United States securities and exchange commission logo
April 27, 2023
Xiaoming Li
Chief Executive Officer
Meta Data Ltd
Flat H 3/F, Haribest Industrial Building , 45-47 Au Pui Wan Street
Sha Tin New Territories
Hong Kong
Re: Meta Data Ltd
Annual Report on
Form 20-F
Filed December 30,
2022
File No. 001-38430
Dear Xiaoming Li:
We have reviewed your filing 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.
Annual Report on Form 20-F filed December 30, 2022
Part 1
Item 3. Key Information, page 1
1. In future filings,
please disclose prominently that you are not a Chinese or Hong Kong
operating company but a
Cayman Islands holding company with operations conducted by
your subsidiaries and
that this structure involves unique risks to investors. Your disclosure
should acknowledge that
Chinese regulatory authorities could disallow this structure,
which would likely
result in a material change in your operations and/or a material change
in the value of your
ADSs, including that it could cause the value of such ADSs to
significantly decline
or become worthless. Provide a cross-reference to your detailed
discussion of risks
facing the company as a result of this structure.
Xiaoming Li
FirstName LastNameXiaoming Li
Meta Data Ltd
Comapany
April NameMeta Data Ltd
27, 2023
April 227, 2023 Page 2
Page
FirstName LastName
2. In future filings, please provide prominent disclosure about the legal
and operational risks
associated with being based in or having the majority of the company
s operations in
Hong Kong. Your disclosure should make clear whether these risks could
result in a
material change in your operations and/or the value of your ADSs or
could significantly
limit or completely hinder your ability to continue to offer ADSs to
investors and cause
the value of such ADSs to significantly decline or be worthless. Your
disclosure should
address how recent statements and regulatory actions by China s
government, such as
those related to data security or anti-monopoly concerns, have or may
impact the
company s ability to conduct its business, accept foreign
investments, or list on a U.S. or
other foreign exchange. Please disclose the location of your auditor's
headquarters and
whether and how the Holding Foreign Companies Accountable Act, as
amended by the
Consolidated Appropriations Act, 2023, and related regulations will
affect your company.
3. Provide a description of how cash is transferred through your
organization and disclose
your intentions to distribute earnings or settle amounts owed under
the VIE agreements, if
any. State whether any transfers, dividends, or distributions have
been made to date
between the holding company its subsidiaries, and consolidated VIEs,
or to investors, and
quantify the amounts where applicable and state the direction of
transfer and any tax
consequences. Your disclosure should make clear if no transfers,
dividends or
distributions have been made to date. Provide cross-references to the
condensed
consolidating schedule and the consolidated financial statements.
Describe any restrictions
on foreign exchange and your ability to transfer cash between
entities, across borders, and
to U.S. investors. Describe any restrictions and limitations on your
ability to distribute
earnings from the company, including your subsidiaries, to the parent
company,
consolidated VIE and U.S. investors, as well as the ability to settle
amounts owed under
the VIE agreements. Tell us what your disclosure will look like.
4. In future filings, please revise here and in the risk factors to state
that, to the extent cash
and/or assets in the business are in Hong Kong/China or a Hong Kong
entity, the funds
and/or assets may not be available to fund operations or for other use
outside of Hong
Kong due to interventions in or the imposition of restrictions and
limitations on the ability
of you or your subsidiaries by the PRC government to transfer cash
and/or assets. Provide
cross-references to this discussion in the risk factors section.
5. To the extent you have cash management policies that dictate how funds
are transferred
between you and your subsidiaries, summarize the policies and disclose
the source of such
policies (e.g., whether they are contractual in nature, pursuant to
regulations, etc.).
Alternatively, state that you have no such cash management policies
that dictate how
funds are transferred. Please tell us what your disclosure will look
like.
6. In future filings, please provide early in this section a diagram of
the company s corporate
structure, such as the one provided on page 23. Identify clearly the
entity in which
investors are purchasing or holding their interest and the entity(ies)
in which the
company s operations are conducted.
Xiaoming Li
Meta Data Ltd
April 27, 2023
Page 3
7. We note that the consolidated VIE constituted a material part of your
consolidated
financial statements. In future filings, please provide, in tabular
form a condensed
consolidating schedule, similar to the one on page F-17, that
disaggregates the operations
and depicts the financial position, cash flows, and results of
operations as of the same
dates and for the same periods for which audited consolidated
financial statements are
required. The schedule should present major line items, such as
revenue and cost of
goods/services, and subtotals and disaggregated intercompany amounts,
such as separate
line items for intercompany receivables and investment in subsidiary.
The schedule should
also disaggregate the parent company, the VIEs and its consolidated
subsidiaries, the
WFOEs that are the primary beneficiary of the VIEs, and an aggregation
of other entities
that are consolidated. The objective of this disclosure is to allow an
investor to evaluate
the nature of assets held by, and the operations of, entities apart
from the VIE, as well as
the nature and amounts associated with intercompany transactions. Any
intercompany
amounts should be presented on a gross basis and when necessary,
additional disclosure
about such amounts should be included in order to make the information
presented not
misleading.
