |
| **Total liabilities** | **1904212** | **1827525** | **255114** |
| **Commitments and contingencies** |  |  |  |
| **Deficit:** |  |  |  |
| &nbsp;&nbsp;&nbsp;Class A ordinary shares (US$0.001 par value, 860,000,000 shares authorized, 58,730,507 and 230,036,532 shares issued, 42,505,619 and 213,811,644 shares outstanding as of December 31, 2024 and June 30, 2025, respectively) | 370 | 1600 | 223 |
| &nbsp;&nbsp;&nbsp;Class B ordinary shares (US$0.001 par value, 40,000,000 shares authorized, 7,206,059 shares issued and outstanding as of December 31, 2024 and June 30, 2025, respectively) | 74 | 74 | 10 |
| &nbsp;&nbsp;&nbsp;Treasury shares (16,224,888 Class A ordinary shares as of December 31, 2024 and June 30, 2025, at cost) | (486706) | (486706) | (67942) |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 1643672 | 1720954 | 240236 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive income/(loss) | 54266 | (7349) | (1027) |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (3014534) | (3003715) | (419302) |
| **Total deficit attributable to the shareholders of VisionSys AI Inc.** | **(1802858)** | **(1775142)** | **(247802)** |
| **Non-controlling interest** | **(737)** | **(756)** | **(106)** |
| **Total deficit** | **(1803595)** | **(1775898)** | **(247908)** |
| **Total liabilities and deficit** | **100617** | **51627** | **7206** |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS**

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** | **June 30,** |
|  | **2024** | **2025** | **2025** |
|  | **Unaudited** | **Unaudited** | **Unaudited** |
|  | **RMB** | **RMB** | **US$** |
| Net revenues | 604051 | 93610 | 13067 |
| Cost of revenues | (372720) | (18852) | (2632) |
| **Gross profit** | **231331** | **74758** | **10435** |
| Selling and marketing expenses | (122422) | (3996) | (558) |
| General and administrative expenses | (144100) | (54279) | (7577) |
| Research and development expenses | (6923) |  |  |
| **Operating (loss)/income** | **(42114)** | **16483** | **2300** |
| Interest income/(expense), net | 244 | (4249) | (593) |
| Other income, net | 337 | (1306) | (182) |
| Foreign currency exchange (loss)/income, net | (84) | 142 | 20 |
| **(Loss)/income before income taxes** | **(41617)** | **11070** | **1545** |
| Income tax expense | (21544) | (270) | (38) |
| **Net (loss)/income from continuing operations** | **(63161)** | **10800** | **1507** |
| **Net loss from discontinued operation, net of tax** | **(51673)** |  |  |
| **Net (loss)/income** | (114834) | 10800 | 1507 |
| Less: Net loss attributable to non-controlling interests | (281) | (19) | (3) |
| **Net (loss)/income attributable to Class A and Class B ordinary shareholders** | **(114553)** | **10819** | **1510** |
| **Less: Net loss from continuing operations attributable to non-controlling interests** | **(281)** | **(19)** | **(3)** |
| **Net (loss)/income from continuing operations attributable to Class A and Class B ordinary shareholders** | **(62880)** | **10819** | **1510** |
| Weighted average number of ordinary shares used in computing basic (loss)/income per share | 50181969 | 107418503 | 107418503 |
| Weighted average number of ordinary shares used in computing diluted (loss)/income per share | 50181969 | 108705638 | 108705638 |
| Basic (loss)/income per ADS attributable to ordinary shareholder from continuing operations | (6.27) | 0.50 | 0.07 |
| Diluted (loss)/income per ADS attributable to ordinary shareholder from continuing operations | (6.27) | 0.50 | 0.07 |
| Basic loss per ADS attributable to ordinary shareholder from discontinued operation | (5.15) | **—**  | **—**  |
| Diluted loss per ADS attributable to ordinary shareholder from discontinued operation | (5.15) |  |  |
| **Other comprehensive loss** |  |  |  |
| Foreign currency translation adjustment | 6226 | (61615) | (8601) |
| **Comprehensive loss** | **(108608)** | **(50815)** | **(7094)** |
| Less: Comprehensive loss attributable to non-controlling interests | (281) | (19) | (3) |
| Comprehensive loss attributable to Class A and Class B ordinary shareholders | (108327) | (50796) | (7091) |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIT**

(Amounts in thousands of RMB, except for number of shares and per share data)

