20-F

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F

(Mark One)

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended August 31, 2021.

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to               

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report .. . . . . . . . . . . . . . . . . . .

For the transition period from to

Commission file number: 001-38430

Meta Data Limited

(Exact Name of Registrant as Specified in Its Charter)

Not Applicable

(Translation of Registrant’s Name Into English)

The Cayman Islands

(Jurisdiction of Incorporation or Organization)

2161 North Zhongshan Road

Putuo District, Shanghai 200333

People’s Republic of China

(Address of principal executive offices)

Chee Jiong Ng, Chief Financial Officer

2161 North Zhongshan Road

Putuo District, Shanghai 200333

People’s Republic of China

Telephone: +86-21- 2250-5999

Email: cj@onesmart.org

(Name, Telephone, E-mail, and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange On Which Registered
American depositary shares, each American depositary share representing 1,000 Class A ordinary shares Class A ordinary shares, par value US$0.000001 per share*	AIU	New York Stock Exchange

* Not for trading, but only in connection with the listing on the New York Stock Exchange of American depositary shares.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

As of August 31, 2021, there were 6,611,659,561 ordinary shares outstanding, par value US$0.000001 per share, being the sum of 4,321,229,545 Class A ordinary shares and 2,290,430,016 Class B ordinary shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐ Yes ☒ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

☐ Yes ☒ No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Emerging growth company ☒

If an emerging growth company that prepare its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☒

†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☒ International Financial Reporting Standards as issued by
the International Accounting Standards Board ☐ Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

☐ Yes ☐ No

TABLE OF CONTENTS

INTRODUCTION		ii
FORWARD-LOOKING STATEMENTS		iii
PART I		1
ITEM 1	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	1
ITEM 2	OFFER STATISTICS AND EXPECTED TIMETABLE	1
ITEM 3	KEY INFORMATION	1
ITEM 4	INFORMATION ON THE COMPANY	34
ITEM 4A.	UNRESOLVED STAFF COMMENTS	74
ITEM 5	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	74
ITEM 6	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	97
ITEM 7	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	105
ITEM 8	FINANCIAL INFORMATION	108
ITEM 9	THE OFFER AND LISTING	109
ITEM 10.	ADDITIONAL INFORMATION	109
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	125
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	127
PART II		129
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	129
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	129
ITEM 15.	CONTROLS AND PROCEDURES	129
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	130
ITEM 16B.	CODE OF ETHICS	131
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	131
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	131
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	131
ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	132
ITEM 16G.	CORPORATE GOVERNANCE	132
ITEM 16H.	MINE SAFETY DISCLOSURE	132
ITEM 16I.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	132
PART III		133
ITEM 17.	FINANCIAL STATEMENTS	133
ITEM 18.	FINANCIAL STATEMENTS	133
ITEM 19.	EXHIBITS	133
SIGNATURES		134

i

INTRODUCTION

Except where the context otherwise requires and for purposes of this annual report only, references in this annual report to:

● “ADSs” are to our American depositary shares, each of which represents 1,000 Class A ordinary shares;

● “ADRs” are to the American depositary receipts that evidence our ADSs;

● “China” or the “PRC” are to the People’s Republic of China, excluding, for the purposes of this annual report only, Hong Kong, Macau and Taiwan;

● each “enrollment,” for the purpose of calculation, are to a student who takes at least one class for one subject in a certain period is treated as one enrollment in the same period. Under this methodology, a student taking at least one class for each of two subjects in a certain period is treated as two enrollments in the same period. The number of students enrolled in our invested schools is not included for this purpose;

● “ordinary shares” are to our Class A ordinary shares and Class B ordinary shares, par value US$0.000001 per share;

● “RMB” and “Renminbi” are to the legal currency of China;

● “US$,” “U.S. dollars,” “$,” and “dollars” are to the legal currency of the United States; and

● “we,” “us,” “our company” and “our” are to Meta Data Limited, its subsidiaries and its consolidated variable interest entities and the subsidiaries of its consolidated variable interest entities.

ii

FORWARD-LOOKING STATEMENTS

This annual report on Form 20-F contains forward-looking statements that reflect our current expectations and views of future events. Known and unknown risks, uncertainties and other factors, including those listed under “Item 3. Key Information-D. Risk Factors,” may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:

● our goals and strategies;

● our future business development, results of operations and financial conditions;

● the expected growth of the K-12 after-school or overall education industries in China;

● our expectations regarding demand for and market acceptance of our products and services;

● our relationships with our students, their parents, our business partners and other stakeholders;

● competition in our industry; and

● relevant government policies and regulations relating to our industry.

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in “Item 3. Key Information-D. Risk Factors,” “Item 4. Information on the Company-B. Business Overview,” “Item 5. Operating and Financial Review and Prospects,” and other sections in this annual report. You should read thoroughly this annual report and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

This annual report contains certain data and information that we obtained from various government and private publications. Statistical data in these publications also include projections based on a number of assumptions. The K-12 after-school industry or overall education industries may not grow at the rate projected by market data, or at all. Failure of this market to grow at the projected rate may have a material and adverse effect on our business and the market price of our ADSs. In addition, the rapidly evolving nature of the education industry results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of our market. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made in this annual report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this annual report and the documents that we refer to in this annual report and have filed as exhibits to the registration statement, of which this annual report is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

iii

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. Selected Financial Data

Our Selected Consolidated Financial Data

The following selected consolidated statements of income data for the fiscal years ended August 31, 2019, 2020 and 2021, selected consolidated balance sheet data as of August 31, 2020 and 2021, and selected consolidated cash flow data for the years ended August 31, 2019, 2020 and 2021, have been derived from our audited consolidated financial statements included elsewhere in this annual report. The selected consolidated statement of income data for the fiscal year ended August 31, 2017 and 2018, the selected consolidated balance sheet data as of August 31, 2017, 2018 and 2019 and the selected consolidated cash flow data for the year ended August 31, 2017 and 2018 are derived from our audited consolidated financial statements not included in this annual report. Our consolidated financial statements are prepared and presented in accordance with the accounting principles generally accepted in the United States of America, or U.S. GAAP. Our historical results do not necessarily indicate results expected for any future periods. You should read this Selected Consolidated Financial Data section together with our consolidated financial statements and the related notes and “Item 5. Operating and Financial Review and Prospects” included elsewhere in this annual report.

	Year Ended August 31,
	2017			2018			2019			2020			2021
	RMB			RMB			RMB			RMB			RMB			US$
	(in thousands, except for share and per share data)
Summary Consolidated Statement of Income:
Net revenues		2,057,557			2,862,692			3,993,873			3,438,881			3,423,410			529,907
Cost of revenues		(1,002,266	)		(1,413,090	)		(2,072,067	)		(2,169,739	)		(2,093,743	)		(324,089	)
Gross profit		1,055,291			1,449,602			1,921,806			1,269,142			1,329,667			205,818
Operating expenses:(1)
Selling and marketing		(369,221	)		(590,589	)		(816,658	)		(820,883	)		(930,140	)		(143,976	)
General and administrative		(381,332	)		(629,596	)		(876,609	)		(810,936	)		(5,261,978	)		(814,497	)
Total operating expenses		(750,553	)		(1,220,185	)		(1,693,267	)		(1,631,819	)		(6,192,118	)		(958,473	)
Operating income/(loss)		304,738			229,417			228,539			(362,677	)		(4,862,451	)		(752,655	)
Interest income		13,484			23,824			81,207			37,393			9,443			1,462
Interest expense		(192	)		(18,660	)		(60,637	)		(103,600	)		(98,302	)		(15,217	)
Other income		19,410			89,320			82,836			93,894			99,335			15,376
Other expense		-			(4,428	)		(15,738	)		(453,391	)		(135,239	)		(20,934	)
Foreign exchange gain/(loss)		(180	)		(1,168	)		(138	)		(69	)		3,295			510
Income/(loss) before income tax and share of net (loss)/income from equity investees		337,260			318,305			316,069			(788,450	)		(4,983,919	)		(771,458	)
Income tax (expense)/benefit		(92,016	)		(108,479	)		(121,541	)		37,785			(30,870	)		(4,778	)
Income/(loss) before share of net (loss)/income from equity investees		245,244			209,826			194,528			(750,665	)		(5,014,789	)		(776,236	)
Share of net (loss)/income from equity investees		(1,939	)		4,630			(28,325	)		(17,977	)		(10,705	)		(1,657	)
Net income/(loss)		243,305			214,456			166,203			(768,642	)		(5,025,494	)		(777,893	)
Add: Net loss attributable to non-controlling interests		15,522			31,480			79,165			38,813			37,927			5,871
Net income/(loss) attributable to Meta Data Limited’s shareholders		258,827			245,936			245,368			(729,829	)		(4,987,567	)		(772,022	)
Net (loss)/income attributable to ordinary shareholders of Meta Data Limited		147,056			(721,235	)		245,368			(729,829	)		(4,987,567	)		(772,022	)
Earnings/(loss) per share:
Basic		0.0580			(0.1740	)		0.0380			(0.1131	)		(0.7543	)		(0.1168	)
Diluted		0.0580			(0.1740	)		0.0366			(0.1131	)		(0.7543	)		(0.1168	)
Shares used in earnings/(loss) per share computation (in millions of shares):
Basic		2,534			4,145			6,460			6,451			6,612			6,612
Diluted		2,534			4,145			6,709			6,451			6,612			6,612

(1) Including share-based compensation expenses as set forth below:

1

	Year Ended August 31,
	2017		2018		2019		2020		2021
	RMB		RMB		RMB		RMB		RMB		US$
	(in thousands)
Allocation of Share based Compensation Expenses
Selling and marketing		735		2,113		906		674		110		17
General and administrative		24,240		144,373		70,626		137,312		42,752		6,618
Total		24,975		146,486		71,532		137,986		42,862		6,635

The following table presents our selected consolidated balance sheet data as of the periods indicated:

	As of August 31,
	2017			2018		2019		2020		2021
	RMB			RMB		RMB		RMB		RMB			US$
	(in thousands)
Summary Consolidated Balance Sheet:
Cash and cash equivalents		981,772			1,410,747		1,386,412		1,158,044		29,626			4,586
Total current assets		1,609,745			2,479,565		2,419,625		2,177,402		466,218			72,166
Total assets		2,317,610			4,202,927		6,071,475		7,898,391		503,173			77,886
Total current liabilities		1,988,358			2,661,471		3,390,300		5,116,754		4,717,577			730,231
Total liabilities		2,001,370			3,107,684		4,914,002		7,456,418		5,124,418			793,206
Total mezzanine equity		1,749,900			-		-		-		-			-
Total shareholders’ (deficit)/equity		(1,433,660	)		1,095,243		1,157,473		441,973		(4,621,245	)		(715,320	)

The following table presents our selected consolidated cash flow data for the periods indicated:

	Year Ended August 31,
	2017			2018			2019			2020			2021
	RMB			RMB			RMB			RMB			RMB			US$
	(in thousands)
Summary Consolidated Cash Flow Data:
Net cash provided by operating activities		773,281			867,370			345,374			240,692			138,343			21,412
Net cash used in investing activities		(80,961	)		(1,169,244	)		(1,392,335	)		(906,931	)		(147,947	)		(22,900	)
Net cash provided by/(used in) financing activities		23,214			652,605			988,358			648,759			(935,190	)		(144,756	)
Effect of exchange rate changes		-			78,244			34,268			(23,647	)		(15,848	)		(2,453	)
Net increase/(decrease) in cash and cash equivalents and restricted cash		715,534			428,975			(24,335	)		(41,127	)		(960,642	)		(148,697	)
Cash and cash equivalents and restricted cash, at beginning of year		266,238			981,772			1,410,747			1,386,412			1,345,285			208,236
Cash and cash equivalents and restricted cash, at end of year		981,772			1,410,747			1,386,412			1,345,285			384,643			59,539

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

A description of factors that could materially affect our business, financial condition or operating results is provided below.

Summary of Risk Factors

An investment in our ADSs is subject to a number of risks, including risks related to our business and corporate structure, risks related to doing business in China and risks related to our ADSs. The following summarizes some, but not all, of these risks. Please carefully consider all of the information discussed in “Item 3. Key Information—D. Risk Factors” in this annual report for a more thorough description of these and other risks.

2

Risks Related to Our Business

● Our business, financial condition and results of operations have been and are likely to continue to be materially and adversely affected by the outbreak of COVID-19.

● China’s regulatory requirements or changes in off-campus training institutions may affect our business operations and prospects.

● Our limited operating history with a relatively new business model in a relatively new market makes it difficult to evaluate our business and growth prospects.

● We may be unable to continue attracting new clients, which may materially and negatively affect our user retention and thus our business and operations.

● Any actual or perceived deterioration in our service quality may harm our brands and reputation and may adversely affect our business, results of operations and financial condition.

● We may be subject to intellectual property infringement claims or other allegations by third parties for information or content displayed on, retrieved from or linked to our platform, or distributed to our users, or for proprietary information appropriated by former employees, which may materially and adversely affect our business, financial condition and prospects.

● Unauthorized use of our intellectual property by our employees and other third parties and the expenses incurred in protecting our intellectual property rights may harm our brands and reputation and materially and adversely affect our business.

● If we are not able to maintain and enhance our brand, our business and operating results may be adversely affected.

● We face intense competition in our industry, which could lead to our premium pricing pressure, reduced operating margins, loss of market share and increased capital expenditures.

Risks Related to Our Corporate Structure

● If the PRC government finds that the agreements that establish the structure for our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.

● Substantial uncertainties exist with respect to the interpretation and implementation of the newly adopted PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.

● We rely on VIE Contractual Arrangements for our PRC operations, which may not be as effective as direct ownership in providing operational control.

● Any failure by our VIEs or their respective shareholders to perform their obligations under the VIE Contractual Arrangements would have a material and adverse effect on our business.

● The shareholders of our VIEs may have potential conflicts of interest with us and not act in the best interest of our company.

3

Risks Related to Doing Business in China

● Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations.

● Uncertainties with respect to the PRC legal system could adversely affect us.

● You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in the annual report based on foreign laws.

● We may rely on dividends and other distributions on equity paid by our PRC subsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiary to make payments to us could have a material and adverse effect on our ability to conduct our business.

● PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of our initial public offering to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

● Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.

● Certain PRC regulations may make it more difficult for us to pursue growth through acquisitions.

● Although the audit report included in this annual report is prepared by U.S. auditors who are currently inspected by the Public Company Accounting Oversight Board (the “PCAOB”), there is no guarantee that future audit reports will be prepared by auditors inspected by the PCAOB and, as such, in the future investors may be deprived of the benefits of such inspection. Furthermore, trading in our securities may be prohibited under the Holding Foreign Companies Accountable Act (the “HFCA Act”) if the SEC subsequently determines our audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely, and as a result, U.S. national securities exchanges, such as the Nasdaq, may determine to delist our securities. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, would amend the HFCA Act and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.

Risks Related to Our ADSs

● The trading price of our ADSs is likely to be volatile, which could result in substantial losses to investors.

● Our dual-class voting structure will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.

● Because we do not expect to pay dividends in the foreseeable future, you must rely on a price appreciation of our ADSs for a return on your investment.

● You, as holders of ADSs, may have fewer rights than holders of our Class A ordinary shares and must act through the deposit to exercise those rights. You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.

● You may experience dilution of your holdings due to the inability to participate in rights offerings and may be subject to limitations on the transfer of your ADSs.

● We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements, and will incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth company.”

4

Risks Related to Our Business

We are transitioning our business from a PRC based business to being internationally operated. Our business plan is at its early stage of development.

Historically, the Company operated as one of the leading providers of K-12 after-school education services in China which developed a comprehensive K-12 after-school education platform that primarily focused on young children mathematics training services and FasTrack English services through a nationwide network of 480 learning centers across 40 cities in China. However, on July 24, 2021, the General Office of Central Committee of the Communist Party of China and the General Office of the State Council jointly released Opinions on what they termed “Further Reducing the Burden of Homework and Off-campus Tutoring for Compulsory Education Students”, the (“Double Reduction Policy”), which basically requires suspension of all subject-based off-campus tutoring business targeting pre-school kids and K12 students. As a result, since October 12, 2021, the Company suspended all education programs and learning centers in China, and we started to expand our business to develop certain software technologies to commercialize a smart student ID card (“Smart ID Card”) and develop smart training systems incorporating VR (virtual reality), AI (artificial intelligence), blockchain and other technologies to facilitate the teaching and training process. We are currently in an early development stage and may be subject to growth-related risks.

Although our management believes that our current business strategy has significant potential, our Company may never attain profitable operations and our management may not succeed in realizing its business objectives. If it is not able to execute our business strategy as anticipated, the Company may not be able to achieve profitability, and our business and financial condition may be adversely affected.

System limitations or failures could harm our business.

Our businesses depend on the integrity and performance of the technology, computer and communications systems supporting them. If our systems cannot expand to cope with increased demand or otherwise fail to perform, we could experience unanticipated disruptions in service, slower response times and delays in the introduction of new services. These consequences could result financial losses and decreased customer service and satisfaction. If trading volumes increase unexpectedly or other unanticipated events occur, we may need to expand and upgrade our technology, transaction processing systems and network infrastructure. We do not know whether we will be able to accurately project the rate, timing or cost of any increases, or expand and upgrade our systems and infrastructure to accommodate any increases in a timely manner.

The success of our business depends on our ability to market and advertise the services we provide effectively.

Our ability to establish effective marketing campaigns is the key to our success. Our advertisements promote our corporate image and our services. If we are unable to increase awareness of our brand, the benefits of using our trading platform to invest in artwork and that such investment is secure, we may not be able to attract new Traders. Our marketing activities may not be successful in promoting our services or in retaining and increasing our Trader base. We cannot assure you that our marketing programs will be adequate to support our future growth, which may result in a material adverse effect on our results of operations.

The failure to manage growth effectively could have an adverse effect on our employee efficiency, product quality, working capital levels, and results of operations.

Any significant growth in the market for our services or our entry into new markets may require an expansion of our employee base for managerial, operational, financial, and other purposes. During any growth, we may face problems related to our operational and financial systems and controls, including quality control and delivery and service capacities. We would also need to continue to expand, train and manage our employee base. Continued future growth will impose significant added responsibilities upon the members of management to identify, recruit, maintain, integrate, and motivate new employees.

Aside from increased difficulties in the management of human resources, we may also encounter working capital issues, as we will need increased liquidity to finance the purchase of supplies, development of new products and services, and the hiring of additional employees. For effective growth management, we will be required to continue improving our operations, management, and financial systems and controls. Our failure to manage growth effectively may lead to operational and financial inefficiencies that will have a negative effect on our profitability. We cannot assure investors that we will be able to timely and effectively meet that demand and maintain the quality standards required by our existing and potential customers.

5

If we need additional capital to fund our growing operations, we may not be able to obtain sufficient capital and may be forced to limit the scope of our operations.

If adequate additional financing is not available on reasonable terms, we may not be able to undertake our expansion plan and we would have to modify our business plans accordingly. There is no assurance that additional financing will be available to us.

In connection with our growth strategies, we may experience increased capital needs and accordingly, we may not have sufficient capital to fund our future operations without additional capital investments. Our capital needs will depend on numerous factors, including (i) our profitability; (ii) the release of competitive products by our competitors; (iii) the level of our investment in research and development; and (iv) the amount of our capital expenditures, including acquisitions. We cannot assure you that we will be able to obtain capital in the future to meet our needs.

If we cannot obtain additional funding, we may be required to: (i) limit our investments in research and development; (ii) limit our marketing efforts; and (iii) decrease or eliminate capital expenditures. Such reductions could materially adversely affect our business and our ability to compete.

Even if we do find a source of additional capital, we may not be able to negotiate terms and conditions for receiving the additional capital that are acceptable to us. Any future capital investments could dilute or otherwise materially and adversely affect the holdings or rights of our existing shareholders. In addition, new equity or convertible debt securities issued by us to obtain financing could have rights, preferences and privileges senior to our common stock. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us.

We are dependent on a trained workforce and any inability to retain or effectively recruit such employees, particularly distribution personnel and regional retail managers for our business, could have a material adverse effect on our business, financial condition and results of operations.

We must attract, recruit and retain a sizeable workforce of qualified and trained staff to operate our business. Our ability to implement effectively our business strategy and expand our operations will depend upon, among other factors, the successful recruitment and retention of highly skilled and experienced distribution personnel, regional retail managers and other technical and marketing personnel. There is significant competition for qualified personnel in our business and we may not be successful in recruiting or retaining sufficient qualified personnel consistent with our current and future operational needs.

Security breaches and attacks against our systems and network, and any potentially resulting breach or failure to otherwise protect confidential and proprietary information, could damage our reputation and negatively impact our business, as well as materially and adversely affect our financial condition and results of operations.

Although we have employed significant resources to develop our security measures against breaches, our cybersecurity measures may not detect or prevent all attempts to compromise our systems, including distributed denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, social engineering, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in and transmitted by our systems or that we otherwise maintain. Breaches of our cybersecurity measures could result in unauthorized access to our systems, misappropriation of information or data, deletion or modification of client information, or a denial-of-service or other interruption to our business operations. As techniques used to obtain unauthorized access to or sabotage systems change frequently and may not be known until launched against us or our third-party service providers, we may be unable to anticipate, or implement adequate measures to protect against, these attacks.

If we are unable to avert these attacks and security breaches, we could be subject to significant legal and financial liability, our reputation would be harmed and we could sustain substantial revenue loss from lost sales and customer dissatisfaction. We may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks. Cyber-attacks may target us, our Traders or other participants, the communication infrastructure, or the e-platform on which we depend. Actual or anticipated attacks and risks may cause us to incur significantly higher costs, including costs to deploy additional personnel and network protection technologies, train employees, and engage third-party experts and consultants. Cybersecurity breaches would not only harm our reputation and business, but also could materially decrease our revenue and net income.

6

Our business, financial condition and results of operations have been and are likely to continue to be materially and adversely affected by the outbreak of COVID-19.

Since the beginning of 2020, there has been an outbreak of COVID-19 in China and other countries. As of the date of this annual report, COVID-19 is still spreading in communities in some parts of the world. The severity of the outbreak has resulted in the temporary closure of schools, learning centers, and many corporate offices across China. In such unusual circumstances, our offline business has been significantly affected due to the temporary closure of our learning centers as mandatorily required by the PRC government. All of our offline learning centers were temporally closed since January 2020 following government’s measures against COVID-19. Because substantially all of our operations are conducted in China and our students had to remain home for a number of months, the outbreak of COVID-19 has caused a disruption to our business.

Despite the impact by the outbreak of COVID-19, our strong execution enabled us to maintain our business activities level and our revenue for the fiscal year 2021 compared to the fiscal year 2020. Our years’ investments and technology development in the online space enables us to respond promptly to the unprecedented COVID-19 situation. Supported by OneSmart Online, we are driving momentum by successfully migrating the majority of its existing students and attracting large numbers of new students to its online platform while maintaining high levels of customer satisfaction.

In addition, we have taken a series of measures in response to the outbreak to protect our employees, students and teachers in reopened learning centers, including, among others, temporary closure of our offices, remote working arrangements and procurement of masks, hand sanitizers and other protective equipment for our employees, which reduced the capacity and efficiency of our operations and increased our operating expenses. Our business operation could also be disrupted if any of our employees are suspected of having contracted COVID-19, since it could require our employees to be quarantined or our offices to be closed down and disinfected. All of these would have a material adverse effect on our results of operations and financial condition in the near terms. Additionally, if the outbreak persists or escalates, we may be subject to further negative impact on our business operations or financial condition.

We believe it is unlikely that our business will be suspended because of the COVID-19 pandemic considering the vaccine rate and the case numbers in China. we currently are unable to predict the duration and severity of the COVID-19 outbreak, the responses thereto, and their impact on our business and operations, our results of operations, financial condition, cash flows and liquidity, as these depend on rapidly evolving developments, which are highly uncertain and will be a function of factors beyond our control. Such factors include, among others, the continued spread or recurrence of contagion, the implementation of effective preventative and containment measures, the development of effective medical solutions, and the extent to which governmental restrictions on travel, public gatherings, mobility and other activities remain in place or are augmented. The COVID-19 outbreak has to some extent, impacted our results of operations and financial conditions and will likely have a continued adverse impact on our results of operations.

7

If we are unable to continue attracting students and their parents to enroll in our education programs at reasonable costs, our business and prospects may be materially and adversely affected.

The success of our business depends primarily on the number of students enrolled in our education programs as well as the amount of tuition fees that we are able to charge our students. Therefore, our ability to continue to recruit and retain students for our programs at reasonable costs is critical to the continued success and growth of our business. This in turn will be subject to several factors, including our ability to:

● enhance existing education programs and services to respond to market changes and student demands;

● continue to incentivize our students to take and consume our classes;

● develop new programs and services that appeal to our students and their parents;

● expand our learning centers and geographic reach to satisfy our strategic needs;

● manage our growth while maintaining consistent and high teaching quality;

● maintain our reputation and enhance our brand recognition;

● effectively market and precisely target our programs to a broader base of prospective students; and

● respond effectively to competitive pressures.

If we are unable to continue to attract students and parents without significantly decreasing tuition fees or incurring significant increase in our selling and marketing expenses, our revenues may decline or we may not be able to maintain profitability, either of which could have a material adverse effect on our business, results of operations and financial conditions.

We face intense competition in our industry, which could lead to our premium pricing pressure, reduced operating margins, loss of market share, departure of qualified faculty and increased capital expenditures.

We face competition in each type of the services we offer and in the markets in which we operate. Our competitors at the national level mainly include New Oriental, TAL, XueDa, ONLY, GSX Techedu and Koolearn. We compete with them in many aspects, including the quality of program and curriculum offerings, tuition fee levels, qualified teachers and other key personnel and facility locations and conditions. Our competitors may offer similar programs with different pricing and service packages that may be more appealing than our offerings. In addition, some of our competitors may be able to devote greater resources than we can to the development, promotion and sale of their programs, services and products, and respond more quickly than we can to changes in student needs, testing materials, admission standards, market trends or new technologies. Moreover, the increasing use of the internet and advances in internet-related and computer-related technologies, such as web video conferencing and online testing simulators, are eliminating geographic and physical facility-related entry barriers to providing private education services. As a result, smaller companies or internet-content providers may be able to offer their programs, services and products at the PC or mobile end quickly and cost-effectively to a large number of students with less capital expenditure than previously required. Consequently, we may be pressured to reduce tuition fees or increase spending in response to competition in order to retain or attract students or pursue new market opportunities, which could result in a decrease in our revenues and profitability. If we are unable to maintain our competitive position or otherwise respond to competition effectively, we may lose our market share and our profitability may be adversely affected.

8

System disruptions to our centralized technology platform and information technology systems may adversely affect our teaching and operating activities.

The performance and reliability of our information technology infrastructure are critical to the consistency of our premium education services. Our proprietary centralized technology platform provides full technology support that connects our teaching service management and operating management systems. Our centralized technology platform and information technology systems could be vulnerable to interruption or malfunction due to events beyond our control, such as natural disasters, power outages or telecommunications failures. The security of our systems could also be compromised due to unauthorized access, hacking, computer viruses or other unanticipated problems. Material breakdown of our centralized technology platform and information technology system could result in the disruption of our operations and harm our service quality and reputation. Furthermore, we may be required to expend significant resources to protect against the threat of security breaches or to alleviate problems caused by these breaches. Any such event may materially and adversely affect our business and results of operations.

We may not be able to execute our growth strategies successfully, which may hinder our ability to capitalize on new business opportunities.

We seek and will continue to implement various strategies to grow our business including expanding our online education initiatives, strengthening our technologies and data analytics capabilities, enhancing our teacher recruitment, development and management and pursuing selective strategic partnerships and acquisitions to further build our eco-system.

These strategies may not be successfully executed due to a number of factors, including, without limitation, the following:

● we may not be able to develop and upgrade our curriculum and product lines that are appealing to our students;

● we may not be able to successfully integrate acquired businesses and may not be able to achieve the benefits we expect from recent and future acquisitions or investments;

● we may not be able to adequately upgrade or strengthen our operational, administrative and technological systems, and our financial and management controls to support our future expansion; and

● we may not be able to further expand our network as fast as we expect.

If we fail to successfully execute our growth strategies, we may not be able to maintain our growth rate, and current business and our prospects may be materially and adversely affected as a result.

9

Future strategic alliances or acquisitions may materially and adversely affect our business, financial condition and results of operations.

We have pursued and may continue to pursue selected strategic alliances and potential strategic acquisitions that are complementary to our business and operations. See “Item 4. Information on the Company— A. History and Development of the Company” for some examples. Strategic alliances or acquisitions could subject us to a number of risks, including risks associated with sharing proprietary information, and non-performance or default by counterparties, any of which may materially and adversely affect our business. We may have little ability to control or monitor the actions of our counterparties in these transactions or alliances. To the extent a strategic partner or investment target suffers any negative publicity as a result of its business operations, our reputation may be negatively affected by virtue of our association with such party.

Strategic acquisitions and subsequent integrations of newly acquired businesses would also require significant managerial and financial resources and could result in a diversion of resources from our existing business. The cost and duration of integrating newly acquired businesses could substantially exceed our expectations and the acquired businesses or assets may not generate expected financial results and may have historically incurred and continue to incur losses. Any such negative developments could materially and adversely affect our business, financial condition, and results of operations.

If we fail to protect our intellectual property rights, our brand and business may suffer.

We consider our copyrights, trademarks, trade names, internet domain names, patents and other intellectual property rights invaluable to our ability to continue to develop and enhance our brand recognition. Unauthorized use of our intellectual property rights may damage our reputation and brands. Our “OneSmart” brand and logo are registered trademarks in China. Our proprietary curricula and teaching materials are protected by copyrights. Unauthorized use of any of our intellectual property may adversely affect our business and reputation. However, preventing unauthorized uses of intellectual property rights could be difficult, costly and time-consuming, particularly in China. Implementation and enforcement of PRC laws relating to intellectual property have historically been deficient and ineffective. Accordingly, protection of intellectual property rights in China may not be as effective as in the United States or other developed countries.

The measures we take to protect our intellectual property rights may not be adequate to prevent infringement on or misuse of our intellectual property. Furthermore, the practice of intellectual property rights enforcement by the PRC regulatory authorities is subject to significant uncertainty. There have been several incidents in the past where third parties used our brand “OneSmart” without our authorization, and on certain occasions we have resorted to litigation to protect our intellectual property rights. Failure to adequately protect our intellectual property could harm our brand name and materially affect our business and results of operations. Furthermore, our management’s attention may be diverted by violations of our intellectual property rights, and we may have to enter into costly litigation to protect our proprietary rights against any infringement or violation.

We may encounter disputes from time to time relating to our use of the intellectual property of third parties.

We cannot assure you that our teaching materials and content, products, platforms or other intellectual property developed or used by us do not or will not infringe upon valid copyrights or other intellectual property rights held by third parties. We may encounter disputes from time to time over rights and obligations concerning intellectual property, and we may not prevail in those disputes. We have adopted policies and procedures to prohibit our employees and contractors from infringing upon third-party intellectual property rights. However, we cannot ensure that our teachers or other personnel will not, against our policies, use third-party copyrighted materials or intellectual property without proper authorization in our classes or via any medium through which we provide our services. We may incur liability for unauthorized duplication or distribution of materials used in our classes or posted on our websites. Any similar claim against us, even without any merit, could also damage our reputation and brand image. Any such event could have a material adverse effect on our business, financial condition and results of operations.

10

Failure to comply with governmental regulation and other legal obligations concerning personal information protection and the unauthorized disclosure, manipulation, illegal sale, procurement of personal data of our students and their parents or other third parties, whether by our employees or third parties could expose us to litigation and/or could adversely affect our reputation and business.

We maintain records of personal data on our internal database, such as names, addresses, phone numbers and other registration information, of our past, existing and prospective students and their parents. If the security measures we use to protect the personal data are ineffective or breached as a result of actions by third parties, employee error, malfeasance or otherwise, we may lose important student data or suffer disruption to our operations. In addition, third parties who receive or are able to access student records due to the failure of our system may misappropriate or illegally disclose confidential information, which could subject us to claims and liabilities. As a result, we could incur significant expenses in connection with rectifying any security breaches, settling any resulting claims and improving protection to prevent further breaches.

In addition, any failure to protect personal information may adversely impact our ability to retain students and increase student enrollment, harm our reputation and materially adversely affect our business, prospects and results of operations. If any of our employees illegally sell our student data to third parties or procure personal data from third parties, they may be subject to individual liabilities. If we or our management team are found to have any involvement in such illegal activities, we and our management team may be held liable as well. While we have adopted internal rules and policies to strictly prohibit and prevent our employees from illegally selling or procuring personal data of our existing or prospective customers, we cannot assure you that all of our employees will abide by these rules and policies at all times. While we have built in safety measures in our information system to identify, deter and avoid such illegal activities and plan to further enhance such measures, we cannot assure you that we will always be able to prevent or identify such illegal activities in a timely manner or at all.

