Ambow Education Holding Ltd.

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this interim report. Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The following discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expect,” “anticipate,” “intend,” “believe,” or similar language. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our business and financial performance are subject to substantial risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. In evaluating our business, you should carefully consider the information set forth under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Readers are cautioned not to place undue reliance on these forward-looking statements.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this interim report. Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The following discussion and analysis contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expect,” “anticipate,” “intend,” “believe,” or similar language. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our business and financial performance are subject to substantial risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. In evaluating our business, you should carefully consider the information set forth under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Readers are cautioned not to place undue reliance on these forward-looking statements.

Previous wording

There were no acquisitions or disposals during the three-month period ended March 31, 2026.

Current wording

There were no acquisitions or disposals during the six-month period ended June 30, 2026.

Previous wording

In the three months ended March 31, 2025 and 2026 net revenues were $2.3 million, $2.8 million, respectively. The increases were primarily due to revenues generated by HybriU.

Current wording

In the six months ended June 30, 2025 and 2026 net revenues were $5.1 million, $5.2 million, respectively. The increase was primarily due to revenues generated by educational program and services. In the three months ended June 30, 2025 and 2026, net revenues were $2.8 million and $2.4 million, respectively. The decrease was primarily attributable to lower net revenues from HybriU licensing and sales, partially offset by growth in educational programs and services.

Previous wording

Selling and marketing expenses. Our selling and marketing expenses primarily consisted of expenses relating to advertising, seminars, marketing and promotional trips and other community activities for brand promotion purposes. Our selling and marketing expenses increased to $0.3 million for the three months ended March 31, 2026, from $0.2 million for the same period of 2025. The increase in selling and marketing expenses for the three months ended March 31, 2026 was primarily driven by increased investment in NewSchool enrollment and the sales of HybriU.

Current wording

Selling and marketing expenses. Our selling and marketing expenses primarily consisted of expenses relating to advertising, seminars, marketing and promotional trips and other community activities for brand promotion purposes. Our selling and marketing expenses increased by 20.0% to $0.6 million for the six months ended June 30, 2026, from $0.5 million for the same period of 2025. The increases in selling and marketing expenses in the six months ended June 30, 2026 were primarily due to higher spending on digital marketing and advertising campaigns to promote brand awareness.

Previous wording

*General and administrative expenses.*Our general and administrative expenses primarily consisted of compensation and benefits of administrative staff, amortization of intangibles, costs of third-party professional services, rental and utility payments relating to office and administrative functions, and depreciation and amortization of property and equipment used in our general and administrative activities, as well as bad-debt provision. Our general and administrative expenses decreased to $0.8 million for the three months ended March 31, 2026, from $0.9 million for the same period of 2025. The decreases were primarily attributed to a one-time audit fee incurred during the first quarter of 2025.

Current wording

*General and administrative expenses.*Our general and administrative expenses primarily consisted of compensation and benefits of administrative staff, amortization of intangibles, costs of third-party professional services, rental and utility payments relating to office and administrative functions, and depreciation and amortization of property and equipment used in our general and administrative activities, as well as bad-debt provision. Our general and administrative expenses decreased by 12.5% to $1.4 million for the six months ended June 30, 2026, from $1.6 million for the same period of 2025, and decreased by 25.0% to $0.6 million for the three months ended June 30, 2026, from $0.8 million for the same period of 2025. The decreases were primarily due to our continued cost control measures and efficient cost management.

Previous wording

*Research and development.*Our research and development consisted of personnel-related expenses directly associated with our research and development organization, depreciation of equipment used in research and development, and allocated overhead. Our research and development expenses increased to $0.2 million for the three months ended March 31, 2026, from $0.1 million for the same period of 2025. The increase in research and development expenses for the three months ended March 31, 2026 was primarily driven by increased share-based compensation recognized in research and development expenses.

Current wording

*Research and development.*Our research and development consisted of personnel-related expenses directly associated with our research and development organization, amortization of software technology used in research and development, and allocated overhead. Our research and development expenses increased to $0.4 million for the six months ended June 30, 2026, from $0.2 million for the same period of 2025, and increased to $0.2 million for the three months ended June 30, 2026, from $0.1 million for the same period of 2025. The increase was primarily driven by increased share-based compensation recognized in research and development expenses.