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary Shares** | **Ordinary Shares** | **Ordinary Shares** | **Ordinary Shares** | | | | | | |
|  | **Number of**<br>**Class A**<br>**Ordinary**<br>**Shares** |<br><br>**Amount** | **Number of**<br>**Class B**<br>**Ordinary**<br>**Shares** |<br><br>**Amount** |<br><br>**Treasury**<br>**Shares** |<br>**Additional**<br>**Paid-in**<br>**Capital** |<br>**Accumulated**<br>**Other**<br>**Comprehensive**<br>**Income (Loss)** |<br><br>**Accumulated**<br>**deficit** |<br>**Non-**<br>**controlling**<br>**Interest** |<br><br>**Total**<br>**deficit** |
|  | | **RMB** | | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** |
| **Balance as of December 31, 2023** | **57861327** | **364** | **7206059** | **74** | **(479346)** | **1360901** | **48216** | **(2427992)** | **(3567)** | **(1501350)** |
| Net loss | **—** | **—** | **—** | **—** | **—** | **—** | **—** | (114553) | (281) | (114834) |
| Issuance of Class A ordinary shares upon exercise of share options and vesting of non-vested shares | 749340 | 5 | **—** | **—** | **—** | 136 | **—** | **—** | **—** | 141 |
| Foreign currency translation adjustment | **—** | **—** | **—** | **—** | **—** | **—** | 6226 | **—** | **—** | 6226 |
| Share-based compensation | **—** | **—** | **—** | **—** | **—** | 605 | **—** | **—** | **—** | 605 |
| Acquisition of noncontrolling interest | **—** | **—** | **—** | **—** | **—** | (5952) | **—** | **—** | 3390 | (2562) |
| Disposal of discontinued operations | **—** | **—** | **—** | **—** | **—** | 287244 | **—** | **—** | **—** | 287244 |
| Repurchase of ordinary shares | **—** | **—** | **—** | **—** | (7298) | **—** | **—** | **—** | **—** | (7298) |
| **Balance as of June 30, 2024 (unaudited)** | **58610667** | **369** | **7206059** | **74** | **(486644)** | **1642934** | **54442** | **(2542545)** | **(458)** | **(1331828)** |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary Shares** | **Ordinary Shares** | **Ordinary Shares** | **Ordinary Shares** | | | | | | |
|  | **Number of**<br>**Class A**<br>**Ordinary**<br>**Shares** |<br><br>**Amount** | **Number of**<br>**Class B**<br>**Ordinary**<br>**Shares** |<br><br>**Amount** |<br><br>**Treasury**<br>**Shares** |<br>**Additional**<br>**Paid-in**<br>**Capital** |<br>**Accumulated**<br>**Other**<br>**Comprehensive**<br>**Income (Loss)** |<br><br>**Accumulated**<br>**deficit** |<br>**Non-**<br>**controlling**<br>**Interest** |<br><br>**Total**<br>**deficit** |
|  | | **RMB** | | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** |
| **Balance as of December 31, 2024** | **58730507** | **370** | **7206059** | **74** | **(486706)** | **1643672** | **54266** | **(3014534)** | **(737)** | **(1803595)** |
| Net income/(loss) |  |  |  |  |  |  |  | 10819 | (19) | 10800 |
| Issuance of Class A ordinary shares upon exercise of share options and vesting of non-vested shares | 171306025 | 1230 |  |  |  | 77008 |  |  |  | 78238 |
| Foreign currency translation adjustment |  |  |  |  |  |  | (61615) |  |  | (61615) |
| Share-based compensation |  |  |  |  |  | 274 |  |  |  | 274 |
| **Balance as of June 30, 2025 (unaudited)** | **230036532** | **1600** | **7206059** | **74** | **(486706)** | **1720954** | **(7349)** | **(3003715)** | **(756)** | **(1775898)** |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

(Amounts in thousands RMB and US$, except for number of shares and per share data)

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** | **June 30,** |
|  | **2024** | **2025** | **2025** |
|  | **Unaudited** | **Unaudited** | **Unaudited** |
|  | **RMB** | **RMB** | **US$** |
| **Operating activities:** |  |  |  |
| **Net cash used in operating activities from continuing operations** | **(87272)** | **(110084)** | **(15367)** |
| **Net cash used in operating activities from discontinued operation** | **(16514)** | **—**  | **—**  |
| **Net cash used in operating activities** | **(103786)** | **(110084)** | **(15367)** |
| **Investing activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;Purchase of property and equipment and intangible assets | (19381) | (189) | (26) |
| &nbsp;&nbsp;&nbsp;Proceeds from disposal of property and equipment | 1001 | **—**  | **—**  |
| &nbsp;&nbsp;&nbsp;Loan provided to related parties | (33383) | **—**  | **—**  |
| &nbsp;&nbsp;&nbsp;Loan collected from related parties | 21753 | **—**  | **—**  |
| **Net cash used in investing activities from continuing operations** | **(30010)** | **(189)** | **(26)** |
| **Net cash used in investing activities from discontinued operation** | **(1835)** | **—**  | **—**  |
| **Net cash used in investing activities** | **(31845)** | **(189)** | **(26)** |
| **Financing activities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from bank borrowing | 11000 | **—**  | **—**  |
| &nbsp;&nbsp;&nbsp;Issuance of Class A ordinary shares in connection with exercise of share options | 141 | 78238 | 10922 |
| &nbsp;&nbsp;&nbsp;Acquisition of noncontrolling interests | (440) | **—**  | **—**  |
| &nbsp;&nbsp;&nbsp;Repayment of bank borrowing | **—**  | (12000) | (1675) |
| &nbsp;&nbsp;&nbsp;Repurchase of ordinary shares | (7298) | **—**  | **—**  |
| **Net cash provided by financing activities from continuing operations** | **3403** | **66238** | **9247** |
| **Net cash used in financing activities from discontinued operation** | **(7792)** | **—**  | **—**  |
| **Net cash (used in)/ provided by financing activities** | **(4389)** | **66238** | **9247** |
| Changes in cash, cash equivalents and restricted cash | (140020) | (44035) | (6146) |
| Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash | 180 | (13) | (3) |
| Net change in cash, cash equivalents and restricted cash | (139840) | (44048) | (6149) |
| Cash, cash equivalents and restricted cash at the beginning of the period | 289852 | 46519 | 6494 |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | 115882 | 2471 | 345 |
| &nbsp;&nbsp;&nbsp;Restricted cash | 34130 | **—**  | **—**  |
| Cash, cash equivalents and restricted cash at the end of the period | 150012 | 2471 | 345 |
| Less: Cash, cash equivalents and restricted cash of discontinued operation | 41768 | **—**  | **—**  |
| Cash, cash equivalents and restricted cash at the end of the period from continuing operations | 108244 | 2471 | 345 |
| **Supplemental disclosure of cash flow information from continuing operations:** |  |  |  |
| &nbsp;&nbsp;&nbsp;Income taxes paid | 827 | 527 | 74 |
| &nbsp;&nbsp;&nbsp;Interest paid | 109 | **—**  | **—**  |
| **Non-cash investing and financing activities from continuing operations:** |  |  |  |
| &nbsp;&nbsp;&nbsp;Accrual for purchase of equipment | 7424 | 5782 | 807 |
| &nbsp;&nbsp;&nbsp;Operating lease right-of-use assets obtained in exchange for new operating lease liabilities | 108456 | 991 | 138 |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