Historically, we experienced incidents in relation to the illegal procurement of personal data. While we believe our policies and procedures in relation to the handling of personal data are adequate, there is a possibility that our employees may use our systems inappropriately by breaching policies or exploiting procedural vulnerabilities in relation to personal data. If any of our employees were found to have engaged in any illegal activities or other wrongdoings, it may cause disruption to our business operations, harm our reputation and undermine our students’ and parents’ perception of our operations, which in turn could have a material adverse effect on our business and results of operation.

11

Negative publicity about us or other players in our industry may harm our brand and reputation and have a material adverse effect on our business and operating results.

Our reputation and brand are vulnerable to many threats that can be difficult or impossible to control. Any malicious or negative publicity about our company, implicating the quality of our services, the integrity of business practices, compliance with laws, and financial condition or prospects, whether with merit or not, could severely harm our reputation, business and results of operations. Furthermore, negative developments in the private education industry, such as regulatory actions against other players or adoption of new laws or regulations that restrict the provision of education services, may result in negative perception of the industry as a whole and undermine the brand recognition we have established. In addition, we are exposed to detrimental conducts against us, including complaints, anonymous or otherwise, to regulatory agencies regarding our operations, accounting, revenues and regulatory compliance. Moreover, any actual or perceived illegal acts, misbehavior or unsatisfactory performance of teachers or staff of other players in our industry may undermine parents’ or students’ perception of the industry as a whole and adversely affect our business and results of operations. Allegations against us may also be posted on the internet by any person or entity that identifies itself or remains anonymous. Defense against the allegations may incur significant time and divert management’s attention, and there is no assurance that we will be able to conclusively refute each of the allegations within a reasonable period of time, or at all. Our reputation may also be negatively affected as a result of public dissemination of allegations or malicious statements about us or our industry, which in turn may materially and adversely affect the trading price of our ADSs.

We may from time to time become a party to litigation, legal disputes, claims or administrative proceedings that may materially and adversely affect us.

We may from time to time become a party to various litigation, legal disputes, claims or administrative proceedings arising in the ordinary course of our business. Negative publicity relating to such litigation, legal disputes, claims or administrative proceedings may damage our reputation and adversely affect the image of our brands and services. In addition, ongoing litigation, legal disputes, claims or administrative proceedings may distract our management’s attention and consume our time and other resources. Furthermore, any litigation, legal disputes, claims or administrative proceedings which are not of material importance may escalate due to the various factors involved, such as the facts and circumstances of the cases, the likelihood of winning or losing, the monetary amount at stake, and the parties concerned continue to evolve in the future, and such factors may result in these cases becoming of material importance to us. For example, in March 2018, certain of our former employees filed lawsuits against one of our subsidiaries in China, claiming that they are entitled to certain options to purchase our shares granted to them before their services with us were terminated. Although we have successfully fended off or settled these lawsuits at minimal costs, we cannot assure you that the outcome of other legal proceedings in the future, if any, will be favorable to us. If any verdict or award is rendered against us or if we decide to settle the disputes, we may be required to incur monetary damages or other liabilities. Even if we can successfully defend ourselves, we may have to incur substantial costs and spend substantial time and efforts in these lawsuits. Consequently, any ongoing or future litigation, legal disputes, claims or administrative proceedings could materially and adversely affect our business, financial condition and results of operations.

Our business is subject to seasonal fluctuations, which may cause our results of operations to fluctuate from term to term. This may result in volatility and adversely affect the price of our ADSs.

Our business is subject to seasonal fluctuations, primarily due to seasonal changes in student enrollments. For example, our courses tend to have the largest student enrollments in our third and fourth fiscal quarters, which run from March 1 to August 31 of each year, primarily because many students take our courses during the summer vacation to improve their academic performance in the subsequent school terms and to prepare for entrance exams to high school and university. However, our expenses vary, and certain of our expenses do not necessarily correspond with changes in our student enrollments and revenues. For example, we make investments in marketing and promotion, teaching staff recruitment and training, and product development throughout the year, and we pay rent for our facilities based on the terms of the lease agreements. In addition, other factors beyond our control, such as special events that take place during a quarter when our student enrollments would normally be high, may have a negative impact on our student enrollments. We expect to continue to experience seasonal fluctuations in our revenues and results of operations. These fluctuations could result in volatility in and adversely affect the price of our ADSs.

12

Higher labor costs in the PRC may adversely affect our business, results of operations and financial conditions.

The economy of China has been experiencing significant growth, leading to inflation and increased labor costs, particularly in the large cities, such as Shanghai, where a large portion of our learning centers are currently located. In addition, we are required by PRC laws and regulations to pay various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of our employees. We expect that our labor costs, including wages and employee benefits, will continue to grow. Unless we are able to pass on these costs to our students by increasing prices of our programs, our profitability and results of operations may be materially and adversely affected.

Pursuant to the Individual Income Tax Law of the PRC, as amended on August 31, 2018, which took effective on January 1, 2019, the amount of taxable income for the comprehensive income of an individual shall be the amount of income in each tax year after deduction of expenses of RMB60,000, special deductibles, special additional deductibles and other deductibles in accordance with relevant laws. Calculations of such special deductibles, special additional deductibles and other deductibles in accordance with relevant laws may result in an increase of our operating costs and expenses.

We have limited insurance coverage, which could expose us to significant costs and business disruption.

We are exposed to various risks associated with our business and operations, and we have limited liability insurance coverage. See “Item 4. Information on the Company—B. Business Overview—Insurance and Safety” for more information. Our insurance coverage for our students and their parents in our learning centers is limited. A successful liability claim against us due to injuries suffered by our students or other people on our premises could materially and adversely affect our reputation, results of operations and financial conditions. Even if unsuccessful, such a claim could cause us adverse publicity, require substantial costs to defend, and divert the time and attention of our management. See “Item 3. Key Information—D. Risk Factors—Accidents, injuries or other harm suffered by our students or other people on our premises may adversely affect our reputation, subject us to liability and cause us to incur substantial expenses.” In addition, we do not have any business disruption insurance. Any business disruption event could result in substantial costs to us and a diversion of our resources.

If we grant employees share options or other equity incentives in the future, our net income could be adversely affected.

In connection with our initial public offering, we undertook a series of corporate restructuring, or 2017 Restructuring. See “Item 4. Information on the Company—A. History and Development of the Company.” Prior to the 2017 Restructuring, we, through our predecessor holding company in the British Virgin Islands, adopted a 2013 share incentive plan in March 2013, which was replaced by a domestic share incentive plan of Shanghai OneSmart approved in February 2016, or the 2015 Plan. As a part of the 2017 Restructuring, we adopted an amended and restated 2015 share incentive plan in September 2017, which was further amended on February 5, 2018, or the Amended and Restated 2015 Plan. The maximum aggregated number of our ordinary shares which may be issued pursuant to all awards under the Amended and Restated 2015 Plan is 336,642,439 Class A ordinary shares, plus an annual 2.0% increase of the total number of ordinary shares outstanding on August 31 of the preceding calendar year of the Company on the first day of each of the nine-fiscal-year period commencing on September 1, 2018. Following the annual increase on September 1, 2021, the maximum aggregate number of shares which may be issued pursuant to all awards under the Amended and Restated 2015 Plan is 727,674,893. As of August 31, 2021, options to purchase a total of 581,844,440 Class A ordinary shares were issued and outstanding under the Amended and Restated 2015 Plan. We were, and may from time to time be, subject to disputes with our current or former employees or advisors who receive our share incentive grants, which may distract our management’s attention and attract negative publicity.

13

We are required to account for share-based compensation in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation, which generally requires a company to recognize, as an expense, the fair value of share options and other equity incentives to employees based on the fair value of equity awards on the date of the grant, with the compensation expense recognized over the period in which the recipient is required to provide service in exchange for the equity award. If we grant options or other equity incentives in the future, we could incur significant additional compensation charges, and our results of operations could be adversely affected.

Discontinuation or reduction of any of the government incentives available to us in the PRC could adversely affect our financial condition and results of operations.

Local PRC governmental authorities have implemented various incentive policies to reward and support the development of companies. With the healthy growth of our business and our increased contribution to local tax income over past few years, we were awarded increasing amounts of government subsidies from local government authorities in Shanghai. Government incentives, as well as preferential tax treatment alike, are subject to review and discretion of the relevant local governmental authorities and may be adjusted or revoked at any time. The discontinuation or reduction of any government incentives currently available to us will cause our income to vary, which could have an adverse effect on our financial condition and results of operations.

If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately or timely report our results of operations or prevent fraud and investor confidence, and the market price of our ADSs may be materially and adversely affected.

We are a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, requires that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F. Our management has concluded that our internal control over financial reporting was effective as of August 31, 2021. See “Item 15. Controls and Procedures—Management’s Report on Internal Control over Financial Reporting.” In addition, if we cease to be an “emerging growth company” as such term is defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, our reporting obligations as a public company may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

During the course of documenting and testing our internal control procedures, we may identify weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. Moreover, our internal control over financial reporting may not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

Generally speaking, if we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations and lead to a decline in the trading price of our ADSs. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets, and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions.

14

If we are not able to continually develop and enhance our online education programs and adapt to rapid changes in technological demands and student needs, we may not acquire and may lose market share and our business could be adversely affected.

Widespread use of the internet for educational purposes is a relatively recent occurrence, and the market for internet-based courses and services is characterized by rapid technological changes and innovations, as well as unpredictable product life cycles and user preferences. We have limited experience with generating revenues from online education programs, and their results are largely uncertain. We must be able to adapt quickly to changing student needs and preferences, technological advances and evolving internet practices in order to compete successfully in online education market. Ongoing enhancement of our online offerings and technologies may entail significant expenses and technological risks. We may not be able to use new technologies effectively or may fail to adapt to changes in the online education market on a timely and cost-effective basis. However, if improvements to our online education programs are delayed, result in systems interruptions or are not aligned with market expectations or preferences, we may not gain market share and our growth prospects could be adversely affected.

We may require additional capital to meet our future capital needs, which may adversely affect our financial position and result in additional shareholder dilution.

We will require significant capital expenditures to fund our future growth. We may need to raise additional funds through equity or debt financings in the future in order to meet our capital needs mostly in relation to the construction of our self-built data centers and future acquisition opportunities. For example, in February 2020, we issued US$25 million convertible senior notes to Yiheng Capital Partners, L.P., or Yiheng Capital. Interest shall be payable semi-annually in arrears at a rate of 4.75% per annum on each August 1 and February 1, commencing on August 1, 2020. The convertible notes will mature on February 28, 2025 unless repurchased or converted in accordance with their terms prior to such date.

If we raise additional funds through further issuances of equity or equity-linked securities, our existing shareholders could suffer significant dilution in their percentage ownership of our company, and any new equity securities we issue could have rights, preferences, and privileges senior to those of holders of our ADSs or ordinary shares.

Risks Related to Our Corporate Structure

If the PRC government finds that the agreements that establish the structure for our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.

Foreign ownership in education services is subject to significant regulations in the PRC. PRC laws and regulations currently require any foreign entity that invests in the education business in China to be an educational institution with relevant experience in providing education services outside China. In addition, foreign investment in private institutions providing compulsory education are prohibited and foreign investment in private institutions providing pre-school, high school or higher education are restricted to Sino-foreign cooperation with the Chinese side playing the major role. See “Item 4. Information on the Company—B. Business overview—Regulation—Regulations Relating to Foreign Investment” for further details. None of our offshore holding companies is an educational institution or provides education services. To comply with PRC laws and regulations, we have entered into (i) a series of contractual arrangements among Shanghai Jing Xue Rui Information and Technology Co., Ltd., or the WFOE, on the one hand, and Shanghai OneSmart Education and Training Co., Ltd., or Shanghai OneSmart, and its shareholders, on the other hand, (ii) a series contractual arrangements among the WFOE, on the one hand, and Shanghai Rui Si Technology Information Consulting Co., Ltd., or Rui Si, and its shareholders, on the other hand, and (iii) a series of contractual arrangements among Yimi Education Technology (Shanghai) Co., Ltd., or the Yimi Shanghai, on the one hand, and Xiangyuan (Shanghai) Education Technology Co., Ltd., or Xiangyuan, and its shareholders, on the other hand. Accordingly, Shanghai OneSmart, Rui Si and Xiangyuan are our variable interest entities. We have been and are expected to continue to be dependent on the contractual arrangements with our VIEs, or the VIE Contractual Arrangements, to operate our after-school education services in China. See “Item 4. Information on the Company—C. Organizational Structure” for more information.

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On May 14, 2021, the State Council promulgated the 2021 Implementation Rules for Private Education Laws, which became effective on September 1, 2021, imposes restrictions on the operation and management of private schools and the capital operation of private education. Pursuant to the 2021 Implementation Rules for Private Education Laws, (1) foreign-invested enterprises established in China and social organizations whose actual controllers are foreign parties shall not sponsor, participate in or actually control private schools that provide compulsory education, (2) social organizations or individuals shall not control any private school that provides compulsory education or any non-profit private school that provides pre-school education by means of merger, acquisition, contractual arrangements, etc., and (3) private schools providing compulsory education shall not conduct any transaction with any related party. Such 2021 Implementation Rules for Private Education Laws may have significant impacts on our business operations and our operations results. Our sponsorship interest in the East Shanghai Foreign Language School may subject to the Implementation Rules.

If the PRC government finds that our contractual arrangements do not comply with its restrictions on foreign investment in education services business, or if the PRC government otherwise finds that we or any of our variable interest entities, or VIEs, are in violation of PRC laws or regulations or lack the necessary permits or licenses to operate our business, the relevant PRC regulatory authorities, including the Ministry of Education, which regulates the education industry in the PRC, the Ministry of Commerce, or MOFCOM, which regulates foreign investments in the PRC, the Ministry of Civil Affairs, which regulates the registration of schools in the PRC, and the State Administration for Market Regulation, which regulates the registration and operation of education training companies in the PRC, would have broad discretion in dealing with such violations or failures, including, without limitation:

● revoking our business and/or operating licenses;

● discontinuing or placing restrictions or onerous conditions on our operations;

● imposing fines, confiscating the income from our PRC subsidiary or our VIEs, or imposing other requirements for our operations with which we or our VIEs may not be able to comply;

● requiring us to restructure our ownership and control structure or operations, including terminating the VIE Contractual Arrangements and deregistering the equity pledges of our VIEs, which in turn would affect our ability to consolidate, derive economic interests from or exert effective control over our VIEs; or

● restricting or prohibiting our use of the proceeds of our initial public offering to finance our business and operations in China.

Any of these actions could cause significant disruption to our business operations and severely damage our reputation, which would in turn materially and adversely affect our business, financial condition and results of operations. If any of these occurrences results in our inability to direct the activities of our VIEs that most significantly impact its economic performance, and/or our failure to receive the economic benefits from our VIEs, we may not be able to consolidate these entities in our consolidated financial statements in accordance with U.S. GAAP.

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Substantial uncertainties exist with respect to the interpretation and implementation of the newly adopted PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.

The “variable interest entity” structure has been adopted by many PRC-based companies, including us, to obtain necessary licenses and permits in the industries that are currently subject to foreign investment restrictions in China. See “—Risks Related to Our Corporate Structure” and “Item 4. Information on the Company— C. Organizational Structure.” The MOFCOM published a discussion draft of the proposed Foreign Investment Law in January 2015, or the 2015 Draft FIL, according to which, variable interest entities that are controlled via contractual arrangements would also be deemed as FIEs, if they are ultimately “controlled” by foreign investors. In March 2019, the National People’s Congress promulgated the Foreign Investment Law, or the 2019 FIL, which will become effective from January 1, 2020 and will replace the major existing laws and regulations governing foreign investment in China. Pursuant to the 2019 FIL, “foreign investments” refer to investment activities conducted by foreign investors “directly” or “indirectly” in China, which include any of the following circumstances: (i) foreign investors setting up foreign-invested enterprises in China solely or jointly with other investors, (ii) foreign investors obtaining shares, equity interests, property portions or other similar rights and interests of enterprises within China, (iii) foreign investors investing in new projects in China solely or jointly with other investors, and (iv) investment in other methods as specified in laws, administrative regulations, or as stipulated by the State Council. Although the 2019 FIL does not introduce the concept of “control” in determining whether a company should be considered as a foreign-invested enterprise, nor does it provide the “variable interest entity” structure as a method of foreign investment, as the 2019 FIL is newly adopted and relevant government authorities may promulgate more laws, regulations or rules on the interpretation and implementation of the 2019 FIL, the possibility cannot be ruled out that the concept of “control” as stated in the 2015 Draft FIL may be embodied in, or the “variable interest entity” structure adopted by us may be deemed as a method of foreign investment by, any of such future laws, regulations and rules. If our consolidated “variable interest entity” were deemed as a foreign-invested enterprise under any of such future laws, regulations and rules, and any of the businesses that we operate were to be included in any “negative list” for foreign investment and therefore subject to foreign investment restrictions or prohibitions, further actions required to be taken by us under such laws, regulations and rules may materially and adversely affect our business and financial condition.

We rely on VIE Contractual Arrangements for our PRC operations, which may not be as effective as direct ownership in providing operational control.

We have relied and expect to continue to rely on VIE Contractual Arrangements to operate our education business in China. For a description of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure.” The VIE Contractual Arrangements may not be as effective as direct ownership in providing us with control over our VIEs.

If we had direct ownership of the VIEs, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of these entities, which in turn could effect changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the VIE Contractual Arrangements, we rely on the performance by our VIEs and their respective shareholders of their obligations under the contracts to exercise control over and receive economic benefits from our VIEs. Any failure by our VIEs or their shareholders to perform their obligations under these contracts would have a material adverse effect on our financial position and performance. Such risks exist throughout the period in which we intend to operate certain portions of our business through VIE Contractual Arrangements. If any disputes relating to these contracts remain unresolved, we will have to enforce our rights under these contracts through the operations of PRC law and arbitration, litigation and other legal proceedings and therefore will be subject to uncertainties in the PRC legal system. Therefore, the VIE Contractual Arrangements may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be.

Any failure by our VIEs or their respective shareholders to perform their obligations under the VIE Contractual Arrangements would have a material and adverse effect on our business.

If any of our VIEs or their respective shareholders fails to perform its respective obligations under the VIE Contractual Arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements, and rely on legal remedies under the PRC laws, including seeking specific performance or injunctive relief and claiming damages, which may not be effective. For example, if the shareholders of our VIEs refuse to transfer their equity interests in our VIEs to us or our designee when we exercise the purchase option pursuant to the VIE Contractual Arrangements, or if they were otherwise to act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractual obligations. In addition, if any third parties claim any interest in such shareholders’ equity interests in our VIEs, our ability to exercise shareholders’ rights or foreclose the share pledge according to the VIE Contractual Arrangements may be impaired. If these or other disputes between the shareholders of our VIEs and third parties were to impair our control over our VIEs, our ability to consolidate the financial results of our VIEs would be affected, which would in turn result in a material adverse effect on our business, operations and financial condition.

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All of the material agreements under the VIE Contractual Arrangements are governed by PRC laws and provide for the resolution of disputes through arbitration in China. Accordingly, these contracts would be interpreted in accordance with PRC laws, and any disputes would be resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce the VIE Contractual Arrangements. Meanwhile, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a VIE should be interpreted or enforced under PRC laws. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. In addition, under PRC laws, rulings by arbitrators are final, parties cannot appeal the arbitration results in courts, and if the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings, which would incur additional expenses and delay. In the event we are unable to enforce the VIE Contractual Arrangements, or if we suffer significant delays or other obstacles in the process of enforcing the VIE Contractual Arrangements, we may not be able to exert effective control over our VIEs, and our ability to conduct our business may be negatively affected.

The shareholders of our VIEs may have potential conflicts of interest with us and not act in the best interest of our company.

The shareholders of our VIEs may have potential conflicts of interest with us. These shareholders may breach, or cause our VIEs to breach, or refuse to renew, the VIE Contractual Arrangements we have with them and our VIEs, which would have a material and adverse effect on our ability to effectively control our VIEs and receive economic benefits from them. For example, the shareholders may be able to cause our agreements with our VIEs to be performed in a manner adverse to us by, among other things, failing to remit payments due under the VIE Contractual Arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise any or all of these shareholders will act in the best interests of our company or such conflicts will be resolved in our favor. If these shareholders do not honor their contractual obligations under the VIE Contractual Arrangements, we may exercise our exclusive option to purchase, or cause our designee to purchase, all or part of the equity interests in the VIEs held by such breaching shareholder to the extent permitted by PRC laws. If we cannot resolve any conflict of interest or dispute between us and these shareholders, we would have to rely on arbitration or legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

The VIE Contractual Arrangements may be subject to scrutiny by the PRC tax authorities, and they may determine that we or our VIEs owe additional taxes, which could negatively affect our financial condition and the value of your investment.

Under applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities subsequent to such transactions. We could face material and adverse tax consequences if the PRC tax authorities determine that the VIE Contractual Arrangements were not entered into on an arm’s-length basis and consequently adjust the income of our VIEs in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction of expense deductions recorded by our VIEs for PRC tax purposes, which could in turn increase their tax liabilities without reducing our PRC subsidiary’s tax expenses. In addition, the PRC tax authorities may impose late payment fees and other penalties on our VIEs for the unpaid taxes. Our consolidated net income could be materially and adversely affected if our VIEs’ tax liabilities increase or if they are required to pay late payment fees or other penalties.

We may lose the ability to use and enjoy assets held by our VIEs that are material to the operation of certain portions of our business if the entity goes bankrupt or becomes subject to a dissolution or liquidation proceeding.

We currently conduct our operations in the PRC through the VIE Contractual Arrangements. As part of these arrangements, our VIEs hold operating permits and licenses and certain assets that are important to the operation of our business. If any of these entities goes bankrupt and all or part of their assets become subject to liens or the rights of third-party creditors, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations. If our VIE undergoes a voluntary or involuntary liquidation proceeding, its equity owner or unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations.

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If the custodians or authorized users of our controlling nontangible assets, including chops and seals, fail to fulfill their responsibilities, or misappropriate or misuse these assets, our business and operations could be materially and adversely affected.

Under PRC laws, legal documents for corporate transactions, including agreements and contracts that our business relies on, are executed using the chop or seal of the signing entity or with the signature of a legal representative whose designation is registered and filed with the relevant PRC industry and commerce authorities. We generally execute legal documents either by affixing chops or seals or having the designated legal representatives sign the documents.

In order to maintain the physical security of our chops, we generally have them stored in secured locations accessible only to authorized employees. Although we monitor such authorized employees, the procedures may not be sufficient to prevent all instances of abuse or negligence. There is a risk that our employees could abuse their authority, for example, by binding the relevant subsidiary or the VIE with contracts against our interests, as we would be obligated to honor these contracts if the other contracting party acts in good faith in reliance on the apparent authority of our chops. If any of the authorized employees obtain and misuse or misappropriate our chops and seals or other controlling intangible assets for whatever reason, we could experience disruption to our normal business operations. We may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from our operations.

Our VIEs may be subject to limitations on their ability to operate private schools or make payments to related parties, or otherwise be materially and adversely affected by changes in PRC laws governing private education providers.

The principal regulations governing private education in China are the Law for Promoting Private Education, or the Private Education Law, and its implementation rules. The Law for Promoting Private Education was amended on November 7, 2016 and on December 29, 2018 and came into effect on September 1, 2017 and on December 29, 2018 respectively. The MOE Draft for Comments has been issued by the MOE on April 20, 2018, and then the MOJ Draft for Comments has been issued by the MOJ on August 20, 2018. Before the 2017 Private Education Law came into effect, a private school may elect to be a school that does not require reasonable returns or a school that requires reasonable returns. A private school that does not require reasonable returns cannot make distribution to its school sponsors. If its sponsor elects to require reasonable returns, a private school must include such election and any additional information required under the PRC regulations in its publicly disclosed articles of association. A number of factors must be taken into consideration when determining the percentage of the school’s net income that would be distributed to the school sponsors as reasonable returns, including the level of a school’s tuition, the ratio of the funds used for education-related activities to the course fees collected, admission standards and educational quality. However, PRC laws and regulations do not provide a formula or guidelines for determining what constitutes a “reasonable return.” PRC laws and regulations require a private school that requires reasonable returns to make an annual appropriation of 25% of its after-tax income to its development fund prior to payments of reasonable returns. Such appropriations are required to be used for the construction or maintenance of the school or for the procurement or upgrade of educational equipment. Furthermore, PRC laws and regulations do not set forth different requirements or restrictions on a private school’s ability to operate its education business based on such school’s status as a school of which the school sponsor requires reasonable returns or a school of which the school sponsor does not require reasonable returns.

As of August 31, 2021, among our learning centers that are registered as private schools, some expressly require reasonable returns and others do not have explicit requirement in their articles of association.

This regulatory landscape, however, have changed significantly after the 2017 Private Education Law comes into effect in September 2017. According to the 2017 Private Education Law, private schools can be established as not-for-profit or for-profit entities, and the term “reasonable return” is no longer used. School sponsors of for-profit schools may obtain operating profits, while schools sponsors of not-for-profit schools cannot obtain operating profits. See “Item 4. Information on the Company—B. Business overview—Regulation—Regulations on Private Education in the PRC—The Law for Promoting Private Education and its Implementation Rules.”

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As a holding company, our ability to pay dividends and other cash distributions to our shareholders depends on our ability to receive dividends and other distributions from our PRC subsidiaries. The amounts of dividends and other distributions our PRC subsidiaries are able to pay to us depends on the amount of service fees paid by our VIEs pursuant to the VIE Contractual Arrangements. King & Wood Mallesons, our PRC legal counsel, advises us that though the Amended Private Education Law does not prohibit the contractual arrangements in relation to schools operating in the PRC, or the payment of service fees by private schools operating in the PRC to their service providers, including the payment of fees pursuant to the contractual arrangements, our PRC legal counsel could not rule out the possibility that the relevant PRC government authorities may take a different view on this or later legislation (for example, the amended implementation rules) may prohibit or restrict the use of VIE Contractual Arrangements, and if that is the case, such authorities may seek to confiscate any or all of the service fees paid by our VIEs, if, among other things, such service fees are viewed as being “reasonable returns” or “profits” taken by the school sponsors of these schools in violation of PRC laws and regulations. The relevant PRC authorities may also seek to stop student enrollments at our schools or, in a worse situation, revoke the operation permits of these schools. As a result, our business and financial performance may be materially and adversely affected.

Risks Related to Doing Business in China

Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations.

Substantially all of our assets and operations are located in China. Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant degree by political, economic and social conditions in China generally.

COVID-19 had a severe and negative impact on the Chinese and the global economy in the first half of 2020. We believe it is unlikely that our business will be suspended because of COVID-19 pandemic considering vaccine rate and the case numbers in China. However, there remains a possibility of further outbreak of COVID-19, and whether this will lead to a prolonged downturn in the economy is still unknown. Even before the outbreak of the COVID-19, the global macroeconomic environment was facing numerous challenges.

The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over China’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

While the Chinese economy has experienced significant growth in the past two or three decades, growth has been uneven, both geographically and among various sectors of the economy, and the rate of growth has been slowing since 2012. Demand of our education services depends, in large part, on economic conditions in the China. Any significant slowdown in the China’s economic growth may adversely affect the disposable income of the families of prospective students and lead to the reduction or delay of the demand for our services, which in turn could affect our financial conditions. In addition, any sudden changes to the Chinese political system or the occurrence of social unrest could also have a material adverse effect on our business, financial condition and results of operations.

Uncertainties with respect to the PRC legal system could adversely affect us.

The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value.

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In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties. Since PRC administrative and court authorities have significant discretion in interpreting, implementing and enforcing statutory provisions and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than some more-developed legal systems. These uncertainties may affect our decisions on the policies and actions to be taken to comply with PRC laws and regulations, and may affect our ability to enforce our contractual rights or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us.

Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have a retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention.

You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in the annual report based on foreign laws.

We are an exempted company incorporated under the laws of the Cayman Islands, we conduct all of our operations in China and majority of our assets are located in China. In addition, all our senior executive officers reside within China for a significant portion of the time and most are PRC nationals. As a result, it may be difficult for you to effect service of process upon us or those persons inside mainland China. In addition, China does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the Cayman Islands and many other countries and regions. Therefore, recognition and enforcement in China of judgments of a court in any of these non-PRC jurisdictions in relation to any matter not subject to a binding arbitration provision may be difficult or impossible.

We may rely on dividends and other distributions on equity paid by our PRC subsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiary to make payments to us could have a material and adverse effect on our ability to conduct our business.

We are a Cayman Islands holding company, and we rely on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and repay any debt we may incur. Our PRC subsidiaries’ ability to distribute dividends is based upon its distributable earnings. Current PRC regulations permit our PRC subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, each of our PRC subsidiaries, as a wholly foreign-owned enterprise in China, is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until the aggregate amount of such reserve reaches 50% of its registered capital. At its discretion, a wholly foreign-owned enterprise may allocate a portion of its after-tax profits based on PRC accounting standards to staff welfare and bonus funds. These reserve funds and staff welfare and bonus funds are not distributable as cash dividends. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may also restrict their ability to pay dividends or make other payments to us. Any limitation on the ability of our PRC subsidiary to distribute dividends or other payments to their respective shareholders could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business.

In addition, the PRC tax authorities may require our PRC subsidiary that entered into contractual arrangement with our VIEs to adjust its taxable income under the VIE Contractual Arrangements it currently has in place with our VIEs and their respective shareholders in a manner that would materially and adversely affect its ability to pay dividends and other distributions to us. See “—Risks Related to Our Corporate Structure—The VIE Contractual Arrangements may be subject to scrutiny by the PRC tax authorities, and they may determine that we or our VIEs owe additional taxes, which could negatively affect our financial condition and the value of your investment.”

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PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of our initial public offering to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

We are an offshore holding company primarily conducting our operations in China. Any funds we transfer to our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, are subject to registration or filing with relevant governmental authorities in China.

According to the relevant PRC regulations on foreign-invested enterprises, or FIEs, in China, capital contributions to our PRC subsidiaries are subject to the requirement of making necessary filings in the Foreign Investment Comprehensive Management Information System, or FICMIS, and registration with other government authorities in China. Any loans to our PRC subsidiaries, which are treated as foreign-invested enterprises, or FIEs under PRC law, are subject to PRC regulations and foreign exchange loan registrations. For example, (a) any foreign loan procured by our PRC subsidiaries is required to be registered with the State Administration of Foreign Exchange, or SAFE, or its local branches, and (b) our PRC subsidiaries may not procure loans which exceed either the cross-border financing risk weighted balance calculated based on a special formula or the difference between their respective registered capital and their respective total investment amount as approved by the MOFCOM or its local branches. Any medium- or long-term loan to be provided by us to our PRC subsidiaries must be filed and registered with the National Development and Reform Committee and the SAFE or their local branches. See “Item 4. Information on the Company—B. Business overview—Regulation—Regulations on Foreign Exchange—Regulations on loans to and direct investment in the PRC entities by offshore holding companies.” We may not obtain these government approvals or complete such registrations on a timely basis, if at all, with respect to future capital contributions or foreign loans by us to our PRC subsidiaries. If we fail to receive such approvals or complete such registration, our ability to use the proceeds of our initial public offering and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business.

On March 30, 2015, the SAFE promulgated the Circular on Reforming the Management Approach Regarding the Foreign Exchange Capital Settlement of Foreign-Invested Enterprises, or SAFE Circular 19, which became effective on June 1, 2015, and partially invalid according to the Circular on Repeating and Invalidating Five Normative Documents Concerning Administration of Foreign Exchange and Some Articles of Seven Normative Documents Concerning Administration of Foreign Exchange promulgated by the SAFE on December 30, 2019. SAFE Circular 19 launched a nationwide reform of the administration of the settlement of the foreign exchange capitals of FIEs and allows FIEs to settle their foreign exchange capital at their discretion, but continues to prohibit FIEs from using the Renminbi fund converted from their foreign exchange capitals for expenditure beyond their business scopes, providing entrusted loans or repaying loans between nonfinancial enterprises. On June 9, 2016, the SAFE promulgated the Circular on Reforming and Standardizing the Administrative Provisions on Capital Account Foreign Exchange, or SAFE Circular 16. SAFE Circular 16 reiterates some of the rules set forth in SAFE Circular 19, but changes the prohibition against using Renminbi capital converted from foreign currency-denominated registered capital of an FIE to issue Renminbi entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises. Violations of these Circulars could result in severe monetary or other penalties. SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to use Renminbi converted from the net proceeds of our initial public offering to fund the establishment of new entities in China by our VIEs, to invest in or acquire any other PRC companies through our PRC subsidiaries or to establish new consolidated variable interest entities in the PRC, which may adversely affect our business, financial condition and results of operations.

Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.

The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and by China’s foreign exchange policies. Since June 2010, the Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. On November 30, 2015, the Executive Board of the International Monetary Fund (IMF) completed the regular five-year review of the basket of currencies that make up the Special Drawing Right, or the SDR, and decided that with effect from October 1, 2016, Renminbi is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, the Euro, the Japanese yen and the British pound. In the fourth quarter of 2016, the Renminbi has depreciated significantly in the backdrop of a surging U.S. dollar and persistent capital outflows of China. This depreciation halted in 2017, and the Renminbi appreciated approximately 7% against the U.S. dollar during this one-year period. After that, Renminbi has been fluctuating against the U.S. dollar significantly and unpredictably. With the development of the foreign exchange market and progress toward interest rate liberalization and Renminbi internationalization, the PRC government may in the future announce further changes to the exchange rate system, and we cannot assure you that the Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future.

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Our revenues and costs are mostly denominated in Renminbi. Significant revaluation of the Renminbi may have a material and adverse effect on your investment. For example, to the extent that we need to convert U.S. dollars we receive from our initial public offering into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our Class A ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount available to us. In addition, appreciation or depreciation in the value of the Renminbi relative to U.S. dollars would affect our financial results reported in U.S. dollar terms regardless of any underlying change in our business or results of operations.

Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited, and we may not be able to adequately hedge our exposure, or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency.

Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.

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 receive all of our revenues in Renminbi. Under our current corporate structure, our Cayman Islands holding company primarily relies on dividend payments from our PRC subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of the SAFE by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our PRC subsidiaries in China may be used to pay dividends to our company. However, approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval to use cash generated from the operations of our PRC subsidiaries and VIEs to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi.

In light of the flood of capital outflows of China, the PRC government may from time to time impose more restrictive foreign exchange policies and step up scrutiny of major outbound capital movement. More restrictions and substantial vetting process may be required by SAFE or other government authorities to regulate cross-border transactions falling under the capital account. The PRC government may at its discretion further restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our ADSs.

Certain PRC regulations may make it more difficult for us to pursue growth through acquisitions.

The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in 2006 and amended in 2009, and some other regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. Such regulation requires, among other things, that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor acquires control of a PRC domestic enterprise and involve any of the following circumstances: (i) any important industry is concerned, (ii) such transaction involves factors that impact or may impact national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. Moreover, the Anti-Monopoly Law promulgated by the Standing Committee of the National People’s Congress, or the NPC Standing Committee, that became effective in 2008 requires that transactions that are deemed concentrations and involve parties with specified turnover thresholds must be cleared by the MOFCOM before they can be completed. In addition, PRC national security review rules that became effective in September 2011 require acquisitions by foreign investors of PRC companies engaged in military-related or certain other industries that are crucial to national security be subject to security review before consummation of any such acquisition. In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of these regulations to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval or clearance from the MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

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Our failure to make full contributions to various employee benefits plans as required by PRC laws may expose us to potential penalties.

Companies operating in China are required to participate in various government sponsored employee benefit plans, including certain social insurance schemes and housing funds, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees up to a maximum amount specified by the local governments from time to time at locations where they operate businesses. The requirement of employee benefit plans has not been implemented consistently by the local governments in China given the different levels of economic development in different locations. We did not pay, or were not able to pay, certain past social security and housing fund contributions in strict compliance with the relevant PRC regulations for and on behalf of our employees due to differences in local regulations and inconsistent implementation or interpretation by local authorities in the PRC. To efficiently administrate the contribution of employment benefit plans of our employees in some cities, we engage third-party agents to make the contribution for our employees. Any failure to make such contribution directly exposes us to the penalties by the local authorities. We will also incur additional costs for the alternative arrangement if we were asked to terminate the existing arrangement with the third-party agents.

PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC laws.

In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37. SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities. SAFE Circular 37 further requires amendment to the SAFE registrations in the event of any changes with respect to the basic information of the offshore special purpose vehicle, such as change of a PRC individual shareholder, name and operation term, or any significant changes with respect to the offshore special purpose vehicle, such as increase or decrease of capital contribution, share transfer or exchange, or mergers or divisions. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future.

If our shareholders who are PRC residents fails to make the required registration or to update the previously filed registration, our PRC subsidiaries may be prohibited from distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to us, and we may also be prohibited from making additional capital contributions into our PRC subsidiaries. On February 13, 2015, the SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1, 2015, and partially invalid according to the Circular on Repeating and Invalidating Five Normative Documents Concerning Administration of Foreign Exchange and Some Articles of Seven Normative Documents Concerning Administration of Foreign Exchange promulgated by the SAFE on December 30, 2019. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under the SAFE Circular 37, will be filed with qualified banks instead of the SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of the SAFE.

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All of our shareholders who we are aware of being subject to the SAFE regulations have completed the necessary registrations with the local SAFE branch or qualified banks as required by SAFE Circular 37. We cannot assure you, however, that all of these individuals may continue to make required amendments or updates on a timely manner, or at all. See “Item 4. Information on the Company—B. Business overview—Regulations— Regulations on Foreign Exchange—Regulations Relating to Foreign Exchange Registration of Overseas Investment by PRC Residents.” We can provide no assurance that we are or will in the future continue to be informed of identities of all PRC residents holding direct or indirect interest in our company. Any failure or inability by such individuals to comply with the SAFE regulations may subject us to fines or legal sanctions, such as restrictions on our cross-border investment activities or our PRC subsidiary’s ability to distribute dividends to, or obtain foreign exchange-denominated loans from, our company or prevent us from making distributions or paying dividends. As a result, our business operations and our ability to make distributions to you could be materially and adversely affected.

Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company. Pursuant to these rules, PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be the PRC subsidiaries of such overseas-listed company, and complete certain other procedures. In addition, an overseas-entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests. We and our directors, executive officers and other employees who are PRC citizens or who reside in the PRC for a continuous period of not less than one year and who have been granted options are subject to these regulations. Failure to complete the SAFE registrations may subject them to fines and legal sanctions, and may also limit our ability to contribute additional capital into our PRC subsidiaries and limit our PRC subsidiaries’ ability to distribute dividends to us. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under PRC law. See “Item 4. Information on the Company—B. Business overview—Regulation—Regulations on Foreign Exchange—Regulations on Stock Incentive Plans.”

In addition, the State Administration of Taxation, or the SAT, has issued certain circulars concerning employee share options and restricted shares. Under these circulars, our employees working in China who exercise share options or are granted restricted shares will be subject to PRC individual income tax. Our PRC subsidiary has obligations to file documents related to employee share options or restricted shares with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options. If our employees fail to pay or we fail to withhold their income taxes according to relevant laws and regulations, we may face sanctions imposed by the tax authorities or other PRC government authorities. See “Item 4. Information on the Company—B. Business overview—Regulation—Regulations on Foreign Exchange—Regulations on Stock Incentive Plans.”

If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.

Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with “de facto management body” within the PRC is considered a “resident enterprise” and will be subject to the enterprise income tax on its global income at the rate of 25%. The implementation rules define the term “de facto management body” as the body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. In 2009, the SAT issued a circular, known as SAT Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners like us, the criteria set forth in the circular may reflect the SAT’s general position on how the “de facto management body” test should be applied in determining the tax resident status of all offshore enterprises. According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China, and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s major assets, accounting books and records, company seals, and board and shareholder resolutions are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.

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We believe none of our entities outside China is a PRC resident enterprise for PRC tax purposes. See “Item 4. Information on the Company—B. Business overview—Regulation—Legal Regulations Over Tax in the PRC—Income Tax.” However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities, and uncertainties remain with respect to the interpretation of the term “de facto management body.” If the PRC tax authorities determine that we or any of our subsidiaries outside of China is a PRC resident enterprise for enterprise income tax purposes, then we or any such subsidiaries could be subject to PRC tax at a rate of 25% on our worldwide income, which could materially reduce our net income. In addition, we would also be subject to PRC enterprise income tax reporting obligations. Furthermore, if the PRC tax authorities determine that we are a PRC resident enterprise for enterprise income tax purposes, gains realized on the sale or other disposition of our ADSs or Class A ordinary shares and dividends distributed to our non-PRC shareholders may be subject to PRC withholding tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains or dividends are deemed to be from PRC sources. Any such tax may reduce the returns on your investment in the ADSs.

We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies, and heightened scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.

The SAT has promulgated several rules and notices to tighten the scrutiny over acquisition transactions in recent years, including the Provisional Measures for the Administration of Withholding of Enterprise Income Tax for Non-resident Enterprises, or the Non-resident Enterprises Measures, the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or SAT Circular 698, the Notice on Several Issues Regarding the Income Tax of Non-PRC Resident Enterprises, or SAT Circular 24, the Notice on Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-PRC Resident Enterprises, or SAT Circular 7 and the Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, or SAT Circular 37. Pursuant to these rules and notices, if a non-PRC resident enterprise transfers its equity interests in a PRC tax resident enterprise, such non-PRC resident transferor must report to the tax authorities at the place where the PRC tax resident enterprise is located and is subject to a PRC withholding tax of up to 10%. In addition, if a non-PRC resident enterprise indirectly transfers PRC taxable properties, referring to properties of an establishment or a place in the PRC, real estate properties in the PRC or equity investments in a PRC tax resident enterprise, by disposing of equity interests in an overseas nonpublic holding company without a reasonable commercial purpose and resulting in the avoidance of PRC enterprise income tax, such transfer will be deemed as a direct transfer of PRC taxable properties and gains derived from the transfer may be subject to the PRC withholding tax at a rate of up to 10%. SAT Circular 7 sets out several factors to be taken into consideration by tax authorities in determining whether an indirect transfer has a reasonable commercial purpose. An indirect transfer satisfying all the following criteria will be deemed to lack reasonable commercial purpose and be taxable under PRC law: (i) 75% or more of the equity value of the intermediary enterprise being transferred is derived directly or indirectly from the PRC taxable properties; (ii) at any time during the one-year period before the indirect transfer, 90% or more of the asset value of the intermediary enterprise (excluding cash) is comprised directly or indirectly of investments in the PRC, or 90% or more of its income is derived directly or indirectly from the PRC; (iii) the functions performed and risks assumed by the intermediary enterprise and any of its subsidiaries that directly or indirectly hold the PRC taxable properties are limited and are insufficient to prove their economic substance; and (iv) the foreign tax payable on the gain derived from the indirect transfer of the PRC taxable properties is lower than the potential PRC income tax on the direct transfer of such assets. Nevertheless, the indirect transfer falling into the safe harbors under SAT Circular 7 may not be subject to PRC tax and the scope of the safe harbors include qualified group restructuring as specifically set out in SAT Circular 7, public market trading and tax treaty exemptions.

Under SAT Circular 7 and other PRC tax regulations, in the case of an indirect transfer, entities or individuals obligated to pay the transfer price to the transferor must act as withholding agents and are required to withhold the PRC tax from the transfer price. If they fail to do so, the transferor is required to report and pay the PRC tax to the PRC tax authorities. If neither party complies with the tax payment or withholding obligations under SAT Circular 7, the tax authority may impose penalties such as late payment interest on the transferor. In addition, the tax authority may also hold the withholding agents liable and impose a penalty of 50% to 300% of the unpaid tax on them. The penalty imposed on the withholding agents may be reduced or waived if the withholding agents have submitted the relevant materials in connection with the indirect transfer to the PRC tax authorities in accordance with SAT Circular 7.

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SAT Circular 37, which took effect on December 1, 2017, superseded the Non-resident Enterprises Measures and SAT Circular 698 as a whole and amended some provisions in SAT Circular 24 and SAT Circular 7. SAT Circular 37 purports to clarify certain issues in the implementation of the above regime, by providing, among others, the definition of equity transfer income and tax basis, the foreign exchange rate to be used in the calculation of withholding amount, and the date of occurrence of the withholding obligation.

We have conducted and may conduct acquisitions or restructurings that may be governed by the aforesaid tax regulations, as well as any possible future acquisition of us. We cannot assure you that the PRC tax authorities will not, at their discretion, impose tax return filing obligations on us or our subsidiaries, require us or our subsidiaries to provide assistance to an investigation by PRC tax authorities with respect to these transactions or adjust any capital gains. Any PRC tax imposed on a transfer of our shares, or equity interests in our PRC subsidiary or any adjustment of such gains, would cause us to incur additional costs and may have a negative impact on our results of operations.

Although the audit report included in this annual report is prepared by auditors who are currently inspected by the Public Company Accounting Oversight Board (the “PCAOB”), there is no guarantee that future audit reports will be prepared by auditors inspected by the PCAOB and, as such, in the future investors may be deprived of the benefits of such inspection. Furthermore, trading in our securities may be prohibited under the Holding Foreign Companies Accountable Act (the “HFCA Act”) if the SEC subsequently determines our audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely, and as a result, U.S. national securities exchanges, such as the Nasdaq, may determine to delist our securities. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, would amend the HFCA Act and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.

As part of a continued regulatory focus in the United States on access to audit and other information currently protected by national law, in particular in Mainland China and Hong Kong, the Holding Foreign Companies Accountable Act, or the HFCAA has been signed into law on December 18, 2020. The HFCAA states that if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection for the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the U.S. Accordingly, under the current law this will happen in 2024.

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. We will be required to comply with these rules if the SEC identifies us as having a “non-inspection” year under a process to be subsequently established by the SEC.

On June 22, 2021, the U.S. Senate passed a bill which, if passed by the U.S. House of Representatives and signed into law, would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two. The SEC is also assessing how to implement other requirements of the HFCAA, including the listing and trading prohibition requirements described above.

On November 5, 2021, the SEC approved the PCAOB Rule 6100 that provides a framework for the PCAOB to determine whether it is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. The rule states that the PCAOB will make these determinations promptly.

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On December 2, 2021, the SEC adopted final amendments to its rules implementing the HFCAA, or the Final Amendments. The Final Amendments include requirements to disclose information, including the auditor name and location, the percentage of shares of the issuer owned by governmental entities, whether governmental entities in the applicable foreign jurisdiction with respect to the auditor has a controlling financial interest with respect to the issuer, the name of each official of the Chinese Communist Party who is a member of the board of the issuer, and whether the articles of incorporation of the issuer contains any charter of the Chinese Communist Party. The Final Amendments also establish procedures the SEC will follow in identifying issuers and prohibiting trading by certain issuers under the HFCAA. According to the Final Amendments, the SEC will identify Commission-Identified Issuers for fiscal years beginning after December 18, 2020. A Commission-Identified Issuer will be required to comply with the submission and disclosure requirements in the annual report for each year in which it was identified. If a registrant is identified as a Commission-Identified Issuer based on its annual report for the fiscal year ended December 31, 2021, the registrant will be required to comply with the submission or disclosure requirements in its annual report filing covering the fiscal year ended December 31, 2022.

On December 16, 2021, the PCAOB issued the HFCAA Determination Report, according to which our auditor is subject to the determinations that the PCAOB is unable to inspect or investigate completely. The HFCAA Determination Report is a report relaying to the SEC its determinations that the PCAOB is unable to inspect or investigate completely registered public accounting firms in Mainland China and Hong Kong due to positions taken by Chinese authorities. The report, issued under Rule 6100, lists dozens of accounting firms based in Mainland China and Hong Kong subject to the determinations. Under Rule 6100, the PCAOB will reassess its determinations at least annually. Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Our auditor, Onestop Assurance PAC, is headquartered in Singapore, not mainland China or Hong Kong and was not identified in this report as a firm subject to the PCAOB’s determination. Therefore, our auditor is not currently subject to the determinations announced by the PCAOB on December 16, 2021, and it is currently subject to PCAOB inspections.

While our auditor is based in Singapore and is registered with PCAOB and has been inspected by the PCAOB on a regular basis, in the event it is later determined that the PCAOB is unable to inspect or investigate completely our auditor because of a position taken by an authority in a foreign jurisdiction, then such lack of inspection could cause trading in the our securities to be prohibited under the Holding Foreign Companies Accountable Act, and ultimately result in a determination by a securities exchange to delist the our securities. In addition, the recent developments would add uncertainties to our offering and we cannot assure you whether NYSE or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. It remains unclear what the SEC’s implementation process related to the above rules will entail or what further actions the SEC, the PCAOB or Nasdaq will take to address these issues and what impact those actions will have on U.S. companies that have significant operations in the PRC and have securities listed on a U.S. stock exchange (including a national securities exchange or over-the-counter stock market). In addition, the above amendments and any additional actions, proceedings, or new rules resulting from these efforts to increase U.S. regulatory access to audit information could create some uncertainty for investors, the market price of our Ordinary Shares could be adversely affected, and we could be delisted if we and our auditor are unable to meet the PCAOB inspection requirement or being required to engage a new audit firm, which would require significant expense and management time.

While we understand that there has been dialogue among the CSRC, the SEC and the PCAOB regarding the inspection of PCAOB-registered accounting firms in China, there can be no assurance that we will be able to comply with requirements imposed by U.S. regulators. Delisting of our ADSs would force holders of our ADSs to sell their ADSs. The market price of our ADSs could be adversely affected as a result of anticipated negative impacts of these executive or legislative actions upon, as well as negative investor sentiment towards, companies with significant operations in China that are listed in the United States, regardless of whether these executive or legislative actions are implemented and regardless of our actual operating performance.

Risks Related to Our ADSs

The trading price of our ADSs is likely to be volatile, which could result in substantial losses to investors.

During our fiscal year ended August 31, 2021, the trading price of our ADSs has ranged from US$7.625 to US$0.533 per ADS. The trading price of our ADSs is likely to continue to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in the United States. The securities of some of these companies, especially companies in the education industry, have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in their trading prices. The trading performances of other Chinese companies’ securities after their offerings may affect the attitudes of investors toward Chinese companies listed in the United States in general and consequently may impact the trading performance of our ADSs, regardless of our actual operating performance.

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In addition to market and industry factors, the price and trading volume for our ADSs may be highly volatile for factors specific to our own operations, including the following:

● variations in our revenues, earnings and cash flow;

● announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;

● changes in financial estimates by securities analysts;

● detrimental adverse publicity about us, our services or our industry;

● additions or departures of key personnel;

● release of lockup or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and

● actual or potential litigation or governmental and regulatory investigations or penalties resulting from our failure to comply with applicable laws, regulations and policies, including those adopted by the government to apply more stringent social, ethical and environmental standards in connection with increased global focus on these areas.

Any of these factors may result in large and sudden changes in the volume and price at which our ADSs will trade.

In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

Our dual-class voting structure will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.

We have a dual-class voting structure such that our ordinary shares consist of Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share in respect of matters requiring the votes of shareholders, while holders of Class B ordinary shares are entitled to twenty votes per share, subject to certain exceptions. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any transfer of Class B ordinary shares by a holder thereof to any person or entity which is not an affiliate of such holder, such Class B ordinary shares shall be automatically and immediately converted into the equal number of Class A ordinary shares.

As of the date of this report, there are no Class B ordinary shares issued and outstanding. If we issue new Class B ordinary shares in the future, such shareholders will gain considerable influence over matters requiring shareholder approval, over matters such as electing directors and approving material mergers, acquisitions or other business combination transactions. This concentrated control will limit your ability to influence corporate matters and could also discourage others from pursuing any potential merger, takeover or other change of control transactions, which could have the effect of depriving the holders of our Class A ordinary shares and our ADSs of the opportunity to sell their shares at a premium over the prevailing market price.

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If securities or industry analysts do not publish research or publishes inaccurate or unfavorable research about our business, or if they adversely change their recommendations regarding our ADSs, the market price for our ADSs and trading volume could decline.

The trading market for our ADSs will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade our ADSs or publishes inaccurate or unfavorable research about our business, the market price for our ADSs would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for our ADSs to fall.

The sale or availability for sale of substantial amounts of our ADSs could adversely affect their market price.

Sales of substantial amounts of our ADSs in the public market, or the perception that these sales could occur, could adversely affect the market price of our ADSs and could materially impair our ability to raise capital through equity offerings in the future. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of our ADSs. In addition, we may issue additional ordinary shares or ADSs for future acquisitions. If we pay for our future acquisitions in whole or in part with additionally issued ordinary shares or ADSs, your ownership interest in our company would be diluted and this, in turn, could have a material adverse effect on the price of our ADSs.

Because we do not expect to pay dividends in the foreseeable future, you must rely on a price appreciation of our ADSs for a return on your investment.

We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our ADSs as a source for any future dividend income.

Our board of directors has discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our ADSs will likely depend entirely upon any future price appreciation of our ADSs. There is no guarantee that our ADSs will appreciate in value or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in our ADSs, and you may even lose your entire investment in our ADSs.

Our memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our Class A ordinary shares and ADSs.

Our sixth amended and restated memorandum and articles of association contain certain provisions to limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions, including a provision that grants authority to our board of directors to establish and issue from time to time one or more series of preferred shares without action by our shareholders and to determine, with respect to any series of preferred shares, the terms and rights of that series. These provisions could have the effect of depriving our shareholders and ADSs holders of the opportunity to sell their shares or ADSs at a premium over the prevailing market price by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transactions.

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You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.

We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our sixth amended and restated memorandum and articles of association, the Companies Act (2020 Revision) of the Cayman Islands, or the Companies Act, and the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands have a less developed body of securities laws than the United States. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than those available under the Companies Act) or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but our directors are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.

It may be difficult for overseas regulators to conduct investigation or collect evidence within China.

Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigations initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the securities regulatory authorities in the Unities States may not be efficient in the absence of mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the PRC territory. While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase the difficulties you face in protecting your interests. See also “—Risks Related to Our ADSs—You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law” for risks associated with investing in us as a Cayman Islands company.

Certain judgments obtained against us by our shareholders may not be enforceable.

We are a Cayman Islands company and all of our assets are located outside of the United States. All of our current operations are conducted in China. In addition, all of our current directors and officers are nationals and residents of countries other than the United States, except Dr. Yan Gong, one of our independent directors. Substantially all of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers.

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You, as holders of ADSs, may have fewer rights than holders of our Class A ordinary shares and must act through the deposit to exercise those rights.

Holders of ADSs do not have the same rights as our registered shareholders. As a holder of our ADSs, you will not have any direct right to attend general meetings of our shareholders or to cast any votes at such meetings. You will only be able to exercise the voting rights that are carried by the underlying Class A ordinary shares represented by your ADSs indirectly in accordance with the provisions of the deposit agreement. Under the deposit agreement, you may vote only by giving voting instructions to the depositary. Upon receipt of your voting instructions, the depositary will try, as far as is practicable, to vote the Class A ordinary shares underlying your ADSs in accordance with your instructions. If we ask for your instructions, then upon receipt of your voting instructions, the depositary will try to vote the underlying Class A ordinary shares in accordance with these instructions. If we do not instruct the depositary to ask for your instructions, the depositary may still vote in accordance with instructions you give, but it is not required to do so. You will not be able to directly exercise your right to vote with respect to the underlying Class A ordinary shares unless you withdraw the shares and become the registered holder of such shares prior to the record date for the general meeting.

Under our articles of association, the minimum notice period required to convene a general meeting is ten days. When a general meeting is convened, you may not receive sufficient advance notice of the meeting to withdraw the shares underlying your ADSs and become the registered holder of such shares to allow you to attend the general meeting and to vote directly with respect to any specific matter or resolution to be considered and voted upon at the general meeting. In addition, under our articles of association, for the purposes of determining those shareholders who are entitled to attend and vote at any general meeting, our directors may close our register of members and/or fix in advance a record date for such meeting, and such closure of our register of members or the setting of such a record date may prevent you from withdrawing the Class A ordinary shares underlying your ADSs and becoming the registered holder of such shares prior to the record date, so that you would not be able to attend the general meeting or to vote directly. If we ask for your instructions, the depositary will notify you of the upcoming vote and will arrange to deliver our voting materials to you. We have agreed to give the depositary at least 30 business days’ prior notice of shareholder meetings. Nevertheless, we cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the underlying Class A ordinary shares represented by your ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions. This means that you may not be able to exercise your right to direct how the shares underlying your ADSs are voted, and you may have no legal remedy if the shares underlying your ADSs are not voted as you requested.

You may experience dilution of your holdings due to the inability to participate in rights offerings.

We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. Under the deposit agreement, the depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exempt from registration under the Securities Act with respect to all holders of ADSs, or are registered under the provisions of the Securities Act. The depositary may, but is not required to, attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unable to establish an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have a registration statement declared effective. Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings as a result.

You may be subject to limitations on the transfer of your ADSs.

Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems it expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including in connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of ADS holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays. The depositary may refuse to deliver, transfer or register transfers of our ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

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We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from requirements applicable to other public companies that are not emerging growth companies, including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 for so long as we remain an emerging growth company. As a result, if we elect not to comply with such auditor attestation requirements, our investors may not have access to certain information they may deem important.

The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. However, we have elected to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth company.”

We are now a public company and expect to incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and the New York Stock Exchange, impose various requirements on the corporate governance practices of public companies.

We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costly. After we are no longer an “emerging growth company,” we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC. For example, as a result of becoming a public company, we will need to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We also expect that operating as a public company will make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the New York Stock Exchange corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the NYSE corporate governance listing standards.

As a Cayman Islands company listed on the New York Stock Exchange, we are subject to the New York Stock Exchange corporate governance listing standards. However, New York Stock Exchange rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the New York Stock Exchange corporate governance listing standards. As we have chosen, and may from time to time to choose, to follow home country practice exemptions with respect to certain corporate matters, such as the requirement of shareholders’ approval for adoption of an equity incentive plan or composition of our committees of board of directors, our shareholders may be afforded less protection under Cayman Islands law than they would under the NYSE rules applicable to U.S. domestic issuers. See “Item 16G. Corporate Governance.”

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We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.

Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

● the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;

● the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;

● the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time;

● the selective disclosure rules by issuers of material nonpublic information under Regulation FD; and

● certain audit committee independence requirements in Rule 10A-3 of the Exchange Act.

There can be no assurance that we will not be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders of our ADSs or Class A ordinary shares.

A non-U.S. corporation will be a passive foreign investment company, or PFIC, for any taxable year if either (1) at least 75% of its gross income for such year consists of certain types of “passive” income; or (2) at least 50% of the value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce passive income or are held for the production of passive income (the “asset test”). We do not believe that we were a PFIC for the taxable year ended August 31, 2021 and do not anticipate becoming a PFIC for the foreseeable future. However, no assurance can be given in this regard because the determination of whether we are or will become a PFIC is a fact-intensive inquiry made on an annual basis that depends, in part, upon the composition of our income and assets. Fluctuations in the market price of our ADSs may cause us to become a PFIC for the current or subsequent taxable years because the value of our assets for the purpose of the asset test may be determined by reference to the market price of our ADSs from time to time (which may be volatile). The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets.

If we were to be or become a PFIC for any taxable year during which a U.S. Holder (as defined in “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations”) holds our ADSs or Class A ordinary shares, certain adverse U.S. federal income tax consequences could apply to such U.S. Holder. See “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Rules.”

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

We established Shanghai OneSmart Education and Training Co., Ltd. (formerly known as Shanghai OneSmart Education Information Consulting Co., Ltd.), or Shanghai OneSmart, a domestic company in China, in 2007. In January 2008, we opened our first learning center in Shanghai to provide premium K-12 after-school education services.

In June 2009, we established Shanghai Rui Si Technology Information Consulting Co., Ltd., or Rui Si, to provide tutoring services that are currently covered under our premium young children education program.

In September 2011, we established Shanghai Jing Xue Rui Information and Technology Co., Ltd., or the WFOE.

In October 2015, we established Shanghai Jing Yu Investment Co., Ltd., or Jing Yu, which is a wholly owned subsidiary of Shanghai OneSmart in the PRC. Currently, it operates the learning centers for our premium tutoring programs outside of Shanghai.

In March 2017, we incorporated Meta Data Limited (formerly known as OneSmart International Education Group Limited), or Meta Data, an exempted company incorporated under the laws of the Cayman Islands, as our offshore holding company to facilitate financing and offshore listing. In connection with our initial public offering, we subsequently undertook a series of corporate restructuring, or 2017 Restructuring. In March 2017, OneSmart Education acquired OneSmart Edu Inc., or OneSmart BVI, a company incorporated in the British Virgin Islands, as our intermediary holding company, which holds 100% of the share capital of OneSmart Edu (HK) Limited, or OneSmart HK. In September 2017, OneSmart HK acquired all of the equity interests in the WFOE, which entered into a series of contractual arrangements with Shanghai OneSmart and its then shareholders. Subsequent to that, we also entered into a series of contractual arrangements with Rui Si and its then shareholders. In January 2018, the WFOE entered into another series of contractual arrangements with Shanghai OneSmart and its then shareholders, replacing the original set. As a result of the foregoing transactions, OneSmart Education became the entity that consolidates Shanghai OneSmart and Rui Si. The 2017 Restructuring was completed under the common control of Xi Zhang, our founder. See also “Item 4. Information on the Company-C. Organizational Structure-Contractual Arrangements with Shanghai OneSmart, Rui Si and their respective shareholders.”

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During the past few years, we pursued several strategic acquisitions of companies in the education industry that are complementary to our business in order to expand and diversify our service offerings. We have integrated and will continue to integrate such acquired business into our operations.

In September 2018, we acquired 100% equity interest in Tianjin Huaying Education Co., Ltd., one of the largest K-12 after-school education service provider based in Tianjin, China, for cash consideration of RMB240.0 million.

In October 2018, we made a strategic investment by acquiring 30% minority equity stake in Beijing Tus-Juren Education Technology Co., Ltd., or Tus-Juren, a leading K-12 after-school education company in China, for consideration of RMB239.4 million. In March 2019, we disposed 12% of equity stake in Tus-Juren.

During the fiscal year 2019, we extended a series of five-year convertible loan in an aggregate amount of RMB668.7 million to Tus-Juren, or the 2019 Tus-Juren Convertible Loan. Such convertible loan bears a 10% annual coupon and we have the option to convert the principal and any unpaid interests of such convertible loan into new equity interest of Tus-Juren at a pre-determined valuation at any time after either the third or fourth anniversary from the borrowing date, as applicable. During the fiscal year 2020, we extended another series of five-year convertible loan in an aggregate amount of RMB51.2 million to Tus-Juren, or the 2020 Tus-Juren Convertible Loan, with terms substantially similar to the 2019 Tus-Juren Convertible Loan. In February 2020, the annual coupon rate of these convertible loans was adjusted to nil, applicable to the outstanding loan period starting from December 1, 2019. As a part of the Yutang transactions in December 2020, we have the option to convert the principal and any unpaid interests of the convertible loans to Tus-Juren into new equity interests of Yutang Inc. at any time within five years starting from December 15, 2020. During the fiscal year 2020, we made a series of 12-month loan available to Tus-Juren and its subsidiaries in an aggregate amount of RMB170.9 million. A majority of such loans bear a 4.35% annual interest rate.

In March 2019, we entered into a US$139 million term facility agreement with a group of arrangers led by UBS AG, Singapore Branch. Pursuant to the agreement, we were provided an interest bearing secured term facility of up to US$139 million. The term facility has a three-year term from the initial drawdown date and should be repaid in installments. We drew down the US$139 million term facility in full in April 2019. The proceeds from this term facility were used for our working capital, capital expenditure, and other general corporate purposes. As of the date of this annual report, the current total outstanding balance of the loan is US$125 million, after a scheduled repayment in October 2020.

In February 2020, we entered into a share swap agreement and an asset and business transfer agreement with Yimi Education Technology Inc., or Yimi Cayman, its affiliated companies and VIE, Shanghai Yimi Education Technology Co., Ltd., or Shanghai Yimi to acquire certain technologies and business as part of Company’s continuing efforts to enhance the quality and customer experience on OneSmart Online, the online platform of the Company, for a total consideration of approximately RMB311.1 million. The foregoing transactions are collectively referred to as the “Yimi transactions.” In connection with the Yimi transactions, in December 2019, we established OneSmart Online Edu Inc., an exempted company duly incorporated and validly existing under the laws of the Cayman Islands, which is 100% owned by OneSmart BVI before the share swap occurs. Immediately after the share swap, we, through OneSmart BVI, hold 90% share capital of OneSmart Online Edu Inc., which in turns hold 100% share capital of Yimi Cayman. Yimi Education Technology (HK) Limited, or Yimi HK, which was established by Yimi Cayman under the laws of Hong Kong and was wholly owned by Yimi Cayman, holds 100% share capital Yimi Education Technology (Shanghai) Co., Ltd., or Yimi Shanghai, a WFOE under the laws of the PRC. In December 2019, we established Xiangyuan (Shanghai) Education Technology Co., Ltd., or Xiangyuan, which entered into a series of contractual agreements with its shareholders and Yimi Shanghai. As a result of the Yimi transactions, OneSmart Education became the entity that consolidates Xiangyuan. See also “Item 4. Information on the Company-C. Organizational Structure-Contractual Arrangements with Xiangyuan and its shareholders.”

