United States securities and exchange commission logo
February 3, 2022
Amy Tung
Chief Financial Officer
ATA Creativity Global
c/o 1/F East Gate, Building No. 2, Jian Wai Soho,
No. 39 Dong San Huan Zhong Road,
Chao Yang District, Beijing 100022, China
Re: ATA Creativity
Global
Form 20-F for the
Fiscal Year Ended December 31, 2020
Filed April 13,
2021
File No. 001-33910
Dear Ms. Tung:
We have reviewed your October 15, 2021 response to our comment
letter and have the
following comments. In some of our comments, we may ask you to provide
us with information
so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your response to these comments, we may have
additional
comments. Unless we note otherwise, our references to prior comments are
to comments in our
September 23, 2021 letter.
Form 20-F for the Fiscal Year Ended December 31, 2020
Item 3. Key Information, page 3
1. We note your response
to comment number 5. However, it appears that you have only
partially addressed our
comment, accordingly we reissue our comment in part. Please
revise to identify
clearly the entity in which investors have or can purchase their interest in
and the entity(ies) in
which the company s operations are conducted with the Corporate
Structure Diagram.
2. We note your response
to comment number 9. Please revise the condensed consolidating
schedule depicting cash
flows to show cash changes from investing and financing
activities individually
to the extent they exceed 10% of the average of net cash flows from
Amy Tung
FirstName LastNameAmy Tung
ATA Creativity Global
Comapany3,NameATA
February 2022 Creativity Global
February
Page 2 3, 2022 Page 2
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operating activities for the most recent three years. Refer to Rule
10-01(a)(4) of
Regulation S-X.
Key Information, page 4
3. We note your proposed disclosure in response to comment 2 that the VIE
structure is
"designed to replicate substantially the same economic benefits as
would be provided by
direct ownership." We note, however, that the structure provides
contractual exposure to
foreign investment in such companies rather than replicating direct
ownership. Please
revise accordingly.
4. We note your proposed disclosure in response to comments 5 and 11 that
you "control"
and receives "economic benefits" of the VIE s business operations
through contractual
agreements between the VIE and your Wholly Foreign-Owned Enterprise
(WFOE) . We
also note your disclosure that the Cayman Islands holding company is
the primary
beneficiary of the VIE. However, neither the investors in the holding
company nor the
holding company itself have an equity ownership in, direct foreign
investment in, or
control of, through such ownership or investment, the VIE.
Accordingly, please refrain
from implying that the contractual agreements are equivalent to equity
ownership in the
business of the VIE. Any references to control or benefits that accrue
to you because of
the VIE should be limited to a clear description of the conditions you
have satisfied for
consolidation of the VIE under U.S. GAAP. Additionally, your
disclosure should clarify
that you are the primary beneficiary of the VIE for accounting
purposes. Please also
disclose, if true, that the VIE agreements have not been tested in a
court of law and the
uncertainties regarding the status of the rights of the Cayman Islands
holding company
with respect to its contractual arrangements with the VIE, its
founders and owners.
5. We note your proposed disclosure in response to comment 6. Please
revise to ensure that
you provide cross-references to each of the more detailed discussion
of these risks in the
annual report.
6. We note your response to comment 7. Revise to describe the
consequences to you and
your investors if you, your subsidiaries, or the VIEs: (i) do not
receive or maintain such
permissions or approvals, (ii) inadvertently conclude that such
permissions or approvals
are not required, or (iii) applicable laws, regulations, or
interpretations change and you are
required to obtain such permissions or approvals in the future.
7. We note your response to comment 8. Provide cross-references to the
condensed
consolidating schedule and the consolidated financial statements.
Risk Factors, page 16
8. We note your response to comment 10. Update your disclosure to reflect
that the
Commission adopted rules to implement the HFCAA and that, pursuant to
the HFCAA,
the PCAOB has issued its report notifying the Commission of its
determination that it is
unable to inspect or investigate completely accounting firms
headquartered in mainland
Amy Tung
ATA Creativity Global
February 3, 2022
Page 3
China or Hong Kong. Acknowledge whether your auditor is subject to the
determinations
announced by the PCAOB on December 16, 2021.
9. We note your proposed disclosure in response to comment 13. Please
update your
response to acknowledge and address that new rules will go into effect
on February 15
that require internet companies holding the data of more than 1
million users to undergo a
network security review before listing overseas. Elaborate upon
whether the availability
of these rules changes your belief that you and your VIE are not
subject to a cybersecurity
review.
Index to Consolidated Financial Statements
Note 1. Description of Business, Organization and Significant Concentrations
and Risks
VIE Agreements, page F-13
10. We note your response to comment number 15. You disclose that
the VIE holds a 70% equity interests in Beijing Zhenwu Technology
Development
Co., Ltd., or Beijing Zhenwu, and that Beijing Zhenwu is mainly
engaged
in conducting some of our project-based learning services, primarily
including short-term
art courses. At a 70% ownership, it would appear that Beijing Zhenwu
would be
consolidated by your VIE and be recognizing its revenues. Accordingly,
please clarify in
further detail as to why you have no net revenues from the VIE.
You may contact Aamira Chaudhry at 202-551-3389 or Lyn Shenk at
202-551-3380 if
you have questions regarding comments on the financial statements and related
matters. Please
contact James Lichtenfels at 202-551-6001 or Mara Ransom at 202-551-3264 with
any other
questions.
FirstName LastNameAmy Tung Sincerely,
Comapany NameATA Creativity Global
Division of
Corporation Finance
February 3, 2022 Page 3 Office of Trade &
Services
FirstName LastName