1 DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS

&nbsp;&nbsp;&nbsp;&nbsp;(a) Description of business

VisionSys AI Inc. (formerly known as TCTM Kids IT Education Inc.), through its wholly-owned subsidiaries and consolidated variable interest entities, or VIEs (collectively referred to hereinafter as the "Company"), is principally engaged in providing IT-focused supplementary STEM education service ("IT-focused Supplementary STEM Education") for students aged between three and eighteen. All of the Company's operations are located in the People's Republic of China ("PRC") with nearly all of its customers located in the PRC.

On December 24, 2023, the Company entered into an agreement to divest its entire professional education business, comprising both professional information technology ("IT") and non-IT training courses (collectively, the "IT Professional Education") to a buyer consortium led by Tarena Weishang Technology (Hainan) Co., Ltd., for a nominal cash consideration of RMB 1 for each of the two main entities involved. The divestiture, in which a principal shareholder's sister had an interest, was completed on March 31, 2024, resulting in the deconsolidation of the professional education business from the Company's financial statements as of that date.

On April 7, 2025, the Company changed its ticker symbol from "TCTM" to "VSA".

On July 22, 2025, the Company entered into an agreement with First Winner Management Limited (a British Virgin Islands company) to sell 100% equity interests in its wholly-owned subsidiaries, Kids IT Education Inc. (incorporated in the Cayman Islands) and Tarena Hong Kong Limited (incorporated in Hong Kong, China), for US$1. The transaction was approved at the Extraordinary General Meeting of Shareholders on August 25, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;***(b)***  ***Organization*** 

VSA is a holding company that was incorporated in the Cayman Islands on October 8, 2003 by Mr. Shaoyun Han ("Mr. Han"), the founder and former chief executive officer of the Company, and five other individuals. VSA is the parent company of a number of wholly-owned subsidiaries that are engaged in the provision of educational products and services, with a specialized focus on brain-computer interface businesses that utilize core algorithms along with related software and hardware systems (AI business). The Company's education services in certain locations of the PRC were previously conducted through Beijing Tarena Jinqiao Technology Co., Ltd. ("Beijing Tarena") and Beijing Tongcheng Shidai Jinqiao Technology Co., Ltd. ("Beijing Tongcheng"), and their subsidiaries, in order to comply with laws and regulations of mainland China which restricted foreign investments in companies that were engaged in education products and services. Similarly, the Company's AI business in Beijing was previously operated through Beijing Wangwen Zhisuan Technology Co., Ltd. ("Beijing Wangwen Zhisuan"), which was established in April 2025, to adhere to the same foreign investment restrictions.

VSA effectively maintains financial control over Beijing Tarena and Beijing Tongcheng and their initial capital funding was provided by Tarena Technologies Inc. (a wholly-owned subsidiary of VSA) ("Tarena Tech"), formerly known as Beijing Tarena Technology Co., Ltd. and Tongcheng Shidai Technology Inc. (a wholly-owned subsidiary of VSA) ("Tongcheng Shidai"), formerly known as Tongcheng Shidai Technology Co., Ltd. through a series of contractual agreements and agreements ("VIE Agreements"). The recognized and unrecognized revenue-producing assets that were held by Beijing Tarena, Beijing Tongcheng and their subsidiaries primarily consists of property and equipment, operating leases for the learning premises, ICP license, www.tmooc.cn website and assembled workforce in those learning centers.

The Company disposed of Tarena Hangzhou and Tarena Technologies and their subsidiaries, including its VIE, Beijing Tarena. Therefore, VSA terminated the Beijing Tarena VIE Agreements in accordance with the Divestiture effective March 31, 2024.

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

1 DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS (CONTINUED)

&nbsp;&nbsp;&nbsp;&nbsp;(b) Organization (Continued)

The assets and liabilities of the consolidated VIEs and their subsidiaries that were included in the accompanying condensed consolidated financial statements as of December 31, 2024 and June 30, 2025 are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2024** | **June 30,**<br>**2025** |
|  | **RMB** | **RMB** |
| Cash and cash equivalents | 2519 |  |
| Amounts due from VSA and its wholly-owned subsidiaries | 32980 |  |
| Prepaid expenses and other current assets | 10042 | 2439 |
| **Total current assets** | **45541** | **2439** |
| **Total assets** | **45541** | **2439** |
| Accounts payable | 2202 | 5426 |
| Deferred revenue-current | 113399 | 107915 |
| Operating lease liabilities-current | 2613 | 2531 |
| Income taxes payable | 48 | 48 |
| Amounts due to VSA and its wholly-owned subsidiaries | 32979 | (57230) |
| Amounts due to related parties | 135 |  |
| Accrued expenses and other current liabilities | 48014 | (20063) |
| **Total current liabilities** | **199390** | **38627** |
| Operating lease liabilities-non current | 1665 |  |
| **Total non-current liabilities** | **1665** | **—**  |
| **Total liabilities** | **201055** | **38627** |

---

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

---

| | |
|:---|:---|
| **1** | **DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS (CONTINUED)** |