In September 2019, we acquired 15% equity interest in Shanghai Yousheng Education and Technology Co., Ltd., or Yousheng, a company providing online English tutoring services to young children in China. In June 2020, we step-acquired 85% equity interest in Yousheng for a total consideration of approximately RMB145.4 million, and we held in aggregate 100% of its equity interest.

In August 2020, we acquired the business from Beijing Ruiyipeiyou Education and Technology Co., Ltd., or Ruiyipeiyou, a company providing online math tutoring services to young children in China, for a total consideration of approximately RMB131.3 million.

In December 2020, we entered into certain agreements to establish a sizable and stronger small-class business by merging a number of small-class K-12 after-school education businesses that OneSmart has invested in for a few years into Yutang Inc., or Yutang. The foregoing transactions are collectively referred to as the “Yutang transactions.” In connection with Yutang transactions, we entered into a share sale and purchase agreement with Yutang, Tus-Juren related parties, pursuant to which, Yutang has agreed to issue 100,340,631 ordinary shares of Yutang to us as share consideration in exchange for all the equity interest of JUREN Education & Technology Group Inc. held by us. We also entered into a share subscription agreement with Yutang Inc. and its shareholder, Tus-Juren related parties and Tianjin Huaying Education Consulting Co., Ltd. to acquire certain equity interest in Yutang. Pursuant to which, Yutang has agreed to (i) issue 36,762,505 ordinary shares of Yutang to us at a purchase price of US$0.0001 per share as consideration to acquire all the equity interests of Tianjin Huaying Education Consulting Co., Ltd. indirectly held by us through VIE contractual arrangement, and (ii) issue 2,188,244 ordinary shares to us at a purchase price of US$0.0001 per share as consideration to acquire our equity interest in Tus-Juren online business. After the Yutang transactions, we became a minority shareholder of Yutang.

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On March 28, 2018, our ADSs commenced trading on the NYSE under the symbol “ONE.” We raised approximately US$162.7 million in net proceeds from the issuance of new shares from the initial public offering after deducting underwriting commissions and the offering expenses payable by us.

On April 28, 2022, our shareholders approved the change of the Company’s name from OneSmart International Education Group Limited to Meta Data Limited at the Company’s annual general meeting. In connection with the change of name, we changed our ticker symbol from “ONE” to “AIU.”

Our principal executive offices are located at 2161 North Zhongshan Road, Putuo District, Shanghai, People’s Republic of China. Our telephone number at this address is +86-21-2250-5999. Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

See “Item 5. Operating and Financial Review and Prospects-B. Liquidity and Capital Resources-Capital Expenditures” for a discussion of our capital expenditures.

B. Business Overview

Historically, the Company operated as one the leading providers of K-12 after-school education services in China which developed a comprehensive K-12 after-school education platform that primarily focused on young children mathematics training services and FasTrack English services through a nationwide network of 480 learning centers across 40 cities in China. The Company had three primary segments, i. e. OneSmart VIP, OneSmart Young Children Education and One Smart Online.

On July 24, 2021, the General Office of Central Committee of the Communist Party of China and the General Office of the State Council jointly released Opinions on what they termed “Further Reducing the Burden of Homework and Off-campus Tutoring for Compulsory Education Students,” (the “Double Reduction Policy”), which basically requires suspension of all subject-based off-campus tutoring business targeting pre-school kids and K12 students. As a result, on October 12, 2021, the Company suspended all education programs and learning centers in China. The revenue and assets from One Smart Online for fiscal year ended August 31, 2021 are RMB48.1 million (US$7.4 million) and RMB3.1 million (US$0.5 million), respectively. The revenue and assets from One Smart Yong Children Education for fiscal year ended August 31, 2021 are RMB546.5 million (US$84.6 million) and RMB122.9 million (US$19.0 million), respectively. The revenue and assets from these two segments are approximately 17.4% of the total revenue and 25.0% of the total assets, respectively, for the fiscal year ended August 31, 2021. Since the suspension, the Company has been in active discussion with regulatory authorities with regard to winding down of the suspended business and implementing its new business model.  

The new business model takes many of the components not affected by the suspension and expands with new initiatives. The model consists of the following segments but will not include providing subject-based off-campus training and tutoring to pre-school kids or K-12 students in China. As such, the new business will not be adversely affected by the Double Reduction Policy.

1. The Company has developed certain software technology to commercialize a smart student ID card (“Smart ID Card”). The Smart ID Cards are designed to track the students’ attendance in real time, and automatically notify administrators in the event of danger or odd behaviors of students.

2. The Company also plans to build a smart training system incorporating virtual reality, artificial intelligence, blockchain and other technologies in order to facilitate the teaching and training process. If successfully developed and implemented, the smart training system is expected to enhance the immersion and interactivity of virtual reality and is suitable for many education and training scenarios.

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Our Service-oriented Learning System

We introduced and implemented distinctive “Power Learning” education philosophy and case study teaching method, which aims at cultivating the study motivation, capability and perseverance of each student by means of interactive learning experience, throughout all stages of our education programs and services and in all of our learning centers. By carefully tailoring our teaching to each student’s capabilities and aptitude, we had become a “Third Classroom” for our students, complementing the education they receive at home and in school. We offered our students a customized and comprehensive learning experience through the following six key components, which are organically combined to form our learning system:

● Power Learning Index aptitude assessment.  Before the commencement of our in-class tutoring, we assessed the capabilities of our students and matched them with our teachers through our proprietary power learning index, or PLI, an aptitude assessment test. PLI consisted of questions designed to assess the student’s analytical and problem solving ability, and psychological and behavioral patterns from multiple dimensions including time management ability, exam taking skill, in-class learning ability, learning interests, learning goals, self-initiative, self-discipline, decisiveness and perseverance. Based on the test results and the preliminary academic assessment for the subjects in which the students are enrolled, our assigned teacher would prepare a customized study plan. The study plan took into consideration the student’s strengths and weaknesses identified from the PLI test, set out the academic goals of our tutoring services, established a timeline for each key milestone and develops weekly or monthly tutoring schedules.

● Personalized and customizable teaching material.  Our big data driven online teaching platform, OneSmart Teaching Bank, equipped and furnished our teachers with a vast database of approximately 17 million teaching notes, practice questions and learning resources to enable them to effectively tailor the teaching note for each student beforehand based on study plan.

OneSmart Teaching Bank allowed flexibility and adjustability for our teachers to redesign or reinforce the teaching notes available in our database. Guided by the customized study plan, our teacher could generate the tailored teaching notes by selecting curriculum for a specific course at the desired difficulty level, and then designing a presentation format in combination with a set of test exercises suitable for the student’s learning aptitude. The teacher might choose to upload the tailored handout to the system for other teachers’ review, and such handout, if highly rated among the teachers, would then be contributed to the database and shared on the teaching platform in order to continuously enrich our teaching and learning resources. Thus, our teaching platform was not only efficient, flexible and well-stocked, but was also continuously growing.

Our OneSmart Teaching Bank contained over 11 million test questions, which were collected and were constantly updated by our in-house research team. As a useful supporting tool, this platform filters and compiles questions that were constantly answered with low accuracy rates. For each of these questions, we provided detailed analysis to help students decipher the weak link in knowledge covered by the question as well as the route of solutions to tackle similar questions. Our teachers targeted the students’ weak areas of academic knowledge to enhance problem-solving techniques and tested skills through a combination of teaching tools including the one-on-one in-depth analysis and discussions, problem sets, and mock tests and thus efficiently improve academic performance.

● Integrated offline-to-online services.  Throughout the learning process, we offered our students integrated and comprehensive services. We provided offline-to-online targeted services for our students and their parents, including real-time communication, assistance and student advisory services from our dedicated team of study advisors and various extra-curricular activities.

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Upon joining our premium education programs, each student was assigned to a study advisor who kept track of the student’s academic performance, progress and study habits throughout his or her study with us. The study advisor also communicated with parents and teachers to report each student’s performance, adjusted the student’s study plan after discussing with the teachers, and takes a supervisory role to help him or her develop good study habits. Our students were also offered a wide selection of extra-curricular classes or services such as complementary classes including online live-streaming tutoring courses, family education training, after-class Q&A sessions, one-on-one psychological counseling services and seminars and lectures focusing on exam preparations.

● iOneSmart Study Master and other apps.  We sought to keep the parents updated of their children’s performance in each step of our education process. Through our proprietary mobile apps that underpin our teaching management function, such as iOneSmart Study Master and iHappyMath, we offered an interactive communication channel from which parents can review teachers’ teaching notes, received reports on children’s academic performance and communicate to us their concerns and suggestions, which are generally responded to within 24 hours. iOneSmart Study Master also extended the tutoring dynamic between the teachers and students after class. Through scanning the bar codes assigned to the questions that students answered wrong, teachers could easily collect these questions via our apps and identify the student’s weak link in knowledge, and further customized the teaching notes. Our apps enabled parents and students to access students’ records, including the results of PLI aptitude test, the test resulted throughout the learning process, and regular assessment and study reports.

● Well-trained teachers.  We had a dedicated teacher team. We recruited our teachers through a multi-step recruiting process and the teachers recruited undergo standardized and comprehensive training courses covering orientation and regular ongoing training at our “OneSmart University” teacher training center and “OneSmart Online Colleges” which were dedicated to the development and improvement of teachers’ professional skills in order to maintain our teaching quality. Our continuous on-the-job training kept our teachers abreast of our latest education content and our learning software and facilities.

● Specifically designed study rooms or classrooms.  Our students of OneSmart VIP programs typically took their classes in private study rooms at our learning centers. Each study room ensured the privacy and comfort of the teaching session while all the necessary and up-to-date teaching facility was equipped in the room. The classrooms for our premium young children education services were installed with multi-media technology tools, which created a relaxing, interactive, and interest-enhancing environment that stimulated the learning interest and knowledge absorption of the students.

Our Education Programs

As a leading premium K-12 after-school education service provider in China, we had built a comprehensive K-12 education platform that encompasses the following:

● OneSmart VIP business. Premium tutoring services for exam preparation under “OneSmart VIP” brand, or OneSmart VIP programs, had been our core service offering. We provided classes covering all key academic subjects taught in primary and secondary schools in China to students between the third grade and the twelfth grade of the K-12 system in one-on-one and one-on-three teacher-to-student settings.

● OneSmart Young Children Education Business. Our young children education business consisted of two segments. (i) HappyMath. Our premium young children mathematics and Chinese training services were offered under the brand “HappyMath” and were typically designed in one-on-eight or one-on-ten teacher-to-student settings, focusing on interest cultivation and early development in the subjects of mathematics, Chinese, science and computer programming to students from early childhood to primary school. (ii) FasTrack English. Our premium young children English training services were offered under the brand “FasTrack English” and were typically designed in one-on-eight or one-on-ten teacher-to-student settings, focusing on STEM (science, technology, engineering and mathematics) and kids MBA English to students from early childhood to primary school.

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● OneSmart Online. We launched OneSmart Online in the fiscal year of 2020, which provided online courses to our existing student base from OneSmart VIP, HappyMath and FasTrack English programs and newly enrolled online students. OneSmart Online leveraged latest education technologies and OMO technologies to offer compelling value proposition by bringing convenience, quality teacher, program flexibility and enhanced value to our students. OneSmart Online allowed students to take classes during the weekday or on demand by offering live broadcasting programs through mobile applications. In 2020, we acquired certain technologies and partial businesses from Yimi Education Technology Inc., Shanghai Yousheng Education and Technology Co., Ltd. and Beijing Ruiyipeiyou Education and Technology Co., Ltd. We successfully integrated their advanced technologies to further improve OneSmart Online platform. The acquisitions added a key component to our premium online services. Their technology and development on big data analytics and artificial intelligence and advanced online courses helped create synergies with OneSmart Online to drive interactive smart learning and further improve learning experience.

The following table provides a list of our previous main after-school tutoring program offerings:

Primary School

Middle School

High School

Category

Brand

Subject

K

1

2

3

4

5

6

7

8

9

10

11

12

OneSmart VIP business

OneSmart VIP

All Key Subjects(1)

-

-

-

●

●

●

●

●

●

●

●

●

●

OneSmart Young Children Education

HappyMath

Mathematics and Chinese

●

●

●

●

●

●

●

-

-

-

-

-

-

FasTrack

English Language

●

●

●

●

●

●

●

-

-

-

-

-

-

OneSmart Online(2)

OneSmart International Education

Subjects for International School

-

-

-

●

●

●

●

●

●

●

●

●

●

Yimi Education

All Key Subjects

-

-

-

●

●

●

●

●

●

●

●

●

●

OneSmart Online Young Children Education

Mathematics and Chinese; English Language

●

●

●

●

●

●

●

-

-

-

-

-

-

Note :

(1) Including mathematics, English, Chinese, physics, chemistry, geography and history.

(2) Including our online business only. The revenues from all the OMO classes were recognized under OneSmart VIP and OneSmart Young Children Education businesses.

OneSmart VIP Business

We had been providing premium after-school tutoring services under our “OneSmart VIP” brand in one-on-one and one-on-three teacher-to-student settings with a full spectrum of course offerings covering key academic subjects taught at Chinese primary and secondary schools, including mathematics, English, Chinese, physics, chemistry, geography and history. Students enrolled in our premium tutoring services were typically between the third grade and the twelfth grade of the K-12 system in China. The programs were conducted in 319 learning centers that we operated as of August 31, 2021 and we had over 100,901 average monthly enrollments in the premium tutoring services in the fiscal year of 2021.

Through our integrated OneSmart learning system, we had been able to carry out our “Power Learning” education philosophy to spark our students’ intellectual curiosity, improve their study habits, foster their confidence and enhance their learning capabilities. The primary goal of our premium tutoring services was to fully explore, cultivate and realize our students’ potential and helped them develop a strong and consistent track record in their academic achievements.

OneSmart Young Children Education Business

In the fiscal year 2020, we combined HappyMath and FasTrack English into one business unit to enhance the sales effectiveness and management efficiency. Both of these two brands targeted young students from kindergarten to primary school.

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HappyMath

HappyMath was one of our course offerings to children from kindergarten to primary school, focusing on interest cultivation and early development in various subjects. Many of the services for the same subjects were offered at ascending levels of difficulty in order to suit our students’ different ages and intellectual development stages. For instance, in our regular mathematics courses, we had grouped students into three phases based on their ages, and additionally offered certain courses for primary school admission purposes.

We offered mathematics courses to students from kindergarten to the fourth grade in primary school. The mathematics program was dedicated to developing the student’s calculation, problem solving, logic thinking, observation and reasoning abilities. We also offered Chinese, science and computer programming to students from kindergarten to the fifth grade in primary school. Our Chinese courses aimed to enhance language organization and communication skills, nurture the students’ appreciation in Chinese literature, and develop their public speaking skills. Our science courses aimed to cultivate students’ interests in science and inspire their exploratory spirit. Our computer programming courses aimed to improve their aptitude to modern technological trends.

In the fiscal years ended August 31, 2019, 2020 and 2021, the number of average monthly enrollments in our HappyMath program was 27,024, 27,569 and 24,957, respectively.

FasTrack English

FasTrack English offersed premium young children English tutoring services. We acquired 55.6% equity interests in Yuhan (Shanghai) Information Technology Co., Ltd., or Yuhan, in January 2018, which allowed us to hold 75.6% equity interests in Yuhan in total. Yuhan provided offline English tutoring services under the brand of “FasTrack English.” After the integration with our existing business, FasTrack English focused on STEM English tutoring services to students from three to twelve year-old with a class format ranging from one-on-eight or one-on-ten teacher-to-student settings. FasTrack English aimed to improve the comprehensive English capacities of young children.

In the fiscal years ended August 31, 2021, the number of average monthly enrollments in our FasTrack English program reached 24,544.

Our HappyMath and FasTrack English adopted group case study method. This method was designed to help our students develop disciplined and sustainable study habits, and improve independent thinking and studying ability. Under the group case study method, our students were incentivized to prepare for their lessons in before-class preview, to have extensive in-class interaction and discussions, and to engage in after-class review and reflection. We utilized scenario-based multi-media teaching content, including instructional videos and audio materials, and white board course management system to make the instructional process more efficient, and integrate story scenarios, role play and team work into the classroom to stimulate the students’ learning interest and motivation throughout the learning experience. To enhance transparency, improve learning experience and build trust between students and teachers, we also provided online streaming of some of our classes and the parents could observe the in-class performance of the students and teachers. Aided by our various apps, parents could watch a pre-recorded class video and communicate with teachers or study advisors on their children’s study and classroom performance.

Our premium young children education services were not designed to focus solely on improving students’ academic performance results at public schools. Nonetheless, these programs might help our students achieve academic excellence or improve school performance by developing their general independent learning and analytical capabilities and stimulating their curiosity in learning.

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Recent Program Initiatives

● OneSmart Online. We launched OneSmart Online in the fiscal year of 2020, which provided online courses to our existing student base from OneSmart VIP, HappyMath and FasTrack English programs and newly enrolled online students. OneSmart Online was a critical part of our long-term strategy. OneSmart Online leveraged latest education technologies and OMO technologies to offer compelling value proposition by bringing convenience, quality teacher, program flexibility and enhanced value to our students. OneSmart Online allowed students to take classes during the weekday or on demand by offering live broadcasting programs through mobile applications. In 2020, we acquired certain technologies and partial businesses from Yimi Education Technology Inc., Shanghai Yousheng Education and Technology Co., Ltd. and Beijing Ruiyipeiyou Education and Technology Co., Ltd. We successfully integrated their advanced technologies to further improve OneSmart Online platform. The acquisitions added a key component to our premium online services. Their technology and development on big data analytics and artificial intelligence and advanced online courses helped create synergies with OneSmart Online to drive interactive smart learning and further improve learning experience.

OneSmart Online served the core needs of students and parents to improve test scores by leveraging its customized approach to teaching based on student aptitude. This was a key differentiator from online big class format or other courses. The online K-12 after-school education industry was massive and online education was rapidly growing in popularity since the COVID-19 outbreak began. The pursuit of teaching efficiency required by parents would drive the continuous penetration of premium personalized online educational products going forward. Our goal was to establish OneSmart Online as the leading online-based premium education services platform to better serve the high-end demand through both online and offline channels. In the cities where we had both offline and online presence, we adopted same price for offline and online class and regarded OneSmart Online business as a supplementary to our solid offline business in the form of “take-out” service. We believed that our online strategies would help us expand into lower tier cities in the long run.

● Premium Services Enhancement. We had been constantly upgrading our premium services in various ways, aiming to improve customer satisfaction. We integrated our education programs with advanced education research products and proprietary technologies. In particular, our latest UPC 12.0 (Unique Personalized Coach), our proprietary teaching and service system, was able to upgrade curriculum database and analyze teaching and study effectiveness. We also integrated IDT 8.0 (Interest Driven Teaching), our latest proprietary HappyMath education system, with OMO technologies, artificial intelligence tools and smart devices to enhance student’ satisfaction. Furthermore, we integrated the PIER 5.0 (Positive Innovative English Reinforcement), our latest proprietary FasTrack English teaching methodology, with AI and 3D technologies to enhance student engagement and learning outcome.

● Elite VIP 1-on-1 Services. We re-launched Elite VIP education services in early fiscal year of 2020 after its initial launch in early fiscal year of 2019 and subsequent suspension due to the outbreak of COVID-19. The new product was priced 80% higher than regular product of our OneSmart VIP business as an upgraded version supported by higher quality teachers and more premium services provided through new technologies, to address the consumption upgrade demand in tier-1 and major tier-2 cities. The Elite VIP program was designed for one-stop school admission planning.

● HappyMath VIP Program. To adapt to the regulatory changes on school admission practices particularly in Shanghai, we launched Practical Math Program, or PMP, in September 2020 to address a broader market demand. The PMP was priced 50% higher than regular product of our HappyMath business. This VIP program was designed to enlighten young children’s early interest in math and to offer online study sessions for preview and review during weekdays.

● FasTrack VIP Program. In September 2020, we launched a Kids MBA English program, which is priced 70% higher than regular product of our FasTrack English Program, provided upgraded content and services by leveraging new technologies. This VIP program was designed to broaden young children’s global vision.

● Overseas Education Program. The Company plans to provide online education and tutoring services exclusively to students outside of China and will teach subjects such as Chinese language and mathematics, and provide overseas education preparation and planning services to students residing within China. The Company will also explore business opportunities relating to vocational education and training and family counseling.

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Curriculum and Teaching Material Development

We based our curriculum and education content on the philosophy and ultimate goal of improving our students’ study capabilities, knowledge and academic performance. As different programs and classes within each program target students with diversified age groups and needs, we customized the teaching materials accordingly.

Our curriculum closely tracked the standard K-12 curriculum of China’s primary and secondary schools. We covered all core K-12 subjects, including mathematics, English, Chinese, physics, chemistry, geography and history.

The development of our teaching materials typically started with our development team’s thorough review of recent teaching and training materials from leading public schools, as well as any new examination requirements and trends to keep up with the changing academic and examination conditions in the PRC education system. Our development team also worked closely with our teachers and solicit feedback from them based on their tutoring experience and constantly updated our centralized database of teaching notes and exam test questions. Leveraging OneSmart Teaching Bank and students’ PLI aptitude test results, our teachers were able to develop and design customized teaching notes and selectively chose the practice questions for each student based on their grade level, study habits, recent academic performance and their academic goals. The teachers might choose to upload their tailored teaching notes to the system for other teachers’ review, and the highly rated teaching notes would be contributed to our database which further enriches our database.

To provide academic and research support to our premium tutoring services and to diversify our education service offerings, we acquired an 80% equity interests in East Shanghai Foreign Language School, a domestic school for compulsory education. Our experience in managing and operating the full-time school had contributed to our teaching and learning resources and curriculum development capabilities.

We had a curriculum and teaching materials development team of over 100 specialists, who were dedicated to developing, updating and improving our teaching materials tailored to different regions and study needs. We also formed a “OneSmart Power Learning Institute” that focuses on analyzing local examination policy development and evaluating corresponding curriculum improvements. We also had a product development team that worked with our education service team and sales and marketing team to design and promote the new program offerings.

Our Learning centers

We operated a network of 498 learning centers across 44 cities in China as of August 31, 2021.

We had a dedicated and experienced management team at our headquarters focusing on learning center expansion and site selection. We went through a comprehensive evaluation process for any expansion and new site selection, with joint efforts and contribution from our senior management, business development team and other administrative departments.

The layout and interior design of each learning center was determined by the type of programs offered in that center. Our classrooms at the learning centers were constructed with specific requirements tailored to the different programs. We emphasized the privacy of small-size study room for our premium tutoring services while ensuring that all the necessary teaching facilities were available in the room. Classrooms of our premium young children education services were installed with the multi-media technology tools and CCTVs for parental auditing. In addition to the teaching classrooms, most of our learning centers were equipped with rooms with different functions to meet the parents’ and students’ needs, including:

● Consulting rooms: We offered consulting, course selection, registration and other advisory services in the consulting rooms.

● Common study classrooms: Our students had free access to our common study classroom where they could prepare for courses before the classes or review and do their assignments after the classes. It also offered a venue for the students to interact with each other.

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● OneSmart Paradise: It was the leisure area available to students at most of learning centers for our premium tutoring services and premium young children education services. We offered various toys, facilities and activities with which students could make new friends and expand their network while playing the games and undertaking the activities together.

● Resting areas: Parents could rest at our designated areas and wait for their children during class hours. Facilities like free wireless internet and vending machines were available.

We were mindful about the safety of our students at our learning centers and implement high safety standards in the design and construction process, and were compliant with local regulations on location choice and constructions. We strived to create an engaging learning environment for both parents and students while ensuring that teaching could be conducted safely and smoothly.

The director of each learning center was responsible for overall management, including student recruitment, staffing and teaching curriculum. All of our service functions had step-by-step procedures that are well-documented for our staff to follow.

Asides from the learning centers we operated, we also worked with certain institutions through franchise arrangements to operate our program offerings and collect a franchise fee from them. As of August 31, 2021, there were 5 learning centers to which we grant franchise under franchise agreements with our OneSmart VIP business and Fastrack English business respectively, and we expected to keep the number of our franchise learning centers at a minimal level. For the fiscal year ended August 31, 2021, franchise fees contributed to an immaterial portion of our total net revenues. To optimize our geographic penetration and expansion in an asset light way, we might selectively enter into more franchise arrangements with third-party operators.

Our Teaching Staff

We had a team of dedicated and capable teaching staff with teaching and management experience. We believed that our teaching staff were critical to maintaining the quality of our services and promotion of our brand and reputation. We maintained a set of qualification standards when selecting and training our teachers to ensure that we could provide consistent and high-quality education to our students.

● Systematic recruitment process.  Approximately 40% of our teachers were recruited from specialized teachers’ colleges in China. We recruited our teachers through on-campus recruitment of teachers’ college graduates and, from time to time, through social channels. We aimed to recruit high-caliber teachers through a multi-step recruitment process, including (i) application; (ii) screening; (iii) qualification tests; (iv) lecture auditions; and (v) interviews. During the recruitment process, we focused on the academic background, communication skills and classroom demeanor of these teacher candidates. We also targeted teacher candidates with energetic and positive personalities who can effectively connect with and motivate our students.

● On-going training, evaluation and development.  Training was a critical part of our daily operations and ensures that the quality of our education services is maintained at a high level. Before being certified as our full teachers, new teachers were required to undergo one month of comprehensive orientation and online and offline training at our OneSmart University and OneSmart Online College, where they familiarized themselves with One Smart Teaching Bank and improved their teaching skills. All of our full-time teachers were required to continue to participate in training programs on a regular basis so that they stay abreast of our latest education content and our learning software and facilities. Other teaching staff also underwent similar systematic online and offline training courses tailored to each individual’s position and specific responsibility.

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We had established a system to evaluate and incentivize our teachers to improve their teaching skills, service quality and teaching results. Among other things, we utilized a 10-level ranking system for teachers at our premium tutoring programs. Through this ranking system, we rated teachers based on a set of criteria, including overall performance, seniority, student and parent reviews, historical refund and retention rates, and the level of ranking for each teacher was directly linked to his or her compensation. To conform to teachers’ ranks in public schools, we cooperated with, and were licensed by, the China Education Association to certify our teachers. In addition, we constantly conducted performance review and adjusted the ranking of teachers. Our teachers went through quarterly examinations and certain number of teachers with low rate in the examinations would end their employment with us. Meanwhile, we encouraged our teachers to put their own spin in their classes to keep students engaged and motivated.

● Career advancement and continued education.  We were committed to the career advancement and continuing education of our teachers. We provided both online and offline training in management skills to our selected teachers. Based on various key performance indicators such as overall teaching ranking, student reviews and refund rate, capable and experienced teachers also had the opportunity to be promoted to directors of our learning centers or our headquarters. As of August 31, 2021, more than 90% of the learning center directors were promoted internally within our OneSmart system.

● Competitive compensation package.  We believed that the compensation package we offered to our teaching staff, which was comprised of a fixed base salary and lecture bonus fees, was competitive in the market. Our competitive compensation and career development opportunity helped ensure the stability of our teaching staff.

Our Students and Student Services

Students on OneSmart Platform. Over the years, we have maintained large and fast-growing student enrollment. Our average monthly enrollments for the fiscal years ended August 31, 2019, 2020 and 2021, were 158,346, 170,995 and 170,854, respectively.

We charge our after-school education programs based on prepaid class units. After a student signs the service contract and purchases a fixed amount of class units, he or she would be deemed to have enrolled with us. The pre-paid class units were consumed when the student took classes under our after-school education programs. In addition, with our approval, the student might use the unconsumed class units on certain programs or subjects different from the ones originally registered for at the time of purchase.

Each OneSmart VIP class typically lasted for 120 minutes, which translated into three class units. Each of our premium young children classes typically lasted for 80 minutes (excluding the break time), which translated into two class units.

Student Services. We provided integrated and comprehensive services to our students and parents through our teachers and study advisors. After the in-class tutoring, our teachers would also make themselves available to answer questions and provide additional guidance on study materials during the scheduled free Q&A sessions if our students studied at our learning centers after class.

Each student was assigned with a study advisor to provide real-time assistance to our student and his or her parents, including establishment and updating of the student’s file, class scheduling and adjustment, follow-ups on parents’ review over the student’s learning experience, periodic assessment on student’s progress, and coordination among the teachers, parents, students and us. To facilitate communication, study advisors had periodical meet-the-parents sessions to update parents on their children’s study progression, discussed with the parents on their and teacher’s observation of the student’s performance, sought students’ and parents’ feedback on our programs, and encouraged the students and parents to provide additional input to adjust and optimized the students’ study plan together with their teachers. Our study advisors would also supervise our students’ study habits and work with our students to help relieve anxiety, maintain motivation and build self-confidence. We provided parenting courses to our parents and our parents also have opportunities to interact with our teachers and study advisors.

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Service Quality Assurance. We endeavored to maintain high service quality consistently at our learning centers. We required our teachers to utilize our OneSmart Teaching Bank and teach each class in accordance with our teaching guidance and course materials. We held weekly meetings to discuss teaching plans and any special accidents or events in the previous week and all teachers and administrative staff are encouraged to join the weekly meetings. Our teachers would share teaching notes with the parents through our mobile app. Moreover, each of our advisors was in close contact with the students and parents through in-person, telephone and mobile app communication. We also provided online streaming of some of our classes and parents could observe the classroom performance of the students and teachers. We had a customer service center in our headquarters, the main functions of which included receiving enquiries, regularly following up on students and parents’ feedback to our education services and teachers, and addressing course-related issues. We also had a quality control team that supervised our customer service center.

Technology

We have built our technology platform and infrastructure relying primarily on proprietary software and systems.

● OneSmart Teaching Bank.  Our proprietary online teaching resources database contained approximately 17 million teaching notes and over 11 million test questions for OneSmart VIP programs. Our online teaching bank enabled our teachers to gain access to the vast teaching resources and further develop and design customized teaching notes and selectively choose practice questions for each student based on their grade level, study habits, recent academic performance and academic goals. It also enabled our teachers and research and development team to collaboratively design, develop and improve the curriculum and share know-how and useful teaching materials efficiently.

● Teaching Service Management.  Underpinning our teaching service management function are our mobile apps such as iOneSmart Study Master and iHappyMath app, which are accessed by our students and their parents for real-time progress tracking and interactions, study plan adjustment, homework assignment and class management. By creating a responsive communication channel between teachers and their students, iOneSmart Study Master also extends the tutoring dynamics between the teachers and students after class. Our technology platform allows for centralized cloud-based storage and analysis of data that we collect on our students, teachers and our curriculum, creating a virtuous feedback loop for continuous improvement of our student experience and sales and marketing effectiveness.

● Operation Management.  Our UPC operation management system is a unified enterprise resources planning and customer resources management system, which was developed by our in-house information technology team to build a set of operational and management information systems that outline protocols for and improve the efficiency of how we expand and operate our learning center network. The system integrates our business operations, including sales and marketing, daily operation, teaching and research management, teachers’ recruiting and training, key performance indicators tracking, operation statement generation, and contract management. The system scientifically schedules courses, matches teachers and students, and allocates students to classes. In the day-to-day operations of our established learning centers, the directors of the learning centers keep close track of a series of operating indicators. These metrics are submitted to and tracked through our systems by management in our headquarters on a daily basis, allowing for centralized administration of adjustments to local strategies.

● Online-merge-offline (OMO) Technologies.  Leveraging OMO technologies, we launched OneSmart Online in February 2020 that provides online courses to our existing student base from OneSmart VIP, HappyMath and FasTrack English programs and newly enrolled online students that allows students to take classes during the weekday or on demand by offering live broadcasting program through mobile application. We continued to enhance our OneSmart Online products and technologies including our latest online teaching platform Cloud Teaching System 6.0. The utilization of OMO technologies also helps to enhance customers services to both students and parents.

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We have implemented performance monitoring for all of our web sites and apps to enable us to respond quickly to potential issues. Our web sites are hosted at our self-owned servers and facilities in Shanghai. The facility provides redundant utility systems and a backup electric generator. All servers have redundant power supplies and file systems to maximize system and data availability.

Our in-house information technology department has a team specialized in the maintenance, update and development of our technology platform. Our information technology team had 85 employees as of August 31, 2021.

