Core Viewpoint - Zhuoyou Zhi Mei has submitted a GEM listing application while simultaneously closing training centers, raising questions about the rationale behind its expansion plans amid financial difficulties [1][2][8]. Company Overview - Zhuoyou Zhi Mei focuses on providing art training for children aged 4 to 14, offering various courses including dance and non-dance categories [2]. - The company was founded in 2018 and transitioned from a limited liability company to a joint-stock company in July 2025 [2]. - It has only completed one round of financing, raising a total of 32.8 million yuan in November 2022 [2]. Financial Situation - As of May 2025, Zhuoyou Zhi Mei's debt-to-asset ratio is 107.97%, indicating insolvency, with a negative operating capital of 43.48 million yuan [1][19]. - The company has significant bank loans exceeding 50 million yuan while providing substantial financial support to its controlling shareholders without interest or fixed repayment terms [1][21]. - The company reported revenues of 128 million yuan, 130 million yuan, and 59 million yuan for the years 2023, 2024, and 2025 (up to May), with net profits of 11.87 million yuan, 5.35 million yuan, and 9.94 million yuan respectively [12]. Market Position - Zhuoyou Zhi Mei is the largest children's art training institution in China but holds only 0.1% of the national market share [5]. - The company has been closing training centers, with 12 closures since 2024, including 9 in Nanchang [7][8]. - The competitive landscape is intensifying, with major players like New Oriental and TAL Education entering the art training market, posing significant challenges for Zhuoyou Zhi Mei [9][10][11]. Expansion Plans - The company plans to use the funds raised from the listing to acquire art training centers in South China and establish approximately 30 new centers in Jiangxi Province and Changsha [1][21]. - Despite its financial struggles, Zhuoyou Zhi Mei continues to provide financial assistance to its shareholders, raising concerns about potential conflicts of interest and regulatory compliance [21][22].