---

 ****

&nbsp;&nbsp;&nbsp;&nbsp;***(b)***  ***Organization (Continued)*** 

The financial performance and cash flows of the consolidated VIEs and their subsidiaries that were included in the accompanying condensed consolidated financial statements before elimination of intercompany balances and transactions between the parent company, non-VIE subsidiaries, VIEs and VIEs' subsidiaries for the six months ended June 30, 2024 and 2025 are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| Net revenues | 46702 | 5892 |
| Net (loss)/ income from continuing operations | (12960) | 1848 |
| Net loss from discontinued operation | (13171) | **—**  |
| Net (loss)/ income | (26131) | 1848 |
| Net cash used in operating activities from continuing operations | (14326) | (73515) |
| Net cash used in operating activities from discontinued operation | (1782) | **—**  |
| Net cash used in investing activities from continuing operations | (3200) | **—**  |
| Net cash provided by financing activities from continuing operations | 18820 | 67663 |
| Net cash used in financing activities from discontinued operation | (82) | **—**  |

---

&nbsp;&nbsp;&nbsp;&nbsp;(c) Basis of presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Security and Exchange Commission (the "SEC") and generally accepted accounting principles in the United States of America ("U.S. GAAP"). Certain information and footnote disclosures normally included in financial statements prepared in conformity with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with audited consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 20-F for the fiscal year ended December 31, 2024.

In the opinion of the management, the accompanying unaudited interim condensed consolidated financial statements reflect all normal recurring adjustments, which are necessary for a fair presentation of financial results for the interim periods presented. The Company believes that the disclosures are adequate to make the information presented not misleading. All amounts in the accompanying unaudited interim condensed consolidated financial statements and notes are expressed in Renminbi ("RMB"). Amounts in United States dollars ("US$") are presented solely for the convenience of readers and use an exchange rate of US$1.00 = RMB 7.1636, representing the exchange rate as set forth in the H.10 statistical release of the U.S. Federal Reserve Board as of June 30, 2025. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate.

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

---

| | |
|:---|:---|
| **1** | **DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS (CONTINUED)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(d) Going concern

As of June 30, 2025, the Company has a significant working capital deficit of approximately RMB 1,819,356. The Company's net operating cash outflow was approximately RMB 110,084 for the six months ended June 30, 2025. These conditions raised substantial doubt about the Company's ability to continue as a going concern. For the next 12 months from September 30, 2025 the issuance date of these financial statements, the Company will strive to achieve positive cash flow by implementing various measures. It has already undertaken several financing initiatives, including: issuing 25,000,000 Class A ordinary shares at US$0.08 per share on April 1, 2025, which raised US$2,000,000; and on the same day, acquiring core brain-computer interface algorithms and systems (valued at US$10,850,000) from Jeethen International Co., Limited in exchange for 135,625,000 Class A ordinary shares. Subsequently, on July 25, 2025, the Company raised approximately US$2,000,000 for working capital by issuing 787,401.5 Units (each comprising one Class A ordinary share and one warrant) to non-U.S. investors under Regulation S at US$0.254 per Unit. The warrants have an initial exercise price of US$0.6, a five-year term, are eligible for cashless exercise after six months, and include anti-dilution provisions.

There can be no assurance that the Company will be successful in achieving its strategic plans, that the Company's future capital raises will be sufficient to support its ongoing operations, or that any additional financing will be available in a timely manner or with acceptable terms, if at all. If the Company is unable to raise sufficient financing or events or circumstances occur such that the Company does not meet its strategic plans, the Company will be required to reduce certain discretionary spending, or be unable to fund capital expenditures, which would have a material adverse effect on the Company's financial position, results of operations, cash flows, and ability to achieve its intended business objectives.

The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

&nbsp;&nbsp;&nbsp;&nbsp;(a) Use of estimates

The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include goodwill impairment and long-term investments, the realizability of deferred income tax assets, the accruals for other contingencies, and the recoverability of the carrying amounts of property and equipment and right-of-use assets. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions.

On an on-going basis, the Company evaluates its estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

 ****

&nbsp;&nbsp;&nbsp;&nbsp;***(b)***  ***Revenue recognition*** 

The Company evaluated and recognized revenue based on the five steps set forth in ASC 606 by:

● identifying the contract(s) with the customer;

● identifying the performance obligations in the contract;

● determining the transaction price;

● allocating the transaction price to performance obligations in the contract; and

● recognizing revenue as each performance obligation is satisfied through the transfer of a promised good or service to a customer (i.e., "transfer of control").

These criteria as they relate to each of the following major revenue generating activities are described below. Revenue is presented net of value added taxes ("VAT") at rates ranging between 1% and 13%, and surcharges. VAT to be collected from customers, net of VAT paid for purchases, is recorded as a liability or asset in the condensed consolidated balance sheets until it is paid to the tax authorities.

 

*Tuition revenue* 

The Company provides IT-focused supplementary STEM education course services to students.

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

&nbsp;&nbsp;&nbsp;&nbsp;(b) Revenue recognition (Continued)

The contract of tuition service is accounted for as a single performance obligation which is satisfied proportionately over the service period. Tuition fees are recognized as revenue proportionately as the training courses are delivered, with unearned portion of tuition fees being recorded as deferred revenue.

Refunds are provided to students if they withdraw from classes, and usually only those unearned portions of the fee will be refunded. A refund liability represents the amounts of consideration received but are not expected to be entitled to earn, and thus are not included in the transaction price because these amounts are expected to be eventually refunded to students. The Company determines the transaction price to be earned by estimating the refund liability based on historical refund ratio on a portfolio basis using the expected value method. Reclassification was made from deferred revenue to refund liabilities, which was recorded under accrued expenses and other current liabilities.

 

*Certification service revenue*

The Company provides certification services to students who complete the training course and enroll for the exams. The Company is responsible for the certification service, including organization, proctoring and grading of exams, and providing the certificates to students. All certificates are issued by third parties to the students who pass the exam.

