CORRESP 1 filename1.htm

 

[AMBOW LETTERHEAD]

 

October 20, 2017

Larry Spirgel
Assistant Director
AD Office 11 – Telecommunications

Division of Corporation Finance

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

 

Re:Ambow Education Holding Ltd.
Form 20-F for Fiscal Year Ended December 31, 2016
Response Dated October 3, 2017
File No. 001-34824

 

Dear Mr. Spirgel:

 

On behalf of Ambow Education Holding Ltd., a Cayman Islands company (the “Company”), we have set forth below responses to the comments of the staff (the “Staff”) of the Securities and Exchange Commission contained in its letter of October 12, 2017 with respect to the Company’s Form 20-F for Fiscal Year Ended December 31, 2016 (the “2016 20-F”) filed on March 23, 2017 by the Company (File No.: 001-34824). For your convenience, the text of the Staff’s comments is set forth below, followed in each case by the Company’s responses.

 

Financial Statements

 

Consolidated Balance Sheets, page F-3 &
Consolidated Statements of Changes in Equity (Deficit), page F-7

 

1.We note the proposed revisions offered in your response to comment 5. Please also include an analysis of changes in each caption of stockholders’ equity and non-controlling interests in accordance with the guidance of Items 17(b) and 18(a) of Form 20-F and Rule 3-04 of Regulation S-X.

 

RESPONSE: The Company respectfully advises the Staff that the Ordinary Shares section in the Company’s Balance Sheet will be revised in future filings to separately disclose Class A ordinary shares and Class C ordinary shares as follows:

 

   As of December 31, 
   2015   2016   2016 
   RMB   RMB   US$ 
EQUITY            
Class A Ordinary shares               
(US$ 0.003 par value; 66,666,667 and 66,666,667 shares authorized; 33,556,762 and 33,990,680 shares issued and outstanding as of December 31, 2015 and 2016, respectively)   627    636    92 
Class C Ordinary shares               
(US$ 0.003 par value; 8,333,333 and 8,333,333 shares authorized; 4,708,415 and 4,708,415 shares issued and outstanding as of December 31, 2015 and 2016, respectively)   90    90    13 

 

 

 

 

The Company respectfully advises the Staff that in its future filings, the Company would include the analysis of changes in each caption of stockholders’ equity and non-controlling interests as below:

 

      Attributable to Ambow Education Holding Ltd.’s Equity         
      Class A Ordinary shares   Class B Ordinary shares     Class C Ordinary shares   Additional      

Retained

Earnings

  

Accumulated

other 

   Non-   Total 
      (Note 16)   (Note 16)   (Note 16)   paid-in   Statutory   (Accumulated   comprehensive   controlling   Equity 
      Shares   Amount   Shares   Amount   Shares   Amount   capital   reserves   deficit)   income(deficit)   Interest   (deficit) 
   Note      RMB       RMB       RMB   RMB   RMB   RMB   RMB   RMB   RMB 
Balance as of January 1, 2015      27,552,058    487    2,984,775    87    -    -    3,325,288    80,777    (3,451,958)   (3,740)   (4,247)   (53,306)
Conversion of Class B ordinary shares to Class A ordinary shares      2,984,775    87    (2,984,775)   (87)   -    -    -    -    -    -    -    - 
Exchange of Class A ordinary shares for Class C ordinary shares      (4,708,415)   (90)   -    -    4,708,415    90    -    -    -    -    -    - 
Conversion of convertible loans to ordinary shares  15   7,244,013    134    -    -    -    -    70,012    -    -    -    -    70,146 
Share-based compensation  17,
23(c)		   -    -    -    -    -    -    50,117    -    -    -    -    50,117 
Issuance of ordinary shares for restricted stock award  17   484,331    9    -    -    -    -    (9)   -    -    -    -    - 
Appropriation to statutory reserves  22   -    -    -    -    -    -    -    228    (228)   -    -    - 
Foreign currency translation adjustment      -    -    -    -    -    -    -    -    -    (1,215)   -    (1,215)
Disposal of subsidiaries      -    -    -    -    -    -    -    -    -    9,084    5,845    14,929 
Capital injection from minority shareholders  27   -    -    -    -    -    -    -    -    -    -    163    163 
Unrealized gain on investment, net of income taxes  5   -    -    -    -    -    -    -    -    -    984    -    984 
Non-controlling interests from reconsolidation of previously deconsolidated entities  26(b)   -    -    -    -    -    -    -    -    -    -    (3,351)   (3,351)
Net income      -    -    -    -    -    -    -    -    63,739    -    617    64,356 
Balance as of December 31, 2015      33,556,762    627    -    -    4,708,415    90    3,445,408    81,005    (3,388,447)   5,113    (973)   142,823 

 

      Attributable to Ambow Education Holding Ltd.’s Equity         
      Class A Ordinary   Class B Ordinary     Class C Ordinary            Retained   Accumulated         
      shares   shares   shares   Additional       Earnings   other   Non-   Total 
      (Note 16)   (Note 16)   (Note 16)   paid-in   Statutory   (Accumulated   comprehensive   controlling   Equity 
      Shares   Amount   Shares   Amount   Shares   Amount   capital   reserves   deficit)   income(deficit)   Interest   (deficit) 
   Note      RMB       RMB       RMB   RMB   RMB   RMB   RMB   RMB   RMB 
Balance as of January 1, 2016      33,556,762    627    -    -    4,708,415    90    3,445,408    81,005    (3,388,447)   5,113    (973)   142,823 
Share-based compensation  17   -    -    -    -    -    -    7,828    -    -    -    -    7,828 
Issuance of ordinary shares for restricted stock award  17   433,918    9    -    -    -    -    (9)   -    -    -    -    - 
Foreign currency translation adjustment      -    -    -    -    -    -    -    -    -    (1,160)   -    (1,160)
Appropriation to statutory reserves  22   -    -    -    -    -    -    -    2    (2)   -    -    - 
Unrealized gain on investment, net of income taxes  5   -    -    -    -    -    -    -    -    -    1,752    -    1,752 
Capital injection from minority shareholders  27   -    -    -    -    -    -    -    -    -    -    796    796 
Net loss      -    -    -    -    -    -    -    -    (35,700)   -    (1,318)   (37,018)
Balance as of December 31, 2016      33,990,680    636    -    -    4,708,415    90    3,453,227    81,007    (3,424,149)   5,705    (1,495)   115,021 