Branding, Marketing and Sales

We positioned ourselves as a premium K-12 private education services provider in China targeting affluent and mass affluent families. We employed a variety of marketing and recruiting methods to attract students and increase enrollments:

Referrals. We believe that an important contributor to our student recruitment has been word-of-mouth referrals by our students and parents who share their experience with other students and parents. Our student enrollment has benefited and will continue to benefit through referrals from our student network and growing student base, and advantages derived from our reputation, brand, and our students’ academic performance.

Media Advertisement. We advertise through China’s leading search engines and internet portals. We also strategically place our advertisements in television channels and other traditional media at outdoor advertising venues that can attract the attention of our prospective students and parents, such as airports. Our course consultants distribute informational brochures, posters and flyers in the vicinity of our learning centers.

Social Events and Activities. We have sponsored a series of national academic competitions and annual meetings of the Institution of China Education. We participate in or host themed open classes for public and private schools and colleges to promote awareness of our brands and programs. We also collaborated with Peking University and Shanghai Education Development Foundation to provide the OneSmart scholarship to students from Peking University and teachers’ colleges and universities.

Online Platform. Our own online platform has also contributed significantly to increasing student loyalty and enhancing our brand awareness. It facilitates direct and frequent communications with our prospective students and parents and lowers our student acquisition costs.

Cross-Selling. As we had already gained a strong foothold in premium tutoring market, we were branching out into other education segments. The premium OneSmart VIP tutoring program, as well as HappyMath and FasTrack English, were targeted at different age groups, while OneSmart Online provides online broadcasting courses to our existing student base during the weekday or on demand. The combination of programs provided a good cross-marketing opportunity to attract students from other programs.

Our course consultant team and our study advisors are in charge of the enrollment of new students and retention of existing students respectively.

Intellectual Property

Our business relies substantially on the creation, use and protection of our proprietary teaching management system and study database.

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We had more than 1,000 registered trademarks including our brand and logo, more than 400 registered domain names, more than 400 copyright registration certificates and five patents as of August 31, 2021. Our copyrights include substantially all of our course content, course videos and materials, and online courses. Our registered domain names incorporate the Chinese spelling of the theme of the corresponding website. We set forth below our five main registered domain names:

Domain Address	Main Purpose
http://www.jingrui.cn/	Premium tutoring services
http://www.xhqcamp.com/zh-cn/	OneSmart Study Camp program
https://www.jronline.com/	OneSmart Online services
https://www.uuabc.com/	Online premium young children English tutoring services
http://www.ftkenglish.com/	FasTrack English program

To protect our brand and other intellectual property, we rely on a combination of trademark, copyright, domain names, know-how and trade secret laws as well as confidentiality agreements that we entered into with our employees, contractors and others. We also actively engage in monitoring and enforcing activities with respect to infringing uses of our intellectual property by third parties. We cannot be certain that our efforts to protect our intellectual property rights will be adequate or that third parties will not infringe or misappropriate these rights. See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business-If we fail to protect our intellectual property rights, our brand and business may suffer.”

Competition

The private education industry in China is highly fragmented, competitive and rapidly developing. We faced competition from national after-school education companies such as New Oriental, TAL, XueDa, ONLY, GSX Techedu and Koolearn in each major program we offer and each geographic market in which we operated.

We believe the principal competitive factors in our industry include the following:

● brand recognition;

● overall student experience;

● price-to-value;

● ability to effectively market programs and service to a broad base of prospective students; and

● scope and quality of program and service offerings.

Our competitors may have greater access to financing and other resources, and a longer operating history than us. See “Item 3 Key Information-D. Risk Factors-Risks Related to Our Business-We face intense competition in our industry, which could lead to our premium pricing pressure, reduced operating margins, loss of market share, departure of qualified faculty and increased capital expenditures.”

For our new planned business, we believe we also have a competitive advantage. Most Metaverse companies focus on gaming platforms, virtual reality products, back-end technologies etc. For example, Unity Software - a top Metaverse technology and software company, Coinbase - Great Metaverse stock for direct exposure to cryptocurrency, Nike - Best Metaverse stock in the retail industry, Match Group - a dating service software provider, Roblox Corporation - an avatar community and gaming platform, Fastly Inc. - a leading RT3D software and hardware supplier to enhance digital experience, and Matterport - a leading the digitization and datafication of the built world. All peers have incurred substantial losses due to heavy investment in research & development (“R&D”). Having been historically a technology-based company, we believe that our foundation will allow us to more easily enter these markets with expected lower R&D expenses.

Insurance and Safety

We endeavor to provide a safe environment for students at our learning centers. Security and safety protocols are set out in detail in our management guidance and in the handbook for our learning centers. Safety is an important factor in the evaluation scale we apply to the performance of our learning center directors.

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We maintain various insurance policies to safeguard against risks and unexpected events. We maintain public liability insurance to cover our liability for any injuries occur at our learning centers. We also maintain property insurance policies covering certain equipment and other property that are essential to our business operations.

We do not maintain business interruption insurance or general third-party liability insurance, nor do we maintain product liability insurance or key-man insurance. We consider our insurance coverage to be in line with that of other companies in the same industry of similar size in China.

Regulations

This section sets forth a summary of the most significant rules and regulations that affect our business activities in China.

Regulations Relating to Foreign Investment

Special Management Measures for Foreign Investment Access (Negative List) (2020)

Pursuant to the Encouraged Industry Catalogue for Foreign Investment (2019), issued by the National Development and Reform Commissions, or NDRC, and the MOFCOM on June 30, 2019, and the Special Management Measures for Foreign Investment Access (Negative List) (2020), or the Foreign Investment Measures, issued by the NDRC and the MOFCOM on June 23, 2020, pre-school education, high school education and higher education are restricted industries for foreign investors, foreign investors are only allowed to invest in pre-school education, high school education and higher education in Sino-foreign cooperative ways, and the Chinese party must play a major role in the cooperation, which means the learning center director or other chief executive officer of the schools must be a PRC national, and the representatives of the Chinese party must account for no less than half of the total members of the board of directors, the executive council or the joint administration committee of the Sino-foreign cooperative educational institution. In addition, according to the Foreign Investment Measures, foreign investors are prohibited from investing in compulsory education, namely primary school and middle school. To comply with PRC laws and regulations, we have relied on the VIE Contractual Arrangements to operate our after-school education services in China. See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Corporate Structure-If the PRC government finds that the agreements that establish the structure for our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.”

Implementation Opinions of the MOE on Encouraging and Guiding the Entry of Private Capital in the Fields of Education and Promoting the Healthy Development of Private Education

In June 2012, the MOE issued the Implementation Opinions of the MOE on Encouraging and Guiding the Entry of Private Capital in the Fields of Education and Promoting the Healthy Development of Private Education to encourage private investment and foreign investment in the field of education. According to these opinions, the proportion of foreign capital in a Sino-foreign cooperative educational institute must be less than 50%. These opinions also provide that each level of the government authorities should increase their support to private schools in terms of financial investment, financial support, subsidy policies, preferential treatments on tax, land policies and fee policies, autonomous operation, and protecting the rights of teachers and students, among other things. Furthermore, these opinions require each level of the government to improve its local policies on private education.

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Foreign Investment Law

On March 15, 2019, the National People’s Congress promulgated the Foreign Investment Law, which will come into effect on January 1, 2020 and replace the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. The existing foreign-invested enterprises established prior to the effective of the Foreign Investment Law may keep their corporate forms within five years. The implementing rules of the Foreign Investment Law will be stipulated separately by State Council. Pursuant to the Foreign Investment Law, “foreign investors” means natural person, enterprise, or other organization of a foreign country, FIEs means any enterprise established under PRC law that is wholly or partially invested by foreign investors and “foreign investment” means any foreign investor’s direct or indirect investment in mainland China, including: (i) establishing FIEs in mainland China either individually or jointly with other investors; (ii) obtaining stock shares, stock equity, property shares, other similar interests in Chinese domestic enterprises; (iii) investing in new projects in mainland China either individually or jointly with other investors; and (iv) making investment through other means provided by laws, administrative regulations, or State Council provisions.

The Foreign Investment Law stipulates that China implements the management system of pre-establishment national treatment plus a negative list to foreign investment and the government generally will not expropriate foreign investment, except under special circumstances, in which case it will provide fair and reasonable compensation to foreign investors. Foreign investors are barred from investing in prohibited industries on the negative list and must comply with the specified requirements when investing in restricted industries on that list. When a license is required to enter a certain industry, the foreign investor must apply for one, and the government must treat the application the same as one by a domestic enterprise, except where laws or regulations provide otherwise. In addition, foreign investors or FIEs are required to file information reports and foreign investment shall be subject to the national security review.

On December 26, 2019, the State Council published the Implementation Rules of Foreign Investment Law, which came into effect on January 1, 2020. The Implementation Rules of Foreign Investment Law restates certain principles of the Foreign Investment Law and further provides, among others, (i) an FIE’s investment within the territory of PRC is also subject to the Foreign Investment Law and the Implementation Rules of Foreign Investment Law; (ii) an FIE may, within five years following January 1, 2020, choose to amend its legal form or the corporate governance and complete amendment registration, or to keep its original legal form or the corporate governance; (iii) the provisions regarding the transfer of equity interests, distribution of profits and remaining assets as stipulated in the contracts among the joint venture parties of an existing FIE may survive the Foreign Investment Law after such FIE amends its legal form or the corporate governance in accordance with relevant applicable laws.

According to Measures for Reporting of Information on Foreign Investment, promulgated by the MOFCOM and the State Administration for Market Regulation of the PRC, or SAMR, formerly known as the State Administration for Industry and Commerce on December 30, 2019 and became effective on January 1, 2020, foreign investors or foreign-invested enterprises shall submit their investment information to the competent commerce authorities through the enterprise registration system and the National Enterprise Credit Information Publicity System. Market regulators shall post the aforesaid investment information submitted by foreign investors and foreign-invested enterprises to competent commerce authorities in a timely manner. When submitting the initial report, a foreign investor shall submit the information including but not limited to basic enterprise information, the information on the investor and the actual controller thereof, and investment transaction information. Where any information in the initial report changes, a foreign-invested enterprise shall submit the report of changes through the enterprise registration system. Where a foreign investor or a foreign-invested enterprise fails to submit the investment information as required, and fails to resubmit or correct such information after being notified by the competent commerce authority, the competent commerce authority shall order it to make corrections within 20 business days; in case that it fails to make corrections within the specified period, the competent commerce authority shall impose a fine of not less than RMB100,000 but not more than RMB300,000, or a fine of RMB300,000 to RMB500,000 if other severe violations exist simultaneously.

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Regulations on Private Education in the PRC

Education Law of the PRC

In 1995, the National People’s Congress enacted the Education Law of the PRC, which was amended on December 27, 2015. This law sets forth provisions relating to the fundamental educational systems of the PRC, including without limitation, a school education system comprising preschool education, primary education, secondary education and higher education, a system of nine-year compulsory education, and a national education examination system. The law stipulates that the government formulates plans for the development of education and establishes and operates schools and other institutions of education, and, in principle, that enterprises, social organizations and individuals are encouraged to establish and operate schools and other types of educational institutions in accordance with PRC laws and regulations. The Education Law also stipulates that some basic conditions must be fulfilled for the establishment of a school or any other educational institution; accordingly, the establishment, modification or termination of a school or any other education institution shall follow specific examination, approval or filing procedures. In the amended Education Law, the NPC Standing Committee narrowed the provision prohibiting the establishment or operation of schools or other educational institutions for profit so that the provision only applies to schools or other educational institutions founded with governmental funds or donated assets.

Compulsory Law of the PRC

The Compulsory Education Law of the PRC was promulgated by the National People’s Congress on April 12, 1986, and last amended on December 29, 2018. According to the Compulsory Law of the PRC, a system of nine-year compulsory education, including six-year primary school and three-year middle school, was adopted.

Further, the MOE issued the Reform Guideline on the Curriculum System of Basic Education (Trial) on June 8, 2001, which became effective on the same day, pursuant to which schools providing basic education shall follow a “state-local-school” three-tier curriculum system. In other words, schools must follow the state curriculum standard for state courses, while the local educational authorities have the power to determine the curriculum standard for other courses, and schools may also develop curricula that are suitable for their specifics needs.

According to the Interim Administrative Measures on the Compilation and Vetting of Primary and Secondary School Textbooks amended on November 10, 2015 by the MOE, textbooks must be vetted before being used in primary and secondary schools. According to the Interim Administrative Measures on the Selection of the Primary and Secondary School Textbooks promulgated on September 30, 2014, the MOE is responsible for publishing the catalog of textbooks for selection, and the provincial education authority is in charge of textbook selection within its relevant administrative jurisdiction.

On June 23, 2019, the Central Committee of the Communist Party of China and the State Council jointly promulgated the Opinions on Deepening the Education Reform and Comprehensively Improving the Quality of Compulsory Education, which emphasizes, among other issues, that schools providing compulsory education shall not admit students based on the results of any examination or competition, training scores, or any certificate, and shall not choose students based on interview or evaluation. The admission process of private schools providing compulsory education will be brought into a unified administration system and take place at the same time as that of public schools; and if the application exceeds the enrollment plan, applicants will be admitted randomly using computers. The above opinions also underline that it is prohibited for schools to replace the national curriculums with local or their specific curriculums, or to use uncertified textbooks, and schools providing compulsory education are not allowed to introduce overseas curriculums or use overseas textbooks. See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business-Failure to adequately and promptly respond to changes in examination systems, admission standards, testing materials and technologies in the PRC could render our courses and services less attractive to students.”

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The Law for Promoting Private Education and its Implementation Rules

In 2002, the NPC Standing Committee promulgated the Law for Promoting Private Education, or the Private Education Law, which became effective on September 1, 2003. The Private Education Law was amended on June 29, 2013, or the 2013 Private Education Law, and subsequently on November 7, 2016 and took into effect on September 1, 2016, or the 2017 Private Education Law. On December 29, 2018, the Decision of the NPC Standing Committee on Amending the Seven Laws of the labor law of the PRC was promulgated by Order No.55 of the President of the PRC and took into effect on December 29, 2018, which made two minor adjustments to Article 26 and Article 64 of the 2017 Private Education Law. In March 2004, the PRC State Council promulgated the Implementation Rules for the Law for Promoting Private Education, or the PE Implementation Rules. On April 20, 2018, the MOE issued the MOE Draft for Comments, subsequently on August 20, 2018, the Ministry of Justice, or the MOJ, issued the MOJ Draft for Comments. The Private Education Law and the PE Law Implementation Rules provide rules for social organizations or individuals to establish schools or other educational organizations using nongovernment funds in the PRC; such schools or educational organizations established using nongovernment funds are referred to as “private schools.”

According to the Private Education Law, establishment of private schools for academic education, preschool education, self-taught examination support and other cultural education shall be subject to approval by the authorities in charge of education, while establishment of private schools for vocational qualification training and vocational skill training shall be subject to approvals from the authorities in charge of labor and social welfare. A duly approved private school will be granted an educational permit, and shall meet all conditions required for a legal person. Under the Private Education Law and PE Implementation Rules, private education is deemed a public welfare undertaking, and entities and individuals who establish private schools are commonly referred to as “sponsors,” instead of “investors” or “shareholders.” Private schools have the same status as public schools, though private schools are prohibited from providing military, police, political and other kinds of education that are of a special nature. Government-run schools that provide compulsory education are not permitted to be converted into private schools. The MOJ Draft for Comments further stipulates that the establishment of private training and educational organizations enrolling students of kindergarten, primary school, middle and high school age and implementing activities relating to cultural and educational courses at school, or examination-related and further education-related tutoring and other cultural and educational activities, would be subject to the review and approval of the administrative departments for education of the governments at or above the county level.

Under the 2013 Private Education Law and PE Implementation Rules, sponsors of a private school may choose to require “reasonable returns” from the annual net balance of the school after deduction of costs, donations received, government subsidies, if any, the reserved development fund and other expenses as required by the relevant regulations. The election to establish a private school requiring reasonable returns shall be made a part of the articles of association of the school, and the percentage of the school’s annual net balance that can be distributed as a reasonable return shall be determined by the school’s board of directors or other forms of decision-making bodies, taking into consideration the following factors: (i) school fee types and collection criteria, (ii) the ratio of the school’s expenses used for educational activities and improvement of educational conditions to the total fees collected, and (iii) admission standards and educational quality. The relevant information relating to the above factors shall be publicly disclosed before the school’s board determines the percentage of the school’s annual net balance that can be distributed as reasonable returns, and such information and the decision to distribute reasonable returns shall also be filed with the approval authorities within fifteen days from the decision made by the board. As of August 31, 2020, nine of 18 of our learning centers that are registered as schools have elected to require “reasonable returns” under the 2013 Private Education Law and PE Implementation Rules.

The 2013 Private Education Law provides that the regulations applicable to private training institutions registered with the SAMR, and its local counterparts shall be formulated by the State Council separately. However, as of the date of this annual report, no specific regulations on private training institutions registered with the SAMR and its local counterparts has been promulgated by the State Council.

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In accordance with the 2017 Private Education Law, as long as schools do not provide compulsory education, school sponsors of private schools are allowed to register and operate the schools as for-profit private schools or not-for-profit private schools. School sponsors of for-profit private schools are allowed to get income from the operation of the school, and the balance of running such schools is permitted to be handled in accordance with the PRC Company Law and other relevant laws and administrative regulations. School sponsors of not-for-profit private schools are prohibited from getting income from the operation of the schools, and the balance of running such schools may only be used for the operation of other not-for-profit schools. Furthermore, the remaining assets upon liquidation after repayment of debts of for-profit private schools are permitted to be handled in accordance with the relevant provisions of the PRC Company Law and that of not-for-profit private schools may only be used for the operation of other not-for-profit schools. For-profit private schools are entitled to make their own decisions about collection of fees in accordance with the market situation, while collection of fees for not-for-profit private schools shall be subject to concrete measures to be promulgated by the provincial, autonomous regional or municipal government. In addition, private schools are entitled to preferential tax policies and land policies in accordance with PRC laws, with the emphasis that not-for-profit private schools shall enjoy preferential tax policies and land policies equivalent to those applicable to public schools.

If the school sponsors of private schools established prior to the promulgation date of the 2017 Private Education Law choose to register and operate their schools as not-for-profit private schools, they shall cause the school to amend its articles of association in accordance with this law. Furthermore, upon the termination of such not-for-profit private schools, the government authority may grant some compensation or reward to the school sponsors who have made capital contributions to such school from the remaining assets of such schools upon their liquidation and may then use the rest of the assets to the operation of other not-for-profit private schools. If the school sponsors of private schools established prior to the promulgation date of this law choose to register and operate their schools as for-profit private schools, the schools shall go through some procedures including, but not limited to, conducting financial settlement, defining the property right, paying relevant taxes and expenses and applying for renewal of registration, the details of which shall be subject to detailed measures to be promulgated by the provincial, autonomous regional or municipal government.

On December 29, 2016, the State Council issued the Several Opinions of the State Council on Encouraging the Operation of Education by Social Forces and Promoting the Healthy Development of Private Education, or State Council Opinions, which require, among other things, access to the operation of private schools and the encouragement of social forces to enter into the education industry. The State Council Opinions also provide that each level of the people’s government shall increase its support to private schools in terms of investment, financial support, autonomous policies, land policies, fee policies, autonomous operation and protection of teachers’ and students’ rights.

Under the Amended Private Education Law, our learning centers that operate for profit are required to obtain an educational permit and a business license. We have worked closely with the local authorities in preparing filings and applying for education permits for these learning centers. See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business-We are subject to governmental policies, licensing and compliance requirements for operating our K-12 after-school education business.”

Implementation Regulations on Classification Registration of Private Schools

According to the Implementation Regulations on Classification Registration of Private Schools, or the Classification Registration Rules which were issued jointly by the MOE, the Ministry of Human Resources and Social Security, the Ministry of Civil Affairs, the State Commission Office of Public Sectors Reform and the State Administration for Industry and Commerce on December 30, 2016, the establishment of private schools is subject to governmental approval. Private schools whose establishment has been approved shall apply for a registration certificate or business license in accordance with the Classification Registration Rules after they have been granted an educational permit by the competent government authorities.

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This regulation is applicable to our learning centers regardless of whether they were established before or after the promulgation of the Amended Private Education Law. Not-for-profit learning centers that meet the requirements under the Interim Administrative Regulations on the Registration of Private Non-enterprise Entities and other relevant regulations shall apply to the civil affairs department for registration as private non-enterprise entities. For-profit learning centers, on the other hand, shall apply to the industry and commerce department for registration in accordance with the jurisdictional provisions set out by the relevant laws and regulations.

We may be required to reclassify our learning centers that are registered as schools according to the above rules. As of August 31, 2021, 18 of our learning centers are registered as schools, among which two are located in Shanghai. We registered the two learning centers in Shanghai as not-for-profit schools in accordance with the local rules published in December 2017.

Implementation Regulations for the Supervision and Administration of For-Profit Private Schools

According to the Implementation Regulations for the Supervision and Administration of For-Profit Private Schools, which was issued jointly by the MOE, the Ministry of Human Resources and Social Security and the State Administration for Industry and Commerce on December 30, 2016, social organizations or individuals are permitted to operate for-profit kindergartens, high schools, colleges, universities and other higher education institutions, but are prohibited from providing compulsory education. According to the implementation regulations, the social organization or individual operating a for-profit private school shall be in good credit standing and have financial strength appropriate to the level, type and scale of the school.

A for-profit private schools shall establish a board of directors, a board of supervisors, administrative organs and labor unions. It shall implement the financial and accounting policies required by the PRC Company Law and other relevant regulations, and publicize their credit information such as annual report information, license information and administrative penalty through a national information system. The school sponsors of for-profit private schools shall neither withdraw their shares of registered capital nor mortgage the educational and teaching facilities for loans or guarantee. The balance of the school operating profits could only be distributed after the annual financial settlement.

The division, merger, termination and other major changes involving for-profit private schools shall be subject to the approval of the boards of directors of the schools and subject to the approval and registration of the relevant government authorities. We may be required to reclassify our learning centers that are registered as schools according to the above rules.

Notice on Alleviating After-School Study Burden on Primary and Middle School Students and Imposing Special Administration on After-School Training Institutions

On February 13, 2018, General Office of the Ministry of Education, jointly with three other government authorities, promulgated the Notice on Alleviating After-School Study Burden on Primary and Middle School Students and Imposing Special Administration on After-School Training Institutions, or Alleviating After-School Burden Notice, which came into effect on the same date. Alleviating After-School Burden Notice aims to solve the issue of excessive adequate after-school study burden on primary and middle school students through inspection and rectification of after-school training institutions. Pursuant to the Alleviating After-School Burden Notice, after-school training institutions that are susceptible to potential safety risks are required to immediately suspend business for self-inspection and rectification; after-school training institutions that operate without adequate educational permits and/or business licenses must apply for relevant permits and licenses in accordance with the law. After-school training institutions must file with the local education administration and allow the public to learn about the classes, courses and other information relating to their curriculum. The Alleviating After-School Burden Notice, prohibits, among other things, after-school training institutions from increasing the difficulties of the content of the courses, accelerating the after-school training course content beyond students’ study level, emphasizing exam-oriented teaching methods, or hosting standard grade examinations and competitions among primary and middle school students. After-school training institutions that are not in compliance with the Alleviating After-School Burden Notice must complete all rectification before the end of 2018. See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business-We are subject to governmental policies, licensing and compliance requirements for operating our K-12 after-school education business.”

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Regulating Development of After-school Tutoring Institutions

On August 22, 2018, the General Office of the State Council issued the State Council Opinions 80 which provided various guidance on regulating after-school training market for primary and secondary school students, including, among others, the operation standards that after-school tutoring institutions should follow, the requirements and approvals necessary for opening new after-school tutoring institutions, the guidance for daily operation of after-school tutoring institutions, and the regulatory supervision scheme for after-school tutoring institutions.

The State Council Opinions 80 set out the operation standards of after-school tutoring institutions, including but not limited to the requirements for Permit for Operating a Private School, size of training area, teachers’ qualification, insurance, fire safety, environmental protection, and health and food safety. The State Council Opinions 80 also provide guidance on daily operation of after-school tutoring institutions, including but not limited to content of course, time of courses, methods of training, method of receiving training service fee, among which, consistent with Circular 3, the State Council Opinions 80 prohibit intensive exam-oriented training, advanced training that do not follow the formal school curricula, and any arrangement that correlates students’ examination performance in after-school tutoring institutions to admission into primary and secondary schools. Moreover, the State Council Opinions 80 set out the general regulatory supervision scheme by education administration authorities. See “Item 3. Key Information-D. Risk Factors-We are subject to governmental policies, licensing and compliance requirements for operating our K-12 after-school education business.”

On August 31, 2018, the General Office of the MOE promulgated the Circular regarding the Truly Implementation of Special Measures and Rectification Work on the Private Education Institutions, which provides detailed requirements for the provincial education departments to enforce the State Council Opinions 80.

On November 20, 2018, the General Office of the MOE, the General Office of the State Administration for Market Regulation of the PRC and the General Office of the Ministry of Emergency Management of the PRC jointly issued the Notice on Improving the Specific Governance and Rectification Mechanisms of After-school Tutoring Institutions, or Circular 10, which provides specific requirements for the local people’s governments at all levels in the implementation of the State Council Opinions 80.

On July 24, 2021, the PRC’s official state media, including Xinhua News Agency and China Central Television, announced the Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education (the “Opinion”), issued by the General Office of the CPC Central Committee and the General Office of the State Council. The Opinion contains high-level policy directives about requirements and restrictions related to after-school tutoring services, including (i) institutions providing after-school tutoring services on academic subjects to students at China’s compulsory education stage, or Academic AST Institutions, need to be registered as non-profit, no approval will be granted to new Academic AST Institutions, and an approval mechanism will be adopted for online Academic AST Institutions; (ii) foreign ownership in Academic AST Institutions is prohibited, including through contractual arrangements, and Academic AST Institutions in violation need to rectify the situation; (iii) listed companies are prohibited from raising capital to invest in Academic AST Institutions; (iv) Academic AST Institutions are prohibited from providing tutoring services on academic subjects in compulsory education during public holidays, weekends and school breaks; and (v) Academic AST Institutions must follow the fee standards to be established by relevant authorities. The Opinion also provides that institutions providing after-school tutoring services on academic subjects in high schools (which do not fall within China’s compulsory education system) shall take into consideration the Opinion when conducting activities.

Local Rules in Shanghai

In January 2011, the Standing Committee of the Shanghai People’s Congress promulgated Regulations of Shanghai Municipality on Promotion of Lifelong Education, or Shanghai Lifelong Education Regulations, to formally implement a classification management scheme on private training institutions in Shanghai. Shanghai Lifelong Education Regulations provides different requirements and procedures for establishment of nonprofit training institution and commercial training institutions. Specifically, with respect to establishment, Shanghai Lifelong Education Regulations stipulate that (i) to set up a nonprofit training institutions, the applicants must first apply to the relevant authorities in charge of education or human resources and social welfare for approval and register such institution as a public institution or private non-enterprise institution after obtaining an educational permit in accordance with the relevant regulations of the state, and (ii) to establish a commercial training institution, the applicants must apply with the local counterparts of the SAMR for business registration directly, and the local counterparts of the SAMR must then consult with authorities in charge of education or human resources and social welfare before it decides whether to approve the business registration.

On June 20, 2013, local authorities in Shanghai promulgated regulatory documents to set forth specific rules and procedures on business registration and operation of a commercial training institution, which became effective on July 19, 2013. These rules had an initial term of effectiveness of two years which was further extended to April 30, 2017.

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On December 27, 2017, the People’s Government of Shanghai promulgated the Implementation Opinions of Shanghai Municipal People’s Government on Promoting the Healthy Development of Private Education, or Shanghai Implementation Opinions, and the Administration Measures of Shanghai Municipality on Classification of Licensing and Registration of Private Schools, or Shanghai Licensing Measures, both of which took effect on January 1, 2018. Shanghai Implementation Opinions and Shanghai Licensing Measures provide implementation rules for the Amended Private Education Law in Shanghai on several aspects, including the procedures and requirements for approving the establishment, major alteration and termination of private schools, the transitional period for existing private schools and training institutions to gain compliance, and compensation and incentive measures for termination of existing private schools that are registered as private non-enterprise entities.

Shanghai Licensing Measures provide that existing private training institutions must receive a new educational permit issued in accordance with these measures by December 31, 2019. To obtain such an educational permit, the training institutions must take various measures to comply with relevant laws and regulations, including amending their articles of association, improving their corporate governance structure and improving their education conditions. After obtaining the new educational permit, the private training institutions must also complete other relevant procedures as required by Shanghai Licensing Measures. As of August 31, 2021, we have established 165 learning centers which are private training institutions in Shanghai. For all of these learning centers, we have either obtained or are applying for the new educational permit as required by Shanghai Licensing Measures.

Furthermore, Shanghai Licensing Measures also provide the requirements and procedures for new private training institutions to obtain the educational permit. To set up a new learning center or private school in Shanghai, we need to follow the procedures in Shanghai Implementation Opinions and Shanghai Licensing Measures, including, but not limited to, applying for pre-approval of the school’s name, acquiring approval of the school’s pre-establishment and formal establishment, obtaining an educational permit issued by the local education bureaus and registering it as a legal entity with local administration for industry and commerce or local civil affairs departments.

Moreover, according to Shanghai Licensing Measures, we, as the sponsors of our private schools in Shanghai registered as private non-enterprise entities before November 7, 2016, must decide whether to register our schools as not-for-profit or for-profit private schools, make relevant changes to the school operations as required by Shanghai Licensing Measures, and submit the application for registration as a not-for-profit or for-profit private school before December 31, 2018. If we choose to register these schools as not-for-profit private schools, we must amend the articles of association and improve the corporate governance structure and internal management system before December 31, 2019. If we choose to register these schools as for-profit private schools, the schools must go through some procedures including, but not limited to, conducting financial settlement, defining the property right, paying relevant taxes and expenses and applying for renewal of registration before the end of 2020. As of August 31, 2020, all of our private schools in Shanghai are established before the enactment of Amended Private Education Law and are registered as private non-enterprise entities. We registered our two schools in Shanghai as not-for-profit private schools as required by the Shanghai Licensing Measures. On December 29, 2017, Shanghai Municipal Education Commission, Shanghai Administration for Industry and Commerce, Shanghai Municipal Human Resources and Social Security Bureau and Shanghai Civil Affairs Bureau jointly issued the Standards of the Establishment of Private Training Institutions in Shanghai Municipality, or the Shanghai Standards, the Administration Measures of Shanghai Municipality on For-profit Private Training Institutions, or Shanghai For-profit Institutions Measures, and the Administration Measures of Shanghai Municipality on Not-for-profit Private Training Institutions. We plan to open new learning centers as for-profit entities, which will be subject to the Shanghai Standards and the Shanghai For-profit Institutions Measures.

The Shanghai Standards and Shanghai For-profit Institutions Measures provide specific and stringent standards and requirements on the sponsors, name, articles of association, organizational structure, management system, teachers, investment, operation sites, facilities and equipment, training programs, teaching materials and sites of learning centers, for example, among others:

● Teachers. Private training institutions must have structurally reasonable and adequate full-time and part-time teaching staff tailored to the training programs and course scales; teachers for school entrance exam courses and the relevant extended trainings must hold the corresponding qualifications; private training institutions must not employ or compensate a teacher who is concurrently employed by a primary or middle school;

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● Operation Sites.  Residential buildings must not be used as operation sites and the term of lease shall not be less than two years since the application for the educational permit; the area coverage of the operation sites and for education uses shall meet certain specific requirements;

● Competition. Private training institutions must not host competitions among primary school students in connection with school entrance exam and the relevant extended trainings subject to limited exceptions; and

● Courses. Private training institutions providing school entrance exam courses and the relevant extended trainings to primary and middle school students must not increase the burdens of the students, enhance the difficulties of the content of the courses or accelerate the teaching progress inappropriately. Specially, the last class held for primary and middle school students must not pass 8:30 p.m.

We believe we comply with the standards and requirements provided in the Shanghai Standards and Shanghai For-profit Institutions Measures in all material aspects. However, we must modify certain aspects of our business operations in accordance with Shanghai Standards and Shanghai For-profit Institutions Measures. Although we require our full-time and part-time teachers not to teach in other institutions while they are employed by us, we are not able to monitor their activities outside their working time with us and therefore cannot assure you that our teachers have always complied or will comply with such requirement. If any of our teachers works concurrently at other institutions, we may not be able to identify such non-compliance on a timely basis or at all, which may cause us to violate these new rules. Moreover, certain of our teachers are not fully compliant with the teacher qualification requirements under the new rules. These teachers may not be able to deliver any school entrance exam courses for compulsory education and may need to receive extended training before they obtain the requisite qualifications. In addition, since the new rules prohibit any courses for primary and middle school students past 8:30 p.m., some of our classes may need to be re-scheduled. See “Item 3. Key Information-Risk Factors-Risks Related to Our Business-We are subject to governmental policies, licensing and compliance requirements for operating our K-12 after-school education business.”