The Company acts as the principal in providing the certificate service to the students and recognizes revenue on gross basis because the Company is able to determine the price, acts as the main obligor in the arrangement, and, is responsible for fulfilling the services ordered by the students. Cash received before the students receive the certificates is recorded as deferred revenue.

Each contract of certification service is accounted for as a single performance obligation which is satisfied at a point in time. The performance obligation is satisfied when the certificates are provided to the students, then the received consideration is recognized as certification service revenue.

Net revenues from continuing operations recognized under ASC Topic 606 for the six months ended June 30, 2024 and 2025 consist of the following:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| Tuition fee | 602877 | 93413 |
| Certification service fee | 109 | 9 |
| Others | 2975 | 189 |
| Business taxes and surcharges | (1910) | (1) |
| **Total net revenues** | **604051** | **93610** |

---

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| **Timing of revenue recognition** |  |  |
| Services transferred at a point in time | 3074 | 198 |
| Services transferred over time | 600977 | 93412 |
| **Total net revenues** | **604051** | **93610** |

---

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

&nbsp;&nbsp;&nbsp;&nbsp;(b) Revenue recognition (Continued)

 

*Contract liability*

The Company does not have amounts of contract assets since the Company receives consideration prior to providing the services.

The contract liabilities consist of deferred revenue, which represent the Company has received consideration but has not satisfied the related performance obligations.

The Company's deferred revenue from continuing operations amounted to RMB1,117,713 and RMB1,189,591 as of December 31, 2024 and June 30, 2025, respectively.

The Company has selected to apply the practical expedient in paragraph ASC 606-10-50-14 and does not disclose information about remaining performance obligations in contracts that have an original expected length of one year or less.

&nbsp;&nbsp;&nbsp;&nbsp;(c) Recently issued accounting standards

In June 2022, the FASB issued ASU 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The update clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The update also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The update also requires certain additional disclosures for equity securities subject to contractual sale restrictions. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The adoption of this ASU did not have any material impact on the Company's unaudited condensed consolidated financial statements and disclosure.

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker ("CODM") and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment's profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of this ASU did not have any material impact on the Company's unaudited condensed consolidated financial statements and disclosure.

**VISIONSYS AI INC. (FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

&nbsp;&nbsp;&nbsp;&nbsp;(c) Recently issued accounting standards (Continued)

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2025. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. Once adopted, this ASU will result in additional disclosures.

In March 2024, the FASB issued ASU 2024-01, "Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards" ("ASU 2024-01"), which intends to improve clarity and operability without changing the existing guidance. ASU 2024-01 provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic 718. Entities can apply the guidance either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. The adoption of this ASU did not have any material impact on the Company's unaudited condensed consolidated financial statements and disclosure.

In March 2024, the FASB issued ASU 2024-02, "Codification Improvements – Amendments to Remove References to the Concept Statements" ("ASU 2024-02"). ASU 2024-02 contains amendments to the FASB Accounting Standards Codification that remove references to various FASB Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas. ASU 2024-02 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the potential impact of adopting this guidance on Financial Statements.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"), and in January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date ("ASU 2025-01"). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact of this accounting standard update on its unaudited condensed consolidated financial statements and related disclosures.

In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. ASU 2025-03 clarifies the guidance to determine the accounting acquirer in a business combination that is effected primarily by exchanging equity interests, when the legal acquiree is a variable interest entity ("VIE") that meets the definition of a business. ASU 2025-03 requires entities to consider the same factors in ASC 805, Business Combinations, required for determining which entity is the accounting acquirer in other acquisition transactions. ASU 2025-03 is effective for the Company's annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-03 is required to be applied on a prospective basis to any acquisition transaction that occurs after the initial application date. The Company is currently assessing the impact this standard will have on the Company's unaudited condensed consolidated financial statements .

**VISIONSYS AI INC. (FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

&nbsp;&nbsp;&nbsp;&nbsp;(c) Recently issued accounting standards (Continued)

In May 2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606). ASU 2025-04 revises the definition of the term performance condition for share-based consideration payable to a customer to incorporate conditions that are based on the volume or monetary amount of a customer's purchases or potential purchases. ASU 2025-04 also eliminates the policy election to account for forfeitures as they occur for awards with service conditions. ASU 2025-04 also clarifies that ASC 606 variable consideration guidance does not apply to share-based payments to customers; instead, vesting probability should be assessed solely under ASC 718, Compensation—Stock Compensation. ASU 2025-04 is effective for the Company's annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-04 may be applied on either a modified retrospective basis or on a retrospective basis. The Company is currently assessing the impact this standard will have on the Company's unaudited condensed consolidated financial statements.

In July 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 amends ASC 326, Financial Instruments—Credit Losses, and introduces a practical expedient available for all entities and an accounting policy election available for all entities, other than public business entities, that elect the practical expedient. These changes apply to the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue Recognition. Under the practical expedient, entities may assume that current conditions as of the balance sheet date remain unchanged for the remaining life of the asset when developing reasonable and supportable forecasts. This simplifies the estimation process for short-term financial assets. ASU 2025-05 is effective for the Company's annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-05 should be applied on a prospective basis. The Company is currently assessing the impact this standard will have on the Company's unaudited condensed consolidated financial statements.

Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the consolidated financial position, statements of operations and cash flows.

3 DISCONTINUED OPERATION

Divestiture of professional education business

On December 24, 2023, the Company entered into an agreement to divest its professional education business. The divestiture was completed on March 31, 2024, resulting in a loss of control over the business and marking a strategic shift in focus to IT-focused supplementary STEM education services. Having met the criteria to be classified as held-for-sale as of December 31, 2023, the business was accounted for as a discontinued operation. Accordingly, its related financial elements have been presented as such in the condensed consolidated financial statements for all periods presented, and were deconsolidated effective March 31, 2024.

