Meta Data CORRESP Correspondence with SEC

Meta Data Limited

Flat H3/F, Haribest Industrial Building , 45-47 Au Pui Wan Street

Sha Tin New Territories, Hong Kong

August 16, 2023

VIA EDGAR

U.S. Securities and Exchange Commission

Division of Corporation Finance

Office of Life Sciences

100 F Street, N.E.

Washington, DC 20549

Attn:	Brian Fetterolf
	Jennifer López Molina
	Keira Nakada
	Linda Cvrkel

Re:

Meta Data Ltd

Annual Report on Form 20-F for the Fiscal Year Ended August 31, 2022

Filed December 30, 2022

Response dated July 21, 2023

File No. 001-38430

Ladies and Gentlemen:

Meta Data Limited (the “Company”, “AIU,” “we”, “us” or “our”) hereby transmits its response to the letter received from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”), dated August 10, 2023 regarding our Form 20-F for fiscal year ended August 31, 2022 and our response letter dated July 21, 2023. For ease of reference, we have repeated the Commission’s comments in this response and numbered them accordingly.

Response Letter dated July 21, 2023

Transfers Between Our Company and Our Subsidiaries, page 4

We note your response to comment 3, as well as your revised disclosure that “[c]ash, not in the form of earnings distribution, was transferred between our Company, our subsidiaries and the former VIEs for the purpose of providing working capital between Meta Data, its subsidiaries, VIEs and its subsidiaries and WFOE.” Please quantify the amounts and state the direction of transfer and any tax consequences. Tell us what your disclosure will look like.

Response: In response to the Staff’s comment, we propose to revise the following disclosures (revisions in italic):

Transfers Between Our Company and Our Subsidiaries

As of the date of this amendment to the annual report, our current corporate structure does not contain any variable interest entity in mainland China and we do not have intention establishing any VIEs in mainland China in the future.

Our management is directly supervising cash management. Our finance department is responsible for establishing the cash management policies and procedures among our departments and the operating entities. Each department or operating entity initiates a cash request by putting forward a cash demand plan, which explains the specific amount and timing of cash requested, and submitting it to designated management members of our Company, based on the amount and the use of cash requested. The designated management member examines and approves the allocation of cash based on the sources of cash and the priorities of the needs, and submit it to the cashier specialists of our finance department for a second review. Other than the above, we currently do not have other cash management policies or procedures that dictate how funds are transferred.

During the fiscal years ended August 31, 2022 and 2021, our Company, our subsidiaries, and the former VIEs have not distributed any earnings or settled any amounts owed under the VIE Agreements. Cash, not in the form of earnings distribution, was transferred between our Company, our subsidiaries and the former VIEs for the purpose of providing working capital between Meta Data, its subsidiaries, VIEs and its subsidiaries and WFOE. As set forth in the tables below, intercompany receivables were cash transferred from Meta Data (for example) to other entities that are consolidated, while intercompany payables were cash received by Meta Data (for example). There is no tax consequence arising from the cash transfer. Please refer to Note 2(d) to the Consolidated Financial Statements – Consolidated of variable interest entities – for a more detailed description in regard to these matters.

The condensed consolidating table below disaggregated the Consolidated Balance Sheets of the Company into Meta Data, the former VIEs and their subsidiaries, the former WFOE that is the primary beneficiary of the former VIEs, of which assets and liabilities are classified as discontinued operation, and an aggregation of other entities that are consolidated as of August 31, 2022 and 2021.

	As of August 31, 2022
	Other entities that are		WFOE that is the primary beneficiary		VIEs and their			Meta Data			Consolidated
	consolidated		of the VIE		subsidiaries			Ltd.			total
	RMB		RMB		RMB			RMB			RMB
Intercompany receivables		22,734		-		-			173,602			196,336
Current assets excluding intercompany receivables		200,902		18,354		106,629			15,669			341,554
Current assets		223,636		18,354		106,629			189,271			537,890
Non-current assets excluding investment in subsidiaries		-		-		-			-
Non-current assets		-		-		-			-			-
Total assets		223,636		18,354		106,629			189,271			537,890
Intercompany payables		196,336		-		-			-			196,336
Current liabilities excluding intercompany payables		25,979		18,264		4,939,851			499,785			5,483,879
Current liabilities		222,315		18,264		4,939,851			499,785			5,680,215
Non-current liabilities		-		-		-			241,115			241,115
Total liabilities		222,315		18,264		4,939,851			740,900			5,921,330
Total shareholders’ equity (net assets)		1,321		90		(4,833,222	)		(551,629	)		(5,383,440	)