Consistent with Shanghai Licensing Measures, Shanghai For-profit Institutions Measures provide a transitional period till December 31, 2019 for existing private training institutions to achieve full compliance with the standards and requirements and obtain the educational permits.

Opinions of the General Office of the State Council on Regulating the Development of After-School Tutoring Institutions

On August 6, 2018, the General Office of the State Council promulgated the After-School Tutoring Institutions Opinions, which came into effect on the same date. The After-School Tutoring Institutions Opinions places further emphasis on alleviation of after-school burden on primary and middle school students and puts forward further requirements to promote the normative development of after-school tutoring institutions. In particular, the opinions provide that rules in respect of financing and asset management promulgated by the state shall be strictly implemented, fee collection period shall be coordinated with the relevant teaching arrangements, and fees for a period spanning more than three months shall not be collected by after-school tutoring institutions at one time. Tutoring venues of after-school tutoring institutions shall meet safety conditions, and the average area per student during the same tutoring period shall be no less than three square meters, so as to ensure easy evacuation. In addition, after-school tutoring institutions shall maintain relatively stable faculty members and shall not engage in-service middle and primary school teachers. Persons engaged in tutoring services shall have obtained corresponding teaching qualifications for relevant subjects. Moreover, when an after-school tutoring institution listed overseas discloses, among others, (i) its periodic reports, or (ii) its interim reports which contain information that would have a material adverse impact on its business operations, it shall concurrently disclose to the domestic public such information in Chinese on the company’s website (or in the absence of such website, on the securities information disclosure platform).

The After-School Tutoring Institutions Opinions are relatively new and there remain uncertainties in respect of their interpretation and implementation. Some local authorities have promulgated rules to further implement the After-School Tutoring Institutions Opinions and strengthened supervision and administration on after-school tutoring institutions. We are working closely with the local authorities to make sure that we are and will be in compliance with the After-School Tutoring Institutions Opinions in all material aspects.

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Regulation on Education Fees

On October 12, 2015, the State Council and the Central Committee of the Communist Party of China jointly issued Certain Opinions of the Central Committee of the Communist Party of China and the State Council on Promoting the Price Mechanism Reform, which allows for-profit private schools to set their tuition fees on their own, while the tuition-collecting policies of not-for-profit private schools shall be determined by provincial governments in a market-oriented manner, taking into account local circumstances.

On August 17, 2020, MOE and other four departments jointly promulgated the Opinions on Further Strengthening and Regulating the Administration of Education Fees, or the Education Fees Opinions, which reiterate the previous provision that the fee level of for-profit private schools is open for market adjustment and can be determined by for-profit private schools at their own discretion, while the fee-collecting regulatory policies for non-profit private schools shall be formulated by the provincial governments. The Education Fees Opinions further clarify that private schools established prior to November 7, 2016 shall be regulated in the same way as non-profit private schools in terms of fee-collecting policies before they have completed the classification registration procedures. Besides the fee-collecting policies, the Education Fees Opinions also contain provisions regarding the management and use of education fees. The Education Fees Opinions require that all education fee revenue of a private school shall be deposited into a bank account filed with education authorities and be used mainly for education activities, the improvement of school conditions, faculty and staff’s compensation and the appropriation of development fund. The Education Fees Opinions propose to explore a special audit system for school education fees, in particular for non-profit private schools. The Education Fees Opinions underline that sponsors of non-profit private schools shall not obtain proceeds from schools’ operating profits, distribute the operating surplus or residual assets, or transfer operating profits through related-party transactions or related parties.

Subject to these applicable regulatory requirements, we generally determine tuition based on the demand for our education services, the cost of our services, and the tuition and price charged by our competitors.

Regulations on Applications Entering the Primary and Secondary Schools

On December 25, 2018, the General Office of the MOE issued Notice on Prohibiting Harmful Apps from Entering the Primary and Secondary Schools, which provides that learning applications shall be reported to the relevant educational authorities for approval, and teachers shall not recommend to students any application which has not be approved by the relevant educational authorities and the school. The use of any application which contains pornography, violence, online games, commercial advertising or relevant links, or which increases the burden of students’ work by test-taking methods such as copying homework, providing large number of test questions or ranking shall be stopped immediately. There is uncertainty whether applications we provide to our students would be found in violation of the above notice or whether such applications need to be approved by the relevant educational authorities. If the relevant authorities find our operation in violation of the above notice, our relevant applications may be ordered to stop use, which may have adverse effect on our business.

Regulations on Online and Distance Education

Pursuant to the Administrative Regulations on Educational Websites and Online and Distance Education Schools issued by the MOE, educational websites and online education schools may provide educational services in relation to higher education, elementary education, pre-school education, teaching education, occupational education, adult education, other education and public educational information services. “Educational websites” refer to organizations providing education or education-related information services to website visitors by means of a database or online education platform connected via the internet or an educational television station through an Internet Service Provider, or ISP. “Online education schools” refer to education websites providing academic education services or training services with the issuance of various certificates within the issuance of various certificates.

Setting up education websites and online education schools was subject to approval from relevant education authorities, depending on the specific categories of education. Any education website and online education school have to, upon the receipt of approval, indicate on its website such approval information as well as the approval date and file number.

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On February 3, 2016, the State Council promulgated the Decision on Cancelling the Second Batch of 152 Items Subject to Administrative Examination and Approval by Local Governments Designated by the Central Government, which explicitly withdrew the approval requirements for operating educational websites and online education schools as provided by the Administrative Regulations on Educational Websites and Online Education Schools, and reiterated the principle that administrative approval requirements may only be imposed in accordance with the PRC Administrative Licensing Law.

Pursuant to the Shanghai Licensing Measure, any management measures and regulations applied to institutions that provide training services only through the Internet will be further promulgated separately. These management measures and regulations have not yet been introduced as of the date hereof.

The Implementation Opinion on Online Tutoring, which was issued by the MOE and other five authorities on July 12, 2019 and became effective on the same date, restated certain requirements that apply to all after-school tutoring institutions and further provides that, among others: (1) online after-school tutoring institutions shall disclose publicly their teachers’ name, photograph, category of the courses and teacher qualification number at prominent location on their home page, and shall disclose publicly their foreign teachers’ education background as well as working and education experience; (2) information including licenses (including ICP), administration of funds, system of privacy and information safety, courses, course schedules, advertisement for student enrollment and teacher qualifications shall be filed with education administration authorities at provincial level before October 31, 2019; education administration authorities at provincial level shall examine these materials and inspect the online tutoring institutions by December 2019, and education administration authorities at provincial level are authorized to issue detailed rules on the implementation of the filing process; (3) tutoring contents and data shall be kept for more than one year and videos of live-streaming tutoring courses shall be kept for at least six months; (4) each class shall not last for more than 40 minutes and the break between two courses shall last for more than 10 minutes; (5) live-streaming tutoring activities for students in the compulsory education stage shall end before 9:00 p.m.; (6) online after-school tutoring institutions shall adopt the internet safety procedures and establish privacy protection system; (7) fee policies, standards and refund policies shall be disclosed publicly at prominent location on the online tutoring platform, and advance payments shall not be used for investing purpose and the scale of advance payments shall fit the tutoring capability; and (8) if students are charged according to numbers of classes they take, tutoring fees for more than 60 classes shall not be collected at one time, and if students are charged for a period of time, tutoring fees for a period spanning more than three months should not be collected at one time.

The Opinion on Healthy Development of Online Education Applications, issued by the MOE and seven other authorities on August 10, 2019, restated certain requirements on online education application providers: (1) online after-school tutoring institutions shall examine their foreign teachers’ teaching qualifications, education background and capability of their foreign teachers; (2) online education applications providers shall file information about themselves as well as their applications with education administration authorities at provincial level, and the MOE will promulgate detailed rules on the filling procedure and make such filing publicly available on certain official website(s); (3) online education applications providers whose applications mainly target juveniles shall limit the length of using time, specify age group of target users and strictly review the content of the applications, and collection of personal information of juveniles shall require the permission from the custodian of these juveniles; (4) online education application providers shall adopt data security systems covering the collection, storage, transfer, using and other respects of personal information, and shall set up a real-name verification system; (5) education authorities at provincial level shall set up negative lists with respect to the online education applications. On November 11, 2019, the General Office of MOE promulgated the Administrative Measures for the Filing of Educational Apps, which further provided the detailed implementation rules with respect to such filing requirements under the Opinion on Healthy Development of Online Education Applications.

On August 19, 2019 and October 8, 2019, separately, the Municipal Education Commissions of Tianjin and Beijing promulgated Rules of Tianjin Municipality for the Implementation of Online After-school Training Filing and Rules of Beijing Municipality for the Implementation of Online After-school Training Filing, providing specific administrative measures for institutions offering after-school training service only via internet to put on record. On February 24, 2020, the Shanghai Municipal Education Commission issued the Rules of Shanghai Municipality for the Implementation of Online After-school Training Filing.

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Regulations Related to Internet Information Security and Privacy Protection

Pursuant to the PRC Cyber Security Law issued by the Standing Committee of the National People’s Congress of the PRC on November 7, 2016, effective as of June 1, 2017, “personal information” refers to all kinds of information recorded by electronic or otherwise that can be used to independently identify or be combined with other information to identify individuals’ personal information including but not limited to: individuals’ names, dates of birth, ID numbers, biologically identified personal information, addresses and telephone numbers, etc. The PRC Cyber Security Law also provides that: (i) to collect and use personal information, network operators shall follow the principles of legitimacy, rightfulness and necessity, disclose rules of data collection and use, clearly express the purposes, means and scope of collecting and using the information, and obtain the consent of the persons whose data is gathered; (ii) network operators shall neither gather personal information unrelated to the services they provide, nor gather or use personal information in violation of the provisions of laws and administrative regulations or the scopes of consent given by the persons whose data is gathered; and shall dispose of personal information they have saved in accordance with the provisions of laws and administrative regulations and agreements reached with users; (iii) network operators shall not divulge, tamper with or damage the personal information they have collected, and shall not provide the personal information to others without the consent of the persons whose data is collected. However, if the information has been processed and cannot be recovered and thus it is impossible to match such information with specific persons, such circumstance is an exception.

In addition, the Office of the Central Cyberspace Affairs Commission, the Ministry of Industry and Information Technology (or the MIIT), the Ministry of Public Security, and the SAMR jointly issued an Announcement of Launching Special Crackdown Against Illegal Collection and Use of Personal Information by Apps on January 23, 2019 to implement special rectification works against mobile Apps that collect and use personal information in violation of applicable laws and regulations, where business operators are prohibited from collecting personal information irrelevant to their services, or forcing users to give authorization in disguised manner. On November 28, 2019, the National Internet Information Office, the MIIT, the Ministry of Public Security and the SAMR further jointly issued a notice to classify and identify illegal collection and use of personal information.

Regulations on Food Safety of Schools

Pursuant to the Food Safety Law of the PRC, which was amended on April 24, 2015 and December 29, 2018, schools should only order meals from off-site providers that have obtained the relevant food production licenses and should conduct regular inspections of the meals provided.

In accordance with the Regulation on Hygiene Administration of School Canteens and Collective Provision of Meals for Students, which was promulgated in 2002 and amended in December 2010, hygiene administration of school canteens and collective provision of meals for students should take precautions and follow the hygiene-related policies and instructions of relevant hygiene and education authorities. As of August 31, 2021, none of our learning centers that are registered as schools have school canteens for provision of meals to students.

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Regulations on Franchise Businesses

On February 6, 2007, the State Council promulgated the Regulation on the Administration of Commercial Franchises, which became effective on May 1, 2007. This regulation requires that any enterprise engaging in trans-provincial franchise business shall register with the Ministry of Commerce, or the MOFCOM, and any enterprise engaging in franchise business within one province shall register with the provincial counterpart of the MOFCOM. On April 30, 2007, the MOFCOM promulgated the Administrative Measures for the Filing of Commercial Franchises, which was amended in 2011 and sets forth in detail the procedures and documents required for such filing, including, among other things, the franchise agreement entered into with the franchisee, the franchise market plan and trademarks and patents relating to the franchise. We are required to file the status of all franchise with the Ministry of Commerce system on a yearly basis, the failure of which may subject us to an order of rectification and a fine up to RMB50,000. As of the date of this annual report, we have filed all franchise agreements in accordance with the applicable laws and regulations and as required by the MOFCOM. See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business-We face risks associated with our franchise learning centers.”

Legal Regulations Over Intellectual Property in the PRC

Copyright

Pursuant to the Copyright Law of the PRC (amended in 2010), copyrights include personal rights such as the right of publication and that of attribution as well as property rights such as the right of production and that of distribution. Reproducing, distributing, performing, projecting, broadcasting or compiling a work or communicating the same to the public via an information network without permission from the owner of the copyright therein, unless otherwise provided in the Copyright Law of the PRC, shall constitute infringements of copyrights. The infringer shall, according to the circumstances of the case, undertake to cease the infringement, take remedial action, and offer an apology, pay damages, etc.

Trademark

Pursuant to the Trademark Law of the PRC (amended in 2013), the right to exclusive use of a registered trademark shall be limited to trademarks which have been approved for registration and to goods for which the use of such trademark has been approved. The period of validity of a registered trademark shall be ten years, counted from the day the registration is approved. According to this law, using a trademark that is identical to or similar to a registered trademark in connection with the same or similar goods without the authorization of the owner of the registered trademark constitutes an infringement of the exclusive right to use a registered trademark. The infringer shall, in accordance with the regulations, undertake to cease the infringement, take remedial action, and pay damages, etc. On April 23, 2019, the NPC Standing Committee promulgated the latest amendment of PRC Trademark Law, which came into effect on November 1, 2019. Compared to the currently effective Trademark Law, the latest amendment of Trademark Law additionally provides that, among other things, (i) an application for registration of a malicious trademark not for use shall be rejected, (ii) those who apply for trademark registration maliciously shall be given administrative penalties of warning or fines according to the circumstances; and (iii) those who file trademark lawsuits maliciously shall be punished by the people’s court according to applicable laws.

Patent

Pursuant to the Patent Law of the PRC (amended in 2008), after the grant of the patent right for an invention or utility model, except where otherwise provided for in the Patent Law, no entity or individual may, without the authorization of the patent owner, exploit the patent, that is, make, use, offer to sell, sell or import the patented product, or use the patented process, or use, offer to sell, sell or import any product which is a direct result of the use of the patented process, for production or business purposes. And after a patent right is granted for a design, no entity or individual shall, without the permission of the patent owner, exploit the patent, that is, for production or business purposes, manufacture, offer to sell, sell, or import any product containing the patented design. Where the infringement of patent is decided, the infringer shall, in accordance with the regulations, undertake to cease the infringement, take remedial action, and pay damages, etc.

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Domain Name

Pursuant to the Measures for the Administration of Internet Domain Names of China promulgated on November 5, 2004 and became effective on December 20, 2004, or the 2004 Domain Names Measures, and the Measures for the Administration of Internet Domain names which was promulgated on August 24, 2017 and will come into effect on November 1, 2017 to replace the 2004 Domain Names Measures, “domain name” shall refer to the character mark of hierarchical structure, which identifies and locates a computer on the Internet and corresponds to the Internet protocol (IP) address of that computer. And the principle of “first come, first serve” is followed for the domain name registration service. After completing the domain name registration, the applicant becomes the holder of the domain name registered by him/it. Any organization or individual may file an application for settlement with the domain names dispute resolution institution or file a lawsuit in the people’s court in accordance with the law, if such organization or individual consider its/his legal rights and interests to be infringed by domain names registered or used by others.

Legal Regulations Over Labor Protection in the PRC

According to the Labor Law of the PRC which was promulgated by the NPC Standing Committee on July 5, 1994, came into effect on January 1, 1995, and was amended on August 27, 2009 and December 29, 2018, an employer shall develop and improve its rules and regulations to safeguard the rights of its workers. An employer shall develop and improve its labor safety and health system, stringently implement national protocols and standards on labor safety and health, conduct labor safety and health education for workers, guard against labor accidents and reduce occupational hazards. Labor safety and health facilities must comply with relevant national standards. An employer must provide workers with the necessary labor protection gear that complies with labor safety and health conditions stipulated under national regulations, as well as provide regular health checks for workers that are engaged in operations with occupational hazards. Laborers engaged in special operations shall have received specialized training and have obtained the pertinent qualifications. An employer shall develop a vocational training system. Vocational training funds shall be set aside and used in accordance with national regulations and vocational training for workers shall be carried out systematically based on the actual conditions of the company.

The Labor Contract Law of the PRC, which was promulgated by the NPC Standing Committee on June 29, 2007, came into effect on January 1, 2008, and was amended on December 28, 2012, and the Implementation Regulations on Labor Contract Law, which was promulgated on September 18, 2008, and became effective since the same day, regulate both parties through a labor contract, namely the employer and the employee, and contain specific provisions involving the terms of the labor contract. It is stipulated by the Labor Contract Law and the Implementation Regulations on Labor Contract Law that a labor contract must be made in writing. An employer and an employee may enter into a fixed-term labor contract, an un-fixed term labor contract, or a labor contract that concludes upon the completion of certain work assignments, after reaching agreement upon due negotiations. An employer may legally terminate a labor contract and dismiss its employees after reaching agreement upon due negotiations with the employee or by fulfilling the statutory conditions. Labor contracts concluded prior to the enactment of the Labor Contract Law and subsisting within the validity period thereof shall continue to be honored. With respect to a circumstance where a labor relationship has already been established but no formal contract has been made, a written labor contract shall be entered into within one month from the effective date of the Labor Contract Law.

According to the Interim Regulations on the Collection and Payment of Social Insurance Premiums, the Regulations on Work Injury Insurance, the Regulations on Unemployment Insurance and the Trial Measures on Employee Maternity Insurance of Enterprises, enterprises in the PRC shall provide benefit plans for their employees, which include basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and basic medical insurance. An enterprise must provide social insurance by processing social insurance registration with local social insurance agencies, and shall pay or withhold relevant social insurance premiums for or on behalf of employees. The Law on Social Insurance of the PRC, which was promulgated on October 28, 2010, and became effective on July 1, 2011, and then was amended on December 29, 2018, has consolidated pertinent provisions for basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and basic medical insurance, and has elaborated in detail the legal obligations and liabilities of employers who do not comply with relevant laws and regulations on social insurance.

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According to the Interim Measures for Participation in the Social Insurance System by Foreigners Working within the Territory of China, which was promulgated by the Ministry of Human Resources and Social Security on September 6, 2011, and became effective on October 15, 2011, employers who employ foreigners shall participate in the basic pension insurance, unemployment insurance, basic medical insurance, occupational injury insurance, and maternity leave insurance in accordance with the relevant law, with the social insurance premiums to be contributed respectively by the employers and foreigner employees as required. In accordance with such Interim Measures, the social insurance administrative agencies shall exercise their right to supervise and examine the legal compliance of foreign employees and employers and the employers who do not pay social insurance premiums in conformity with the laws shall be subject to the administrative provisions provided in the Social Insurance Law and other relevant regulations and rules.

According to the Regulations on the Administration of Housing Provident Fund, which was promulgated and became effective on April 3, 1999, and was amended on March 24, 2002 and March 24, 2019, housing provident fund contributions by an individual employee and housing provident fund contributions by his or her employer shall belong to the individual employee.

The employer shall timely pay up and deposit housing provident fund contributions in full amount and late or insufficient payments shall be prohibited. The employer shall process housing provident fund payment and deposit registrations with the housing provident fund administration center. With respect to companies who violate the above regulations and fail to process housing provident fund payment and deposit registrations or open housing provident fund accounts for their employees, such companies shall be ordered by the housing provident fund administration center to complete such procedures within a designated period. Those who fail to process their registrations within the designated period shall be subject to a fine ranging from RMB10,000 to RMB50,000. When companies breach these regulations and fail to pay up housing provident fund contributions in full amount as due, the housing provident fund administration center shall order such companies to pay up within a designated period, and may further apply to the People’s Court for mandatory enforcement against those who still fail to comply after the expiry of such period.

Legal Regulations Over Tax in the PRC

Income Tax

The PRC Enterprise Income Tax Law was promulgated on March 16, 2007 and was amended on February 24, 2017 and December 29, 2018. The PRC Enterprise Income Tax Law applies a uniform 25 percent enterprise income tax rate to both foreign-invested enterprises and domestic enterprises, except where tax incentives are granted to special industries and projects. Under the PRC Enterprise Income Tax Law, an enterprise established outside China with “de facto management bodies” within China is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform 25 percent enterprise income tax rate on its worldwide income. Under the implementation regulations to the PRC Enterprise Income Tax Law, a “de facto management body” is defined as the body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise.

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In January 2009, the SAT promulgated the Provisional Measures for the Administration of Withholding of Enterprise Income Tax for Non-resident Enterprises, or the Non-resident Enterprises Measures, pursuant to which entities that have direct obligation to make certain payments to a nonresident enterprise shall be the relevant tax withholders for such non-resident enterprise. Further, the Non-resident Enterprises Measures provide that, in case of an equity transfer between two non-resident enterprises occurring outside China, which is indirectly related to the transfer of equity interests of a PRC resident enterprise, the non-resident enterprise which receives the equity transfer payment shall, by itself or engage an agent to, file tax declaration with the PRC tax authority located at the place of the PRC company whose equity has been transferred, and the PRC company whose equity has been transferred shall assist the tax authorities to collect taxes from the relevant non-resident enterprise. On April 30, 2009, the Ministry of Finance, or MOF, and the SAT jointly issued the Notice on Issues Concerning Process of Enterprise Income Tax in Enterprise Restructuring Business, or Circular 59. On December 10, 2009, the SAT issued the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or Circular 698. Both Circular 59 and Circular 698 became effective retroactively as of January 1, 2008. On February 28, 2011, the SAT issued the Notice on Several Issues Regarding the Income Tax of Non-PRC Resident Enterprises, or SAT Circular 24, which became effective on April 1, 2011. By promulgating and implementing these circulars, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-resident enterprise.

On February 3, 2015, the SAT issued the Notice on Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-PRC Resident Enterprises, or SAT Circular 7, to supersede existing provisions in relation to the indirect transfer as set forth in Circular 698, while the other provisions of Circular 698 remain in force. SAT Circular 7 introduces a new tax regime that is significantly different from that under Circular 698. SAT Circular 7 extends its tax jurisdiction to capture not only indirect transfers as set forth under Circular 698 but also transactions involving transfer of immovable property in China and assets held under the establishment, and placement in China, of a foreign company through the offshore transfer of a foreign intermediate holding company. SAT Circular 7 also addresses transfer of the equity interests in a foreign intermediate holding company broadly. In addition, SAT Circular 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings. However, it also brings challenges to both the foreign transferor and transferee of the indirect transfer as they have to determine whether the transaction should be subject to PRC tax and to file or withhold the PRC tax accordingly. On October 17, 2017, the SAT issued the Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, or SAT Circular 37. SAT Circular 37, which took effect on December 1, 2017, superseded the Non-resident Enterprises Measures and SAT Circular 698 as a whole and partially amended some provisions in SAT Circular 24 and SAT Circular 7. SAT Circular 37 purports to clarify certain issues in the implementation of the above regime, by providing, among others, the definition of equity transfer income and tax basis, the foreign exchange rate to be used in the calculation of withholding amount, and the date of occurrence of the withholding obligation. Specifically, SAT Circular 37 provides that where the transfer income subject to withholding at source is derived by a non-PRC resident enterprise in installments, the installments may first be treated as recovery of costs of previous investments. Upon recovery of all costs, the tax amount to be withheld must then be computed and withheld.

Where non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may be at risk of being required to file a return and be taxed under these circulars and we may be required to expend valuable resources to ensure compliance or to establish that we should not be held liable for any obligations under these circulars.

According to Notice of the Ministry of Finance and the State Administration of Taxation on Tax Policies Relating to Education, or Circular 39, schools are not required to pay enterprise income tax on fees they have collected upon approval and have incorporated under the fiscal budget management or the special account management of the funds outside the fiscal budget. Schools are not required to pay enterprise income tax on the financial allocations they have received and special subsidies they have obtained from their administrative departments or institutions at higher levels.

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Business Tax

According to the Provisional Regulations on Business Tax, which was amended on November 10, 2008, and became effective on January 1, 2009, and the Detailed Implementing Rules on the Provisional Regulations on Business Tax, which was amended on October 28, 2011, business tax is imposed on income derived from the furnishing of specified services and transferring of immovable property or intangible property at rates ranging from 3 percent to 20 percent, depending on the activity.

According to Circular 39, Notice of the Ministry of Finance and the State Administration of Taxation on Issues Concerning Strengthening the Administration over the Collection of Business Tax on Educational Services, or Circular 3, and the Provisional Regulations of the PRC on Business Tax, nursing services provided by nurseries, kindergartens and educational services provided by schools and other education institutions shall be exempt from business tax.

Other Tax Exemptions

According to Circular 39 and Circular 3, the real properties and land used by schools, nurseries and kindergartens established by enterprises shall be exempt from house property tax and urban land use tax. Schools expropriating arable land upon approval shall be exempt from arable land use tax. Schools and educational institutions established by any enterprises, government affiliated institutions, social groups or other social organizations or individuals and citizens with non-state fiscal funds for education and open to the public upon the approval of the administrative department for education or for labor of the relevant people’s government at the county level or above which has also issued the relevant school running license, shall be exempted from deed tax on their ownership of land and houses used for teaching activities.

Value-Added Tax

According to the Temporary Regulations on Value-added Tax, which was amended on February 6, 2016, and the Detailed Implementing Rules of the Temporary Regulations on Value-added Tax, which was amended on October 28, 2011, all taxpayers selling goods, providing processing, repair or replacement services or importing goods within the PRC shall pay Value-Added Tax. The tax rate of 17 percent shall be levied on general taxpayers selling or importing various goods; the tax rate of 17 percent shall be levied on the taxpayers providing processing, repairing or replacement service; the applicable rate for the export of goods by taxpayers shall be nil, unless otherwise stipulated.

Furthermore, according to the Trial Scheme for the Conversion of Business Tax to Value-added Tax, which was promulgated by the MOF and the SAT on November 16, 2011, the State began to launch taxation reforms in a gradual manner in January 1, 2012, whereby the collection of value-added tax in lieu of business tax items was implemented on a trial basis in regions showing significant radiating effects in economic development and providing outstanding reform examples, beginning with production service industries such as transportation and certain modern service industries.

In accordance with a SAT circular that took effect on May 1, 2016, upon approval of the State Council, the pilot program of the collection of value-added tax in lieu of business tax shall be promoted nationwide in a comprehensive manner starting from May 1, 2016, and all taxpayers of business tax engaged in the building industry, the real estate industry, the financial industry and the life service industry shall be included in the scope of the pilot program with regard to payment of value-added tax instead of business tax.

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In April 2018, MOF and the SAT jointly promulgated the Circular of the Ministry of Finance and the State Administration of Taxation on Adjustment of Value-Added Tax Rates, or Circular 32, according to which (i) for VAT taxable sales acts or importation of goods originally subject to value-added tax rates of 17% and 11% respectively, such tax rates shall be adjusted to 16% and 10%, respectively; (ii) for purchase of agricultural products originally subject to deduction rate of 11%, such deduction rate shall be adjusted to 10%; (iii) for purchase of agricultural products for the purpose of production and sales or consigned processing of goods subject to tax rate of 16%, such tax shall be calculated at the deduction rate of 12%; (iv) for exported goods originally subject to tax rate of 17% and export tax refund rate of 17%, the export tax refund rate shall be adjusted to 16%; and (v) for exported goods and cross-border taxable acts originally subject to tax rate of 11% and export tax refund rate of 11%, the export tax refund rate shall be adjusted to 10%. Circular 32 became effective on May 1, 2018 and shall supersede existing provisions which are inconsistent with Circular 32.

In March 2019, MOF, the SAT and General Administration of Customs jointly promulgated the Announcement on Policies for Deepening the VAT Reform according to which (i) for VAT taxable sales acts or importation of goods originally subject to value-added tax rates of 16% and 10% respectively, such tax rates shall be adjusted to 13% and 9%, respectively; (ii) for purchase of agricultural products originally subject to deduction rate of 10%, such deduction rate shall be adjusted to 9%; (iii) for purchase of agricultural products for the purpose of production and sales or consigned processing of goods subject to tax rate of 13%, such tax shall be calculated at the deduction rate of 10%; (iv) for exported goods originally subject to tax rate of 16% and export tax refund rate of 16%, the export tax refund rate shall be adjusted to 13%; and (v) for exported goods and cross border taxable acts originally subject to tax rate of 10% and export tax refund rate of 10%, the export tax refund rate shall be adjusted to 9%. The Announcement became effective on April 1, 2019 and shall supersede existing provisions which are inconsistent with the Announcement.

Regulations on Foreign Exchange

Foreign Currency Exchange

Pursuant to the Foreign Currency Administration Rules, as amended, and various regulations issued by SAFE and other relevant PRC government authorities, Renminbi is freely convertible to the extent of current account items, such as trade related receipts and payments, interest and dividends. Capital account items, such as direct equity investments, loans and repatriation of investment, unless expressly exempted by laws and regulations, still require prior approval from SAFE or its provincial branch for conversion of Renminbi into a foreign currency, such as U.S. dollars, and remittance of the foreign currency outside of the PRC. Payments for transactions that take place within the PRC must be made in Renminbi. Foreign currency revenues received by PRC companies may be repatriated into China or retained outside of China in accordance with requirements and terms specified by SAFE.

Dividend Distribution

Wholly foreign-owned enterprises and Sino-foreign equity joint ventures in the PRC may pay dividends only out of their accumulated profits, if any, as determined in accordance with PRC accounting standards and regulations. Additionally, these foreign-invested enterprises may not pay dividends unless they set aside at least 10 percent of their respective accumulated profits after tax each year, if any, to fund certain reserve funds, until such time as the accumulative amount of such fund reaches 50 percent of the enterprise’s registered capital. In addition, these companies also may allocate a portion of their after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends.

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Regulations Relating to Foreign Exchange Registration of Overseas Investment by PRC Residents

Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or Circular 37, issued by SAFE and effective on July 4, 2014, regulates foreign exchange matters in relation to the use of special purpose vehicles, or SPVs, by PRC residents or entities to seek offshore investment and financing and conduct round trip investment in China. Under Circular 37, a SPV refers to an offshore entity established or controlled, directly or indirectly, by PRC residents or entities for the purpose of seeking offshore financing or making offshore investment, using legitimate domestic or offshore assets or interests, while “round trip investment” refers to the direct investment in China by PRC residents or entities through SPVs, namely, establishing foreign-invested enterprises to obtain the ownership, control rights and management rights. Circular 37 requires that, before making contribution into an SPV, PRC residents or entities are required to complete foreign exchange registration with the SAFE or its local branch. Circular 37 further provides that option or share-based incentive tool holders of a non-listed SPV can exercise the options or share incentive tools to become a shareholder of such non-listed SPV, subject to registration with SAFE or its local branch.

PRC residents or entities who have contributed legitimate domestic or offshore interests or assets to SPVs but have yet to obtain SAFE registration before the implementation of the Circular 37 shall register their ownership interests or control in such SPVs with SAFE or its local branch. An amendment to the registration is required if there is a material change in the registered SPV, such as any change of basic information (including change of such PRC resident’s name and operation term), increases or decreases in investment amounts, transfers or exchanges of shares, or mergers or divisions. Failure to comply with the registration procedures set forth in Circular 37, or making misrepresentation on or failure to disclose controllers of foreign-invested enterprise that is established through round-trip investment, may result in restrictions on the foreign exchange activities of the relevant foreign-invested enterprises, including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant PRC residents or entities to penalties under PRC foreign exchange administration regulations. On February 13, 2015, SAFE further promulgated the Circular on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Circular 13, which took effect on June 1, 2015. This SAFE Circular 13 has amended SAFE Circular 37 by requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future. All of our shareholders who, to our knowledge, are subject to the above SAFE regulations have completed the necessary registrations with the local SAFE branch or qualified banks as required by SAFE Circular 37.

On March 30, 2015, the SAFE promulgated the Circular on Reforming the Management Approach regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises, or Circular 19, which became effective on June 1, 2015, and partially invalid according to the Circular on Repeating and Invalidating Five Normative Documents Concerning Administration of Foreign Exchange and Some Articles of Seven Normative Documents Concerning Administration of Foreign Exchange promulgated by the SAFE on December 30, 2019. According to Circular 19, the foreign exchange capital of foreign-invested enterprises shall be subject to the Discretional Foreign Exchange Settlement. The Discretional Foreign Exchange Settlement refers to the foreign exchange capital in the capital account of a foreign-invested enterprise for which the rights and interests of monetary contribution has been confirmed by the local foreign exchange bureau (or the book-entry registration of monetary contribution by the banks) can be settled at the banks based on the actual operational needs of the foreign-invested enterprise. The proportion of Discretional Foreign Exchange Settlement of the foreign exchange capital of a foreign-invested enterprise is temporarily determined to be 100%. The Renminbi converted from the foreign exchange capital will be kept in a designated account and if a foreign-invested enterprise needs to make further payment from such account, it still needs to provide supporting documents and go through the review process with the banks.