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

4 PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET

Prepaid expenses and other current assets, net consist of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2024** | **June 30,**<br>**2025** |
|  | **RMB** | **RMB** |
| **Prepaid expenses and other current assets:** |  |  |
| &nbsp;&nbsp;&nbsp;Prepaid deposits (a) | 13955 | 15543 |
| &nbsp;&nbsp;&nbsp;Prepaid professional fee | 13707 | 15226 |
| &nbsp;&nbsp;&nbsp;Inventories | 10475 | 10475 |
| &nbsp;&nbsp;&nbsp;Prepaid value-added tax | 4898 | 3980 |
| &nbsp;&nbsp;&nbsp;Prepaid advertising expenses | 4815 | 4508 |
| &nbsp;&nbsp;&nbsp;Prepaid rental expenses | 2230 | 1041 |
| &nbsp;&nbsp;&nbsp;Others | 4525 | 9242 |
| **Total prepaid expenses and other current assets** | **54605** | **60015** |
| &nbsp;&nbsp;&nbsp;Less: allowance for credit losses | (49707) | (54317) |
| **Prepaid expenses and other current assets, net** | **4898** | **5698** |

---

(a) It mainly included prepaid rental deposits.

5 PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2024** | **June 30,**<br>**2025** |
|  | **RMB** | **RMB** |
| Office buildings | 25679 | 25679 |
| Furniture | 15795 |  |
| Office equipment | 163893 |  |
| Leasehold improvements | 63784 |  |
| **Total property and equipment** | **269151** | **25679** |
| Less: accumulated depreciation | (186646) | (4393) |
| Less: Impairment | **(60914)** | **—**  |
| **Property and equipment, net** | **21591** | **21286** |

---

Depreciation expense for property and equipment was allocated to the following:

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br>**2024** | **June 30,**<br>**2025** |
|  | **RMB** | **RMB** |
| Cost of revenues | 12806 |  |
| Selling and marketing expenses | 611 |  |
| General and administrative expenses | 3824 | 305 |
| Research and development expenses | 4 |  |
| **Total** | **17245** | **305** |

---

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

6 LONG-TERM INVESTMENTS

Long-term investments consist of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2024** | **June 30,**<br>**2025** |
|  | **RMB** | **RMB** |
| Equity investments without readily determinable fair values |  |  |
| &nbsp;&nbsp;A company providing mechanic training (a) | 11992 | 1974 |
| &nbsp;&nbsp;Other equity investments without readily determinable fair values (b) | 15000 | 10628 |
| &nbsp;&nbsp;Impairment of equity investments without readily determinable fair values | (14390) |  |
| **Total equity investments without readily determinable fair values, net** | **12602** | **12602** |
| Equity method investments |  |  |
| &nbsp;&nbsp;Companies providing hockey program management | 1589 | 233 |
| &nbsp;&nbsp;A company providing Internet product solutions (c) | 18870 | 8485 |
| &nbsp;&nbsp;Impairment of equity method investments | (10244) |  |
| **Total equity method investments, net** | **10215** | **8718** |
| **Total long-term investments** | **22817** | **21320** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(a) In October 2015, the Company paid RMB12,000 in cash to acquire 2.86% of the total equity interest in an education company, which provides training for senior mechanic in vehicle maintenance and repair. In 2023, the Company sold a portion of those shares. No impairment loss was recognized for the six months ended June 30, 2024 and 2025, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;(b) During the years ended December 31, 2018 and 2019, the Company acquired minority equity interests in several third - party companies. No impairment loss was recognized for the six months ended June 30, 2024 and 2025, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;(c) In January 2018, the Company paid RMB14,000 in cash to acquire a 20% equity interest in a company which provides IT consulting services and programming and accounted for the investment using equity method. No impairment loss was recognized for the six months ended June 30, 2024 and 2025, respectively.

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

7 SHORT-TERM BANK LOANS

On August 19, 2024, the Company signed a credit agreement with China Merchants Bank with a credit limit of RMB 15,000. As of June 30, 2025, the Company has drawn RMB14,291, which will mature in 12 months from the effective date of the credit agreement. The applicable interest rate for the loan is 3.6% per annum.

Interest expenses of the loans were RMB109 and RMB326 for the six months ended June 30, 2024 and 2025, respectively.

8 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2024** | **June 30,**<br>**2025** |
|  | **RMB** | **RMB** |
| Recharge card (a) | 237570 | 237217 |
| Refund liability | 167349 |  |
| Accrued payroll and employee benefits (b) | 48343 | 43727 |
| Payable for advertisement | 19094 | 19372 |
| Professional service fee | 11735 | 11373 |
| VAT and other tax payables | 5510 | 5838 |
| Short-term rental payable | 2750 | 87097 |
| Loan from former employees | 2000 | 10803 |
| Payable for IT support service fee |  | 47032 |
| Others | 12382 | 13094 |
| **Total** | **506733** | **475553** |

---

(a) Recharge card is the amount that customers paid in advance
without designated enrollment contract for IT - focused supplementary
STEM education training courses.

(b) Exclude the retrenchment fee and penalty for those employees who were retrenched from January to June 2025.

9 INCOME TAXES

For the six months ended June 30, 2024 and 2025, the Company had income tax expenses for the continuing operations of RMB 21,544 and RMB 270, respectively.