	As of August 31, 2021
	Other entities that are			WFOE that is the primary beneficiary		VIEs and their						Consolidated
	consolidated			of the VIE		subsidiaries			Meta Data			total
	RMB			RMB		RMB			RMB			RMB
Intercompany receivables		3,670,240			3,608,176		6,275,233			2,081,389			-
Current assets excluding intercompany receivables		6,239			59,187		293,021			107,771			466,218
Current assets		3,676,479			3,667,363		6,568,254			2,189,160			466,218
Non-current assets excluding investment in subsidiaries		191			15,038		21,726			-			36,955
Non-current assets		191			15,038		21,726			-			36,955
Total assets		6,430			74,225		314,747			107,771			503,173
Intercompany payables		5,301,895			3,208,560		6,878,456			246,127			-
Current liabilities excluding intercompany payables		3,613			4,370		4,295,643			413,951			4,717,577
Current liabilities		5,305,508			3,212,930		11,174,099			660,078			4,717,577
Non-current liabilities		22,643			-		158,084			226,114			406,841
Total liabilities		26,256			4,370		4,453,727			640,065			5,124,418
Total shareholders’ equity (net assets)		(19,826	)		69,855		(4,138,980	)		(532,294	)		(4,621,245	)

The condensed consolidating table below disaggregated the Consolidated Statements of Operations and Comprehensive Income (Loss) of the Company into Meta Data, the former VIEs and their subsidiaries, the WFOE that is the primary beneficiary of the former VIEs and an aggregation of other entities that are consolidated for the financial years ended August 31, 2021 and 2022.

	For the years ended August 31, 2022
				WFOE
	Other entities			that is the primary
	that are			beneficiary			VIEs and their						Consolidated
	consolidated			of the VIE			subsidiaries			Meta Data			total
	RMB			RMB			RMB			RMB			RMB
Net revenues		14,605			-			-			-			14,605
Cost of revenues		(12,787	)		-			-			-			(12,787	)
Gross profit		1,818			-			-			-			1,818
Operating expenses		(418	)		-			-			(367,698	)		(368,116	)
Income (loss) from operations		1,400			-			-			(367,698	)		(366,298	)
Other expenses		(79	)		-			-			(50,930	)		(51,009	)
Income (loss) before income taxes		1,321			-			-			(418,628	)		(417,307	)
Provision for income taxes		-			-			-			-			-
Net income (loss) from continuing operations		1,321			-			-			(418,628	)		(417,307	)

Net income (loss) from discontinuing operations		-			(470,413	)		(312,272	)		-			(782,685	)

	For the years ended August 31, 2021
				WFOE
	Other entities			that is the primary
	that are			beneficiary			VIEs and their						Consolidated
	consolidated			of the VIE			subsidiaries			Meta Data			total
	RMB			RMB			RMB			RMB			RMB
Net revenues		-			-			-			-			-
Cost of revenues		-			-			-			-			-
Gross profit		-			-			-			-			-
Operating expenses		-			-			-			(62,602	)		(62,602	)
Income (loss) from operations		-			-			-			(62,602	)		(62,602	)
Other expenses		-			-			-			(47,312	)		(47,312	)
Income (loss) before income taxes		-			-			-			(109,914	)		(109,914	)
Provision for income taxes		-			-			-			-			-
Net income (loss) from continuing operations		-			-			-			(109,914	)		(109,914	)
Net income (loss) from discontinuing operations		(2,442	)		(165,383	)		(4,747,755	)		-			(4,915,580	)

The condensed consolidating table below disaggregated the Consolidated Statements of Cash Flows of the Company into Meta Data, the VIEs and their subsidiaries, the WFOE that is the primary beneficiary of the VIEs and an aggregation of other entities that are consolidated for the financial years ended August 30, 2021 and 2022.

	For the years ended August 31, 2022
			WFOE
	Other		that is the
	entities		primary
	that are		beneficiary			VIEs and their						Consolidated
	consolidated		of the VIE			subsidiaries			Meta Data			total
	RMB		RMB			RMB			RMB			RMB
Net cash provided by (used in) operating activities from continuing operations		200,902		-			-			(253,029	)		(52,127	)
Net cash provided by (used in) operating activities from discontinuing operations		-		(53,524	)		(196,293	)		-			(249,817	)
Net cash used in investing activities from continuing operations							-			58,965			58,965
Net cash used in investing activities from discontinuing operations							20,750			-			20,750
Net cash provided by (used in) financing activities from continuing operations		-		-			-			211,361			211,361
Net cash provided by (used in) financing activities from discontinuing operations		-		-			(55,110	)		-			(55,110	)
Effect of exchange rate changes on cash and restricted cash from continuing operations		-		-			-			(54,983	)		(54,983	)
Effect of exchange rate changes on cash and restricted cash from discontinuing operations		-		-			49,622			-			49,622
Net increase (decrease) in cash and restricted cash		200,902		(53,524	)		(181,031	)		(37,686	)		(71,339	)
Cash and restricted cash from continuing and discontinued operations, beginning of year		-		57,926			287,521			39,196			384,643
Cash and restricted cash from continuing and discontinued operations, end of year		200,902		4,402			106,490			1,510			313,304