 

 

 

 

21. Segment Information, page F-46

 

2.We note your response to comment 8. In addition to the disclosures you propose to include in future filings, please include a reconciliation of gross profit to loss before income taxes as required by ASC 280-10-50-30(b).

 

RESPONSE: The Company respectfully advises the Staff that in its future filings, the Company would disclose a reconciliation of gross profit to loss before income taxes in segment information as below:

 

For the year ended December 31, 2015

 

(RMB in thousands)  Better School   Better Job     
   Tutoring   K-12   Subtotal   Career
Enhancement		   Consolidated 
   RMB   RMB   RMB   RMB   RMB 
                     
Net Revenues   54,888    186,747    241,635    154,080    395,715 
Cost of revenues   (41,048)   (116,819)   (157,867)   (88,078)   (245,945)
GROSS PROFIT   13,840    69,928    83,768    66,002    149,770 
                          
OPERATING EXPENSES                         
Selling and marketing   (7,690)   (964)   (8,654)   (38,976)   (47,630)
General and administrative   (18,601)   (37,787)   (56,388)   (48,337)   (104,725)
Research and development   (1,773)   -    (1,773)   (321)   (2,094)
Impairment loss   (2,702)   -    (2,702)   (7,630)   (10,332)
Unallocated corporate expenses   -    -    -    -    (341,023)
Total operating expenses   (30,766)   (38,751)   (69,517)   (95,264)   (505,804)
                          
OPERATING (LOSS) INCOME   (16,926)   31,177    14,251    (29,262)   (356,034)
                          
OTHER INCOME (EXPENSE)                         
Interest (expenses) income, net   (307)   22    (285)   (2,100)   (2,385)
Foreign exchange gain, net   10    -    10    24    34 
Other (loss) income, net   (7,966)   (237)   (8,203)   665    (7,538)
Loss (income) on reconsolidation of previously deconsolidated entities   (23,908)   -    (23,908)   6,439    (17,469)
Gain on sale of investment  available for sale   -    1,971    1,971    -    1,971 
Unallocated corporate other expenses   -    -    -    -    (13,984)
Total other (expenses) income   (32,171)   1,756    (30,415)   5,028    (39,371)
                          
(LOSS) INCOME BEFORE INCOME TAX, NON-CONTROLLING INTERESTS AND DISCONTINUED OPERATIONS   (49,097)   32,933    (16,164)   (24,234)   (395,405)
                          
Segment assets   139,905    331,127    471,032    175,056    646,088 
Unallocated corporate assets   -    -    -    -    361,837 
TOTAL ASSETS   139,905    331,127    471,032    175,056    1,007,925 

 

 

 

 

For the year ended December 31, 2016

 

(RMB in thousands)  Better School   Better Job     
   Tutoring   K-12   Subtotal   Career
Enhancement		   Consolidated 
   RMB   RMB   RMB   RMB   RMB 
                     
Net Revenues   47,985    222,592    270,577    141,439    412,016 
Cost of revenues   (33,465)   (137,833)   (171,298)   (67,444)   (238,742)
GROSS PROFIT   14,520    84,759    99,279    73,995    173,274 
                          
OPERATING EXPENSES                         
Selling and marketing   (5,516)   (1,065)   (6,581)   (30,810)   (37,391)
General and administrative   (21,929)   (42,205)   (64,134)   (34,023)   (98,157)
Research and development   (1,445)   -    (1,445)   (924)   (2,369)
Impairment loss   (21,779)   -    (21,779)   (623)   (22,402)
Unallocated corporate expenses   -    -    -    -    (56,986)
Total operating expenses   (50,669)   (43,270)   (93,939)   (66,380)   (217,305)
                          
OPERATING (LOSS) INCOME   (36,149)   41,489    5,340    7,615    (44,031)
                          
OTHER INCOME (EXPENSE)                         
Interest income, net   106    106    212    186    398 
Foreign exchange gain, net   -    -    -    12    12 
Other (loss) income, net   (2,514)   195    (2,319)   (1,714)   (4,033)
Gain on sale of investment  available for sale   -    2,464    2,464    138    2,602 
Unallocated corporate other income   -    -    -    -    13,945 
Total other (expenses) income   (2,408)   2,765    357    (1,378)   12,924 
                          
(LOSS) INCOME BEFORE INCOME TAX AND NON-CONTROLLING INTERESTS   (38,557)   44,254    5,697    6,237    (31,107)
                          
Segment assets   119,878    381,786    501,664    190,088    691,752 
Unallocated corporate assets   -    -    -    -    284,443 
TOTAL ASSETS   119,878    381,786    501,664    190,088    976,195 

 

Should you have any questions relating to the foregoing or wish to discuss any aspect of the Company’s filing, please contact our legal counsel Mitchell S. Nussbaum, Partner of Loeb & Loeb LLP, at 212-407-4159 or mnussbaum@loeb.com.

 

Sincerely,

Ambow Education Holding Ltd.

/s/ Jin Huang                                  
Chief Executive Officer