Income tax expense consists of the following:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| Current income tax expense | 1021 | 270 |
| Deferred income tax expense | 20523 |  |
| **Total** | **21544** | **270** |

---

*Uncertain tax positions*

The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. For the six months ended June 30, 2024 and 2025, the Company had no unrecognized tax benefits.

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

10 RELATED PARTY TRANSACTIONS

The following is a list of related parties from continuing operations which the Company had major transactions with during the six months ended June 30, 2025:

&nbsp;&nbsp;&nbsp;&nbsp;(1) Ms. Han Lijuan, a sister of Mr. Han.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Dock Software Technology (Beijing) Co., Ltd or "Dock Software", a company controlled by Mr. Han's sister.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Tarena Weishang Technology (Hainan) Co., Ltd., or "Tarena Weishang", a company controlled by Mr. Han's sister.

&nbsp;&nbsp;&nbsp;&nbsp;(4) Tarena Software Technology (Hangzhou) Co., Ltd., or "Tarena Hangzhou", a subsidiary of Tarena Weishang Technology (Hainan) Co., Ltd.

&nbsp;&nbsp;&nbsp;&nbsp;(5) Tarena Technologies Inc., or "Tarena Tech", a subsidiary of Tarena Weishang Technology (Hainan) Co., Ltd.

<u>Related party transactions</u>

On December 24, 2023, the Company entered into an equity transfer agreement to dispose of our equity interests in the professional education business to a buyer consortium led by Tarena Weishang. The net transfer consideration, based on third party independent appraiser, for the Disposal amounted to RMB1 and RMB1 in exchange of the equity interest of Tarena Tech and Tarena Hangzhou in cash, respectively. Upon consummation of the divestiture of the professional education business, the Company has no ownership interest in professional education business. The Company deconsolidated the financial statements of professional education business from its condensed consolidated financial statements since March 31, 2024. The difference between consideration received over the carrying amount of the net liability of professional education business disposed were recorded in additional paid - in capital.

During the year ended December 31, 2024, the Company provided new loans totaling RMB 33,383 to its related parties, Tarena Tech and Tarena Hangzhou. The repayment and settlement of these loans occurred as follows: In August 2024, Tarena Tech repaid RMB 7,000 in cash to the Company. Subsequently, in December 2024, the remaining loan receivable from Tarena Tech was transferred to Tarena Hangzhou, consolidating the total debt obligation under Tarena Hangzhou. Also in December, the Company entered into an agreement to purchase a building from Tarena Hangzhou for approximately RMB 21,591. The parties agreed to offset the purchase price against an equivalent portion (RMB 21,591) of the outstanding loans due from Tarena Hangzhou. The remaining loan balance of RMB 4,792 was settled in cash by Tarena Hangzhou by the end of December 2024.

To facilitate resources mainly including HR and IT staff sharing between the Company and Tarena Tech, both parties provided centralized and professional supporting services to each other. After divestiture, the Company provided service to Tarena Tech in the amount of RMB 3,338 while Tarena Technologies provided service to the Company in the amount of RMB 10,942 for the year end December 31, 2024. The net amount due from Tarena Tech for professional supporting services was nil as of December 31, 2024.

Starting from 2025, Tarena Hangzhou and Tarena Tech are no longer subsidiaries of Tarena Weishang Technology (Hainan) Co., Ltd. and thus cease to be related parties of the Company.

Dock Software provided a loan of RMB1,000 to the company in 2024, and did not conduct any transactions with the company during the six-month period ended on June 30, 2025.

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

11 GENERAL AND ADMINISTRATIVE EXPENSES

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| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| Personnel Cost and Welfare | 101333 | 1998 |
| Professional Expenses | 12646 | 8958 |
| Rental Charge | 10193 | 3868 |
| Depreciation Cost and Office Expense | 7866 | 738 |
| Cash Collection Charges | 2772 | 29 |
| Miscellaneous Expense | 1442 | 753 |
| Transportation & Travelling | 1284 | 4 |
| Credit loss | 110 | 12398 |
| Others | 10030 | 2209 |
| Non-operating income | (3576) | (714) |
| Extraordinary loss (a) |  | 24038 |
| **Total** | **144100** | **54279** |

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&nbsp;&nbsp;&nbsp;&nbsp;(a) As of June 30, 2025, the Company was unable to obtain bank reconciliation statements for an aggregate amount of RMB 24 million held in bank accounts of certain subsidiaries. The primary reasons are as follows: (1) Due to business adjustments initiated by the Company since January 2025, changes occurred in relevant financial personnel, and the transfer of certain bank U-tokens has not yet been completed. The Company is actively verifying and facilitating the handover of relevant account materials; (2) The replacement of bank statements was not completed by June 30, 2025, as some required seals were temporarily unavailable. In light of the current circumstances, the Company has prudently recognized an appropriate impairment loss on these bank deposits.

---

| | |
|:---|:---|
| **12** | **SHARE BASED COMPENSATION** |

---

The following table summarizes the share-based compensation expense, by type of awards:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** |
|  | **2024** | **2025** |
| Employee stock options | 221 | 43 |
| Restricted share units grants | 382 | 231 |
| Total share-based compensation expense | 603 | 274 |

---

The following table summarizes the share-based compensation by line items:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** |
|  | **2024** | **2025** |
| Cost of revenues | 12 | 2 |
| General and administrative expenses | 590 | 272 |
| Selling and marketing expenses | 1 |  |
| Research and development expenses | **—**  |  |
| Total share-based compensation expense | 603 | 274 |