	For the years ended August 31, 2021
				WFOE
	Other			that is the
	entities			primary
	that are			beneficiary		VIEs and their						Consolidated
	consolidated			of the VIE		subsidiaries			Meta Data			total
	RMB			RMB		RMB			RMB			RMB
Net cash provided by (used in) operating activities from continuing operations		-			-		-			(54,033	)		(54,033	)
Net cash provided by (used in) operating activities from discontinuing operations		(1,167	)		29,266		164,277			-			192,376
Net cash used in investing activities from continuing operations		-			-		-			219,010			219,010
Net cash used in investing activities from discontinuing operations		-			15		(366,972	)		-			(366,957	)
Net cash provided by (used in) financing activities from continuing operations		-			-		-			(483,965	)		(483,965	)
Net cash provided by (used in) financing activities from discontinuing operations		-			-		(451,225	)		-			(451,225	)
Effect of exchange rate changes on cash and restricted cash from continuing operations		-			-		-			(15,848	)		(15,848	)
Effect of exchange rate changes on cash and restricted cash from discontinuing operations		-			-		-			-			-
Net increase (decrease) in cash and restricted cash		(1,167	)		29,281		(653,920	)		(334,836	)		(960,642	)
Cash and restricted cash from continuing and discontinued operations, beginning of year		11,677			28,645		930,931			374,032			1,345,285
Cash and restricted cash from continuing and discontinued operations, end of year		10,510			57,926		277,011			39,196			384,643

Cash is transferred within the Company through the banking system in PRC. Under the VIE agreements, the Company intends to distribute all or part of VIEs’ earnings after eliminating VIEs’ accumulated losses and making appropriation of VIEs’ after-tax net income into the statutory surplus reserve based on at least 10% of the after-tax net income determined in accordance with generally accepted accounting principles of the PRC. When there are retained earnings available for distribution, the distribution of VIEs’ earnings will be through payment of service fees to Meta Data, such service fee is subject to 6% value-added sales tax, other taxes of 12% which calculation is based on 6% value-added taxes. Under the VIE agreements, when there is a change of shareholder in VIEs, amount owed by VIEs to the Company should be first settled. Cash transfers were mainly for the purpose of providing working capital between Meta Data and its subsidiaries, VIEs and its subsidiaries and WFOE that is the primary beneficiary of the VIEs.

Dividends, Distributions or Transfers Made to our Company and U.S. Investors and Tax Consequences

Under the Cayman Islands law, we are permitted to provide funding to our subsidiaries through loans or capital contributions without restrictions on the amount of the funds, and we are permitted to pay a dividend out of either profit or share premium amount, provided that in no circumstances may a dividend be paid if this would result in us being unable to pay our debts due in the ordinary course of business.

Meta HK is permitted under the laws of Hong Kong to provide funding to Meta Data, the holding company incorporated in Cayman Islands through dividend distribution without restrictions on the amount of the funds. Both Meta Data and Meta HK currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business and do not anticipate declaring or paying any dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments. See ” – D. Risk Factors – Risks Related to Our Corporate Structure – We rely on dividends and other distributions on equity paid by our subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.”

According to the Companies Ordinance of Hong Kong, a Hong Kong company may only make a distribution out of profits available for distribution or other distributable reserves. Dividends cannot be paid out from share capital. In addition, there can be no assurance that in the future the PRC government will not intervene or impose restrictions on Meta HK’s ability to transfer or distribute cash/assets to entities outside of Hong Kong, which could result in an inability or prohibition on making transfers or distributions to Meta Data and adversely affect our business. There are currently no restrictions or limitation under the laws of Hong Kong imposed on the conversion of HKD into foreign currencies and the remittance of currencies out of Hong Kong. The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We do not maintain any funds in mainland China. See ” – D. Risk Factors – Risks Related to Doing Business in China – Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.”

As of the date of this amendment to the annual report, none of our subsidiaries have made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders. We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. Subject to the passive foreign investment company (“PFIC”) rules, the gross amount of distributions we make to investors with respect to our Class A Ordinary Shares (including the amount of any taxes withheld therefrom) will be taxable as a dividend, to the extent that the distribution is paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Cash, not in the form of earnings distribution, was transferred between our Company, our subsidiaries and the former VIEs for the purpose of providing working capital between Meta Data, its subsidiaries, VIEs and its subsidiaries and WFOE. As of August 31, 2022 and August 31, 2021, Meta Data transferred RMB0.2 billion and RMB2.1 billion to its subsidiaries, respectively, WFOE transferred nil and RMB3.6 billion to the VIEs and its subsidiaries, respectively, the VIEs and its subsidiaries transferred nil and RMB6.3 billion to WFOE and other subsidiaries, respectively, and other subsidiaries transferred RMB22.7 million and RMB3.7 billion to other subsidiaries, respectively. Please refer to Note 2(d) to the Consolidated Financial Statements.

We thank the Staff for its review of the foregoing. If you have further comments, we ask that you forward them by electronic mail to our counsel, Joan Wu, Esq. at jwu@htflawyers.com and Charles Tan, Esq. at ctan@htflawyers.com or by telephone at (212) 530-2208.

	Very truly yours,

	/s/ Xiaoming Li
	Xiaoming Li
	Chief Executive Officer

cc:	Joan Wu, Esq.
	Charles Tan, Esq.
	Hunter Taubman Fischer & Li LLC

Meta Data (AIU) CORRESPCorrespondence with SEC