Previous wording

Three months ended March 31, 2026, compared with the three months ended March 31, 2025

Current wording

Six and three months ended June 30, 2026, compared with the six and three months ended June 30, 2025

Previous wording

Cost of revenues. Cost of revenues increased by $0.1 million to $1.1 million for the three months ended March 31, 2026, from $1.0 million in the same period of 2025.

Current wording

Cost of revenues. Cost of revenues amounted to $2.3 million for the six months ended June 30, 2026, remaining relatively flat compared to $2.3 million in the same period of 2025. For the three months ended June 30, 2026, cost of revenues decreased by $0.1 million to $1.2 million, from $1.3 million in the same period of 2025.

Previous wording

*Gross profit.*Gross profit increased to $1.7 million in the three months ended March 31, 2026, from $1.3 million in the same period of 2025.

Current wording

*Gross profit.*Gross profit increased to $2.9 million in the six months ended June 30, 2026, from $2.8 million in the same period of 2025, and decreased to $1.2 million in the three months ended June 30, 2026, from $1.5 million in the same period of 2025.

Previous wording

*Gross profit margin.*Gross profit margin increased to 60.2% in the three months ended March 31, 2026, from 57.7% in the same period of 2025.

Current wording

*Gross profit margin.*Gross margin increased to 56.2% in the six months ended June 30, 2026, from 55.3% in the same period of 2025, and decreased to 51.4% in the three months ended June 30, 2026, from 53.3% in the same period of 2025.

Previous wording

Income. In line with the above-mentioned factors, there was an income of $0.4 million for the three months ended March 31, 2026, compared with the income of $0.1 million in the same period of 2025.

Current wording

Income / (loss). In line with the above-mentioned factors, there was an income of $0.3 million for the six months ended June 30, 2026, compared with the income of $1.9 million in the same period of 2025. Loss for the three months ended June 30, 2026 was $0.1 million, compared with the income of $1.8 million in the same period of 2025.

Previous wording

As of March 31, 2026, our consolidated current assets exceeded consolidated current liabilities by $6.3 million. With certain non-cash payment adjustments excluded, there would have been a positive working capital balance as of March 31, 2026. Our consolidated net assets were $8.7 million as of March 31, 2026.

Current wording

As of June 30, 2026, our consolidated current assets exceeded consolidated current liabilities by $5.5 million. With certain non-cash payment adjustments excluded, there would have been a positive working capital balance as of June 30, 2026. Our consolidated net assets were $8.6 million as of June 30, 2026.

Previous wording

Our principal sources of liquidity were cash provided by operating activities, bank borrowings. We had net cash used in operating activities of $0.9 and $1.2 million for the three months ended March 31, 2025 and 2026, respectively. As of March 31, 2026, we had $4.2 million in unrestricted cash and cash equivalents and $2.7 million in restricted cash.

Current wording

Our principal sources of liquidity were cash provided by operating activities and bank borrowings. We had net cash provided by $1.0 million and net cash used in operating activities of $0.1 million for the six months ended June 30, 2025 and 2026, respectively. As of June 30, 2026, we had $4.5 million in unrestricted cash and cash equivalents and $2.7 million in restricted cash.

Previous wording

The weighted average interest rate of the borrowings outstanding was 6.28% and 6.25% per annum as of December 31, 2025 and March 31, 2026, respectively. The fair values of the borrowings approximate their carrying amounts. The weighted average borrowings for the three months ended March 31, 2025 and 2026 were $2.7 million and $3.2 million, respectively.

Current wording

The weighted average interest rate of the borrowings outstanding was 6.28% and 6.29% per annum as of December 31, 2025 and June 30, 2026, respectively. The fair values of the borrowings approximate their carrying amounts. The weighted average borrowings for the six months ended June 30, 2025, and 2026 were $3.0 million and $3.4 million, respectively.

Previous wording

As of March 31, 2026, we employed six full-time and part-time software and educational professionals. We spent $0.1 and $0.2 million on research and development expenses for the three months ended March 31, 2025 and 2026, respectively.

Current wording

As of June 30, 2026, we employed eight full-time and part-time software and educational professionals. We spent $0.2 million and $0.4 million on research and development expenses for the six months ended June 30, 2025 and 2026, respectively.