---

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

13 (LOSS) EARNINGS PER SHARE

Basic and diluted (loss) earnings per share is calculated as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30,** | **June 30,** |
|  | **2024** | **2025** |
|  | **RMB** | **RMB** |
| **Numerator:** |  |  |
| Net loss from discontinued operation | (51673) |  |
| **Denominator:** |  |  |
| Denominator for basic and diluted loss per share: |  |  |
| Weighted average number of Class A and Class B ordinary shares outstanding-basic | 50181969 | 107418503 |
| Weighted average number of Class A and Class B ordinary shares outstanding-diluted | 50181969 | 108705638 |
| **Basic loss from discontinued operation per ADS\*** | **(5.15)** |  |
| **Diluted loss from discontinued operation per ADS\*** | **(5.15)** |  |
| **Numerator:** |  |  |
| Net (loss)/income from continuing operations attributable to ordinary shareholder | (62880) | 10819 |
| **Denominator:** |  |  |
| Denominator for basic and diluted (loss) earnings per share: |  |  |
| Weighted average number of Class A and Class B ordinary shares outstanding-basic | 50181969 | 107418503 |
| Weighted average number of Class A and Class B ordinary shares outstanding-diluted | 50181969 | 108705638 |
| **Basic (loss) earnings from continuing operations per ADS\*** | (6.27) | 0.50 |
| **Diluted (loss) earnings from continuing operations per ADS\*** | (6.27) | 0.50 |

---

*\** *The Company applied the ratio of American depositary shares ("ADSs") to Class A ordinary shares (the "ADS Ratio") as one ADS representing five Class A ordinary shares.*

---

| | |
|:---|:---|
| **14** | **COMMITMENTS AND CONTINGENCIES** |

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<u>Capital commitment.</u>

As of June 30, 2025, the Group had no significant outstanding capital commitments.

<u>Contingencies</u>

The Company and certain of its current and former officers and directors have been named as defendants in a putative securities class action captioned Yili Qiu v. TCTM, Inc. et al., (Case No. 1:21-cv-03502) filed on June 22, 2021 in the U.S. District Court for the Eastern District of New York. The complaint asserts that defendants made false or misleading statements in certain SEC filings between August 16, 2016 and November 1, 2019 related to the Company's business and operating results in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. After years of communication and coordination, plaintiff and the company reached an agreement in principle to settle all claims. On September 5, 2023, the Court granted preliminary approval for the TCTM settlement agreement. On July 31, 2024, the court issued an order directing plaintiffs to submit a final accounting of the class members that submitted valid claims under the settlement agreement. On September 9, 2024, the Judge filed a memorandum and order approving the settlement agreement, and certifying the Settlement Class. On September 20, 2024, the plaintiffs filed motion for approval of the Proposed Order for Distribution Settlement Distribution of Class Action Settlement Funds. On September 23, 2024, the court filed its judgment in the case. This case is now closed.

Separately, following the Company's decision to discontinue its STEM business in January 2025, a number of employees have initiated labor arbitration proceedings. As of the date of this report, these matters remain within the statutory limitation period. Because additional affected employees may file claims, and because some pending claims may be withdrawn prior to expiration of the limitation period, the ultimate number of arbitrations and the aggregate compensation the Company may be required to pay cannot presently be determined.

Except as described above, the Company is not a party to any material legal or administrative proceedings. From time to time, the Company is involved in various other legal and regulatory proceedings arising in the normal course of business. While the Company cannot predict the occurrence or outcome of these proceedings with certainty, it does not believe that an adverse result in any pending legal or regulatory proceeding, individually or in the aggregate, would be material to the Company's consolidated financial condition or cash flows.

**VISIONSYS AI INC. **(FORMERLY KNOWN AS TCTM KIDS IT EDUCATION INC.)**

**AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

(Amounts in thousands of RMB and US$, except for number of shares and per share data)

15 SUBSEQUENT EVENTS

 

*Subsidiary Divestiture*

On July 22, 2025, the Company entered into an agreement with First Winner Management Limited (a British Virgin Islands company) to sell 100% equity interests in its wholly-owned subsidiaries, Kids IT Education Inc. (incorporated in the Cayman Islands) and Tarena Hong Kong Limited (incorporated in Hong Kong, China), for US$1. The transaction was approved at the Extraordinary General Meeting of Shareholders on August 25, 2025.

 

*External Financing*

On April 1, 2025, the Company entered into an agreement with investors to issue 25,000,000 Class A ordinary shares, raising US$2,000,000 at a per-share price of US$0.08 (converted based on the closing price of the Company's ADSs on March 31, 2025); on the same day, the Company entered into an agreement with Jeethen International Co., Limited to acquire its core brain-computer interface algorithms and software-hardware systems (valued at US$10,850,000) in exchange for 135,625,000 Class A ordinary shares (at US$0.08 per share).

On July 25, 2025, the Company issued 7,874,015 units, with each unit consisting of 1 Class A ordinary share and 1 warrant to purchase one Class A ordinary share, to certain non-U.S. investors pursuant to the exemption from registration under Regulation S of the Securities Act, at a per unit price of US$0.254 (converted based on the closing price of ADSs on July 25, 2025), raising approximately US$2,000,000 (for working capital). The warrants have an initial exercise price of US$0.6, a 5-year term, allowing for cashless exercise after 6 months from issuance if there is no effective registration statement for the resale of the warrant shares, and includes customary anti-dilution provisions for dividends, reverse share splits, or other similar transactions.

 

*Equity Incentive Plan*

On August 4, 2025, the Company announced its plan to launch the 2025 Equity Incentive Plan, reserving 34,430,300 Class A ordinary shares to attract and retain key talents, with grantees including employees, directors, and consultants; the plan was approved at the Extraordinary General Meeting of Shareholders on August 25, 2025.

 

*Company Name Change*

On August 4, 2025, the Company announced its plan to change its name from "TCTM Kids IT Education Inc." to "VisionSys AI Inc." to align with its AI healthcare business transformation strategy.