D. Risk Factors
Summary of Risk Factors, page 2
8. In your summary of risk factors, please revise to provide specific
cross-references to each
corresponding individual risk factor related to China and Hong Kong.
Additionally, please
revise your summary risk factor entitled "PRC laws and regulations
related to our current
business operations . . . " to specifically discuss the risks and
uncertainties regarding the
enforcement of laws and that rules and regulations in China can change
quickly with little
advance notice, as well as the risk that the Chinese government may
intervene or influence
your operations at any time, or may exert more control over offerings
conducted overseas
and/or foreign investment in China-based issuers, which could result
in a material change
in your operations and/or the value of your ADSs, as you disclose on
page 9. Please tell
us what your disclosure will look like in your supplemental response.
Risks Related to Our Corporate Structure, page 9
9. We note your disclosure that you "have entered a share purchase
agreement to sell our
VIE structure in mainland China . . . ." Please revise to clarify that
you have sold such
VIE structure, if true. Additionally, where you refer to "our VIE" here
and on page 46,
please
FirstName revise to refer to "the
LastNameXiaoming Li VIE."
Comapany
10. NameMeta
Disclose the risksData Ltd
associated with winding-up your VIE structure.
Please tell us what your
disclosure
April 27, will3 look like in your supplemental response.
2023 Page
FirstName LastName
Xiaoming Li
FirstName LastNameXiaoming Li
Meta Data Ltd
Comapany
April NameMeta Data Ltd
27, 2023
April 427, 2023 Page 4
Page
FirstName LastName
"If the Chinese government chooses to exert more oversight and control over
offerings that are
conducted overseas . . . ", page 10
11. We note your disclosure that you "believe, as of the date of this
prospectus, Meta HK is
not required to obtain any permission or approval from Hong Kong
authorities to operate
our business" and that you "are also not required to obtain
permissions or approvals from
Hong Kong authorities nor any PRC authorities for our listing in the
U.S. or issuing our
ADSs to foreign investors, including the CSRC or the CAC." Please tell
us whether you
relied upon an opinion of counsel with respect to such conclusions,
and if not, revise in
future filings to state as much and explain why such an opinion was
not obtained.
Additionally, in your Item 3 section, please provide disclosure
comparable to your
discussion of permissions and approvals here. Further, revise your
disclosure so as to
expand your discussion regarding "Meta HK" to disclose whether you and
your
subsidiaries are required to obtain any permissions or approvals from
Hong Kong or
Chinese authorities to operate your business. To the extent that you
are subject to any
permission or approval requirements, state affirmatively whether you
have received all
requisite permissions or approvals and whether any permissions or
approvals have been
denied. Please also describe the consequences to you and your
investors if you or your
subsidiaries: (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. Please tell us what your
disclosure will look
like.
"You may incur additional costs and procedural obstacles in effecting service
of legal process . . .
", page 11
12. We note your disclosure that "[y]ou may incur additional costs and
procedural obstacles in
effecting service of legal process, enforcing foreign judgments or
bringing actions in
Hong Kong against us or our management named in this annual report . .
.. ." To the
extent that one or more of your directors or members of senior
management is based in
Hong Kong or the PRC, please state that is the case and identify the
relevant individuals.
Please also include a separate "Enforceability" section that addresses
whether or not
investors may bring actions under the civil liability provisions of
the U.S. federal
securities laws against you, your officers or directors who are
residents of a foreign
country, and whether investors may enforce these civil liability
provisions when your
assets, officers, and directors are located outside of the United
States. Please tell us what
your disclosure will look like.
Xiaoming Li
FirstName LastNameXiaoming Li
Meta Data Ltd
Comapany
April NameMeta Data Ltd
27, 2023
April 527, 2023 Page 5
Page
FirstName LastName
Item 4. Information on the Company
B. Our Business Model , page 24
13. We note that in 2021, you suspended all education programs and
learning centers in China
due to the "Double Reduction Policy" released by the General office of
Central
Committee of the Communist Party of China and the General Office of
the State Council.
To provide balanced disclosure, please revise in future filings to
quantify the portion of
your total revenues that was impacted by the cessation of these
education centers and
learning centers and any other material financial impacts related to
the cessation of these
services, if any. In this regard, we note that your disclosure here
quantifies the revenue
from your new business lines for the fiscal year ended August 31,
2022. Please tell us
what your disclosure will look like in your supplemental response.
14. Discuss any risks related to your current artificial intelligence
smart training systems and
how this new business line complies with PRC regulations regarding
K-12 education,
including the "Double Reduction Policy." Please tell us what your
disclosure will look
like in your supplemental response.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Keira Nakada at 202-551-3659 or Linda Cvrkel at
202-551-3813 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Brian Fetterolf at 202-551-6613 or Jennifer L pez Molina at
202-551-3792 with any
other questions.
Sincerely,
Division of
Corporation Finance
Office of Trade
& Services
cc: Joan Wu