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SAFE issued the Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or Circular 16, on June 9, 2016, which took effect on the same date. Pursuant to Circular 16, enterprises registered in the PRC may also convert their foreign debts from foreign currency to Renminbi on a discretionary basis. Circular 16 provides an integrated standard for conversion of foreign exchange under capital account items (including but not limited to foreign currency capital and foreign debts) on a discretionary basis which applies to all enterprises registered in the PRC. Circular 16 reiterates the principle that Renminbi converted from foreign currency-denominated capital of a company may not be directly or indirectly used for purposes beyond its business scope or prohibited by PRC laws or regulations, while such converted Renminbi shall not be provided as loans to its non-affiliated entities.

Regulations on loans to and direct investment in the PRC entities by offshore holding companies

According to the Implementation Rules for the Statistics and Supervision of Foreign Debt promulgated by SAFE on September 24, 1997 and the Interim Provisions on the Management of Foreign Debts promulgated by SAFE, the NDRC and the MOF and effective from March 1, 2003, loans by foreign companies to their subsidiaries in China, which accordingly are foreign-invested enterprises, are considered foreign debt, and such loans must be registered with the local branches of the SAFE. Under the provisions, the total amount of accumulated medium-term and long-term foreign debt and the balance of short-term debt borrowed by a foreign-invested enterprise is limited to the difference between the total investment and the registered capital of the foreign-invested enterprise.

Pursuant to the NDRC Circular on Promoting the Reform of the Administration on the Filing and Registration System for Foreign Debts Issued by Enterprises promulgated by the NDRC on September 14, 2015, which came into effect on the same date, enterprises domiciled within the PRC and their controlling subsidiaries or branches should file and register with the NDRC prior to issuance of foreign debts, including without limitation medium-term and long-term international commercial loans, and report relevant information on the issuance of the foreign debts to the NDRC within ten working days after the completion of the issuance.

On January 11, 2017, the People’s Bank of China, or PBOC, promulgated the Circular of the People’s Bank of China on Matters relating to the Macro-prudential Management of Comprehensive Cross-border Financing, or PBOC Circular 9, which took effect on the same date. The PBOC Circular 9 established a capital or net assets-based constraint mechanism for cross-border financings. Under such mechanism, a company may carry out cross-border financings in Renminbi or foreign currencies at their own discretion. The total cross-border financings of a company shall be calculated using a risk-weighted approach and shall not exceed an upper limit. The upper limit is calculated as capital or assets multiplied by a cross-border financing leverage ratio and multiplied by a macro-prudential regulation parameter.

In addition, according to PBOC Circular 9, as of the date of the promulgation of PBOC Circular 9, a transition period of one year is set for foreign-invested enterprises and during such transition period, foreign-invested enterprises may apply either the current cross-border financing management mode, namely the mode provided by Implementation Rules for the Statistics and Supervision of Foreign Debt and the Interim Provisions on the Management of Foreign Debts, or the mode in this PBOC Circular 9 at its sole discretion. After the end of the transition period, the cross-border financing management mode for foreign-invested enterprises will be determined by the People’s Bank of China and SAFE after assessment based on the overall implementation of this PBOC Circular 9.

According to applicable PRC regulations on foreign-invested enterprises, capital contributions from a foreign holding company to its PRC subsidiaries, which are considered foreign-invested enterprises, may only be made when approval by or registration with the MOFCOM or its local counterpart is obtained.

We may not obtain these government approvals or complete such registrations on a timely basis, if at all, with respect to future capital contributions or foreign loans by us to our PRC subsidiaries. See “Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in China-PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of our initial public offering to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.”

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Regulations on Stock Incentive Plans

Pursuant to the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company, or Circular 7, issued by SAFE in February 2012, employees, directors, supervisors and other senior management participating in any stock incentive plan of an overseas publicly listed company who are PRC citizens or who are non-PRC citizens residing in China for a continuous period of not less than one year, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be a PRC subsidiary of such overseas listed company, and complete certain other procedures. We and our directors, executive officers and other employees who are PRC citizens or who reside in the PRC for a continuous period of not less than one year and who have been granted options are subject to these regulations. See “Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in China-Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.”

In addition, the State Administration for Taxation has issued certain circulars concerning employee share options or restricted shares. Under these circulars, the employees working in the PRC who exercise share options or are granted restricted shares will be subject to PRC individual income tax. The PRC subsidiaries of such overseas listed company have obligations to file documents related to employee share options or restricted shares with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options. If the employees fail to pay or the PRC subsidiaries fail to withhold their income taxes according to relevant laws and regulations, the PRC subsidiaries may face sanctions imposed by the tax authorities or other PRC government authorities.

M&A Rule and Overseas Listing

Under the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rule, were jointly adopted by six PRC regulatory authorities, including CSRC, on August 8, 2006, and became effective as of September 8, 2006, and were later amended on June 22, 2009, a foreign investor is required to obtain necessary approvals when (i) a foreign investor acquires equity in a domestic non-foreign invested enterprise thereby converting it into a foreign-invested enterprise, or subscribes for new equity in a domestic enterprise via an increase of registered capital thereby converting it into a foreign-invested enterprise; or (ii) a foreign investor establishes a foreign-invested enterprise which purchases and operates the assets of a domestic enterprise, or which purchases the assets of a domestic enterprise and injects those assets to establish a foreign-invested enterprise. According to the M&A Rule, where a domestic company or enterprise, or a domestic natural person, through an overseas company established or controlled by it/him, acquires a domestic company which is related to or connected with it/him, approval from MOFCOM is required.

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C. Organizational Structure

The chart below summarizes our corporate legal structure and identifies our significant subsidiaries and other entities that are material to our business as of the date of this annual report:

Notes:

(1) Mr. Xi Zhang and his wholly owned company collectively and directly hold 100% equity interests in Shanghai OneSmart.

(2) Mr. Xi Zhang and his wholly owned company collectively and directly hold 100% equity interests in Rui Si.

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(3) Including East Shanghai Foreign Language School, a domestic school for compulsory education, in which we hold an 80% equity interests.

(4) Including 64 subsidiaries in which we have a majority interest and 13 subsidiaries in which we have 100% equity interests.

(5) Including 22 subsidiaries in which we have a majority interest and five subsidiaries in which we have 100% equity interests.

(6) Including 29 subsidiaries in which we have a majority interest in and 55 subsidiaries in which we have 100% equity interests.

(7) Shanghai Jingrui Education Technology Group and Shanghai OneSmart Education Investment Co., Ltd. hold 90% and 10% equity interests in Xiangyuan, respectively.

Contractual Arrangements with Shanghai OneSmart, Rui Si and their respective shareholders

The following is a summary of the contractual arrangements with Shanghai OneSmart, Rui Si and their respective shareholders.

Agreements that provide us with effective control over Shanghai OneSmart and Rui Si

Shareholders’ Voting Rights Agreement. On January 24, 2018, the shareholders of Shanghai OneSmart, Shanghai OneSmart and the WFOE entered into a shareholders’ voting rights agreement. Pursuant to the shareholders’ voting rights agreement, each such shareholder irrevocably authorized the WFOE or any person(s) designated by the WFOE to exercise such shareholder’s rights in Shanghai OneSmart, including without limitation, the power to participate in and vote at shareholder’s meetings and execute shareholders’ resolutions, the power to sell or transfer such shareholder’s equity interests in Shanghai OneSmart, the power to nominate and appoint the directors, senior management, and other shareholders’ voting rights permitted by the Articles of Association of Shanghai OneSmart. The shareholders’ voting rights agreement will remain in force and irrevocable, unless all parties mutually agree in writing to terminate or the WFOE decides to terminate upon breach of contract by Shanghai OneSmart or its shareholders.

On November 1, 2017, the shareholders of Rui Si entered into a shareholders’ voting rights agreement with Rui Si and the WFOE. The shareholders’ voting rights agreement contain terms substantially similar to the shareholders’ voting rights agreement entered into by the shareholders of Shanghai OneSmart described above.

Loan Agreement. On January 24, 2018, the shareholders of Shanghai OneSmart and the WFOE entered into a loan agreement. Pursuant to the loan agreement, the WFOE will provide loan to the shareholders of Shanghai OneSmart for the purpose of corporate operation of Shanghai OneSmart or other legitimate use permitted by the WFOE. The shareholders of Shanghai OneSmart should pledge their equity interests in Shanghai OneSmart and enter into an equity pledge agreement to secure such loan and other obligations. The WFOE undertakes that it will provide unconditional financial support to Shanghai OneSmart pursuant to the terms of the loan agreement and irrevocably agrees to forgive the loan if Shanghai OneSmart is not able to repay the loan. Unless the WFOE terminates this agreement in advance pursuant to the terms and conditions contained therein, this agreement will remain effective for ten years and will automatically and continuously renew for another ten years upon expiration. In addition, to the extent as permitted by applicable laws, we agree to provide unlimited financial support for VIE’s operation.

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Pursuant to the loan agreement dated November 1, 2017 between the WFOE and the shareholders of Rui Si, the WFOE will make loans to the shareholders of Rui Si. The loan agreement contains terms substantially similar to the loan agreement entered into by the shareholders of Shanghai OneSmart described above.

Equity Pledge Agreement. On January 24, 2018, the WFOE, Shanghai OneSmart and its shareholders entered into an equity pledge agreement. Pursuant to the equity pledge agreement, those shareholders should pledge 100% equity interests in Shanghai OneSmart to the WFOE to guarantee the performance by Shanghai OneSmart and its shareholders of their obligations under the loan agreement, the exclusive purchase right agreement, the exclusive technology and consultation service agreement, the shareholders’ voting rights agreement and this agreement as well as the payment of the loan, service fee, their respective interests and any loss incurred by events of default defined therein. If events of default defined therein occurs, upon giving written notice to Shanghai OneSmart, the WFOE, as pledgee, will have the right to dispose of the pledged equity interests in Shanghai OneSmart and priority in receiving the proceeds from such disposal. Those shareholders agrees that, without WFOE’s prior written approval, during the term of the equity pledge agreement, they will not dispose of the pledged equity interests or create or allow any other encumbrance on the pledged equity interests. We have completed registering the equity pledge with the relevant office of Administration for Industry and Commerce in accordance with the PRC Property Rights Law.

On November 1, 2017, the WFOE, Rui Si and the shareholders of Rui Si entered into an equity pledge agreement. The equity pledge agreement contain terms substantially similar to the equity pledge agreement relating to Shanghai OneSmart described above. We have completed registering the equity pledge with the relevant office of Administration for Industry and Commerce in accordance with the PRC Property Rights Law.

Agreement that allows us to receive economic benefits from Shanghai OneSmart and Rui Si

Exclusive Technology and Consultation Service Agreement. On January 24, 2018, the WFOE and Shanghai OneSmart entered into an exclusive technology consultation service agreement. Pursuant to the exclusive technology and consultation service agreement, the WFOE or its designated person has the exclusive right to provide Shanghai OneSmart with technology consultation and other services. Without prior written consent of the WFOE, Shanghai OneSmart may not accept any services subject to this agreement from any third party. The WFOE has the right to determine the service fee to be charged to Shanghai OneSmart under this agreement by considering, among other things, the operation status and development demands of Shanghai OneSmart and the actual technology consultation and services provided. The WFOE will have the exclusive ownership of all intellectual property rights created as a result of the performance of this agreement. To guarantee Shanghai OneSmart’s performance of this agreement, upon request from the WFOE, Shanghai OneSmart shall pledge or mortgage all of its accounts receivable and/or all of its other assets to the WFOE. Unless the WFOE terminates this agreement or this agreement is terminated according to applicable laws, this agreement will remain effective.

The WFOE and Rui Si entered into an exclusive technology and consultation service agreement on November 1, 2017. The exclusive technology and consultation service agreement contains terms substantially similar to the exclusive technology and consultation service agreement relating to Shanghai OneSmart described above.

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Agreement that provides us with the option to purchase the equity interests in Shanghai OneSmart and Rui Si

Exclusive Purchase Right Agreement. On January 24, 2018, the WFOE, Shanghai OneSmart and its shareholders entered into an exclusive purchase right agreement. Pursuant to the exclusive purchase right agreement, the shareholders of Shanghai OneSmart irrevocably and unconditionally granted the WFOE or any third party designated by the WFOE an exclusive option to purchase all or part of the equity interests or assets of Shanghai OneSmart at the lowest price permitted by applicable PRC laws. Those shareholders further undertake that, without prior written consent of the WFOE, they will neither create, except for the rights set forth in the equity pledge agreement and shareholders’ voting rights agreement, any pledge or encumbrance on their equity interests of Shanghai OneSmart, nor approve any transfer or disposal of their equity interests or assets to any person other than the WFOE or its designated third party. Without the WFOE’s prior written consent, those shareholders agree not to cause Shanghai OneSmart, among other things to merge with any other entities, distribute dividends, amend its articles of association, terminate any material contract, or terminate any current business operation. This agreement will remain effective until all the equity interests and assets are duly transferred to the WFOE or its designated third party.

On November 1, 2017, the WFOE, Rui Si and the shareholders of Rui Si entered into an exclusive purchase right agreement. The exclusive purchase right agreement contains terms substantially similar to the exclusive purchase right agreement relating to Shanghai OneSmart described above.

In the opinion of King & Wood Mallesons, our PRC counsel:

● the ownership structures of the WFOE, Shanghai OneSmart and Rui Si are not in violation of PRC laws or regulations currently in effect; and

● the contractual arrangements among the WFOE, Shanghai OneSmart and Rui Si, and the shareholders of Shanghai OneSmart and Rui Si governed by PRC laws are valid, binding and enforceable under PRC laws, and do not and will not result in any violation of applicable PRC laws or regulations currently in effect.

Contractual Arrangements with Xiangyuan and its shareholders

The following is a summary of the contractual arrangements with Xiangyuan and its shareholders.

Agreements that provide us with effective control over Xiangyuan

Equity Pledge Agreement. On February 1, 2020, Yimi Shanghai, Xiangyuan and its shareholders entered into an equity pledge agreement. Pursuant to the equity pledge agreement, those shareholders should pledge 100% equity interests in Xiangyuan to Yimi Shanghai to guarantee the performance by Xiangyuan and its shareholders of their obligations under the exclusive purchase right agreement, the exclusive business cooperation agreement and this agreement as well as the payment of the service fee, their respective interests and any loss incurred by events of default defined therein. If events of default defined therein occurs, upon giving written notice to Yimi Shanghai, as pledgee, Yimi Shanghai will have the right to dispose of the pledged equity interests in Xiangyuan and priority in receiving the proceeds from such disposal. Xiangyuan and its shareholders agree that, without Yimi Shanghai’s prior written approval, during the term of the equity pledge agreement, they will not dispose of the pledged equity interests or create or allow any other encumbrance on the pledged equity interests. Upon acquisition of Yimi, we have not completed registering the equity pledge with the relevant office of Administration for Industry and Commerce in accordance with the PRC Property Rights Law.

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Agreement that allows us to receive economic benefits from Xiangyuan

Exclusive Business Cooperation Agreement. On February 1, 2020, Yimi Shanghai and Xiangyuan entered into an exclusive business cooperation agreement. Pursuant to the exclusive business cooperation agreement, Yimi Shanghai or its designated person has the exclusive right to provide Xiangyuan with technology, software and other services. Without prior written consent of Yimi Shanghai, Xiangyuan may not accept any services subject to this agreement from any third party. Yimi Shanghai has the right to determine the service fee to be charged to Shanghai OneSmart under this agreement by considering, among other things, the operation status of Xiangyuan and the complexity and difficulty of the services provided. Yimi Shanghai will have the exclusive ownership of all intellectual property rights created as a result of the performance of this agreement. Unless earlier terminated in accordance with the provisions of this agreement or relevant agreements separately executed between Yimi Shanghai and Xiangyuan, the term of this Agreement shall be 30 years.

Agreement that provides us with the option to purchase the equity interests in Xiangyuan

Exclusive Purchase Right Agreement. On February 1, 2020, Yimi Shanghai, Xiangyuan and its shareholders entered into an exclusive purchase right agreement. Pursuant to the exclusive purchase right agreement, the shareholders of Xiangyuan irrevocably and unconditionally granted Yimi Shanghai or any third party designated by Yimi Shanghai an exclusive option to purchase all or part of the equity interests of Xiangyuan at the lowest price permitted by applicable PRC laws. Those shareholders further undertake that, without prior written consent of the Yimi Shanghai, they will neither create any pledge or encumbrance on their equity interests of Xiangyuan, nor approve any transfer or disposal of their equity interests or assets to any person other than Yimi Shanghai or its designated third party.

In the opinion of King & Wood Mallesons, our PRC counsel:

● the ownership structures of Yimi Shanghai and Xiangyuan are not in violation of PRC laws or regulations currently in effect; and

● the contractual arrangements among Yimi Shanghai, Xiangyuan and its shareholders governed by PRC laws are valid, binding and enforceable under PRC laws, and do not and will not result in any violation of applicable PRC laws or regulations currently in effect.

The contractual arrangements with respect to Shanghai OneSmart, Rui Si and Xiangyuan enable us to (i) exercise effective control over Shanghai OneSmart, Rui Si and Xiangyuan; (ii) receive substantially all of the economic benefits of Shanghai OneSmart, Rui Si and Xiangyuan in consideration for the technical and consulting services provided by the WFOE and Yimi Shanghai; and (iii) have an exclusive option to purchase all of the equity interests in Shanghai OneSmart, Rui Si and Xiangyuan when and to the extent permitted under PRC laws and regulations. We also agree to provide unlimited financial support for the VIEs’ operations. As a result of these contractual arrangements, we are considered the primary beneficiary of Shanghai OneSmart, Rui Si and Xiangyuan, and we treat them as our VIEs, under the U.S. GAAP. We have consolidated the financial results of Shanghai OneSmart, Rui Si and Xiangyuan and their subsidiaries in our consolidated financial statements in accordance with U.S. GAAP. Due to the PRC legal restrictions on foreign ownership and investment in the education business, OneSmart Education has relied on these contractual arrangements to conduct a significant part of its operations in China.

However, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules. Accordingly, the PRC regulatory authorities may in the future take a view that is contrary to the above opinion of our PRC counsel. If the PRC government finds that the agreements that establish the structure for operating our education business do not comply with PRC government restrictions on foreign investment, we may be required to unwind such agreements and/or dispose of such business. See “Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in China-If the PRC government finds that the agreements that establish the structure for our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.”

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D. Property, Plant and Equipment

Our headquarters is located in Shanghai, China. As of August 31, 2021, we had learning centers in Shanghai and 43 other cities in China. We lease our headquarters, which occupies approximately 6,888 square meters under a lease which expires in March 2025. We also lease all of our learning centers and service centers, which occupy an aggregate of approximately 300,977 square meters in 44 cities in China. Subsequent to August 31, 2021, the majority of lease agreements for our Shanghai learning centers have durations of less than a year. For most of our learning centers, we pay annual rental fees. The rental payments for our learning centers are either set at a fixed rate during the entire rental period or increased every other year based on a preset rate. For more details, see “Item 4. Information on the Company-B. Business Overview-Our Learning centers.”

ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

You should read the following discussion together with our consolidated financial statements and the related notes included elsewhere in this annual report on Form 20-F. This discussion contains forward-looking statements that involve risks and uncertainties about our business and operations. Our actual results may differ materially from those we currently anticipate as a result of various factors, including those we describe under “Item 3. Key Information-D. Risk Factors” and elsewhere in this annual report on Form 20-F. See “Forward-Looking Statements.”

A. Operating Results

Overview

We generated our revenue primarily from tuition fees from our premium tutoring services for exam preparation under the brand of “OneSmart VIP,” premium young children education services under the brand of “HappyMath” and “FasTrack English,” and online business. As of August 31, 2021, we operated a nationwide network of 498 learning centers across 44 cities in China. Our average monthly enrollments for the fiscal years ended August 31, 2019, 2020 and 2021 were 158,346, 170,995 and 170,854, respectively. The total number of class units consumed in the fiscal years ended August 31, 2019, 2020 and 2021 were 22,201,806, 20,089,538 and 20,073,009, respectively. We have experienced substantial revenue growth historically. Our net revenues decreased from RMB4.0 billion in the fiscal year of 2019 to RMB3.4 billion in the fiscal year of 2020 primarily due to the outbreak of COVID-19 which caused shutdown of all or some of our learning centers for a certain period of time, and maintained RMB3.4 billion (US$529.9 million) in the fiscal year of 2021. We recorded net income of RMB166.2 million in the fiscal years of 2019 and net loss of RMB768.6 million and RMB5.0 billion (US$777.9 million) in the fiscal year of 2020 and 2021, respectively. The increased net loss in the fiscal year of 2021 is mainly driven by the impairment losses RMB4.4 billion (US$ 677.1 million) recognized because of the material effect taken by the adverse changes in the regulatory environment on the private education industry in China.

Factors Affecting Our Results of Operations

Our current business and operating results are affected by factors affecting China’s K-12 after-school education services industry generally. Historically, we have benefited from the rapid economic growth, significant urbanization and higher per capita disposable income of urban households in China, which has allowed many Chinese parents to spend more on their children’s education.

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While our business is influenced by factors affecting the K-12 after-school education services industry in China generally, our results of operations are more directly affected by company-specific factors, including the following major factors:

Industry regulations in China

The adverse changes in the economic conditions or regulatory environment in China have had a material adverse effect on the private education industry in China, which in turn have harmed our business and results of operations. On July 24, 2021, the General Office of State Council and the General Office of Central Committee of the Communist Party of China jointly promulgated the Alleviating Burden Opinion, which provides, among others, that (i) Academic AST Institutions are prohibited from raising funds by listing on stock markets or conducting any capitalization activities; (ii) foreign capital is prohibited from controlling or participating in any Academic AST Institutions through mergers and acquisitions, entrusted operation, joining franchise or variable interest entities; (iii) online tutoring for preschool-age children is prohibited, and offline academic subjects (including foreign language) tutoring services for preschool-age children is also strictly prohibited. The Alleviating Burden Opinion provides that any violation of the foregoing shall be rectified. The Alleviating Burden Opinion further states that the administration and supervision over academic subjects tutoring institutions for students on grade ten to twelve shall be implemented by reference to the relevant provisions of the Alleviating Burden Opinion. See “Item 3. Key Information-D. Risk Factors” and “Item 4. Information on the Company - B. Business Overview – Regulation - Regulations on Private Education in the PRC - Regulating Development of After-school Tutoring Institutions” for more details.

Impact of COVID-19

The outbreak of COVID-19 pandemic around the globe has had and is expected to continue to have an impact on our operations and financial performance. As of the date of this annual report, COVID-19 is still spreading in communities in some parts of the world. The severity of the outbreak has resulted in the temporary closure of schools, learning centers, and many corporate offices across China. In such unusual circumstances, our offline business has been significantly affected due to the temporary closure of our learning centers as mandatorily required by the PRC government. All of our offline learning centers were temporally closed since January 2020 following government’s measures against COVID-19. Because substantially all of our operations are conducted in China and our students had to remain home for a number of months, the outbreak of COVID-19 has caused a disruption to our business.

Despite the impact by the outbreak of COVID-19, we were able to maintain our revenues at substantially the same level as compared to last year. As a result of the decrease of the student attendance to class in our programs, our net revenues were maintained with RMB3.4 billion (US$529.9 million) in the fiscal year 2021. Our historical investments and technology development in the online space enabled us to respond promptly to the unprecedented COVID-19 situation. Supported by OneSmart Online, we successfully migrated the majority of our existing students and attracted a large number of new students to our online platform while maintaining high levels of customer satisfaction. The COVID-19 pandemic did not result in decreased student enrollments, on the contrary, our average monthly enrollments is maintained from 170,995 for the fiscal year ended August 31, 2020 to 170,854 for the fiscal year ended August 31, 2021.

The COVID-19 outbreak may continue to affect our business operations and its financial condition and operating results for the fiscal year 2022, including but not limited to negative impact to our total revenues, fair value adjustments or impairment to our long-term investments.

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Student Enrollment

Our revenues are primarily generated from tuition fees from students enrolled in our education programs, which is directly driven by the number of student enrollments. The growth of our enrollments in turn is affected by a mix of factors including the number of our learning centers, the number and variety of our programs and service offerings and our reputation.

In recent years, growth in student enrollment has been, to a substantial extent, driven by the ramp up of our existing learning centers and the expansion of our service network. The number of learning centers within our nationwide network has grown from 480 as of August 31, 2020 to 498 as of August 31, 2021, covering 44 cities throughout China.

In addition, our portfolio of program offerings is also an important driving force for student enrollments. We established our trusted brand through our premium tutoring services covering all key academic subjects taught in public schools at levels between the fourth grade in primary school and the twelfth grade in high school of the K-12 system in China. We subsequently added premium young children education services focusing on interest cultivation and early development, through which, we have successfully extended our services to younger children in kindergarten and primary schools. Throughout years of rapid growth, HappyMath has become one of the most renowned education brands in the young children mathematics tutoring market in China. By acquiring “FasTrack English,” we have been successfully expanding our service offering into premium young children English tutoring. We acquired Tianjin Huaying Education Co., Ltd. in September 2018, which primarily provides classes with a class size of up to 25 students and has major presence in Tianjin, aiming at mass market and further penetrating into Northern China. Leveraging OMO technologies, we launched OneSmart Online that provides online courses to our existing student base from OneSmart VIP, HappyMath and FasTrack English and newly enrolled online students. Our portfolio of program offerings helps us to retain our existing students and attract new students and provides us with greater cross-selling opportunities.

Ability to Increase Revenue per Student

We primarily charge students based on the fee rate per class unit and the total number of class units taken by students. Our results of operations are affected by our ability to increase revenue per student, which is primarily affected by the pricing of our education programs and the class unit consumption speed of our students:

● Pricing.  Our ability to maintain and increase the pricing of our education programs is an important factor that affects our revenue. We determine the fee rate per class unit for our classes based on a number of factors, primarily the type of education programs with different class formats and sizes, overall demand for our program offerings, cost of our services, the geographic markets where the programs are offered, and the fees charged by our competitors for the same or similar programs. We maintained our average fee rate per class unit for our premium tutoring services at RMB199.0, RMB198.4 and RMB196.4, and our average fee rate per class unit for our premium young children education services at RMB136.1, RMB118.1 and RMB117.0, in the fiscal year of 2019, 2020 and 2021, respectively. Under favorable conditions and supply situation in the K-12 after-school education market, we may seek to further raise the fee rate of our education programs gradually.

● Class Unit Consumption.  After a student signs the service contract for after-school education programs and purchases a fixed amount of class units, he or she will be deemed to have enrolled with us. The pre-paid class units are consumed when the student takes classes and tuition revenue is recognized proportionally as the classes are delivered. Our ability to encourage our students to consume class units more frequently, directly affects our recognized revenue, and this ability is highly dependent upon the number and varieties of our programs and service offerings and our cross-selling efforts. Refunds for any remaining unconsumed class units do not affect our reported revenue as the tuition fees for refunded class units have not yet been recognized as revenue, but may have an adverse effect on our cash flow for the periods in which a significant amount of refunds are made. In general, with our approval, the student may use the unconsumed class units on certain programs or subjects that are different from the ones originally registered for at the time of purchase.

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Operating Efficiency

Our ability to manage operating costs and expenses directly affects our profitability.

Our cost of revenues primarily consists of compensation to our teachers and study advisors and the rental costs associated with the headcounts of the teachers and study advisors. We offer competitive compensation to our teachers in order to attract and retain these talents. The number of our teachers decreased from 6,598 as of August 31, 2020 to 6,508 as of August 31, 2021 with operating efficiency of our learning centers and program offerings. The rental payments increased in absolute amounts during the same periods due to our learning center expansion. Costs related to our teachers and study advisors have a direct impact on our gross margin. Our ability to drive the productivity of our teachers and study advisors affects our profitability. The ratio of the number of our students to the number of our teachers and study advisors for a mix of program offerings has an impact on our margins, with higher student-to-teacher ratios generally representing higher margins. In general, our HappyMath and FasTrack English programs are conducted in larger classes, and therefore typically yield higher gross margin without the impact of COVID-19.

Our operating expenses consist of sales and marketing expenses, and general and administrative expenses. Due to our efforts for compliance with regulatory standards, investments in research and development and the expansion in the coverage of our learning center, our operating expenses excluding assets impairment as a percentage of net revenues increased from 42.4% for the fiscal year 2019 to 47.5% for the fiscal year 2020 and further increased to 53.1% for the fiscal year 2021.

To date, in order to complied with all applicable rules and regulations in providing educational services, including those to be adopted following the policy directives of related regulations, we have ceased our original tutoring service business and plans to restructure our business by selling tutoring services and then focus on smart education services. To manage and support the growth of our new business, we must enhance our operational, administrative and technological systems and our financial and management controls, and recruit, train and retain additional qualified teachers and management personnel as well as other administrative and sales and marketing personnel, particularly as we grow outside of our existing markets. If we cannot achieve these operational improvements, our financial condition and results of operations may be materially adversely affected.

Seasonality

Our results of operations are also affected by seasonal factors. Our revenues are typically relatively higher in the third and fourth fiscal quarters, because our learning centers generally have the largest numbers of enrollments and class units delivered for our premium programs in these quarters, when most primary and secondary school students prepare for their final exams in the spring semester and, particularly, when ninth- and twelfth-grade students are about to take high school and college entrance exams in China. On the other hand, our costs and expenses are generally not significantly affected by seasonal factors, as a significant portion of such costs and expenses are fixed throughout a fiscal year. We expect this seasonal pattern of our results of operations to continue, although the impact of seasonal factors may not be as prominent in all periods as other factors due to our rapid business expansion.

Key Components of Results of Operations

Net Revenues

On September 1, 2018, we adopted ASC 606, Revenue from Contracts with Customers (“Topic 606”), applying the modified retrospective method to all contracts that were not completed as of September 1, 2018. Results for the year ended August 31, 2019, 2020 and 2021 are presented under Topic 606, while revenues for the years ended August 31, 2018 are not adjusted and continue to be reported under ASC Topic 605, Revenue Recognition (“Topic 605”). Based on our assessment, the adoption of ASC 606 did not have any material impact on our consolidated financial statements.

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As of August 31, 2021, we derived substantially all of our net revenues from tuition for OneSmart VIP business (including our premium tutoring programs for exam preparation and other language and culture programs), OneSmart Young Children Education business (including HappyMath programs and FasTrack English programs) and OneSmart Online, which collectively accounted for 97.0%, 96.8% and 98.6% of the total revenues, for the fiscal years ended August 31, 2019, 2020 and 2021, respectively. The following table sets forth the breakdown of our net revenues, both in absolute amount and as a percentage of our net revenues, for the periods presented.

	Year Ended August 31,
	2019				2020				2021
	RMB		%		RMB		%		RMB		US$		%
	(in thousands, except for percentages)
Net revenues
OneSmart VIP business		3,167,525		79.3		2,625,179		76.3		2,780,106		430,330		81.2
OneSmart Young Children Education business		706,672		17.7		599,414		17.4		546,487		84,590		16.0
OneSmart Online		-		-		103,848		3.1		48,076		7,442		1.4
Other		119,676		3.0		110,440		3.2		48,741		7,545		1.4
Total net revenues		3,993,873		100.0		3,438,881		100.0		3,423,410		529,907		100.0

We collect tuition fees in advance of commencement of our service, which we initially record as prepayments and revenues are recognized proportionately as classes are delivered. Our net revenues from OneSmart VIP business and FasTrack English also include franchise fees we collected from certain institutions with whom we operate our program offerings through franchise arrangements. For each of the fiscal years ended August 31, 2019, 2020 and 2021, net revenues from all the franchise fees contributed to an immaterial portion of our total net revenues, respectively. As of August 31, 2021, there were 13 franchise learning centers.

We also generate other revenues from the tuitions generated by East Shanghai Foreign Language School, a domestic school for compulsory education in which we hold 80% equity interests.

Cost of Revenues

As of August 31, 2021, our cost of revenues primarily includes (i) compensation to teachers and study advisors, including salaries, performance-based bonus and other benefits, (ii) rental cost related to the teaching and service functions, and to a lesser extent, (iii) depreciation and amortization in relation to renovation costs of our learning centers, and (iv) other costs, mainly including office supplies for the teaching activities. The table below sets forth a breakdown of our cost of revenues for the periods indicated, both in absolute amount and as a percentage of our revenues:

	Year Ended August 31,
	2019						2020						2021
	RMB			%			RMB			%			RMB			US$			%
	(in thousands, except for percentages)
Cost of revenues
Staff costs		(1,240,740	)		(31.1	)		(1,240,871	)		(36.1	)		(1,253,082	)		(193,963	)		(36.6	)
Rental costs		(442,175	)		(11.1	)		(488,592	)		(14.2	)		(577,208	)		(89,346	)		(16.9	)
Depreciation and amortization		(145,691	)		(3.6	)		(204,598	)		(5.9	)		(84,490	)		(13,078	)		(2.5	)
Other costs		(243,461	)		(6.1	)		(235,678	)		(6.9	)		(178,963	)		(27,702	)		(5.2	)
Total cost of revenues		(2,072,067	)		(51.9	)		(2,169,739	)		(63.1	)		(2,093,743	)		(324,089	)		(61.2	)

Operating Expenses

Our operating expenses consist of selling and marketing expenses and general and administrative expenses.

Selling and Marketing Expenses

As of August 31, 2021, our selling and marketing expenses primarily consist of (i) compensation to selling personnel, including the salaries, performance-based bonus and share-based and other benefits, (ii) advertising, marketing and brand promotion expenses, (iii) rental costs for the leases related to the sales and marketing function, and (iv) office supplies in relation to the selling and marketing activities. Our selling and marketing expenses as a percentage of revenues were 20.5%, 23.9% and 27.2% for the fiscal years of 2019, 2020 and 2021, respectively. Our selling and marketing expenses as a percentage of revenues increased from 2019 to 2021 as a result of our increased sales and marketing activities to support new students enrollment growth and adoption of more effective sales and marketing channels. We expect that our selling and marketing expenses will decrease in absolute amounts as we are planning to restructure our business by selling tutoring services and then focus on smart education services.

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General and Administrative Expenses

As of August 31, 2021, our general and administrative expenses mainly consist of (i) compensation to our learning center directors, management at our headquarters, administrative and R&D personnel, including base salaries, performance-based bonuses and share-based and other benefits, (ii) rental costs for the leases related to the general and administrative function, (iii) office expenses in relation to the general and administrative activities, and (iv) professional service expense, (v) assets impairment loss and others.

On July 24, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council of the PRC jointly issued the “Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education (compulsory education includes primary school education of six years and middle school education of three years, together as the “Compulsory Stage Education”)” (the “Opinion”). The key provisions of the Opinion include, but are not limited to: (i) institutions providing after-school tutoring (the “AST”) services on academic subjects in relation to the Compulsory Stage Education (“Academic AST Institutions”) are required to be registered as non-profit organization, (ii) Academic AST Institutions providing online tutoring services are required to make application to renew their operating permit in order to maintain the internet content provider license (the “ICP License”); (iii) foreign investors shall not control or hold interest in Academic AST Institutions by means of direct investment, merger and acquisition, franchise or contractual arrangements; (iv) certain restrictions on timing and fee of academic AST services.

On September 7, 2021, to implement the Opinion, the Chinese Ministry of Education (“MOE”) published on its website that the MOE, together with two other government authorities, issued a circular requiring all Academic AST Institutions to complete registration as non-profit by the end of 2021, and all Academic AST Institutions shall, before completing such registration, suspend enrollment of students and charging fees. The Opinion and a related series of notice, administrative measures or circular have a material adverse impact on our AST services relating to academic subjects in the PRC’s Compulsory Stage Education. To the extent we are unable to provide AST related services related to this obligation in the future as a result of the Opinion, we may be required to refund any remaining balance in cash to our customers. Additionally, a significant portion of the Company’s long-lived assets related to its AST business. Those assets might be subject to future impairment based on the future steps that the Company will take to comply with the Opinion. We have considered the impact of the Opinion on our current business and the necessary steps that need to be undertaken in order to fully comply with the Opinion. As a result, we recorded RMB 4.4 billion (US$677.1) assets impairment losses for the years ended August 31, 2021, with nil for the year ended August 31, 2019 and 2020.

We expect that our general and administrative expenses will decrease in absolute amounts in the foreseeable future as we are planning to restructure our business by selling tutoring services and then focus on smart education services, offset by the additional personnel recruitment and incur additional expenses in connection with our new smart education business operations, in particular in connection with our technology development and online education initiatives and other new program offerings, the compliance with the new regulatory standards, the enhancement of our internal controls and the provisions of share-based compensation and as well as other expenses for becoming and being a public company.

The following table sets forth our operating expenses, both in absolute amount and as a percentage of our revenues, for the periods presented.

	Year Ended August 31,
	2019						2020						2021
	RMB			%			RMB			%			RMB			US$			%
	(in thousands, except for percentages)
Operating expenses:
Selling and marketing expenses		(816,658	)		(20.5	)		(820,883	)		(23.9	)		(930,140	)		(143,976	)		(27.2	)
General and administrative expenses		(876,609	)		(21.9	)		(810,936	)		(23.6	)		(5,261,978	)		(814,497	)		(153.7	)
Total operating expenses		(1,693,267	)		(42.4	)		(1,631,819	)		(47.5	)		(6,192,118	)		(958,473	)		(180.9	)

The increased general and administrative expenses in the fiscal year of 2021 is mainly driven by the impairment losses RMB4.4 billion (US$677.1 million) recognized by us because of the material effect taken by the adverse changes in the regulatory environment on the private education industry in China.

Taxation

Cayman Islands

We are incorporated in the Cayman Islands. The Cayman Islands currently have no income, corporation or capital gains tax and no estate duty, inheritance tax or gift tax. The Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.

British Virgin Islands

OneSmart BVI, our wholly-owned subsidiary incorporated in the British Virgin Islands, is not subject to tax on income or capital gains in the British Virgin Islands. In addition, upon payments of dividends by OneSmart BVI to us, no British Virgin Islands withholding tax will be imposed.

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Hong Kong

OneSmart HK, OneSmart Great Edu (HK) Limited and Yimi HK, our subsidiaries in Hong Kong, are subject to Hong Kong profits tax of 16.5% on its activities conducted in Hong Kong. No provision for Hong Kong profits tax has been made as it has no assessable income for the fiscal years ended August 31, 2019, 2020 and 2021.

PRC

Generally, our PRC subsidiaries, our VIEs and their subsidiaries, which are considered PRC resident enterprises under PRC tax law, are subject to enterprise income tax on their worldwide taxable income as determined under PRC tax laws and accounting standards at a rate of 25%. In accordance with the PRC Enterprise Income Tax Law, dividends, which arise from profits of foreign invested enterprises, or FIEs, earned after January 1, 2008, are subject to a 10% withholding income tax. The WFOE meets the requirements of “high and new technology enterprise,” or HNTE, and could enjoy the preferential tax rate of 15%. The WFOE obtained the HNTE certificate on October 23, 2017 and was subject to an enterprise income tax rate of 15% from calendar years 2019 through 2021.

Our PRC subsidiaries and VIEs are subject to value added tax, or VAT, at a rate of 3% to 6%. We are also subject to surcharges on VAT payments in accordance with PRC laws.

Dividends paid by our wholly foreign-owned subsidiary in China to our holding company will be subject to a withholding tax at the rate of 10%. We do not plan to declare and pay dividends in the foreseeable future.

If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. See “Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in China-If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.”

Critical Accounting Policies

We prepare our financial statements in accordance with U.S. GAAP, which requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting periods. We continually evaluate these judgments and estimates based on our own historical experience, knowledge and assessment of current business and other conditions, our expectations regarding the future based on available information and assumptions that we believe to be reasonable, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.

The selection of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors that should be considered when reviewing our financial statements. We believe the following accounting policies involve the most significant judgments and estimates used in the preparation of our financial statements. You should read the following description of critical accounting policies, judgments and estimates in conjunction with our consolidated financial statements and other disclosures included with this annual report.

Consolidation of variable interest entities

Our consolidated financial statements include the financial statements of our holding company, our subsidiaries and our VIEs and its subsidiaries. All significant inter-company transactions and balances between us, our subsidiaries and our VIEs and its subsidiaries and schools are eliminated upon consolidation.

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PRC laws and regulations currently require any foreign entity that invests in the education business in China to be an educational institution with relevant experience in providing education services outside China. In addition, foreign investment in private institutions providing compulsory education are prohibited and foreign investment in private institutions providing pre-school, high school or higher education are restricted to Sino-foreign cooperation with the Chinese side playing the major role. Our offshore holding companies are not educational institutions and do not provide educational services outside China. To comply with PRC laws and regulations, we conduct all of our business in China through our VIEs. In addition, our VIEs and its subsidiaries hold leases and other assets necessary to operate our learning centers, and generate substantially all of our revenues. Despite the lack of technical majority ownership, we have effective control of our VIEs through a series of contractual arrangements, and a parent-subsidiary relationship exists between us and our VIEs. The equity interests of our VIEs are legally held by PRC individuals, or the nominee shareholders. Through the contractual arrangements, the nominee shareholders of our VIEs effectively assigned all their voting rights underlying their equity interests in our VIEs to us, and therefore, we have the power to direct the activities of our VIEs that most significantly impact its economic performance. We also have the right to receive economic benefits and the obligations to absorb losses from our VIEs that potentially could be significant to our VIEs. Based on the above, we consolidate our VIEs in accordance with SEC Regulation SX-3A-02 and ASC810-10, Consolidation: Overall.

For more information on consolidation of our VIEs, see Note 1 to our audited consolidated financial statements appearing elsewhere in this annual report.

Revenue recognition

On September 1, 2018, we adopted ASC Topic 606, Revenue from Contracts with Customers, or Topic 606, applying the modified retrospective method to all contracts that were not completed as of September 1, 2018. Results for the year ended August 31, 2019,2020 and 2021 are presented under Topic 606, while revenues for the years ended August 31, 2018 are not adjusted and continue to be reported under ASC Topic 605, Revenue Recognition, or Topic 605.

Revenue is recognized when control of promised services are transferred to our customers in amounts of consideration to which we expect to be entitled to in exchange for those services. We follow the five steps approach for revenue recognition under Topic 606: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue as we satisfy a performance obligation.

We generate revenues primarily through tuition fees from personalized and small class premium tutoring services with individual students in the PRC. In addition, we generate revenues from other services such as franchise, licensing, study tours and management services. The following table presents our revenues disaggregated by revenue sources for the year ended August 31, 2021.

	Personalized and small
	class premium tutoring services		Others		Total
Disaggregation of net revenues	RMB		RMB		RMB
OneSmart VIP		2,767,502		12,604		2,780,106
OneSmart Young Children Education		546,487		-		546,487
OneSmart Online		48,076		-		48,076
Hu Dong		48,741		-		48,741
		3,410,806		12,604		3,423,410

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Primary sources of our revenues are as follows:

(1) Personalized premium tutoring services is referring to OneSmart VIP one-on-one and one-on-three tutoring services. Small class premium tutoring services primarily consist of HappyMath, FasTrack, and other after-school small classes tutoring. We launched OneSmart Online in February, 2020 as a complementary to offline business, which provided online courses to the existing student base from OneSmart VIP, HappyMath and FasTrack English programs through its online platform. OneSmart Online also integrated the online tutoring business of Shanghai Yimi after the acquisition. Each contract of personalized premium service and small class tutoring service is accounted for as a single performance obligation which is satisfied proportionately over the stated service period. Tuition fees are generally collected in advance and are initially recorded as prepayments from customers. Tuition revenues are recognized proportionately as the tutoring sessions are delivered.

Refunds are provided to students who decide to withdraw from contracts for remaining undelivered tutoring sessions. The refund is equal to and limited to the amount related to the undelivered classes. We estimate and record refund liability for the potion we do not expect to be entitled to.

(2) Other revenues included franchise revenues derived from franchise agreements where the franchisees operating under the OneSmart or FasTrack brand are required to pay an initial one-time non-refundable franchise fee and recurring franchise fees, which mainly consist of on-going management and service fees based on a certain percentage of the franchisees’ monthly tuition received. Each franchise contract is accounted for as a single performance obligation to provide the franchisee the license to its OneSmart or FasTrack intellectual property. The one-time franchise fees are fixed consideration payable upon submission of a franchise application or renewal and are recognized on a straight-line basis over the initial or renewal term of the franchise contracts. The continuing fees represent variable consideration that are recognized on a monthly basis.

Our contract assets consisted of accounts receivable for other services. The balance of contract assets amounted to nil as of both August 31, 2020 and August 31, 2021. Our contract liabilities mainly consisted of prepayments from customers, with a balance of RMB2,547.5 million and RMB2,787.7 million (US$431.5 million) as of August 31, 2020 and August 31, 2021, respectively. A majority of contract liabilities at the beginning of the year ended August 31, 2021 were recognized as revenues during the year ended August 31, 2021 and a majority of contract liabilities as of August 31, 2021 might be refunded to our customers. The difference between the opening and closing balances of our contract liabilities primarily results from the timing difference between our satisfaction of performance obligation and the customer’s payment.

Leases

We adopted ASU No. 2016-02, Leases (Topic 842), or ASC 842, from September 1, 2019 by using the modified retrospective method and did not restate the comparable periods. We have elected the package of practical expedients, which allows us not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any expired or existing leases as of the adoption date. We also elected the short-term lease exemption for all contracts with lease terms of 12 months or less. We have lease agreements with lease and non-lease components, which are generally accounted for separately.

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We determine if an arrangement is a lease or contains a lease at lease inception. For operating leases, we recognize a right-of-use (“ROU”) asset and a lease liability based on the present value of the lease payments over the lease term on the consolidated balance sheets at commencement date. As most of our leases do not provide an implicit rate, we estimate our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The ROU assets also include any lease payments made, net of lease incentives. Lease expense is recorded on a straight-line basis over the lease term. Our leases often include options to extend and lease terms include such extended terms when we are reasonably certain to exercise those options. Lease terms also include periods covered by options to terminate the leases when we are reasonably certain not to exercise those options.

Upon adoption, we recognized ROU assets of RMB1,632.2 million and total lease liabilities (including current and non-current) RMB1,550.9 million for operating leases, based on the present value of the remaining minimum rental payments under existing operating leases. The difference between the lease liabilities and ROU assets represented the prepaid rent balances of RMB81.4 million. The impact of adopting ASC 842 on our opening retained earnings, current year net income and current year cash flow was insignificant. As of August 31, 2020, we recognized operating lease ROU assets of RMB1,481.2 million (US$229.3 million) and total lease liabilities RMB1,412.2 million (US$218.6 million), including current portion of RMB483.1 million (US$74.8 million) for operating leases.

The Opinion and a related series of notice, administrative measures or circular and the compliance measures taken by the Company have material adverse impact on our after-school tutoring services related to academic subjects in China’s compulsory education system, which in turn have adversely affected the Company’s results of operations and prospect. We have gradually terminated our after-school tutoring services related to academic subjects business since August 2021, and officially ceased our all business in October 2021. All of the Company’s operating leases mainly related to offices and classroom facilities were gradually terminated since August 2021. The Company removed the right-of-use asset and the lease liability, with loss recognized of RMB45.1 million (US$7.0 million) for the difference in accordance with ASC842-20-40-1. By the end of August 31, 2021, all rental deposits related to those early terminated lease contracts have been expensed as the early termination penalty by the Company.

Income taxes

We follow the liability method of accounting for income taxes in accordance with ASC 740, Income Taxes, or ASC 740. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. We record a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in tax expense in the period that includes the enactment date of the change in tax rate.

We accounted for uncertainties in income taxes in accordance with ASC 740. Interest and penalties related to unrecognized tax benefit recognized in accordance with ASC 740 are classified in the consolidated statements of income as income tax expense.

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Business combination

We account for our business combinations using the purchase method of accounting in accordance with ASC 805, Business Combinations, or ASC 805. The purchase method of accounting requires that the consideration transferred to be allocated to the assets, including separately identifiable assets and liabilities we acquired, based on their estimated fair values. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and all contractual contingencies as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of cost of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the businesses acquired, the difference is recognized directly in earnings.

In a business combination achieved in stages, we remeasure the previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the remeasurement gain or loss, if any, is recognized in the consolidated statements of income.

The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and non-controlling interests is based on various assumptions and valuation methodologies requiring considerable judgment from management. The most significant variables in these valuations are discount rates, terminal values, the number of years on which the cash flow projections are based, as well as the assumptions and estimates used to determine the cash inflows and outflows. We determine discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons. Terminal values are based on the expected life of assets, forecasted life cycle and forecasted cash flows over that period.

Goodwill

We assess goodwill for impairment in accordance with ASC 350-20, Intangibles-Goodwill and Other: Goodwill, or ASC 350-20, which requires that goodwill be tested for impairment at the reporting unit level at least annually and more frequently upon the occurrence of certain events, as defined by ASC 350-20.

We determined that we have five reporting units. Goodwill was allocated to four reporting units as of August 31, 2019, and five reporting units as of both August 31, 2020 and 2021, respectively. We have the option to assess qualitative factors first to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. In the qualitative assessment, we consider primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. Based on the qualitative assessment, if it is more likely than not that the fair value of each reporting unit is less than the carrying amount, the quantitative impairment test is performed.

Specifically, the quantitative impairment test is determined using a two-step process. The first step compares the fair value of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of the affected reporting unit’s goodwill to the carrying value of that goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. An impairment loss is recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill. Estimating fair value is performed by utilizing various valuation techniques, with the primary technique being a discounted cash flow.

Affected by the Opinion and a related series of notice, administrative measures or circular, all subsidiaries acquired by the Company also terminated their education programs and learning centers from August 2021 gradually. The Company recognized an impairment loss with amount of RMB 1.08 billion (US$166.6 million) for goodwill.

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Impairment of long-lived assets other than goodwill

We evaluate our long-lived assets, including fixed assets and intangible assets with finite lives, for impairment whenever events or changes in circumstances, such as a significant adverse change to market conditions that will impact the future use of the assets, indicate that the carrying amount of an asset may not be fully recoverable. When these events occur, we evaluate the recoverability of long-lived assets by comparing the carrying amount of the assets to the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, we recognize an impairment loss based on the excess of the carrying amount of the assets over their fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the assets, when the market prices are not readily available. During the fiscal year ended August 31, 2019 and 2020, there was no impairment of any of our long-lived assets. However, the Opinion and a related series of notice, administrative measures or circular and the compliance measures taken by the Company have material adverse impact on our after-school tutoring services related to academic subjects in China’s compulsory education system, which in turn have adversely affected the Company’s results of operations and prospect. We have gradually terminated our after-school tutoring services related to academic subjects business since August 2021, and officially ceased our business in October 2021. As a result, the Company recognized an impairment loss with amount of RMB 849.2 million (US$131.4 million) for long-lived assets other than goodwill.

Long-term investments

Our long-term investments consist of equity securities without readily determinable fair value, investment in debt securities accounted for at fair value and equity method investments.

We adopted ASC Topic 321, Investments-Equity Securities, or ASC 321, from September 1, 2018. Pursuant to ASC 321, for equity securities measured at fair value with changes in fair value record in earnings, we do not assess whether those investments are impaired. For those equity securities that we select to use the measurement alternative, we use the measurement alternative to measure those investments at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. We make a qualitative assessment of whether the investment is impaired at each reporting date. If a qualitative assessment indicates that the investment is impaired, we have to estimate the investment’s fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, (“ASC 820”). If the fair value is less than the investment’s carrying value, we recognize an impairment loss in net income equal to the difference between the carrying value and fair value.

Investments in equity investees represent investments in entities in which we can exercise significant influence but does not own a majority equity interest or control are accounted for using the equity method of accounting in accordance with ASC 323-10, Investments-Equity Method and Joint Ventures: Overall, or ASC 323-10. Under the equity method, we initially record our investment at cost and prospectively recognize our proportionate share of each equity investee’s net profit or loss into its consolidated statements of income. The difference between the cost of the equity investee and the amount of the underlying equity in the net assets of the equity investee is recognized as equity method goodwill included in equity method investments on the consolidated balance sheets. We evaluate our equity method investment for impairment under ASC 323-10. An impairment loss on the equity method investment is recognized in the consolidated statements of income when the decline in value is determined to be other-than-temporary.

Investment in debt securities accounted for at fair value with original maturities of greater than twelve months are classified as long-term investments. As investment in debt securities classified as available for sale in accordance with ASC 320 are reported at fair value. Any unrealized gains and losses on available-for-sale investments are included in other comprehensive income. Interest income are recognized in earnings. When a decline in value is determined to be other-than-temporary, the impairment loss on the long-term available-for-sale investments would be recognized in the consolidated statements of comprehensive income.

In 2019, 2020 and 2021, we evaluated our investments, taking into consideration, including, but not limited to, the duration, degree and causes of the decline in financial results, its intent and ability to hold the investment and the invested companies’ financial performance and near-term prospects. Based on the evaluation, we recorded impairment loss of RMB10.0 million, RMB161.6 million and RMB1.7 billion (US$255.8 million) for the years ended August 31, 2019, 2020 and 2021, respectively. The impairment loss accrued for the long-term investment is mainly driven by the Opinion and a related series of notice, administrative measures or circular, which affected on the business of all of our invested companies.

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Measurement of Share-based Compensation

Amended and Restated 2015 Plan

In connection with the Reorganization on September 17, 2017, we adopted the Amended and Restated 2015 Plan to replace the 2015 Plan which was cancelled concurrently. Under the Amended and Restated 2015 Plan, the board of directors is authorized to grant share options or other equity incentives to employees, directors or consultants to purchase up to an aggregate of 336,642,439 Class A ordinary shares. The employees generally received 102.10 options for each fully vested share that was outstanding as of September 17, 2017, totaling 63,880,024 fully vested options. The employees also received 16,442,655 and 49,634,837 share options at the same exchange ratio to replace the restricted shares that were vested or vesting on December 1, 2017 and 2018, respectively, as issued under the 2015 Plan. All of the share options contain a performance condition whereby no share options are exercisable until the consummation of a qualified initial public offering. The share options expire 10 years from the date of grant. We accounted for the termination of the shares under the 2015 Plan and the concurrent issuance of options as replacement awards as a Type II modification in accordance with ASC 718, under which, we deferred the recognition of the incremental share-based compensation expense until the qualified initial public offering occurred. Upon the completion date of our initial public offering, we recognized incremental share-based compensation amounting to RMB39.9 million (US$6.2 million).

From November 2017 to immediately before the initial public offering, we granted 164,865,010 share options under the Amended and Restated 2015 Plan. Whereas some of the share options carry requisite service periods of four years with: (i) 50%, 25% and 25% of the share options vesting on the second, third and fourth anniversary of the vesting commencement date, respectively; or (ii) 50% and 50% of the share options vesting on the second and fourth anniversary of the vesting commencement date, respectively, all of the share options contain the same IPO performance condition described in the paragraph above.

In February 2018, our board of directors approved an evergreen term of the Amended and Restated 2015 Plan which permits an annual 2.0% increase of the total number of ordinary shares outstanding on August 31 of our preceding calendar year on the first day of each the following nine fiscal years commencing on September 1, 2018.

During the year ended August 31, 2018, subsequent to the completion of the initial public offering, we granted 9,172,674 share options under the Amended and Restated 2015 Plan. Vesting terms included (i) immediate vesting of 100% of the share options on date of grant; (ii) vesting periods of 2 years, with immediate vesting of 1/3 of the share options on date of grant, first and second anniversary of the vesting commencement date, respectively; (iii) a vesting period of 4 years, with 50% and 50% of the share options vesting on the second and fourth anniversary of the vesting commencement date, respectively; or (iv) vesting periods of 4 years, with 25% of the share options vesting on each anniversary of the vesting commencement date.

During the year ended August 31, 2019, we granted 141,997,178 share options under the Amended and Restated 2015 Plan. Vesting terms included (i) immediate vesting of 100% of the share options on date of grant; (ii) vesting periods of 3 years, with immediate vesting of 25% of the share options on date of grant, 1/48 of the share options in the each month 1 year after the vesting commencement date, respectively; (iii) vesting periods of 3 years, with 1/3 of the share options vesting on each anniversary of the vesting commencement date; (iv) vesting periods of 4 years, with 50% and 50% of the share options vesting on the second and fourth anniversary of the vesting commencement date, respectively; or (v) vesting periods of 4 years, with 25% of the share options vesting on each anniversary of the vesting commencement date. During the year, we also granted to an executive 39,669,960 options under the Amended and Restated 2015 Plan with market conditions tied to our market capitalization for specified periods while he remains employed by us. In addition, certain share options were modified to become fully invested immediately prior to an employee’s termination.

During the year ended August 31, 2019, the Group granted 14,556,320 restricted Class A ordinary shares (“Restricted Shares”) under the Amended and Restated 2015 Plan. Vesting terms included i) immediate vesting of 100% of the Restricted Shares after one year of the vesting commencement date, ii) vesting periods of 4 years, with 25% of the Restricted Shares vesting on each anniversary of the vesting commencement date.

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During the fiscal year ended August 31, 2020, we granted 93,574,240 share options under the Amended and Restated 2015 Plan. Vesting terms included i) immediate vesting of 100% of the share options on date of grant, ii) vesting periods of 4 years, with 50% and 50% of the share options vesting on the second and fourth anniversary of the vesting commencement date, or iii) vesting periods of 4 years, with 25% of the share options vesting on each anniversary of the vesting commencement date, respectively.

During the year ended August 31, 2020, we granted 39,821,200 restricted Class A ordinary shares under the Amended and Restated 2015 Plan. Vesting terms included vesting periods of 4 years, with 25% of the Restricted Shares vesting on each anniversary of the vesting commencement date.

During the fiscal year ended August 31, 2021, we granted 120,744,240 share options under the Amended and Restated 2015 Plan. Vesting terms included i) immediate vesting of 100% of the share options on date of grant, ii) vesting periods of 4 years, with 50% and 50% of the share options vesting on the second and fourth anniversary of the vesting commencement date, or iii) vesting periods of 4 years, with 25% of the share options vesting on each anniversary of the vesting commencement date, respectively.

During the year ended August 31, 2021, we granted 5,502,840 restricted Class A ordinary shares under the Amended and Restated 2015 Plan. Vesting terms included vesting periods of 4 years, with 25% of the Restricted Shares vesting on each anniversary of the vesting commencement date.

The fair value of the share options under the Amended and Restated 2015 Plan were determined on the grant dates using the binomial option pricing model with assistance from an independent valuation firm. Prior to our initial public offering, we determined the fair value of our ordinary shares using the income approach based on key assumptions including WACC and DLOM. The income approach involved applying appropriate discount rates to estimated cash flows that were based on earnings forecasts. The growth rates of our revenues, as well as major milestones that we achieved, contributed to the fair value of the ordinary shares. Subsequently to our initial public offering, fair value of the ordinary shares is the price of our publicly traded shares. The assumptions adopted to estimate the fair value of share options granted were as follows:

	Year Ended	Year Ended	Year Ended
	August 31, 2019	August 31, 2020	August 31, 2021
Risk-free interest rate	2.0%-3.1%	0.65%-1.92%	0.65%-1.92%
Expected volatility	51.4%-56.6%	51.8%-52.7%	33.27%
Suboptimal exercise factor	2.20-2.80	2.20-2.80	2.20-2.80
Fair value per ordinary share	US$0.19-US$0.23	US$0.05-US$0.12	US$0.05-US$0.12

Domestic Plan

In March 2017, one of our subsidiaries approved an employee share incentive scheme under which, incentives are provided by certain of Shanghai OneSmart’s subsidiaries to their regional management and staff, or the Domestic Plan. According to the scheme, the subsidiaries may grant to their employees options with independent annual performance conditions specified for each tranche of options, in four tranches, as well as an additional performance condition at the end of the fourth year based on the cumulative result of the business over the term of the four years. When vested, the options are exercisable into the subsidiaries’ equity interests. The share options expire 4 years from the date of grant.

On May 2, 2017, 120,000 options were granted to employees, accounting for 8% of the total equity interests in the subsidiaries. The exercise price ranged from RMB40 to RMB160 per option. The options are equity awards measured at their fair values on May 2, 2017, the grant date. Given only the achievement of the performance conditions of the first two tranches of the options were determined to be probable, each of the first two tranches of the options was accounted for as a separate award with its own service inception date and requisite service period. On March 31, 2019, we modified the annual performance condition for the fourth tranche of the options granted on May 2, 2017, however, the achievement of the third and fourth traches as well as the final cumulative result of the business over the term of four years continued to improbable. Thus, no incremental costs were incurred as a result of the modification. As of August 31, 2019 and 2020, 60,000 and nil options did not meet the performance conditions and were forfeited. The remaining 70,000 options were vested and exercised as of August 31, 2020.

On March 31, 2019, 10,000 options were granted to a certain employee, accounting for 1% of the total equity interests in a certain subsidiary. The exercise price is RMB80 per option. The options are equity awards measured at their fair values on March 31, 2019, the grant date, immediate vesting of 100% of the share options on date of grant.

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We calculated the estimated fair value of the share options under the Domestic Plan on the grant date using the binomial option pricing model with assistance from an independent valuation firm. Assumptions used to determine the fair value of the share options granted under the Domestic Plan is summarized in the following table:

	For the year ended August 31, 2019
Risk-free interest rate	2.4%
Expected volatility	47.0%
Suboptimal exercise factor	2.80
Fair value per ordinary share	RMB351.24

Restricted shares issued to the founding shareholders of Shanghai Yimi

On February 1, 2020, we granted 9,677,288 restricted shares to the founding shareholders of Shanghai Yimi in connection with Yimi transactions. The vesting of the restricted shares is subject to the achievement of certain online tutoring business from Yimi Cayman and Shanghai Yimi. If performance target is achieved, 50% of the restricted shares shall vest on January 1, 2021 and remaining 50% shall vest on January 1, 2022. The restricted shares are measured at their fair values on February 1, 2020, the grant date. Given the achievement of the performance conditions were determined to be probable, each of the two tranches was accounted for as a separate award with its own service inception date and requisite service period.

We calculated the estimated fair value of the restricted shares on the grant date using the binomial option pricing model with assistance from an independent valuation firm. Assumptions used to determine the fair value of the restricted shares is summarized in the following table:

	For the year ended
	August 31, 2020
Risk-free interest rate	1.51%
Expected volatility	50.15%
Suboptimal exercise factor	2.80
Fair value per ordinary share	RMB1.41

A summary of the share option activities under the Amended and Restated 2015 Plan is as follows: 

	Number of share options			Weighted average exercise price		Weighted average grant date fair value		Aggregate intrinsic value		Weighted average remaining contractual term
				US$		US$		US$
Outstanding as of September 1, 2018		301,190,650			0.03		0.16		54,133		8.59
Granted		181,667,138			0.10		0.05
Forfeited		(33,355,010	)		0.17		0.08
Exercised		(55,658,760	)		0.02		0.02
Outstanding as of August 31, 2019		393,844,018			0.05		0.13		53,966		7.80
Granted		93,574,240			0.05		0.10
Forfeited		(29,876,751	)		0.11		0.11
Exercised		(65,654,200	)		0.01		0.13
Outstanding as of August 31, 2020		391,887,307			0.05		0.04		31,356		7.57
Granted		115,241,400			0.04		0.05
Forfeited		(82,902,302	)		0.03		0.14
Exercised		(81,138,360	)		0.02		0.17
Outstanding as of August 31, 2021		343,088,045			0.06		0.00		1,375		5.58
Vested and expected to vest as of August 31, 2021		343,088,045			0.06		0.00		1,375		5.58

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A summary of the Restricted Shares activities under the Amended and Restated 2015 Plan is as follows:

								Weighted
				Weighted				average
	Number of			average		Aggregate		remaining
	Restricted			grant date		intrinsic		contractual
	Shares			fair value		value		term
				US$		US$
Outstanding as of September 1, 2019		14,337,880			0.21		2,737		2.80
Granted		39,821,200			0.20
Forfeited		(2,409,120	)		0.54
Exercised		(4,341,329	)		1.42
Outstanding as of August 31, 2020		47,408,631			0.07		5,025		0.01
Granted		5,502,840			0.11
Forfeited		(7,949,681	)		0.19
Exercised		(2,185,400	)		0.22
Outstanding as of August 31, 2021		42,776,390			0.04		596		1.61
Vested and expected to vest as of August 31, 2021		42,776,390			0.04		596		1.61

A summary of the activities under the Domestic Plan is as follows:

				Weighted		Weighted
	Number of			average		average		Aggregate
	share			purchase		grant date		intrinsic
	options			price		fair value		value
				RMB		RMB		RMB
Outstanding as of September 1, 2017		120,000			93.33		151.19		7,023
Granted		-			-		-
Forfeited		-			-		-
Outstanding as of August 31, 2018		120,000			93.33		151.19		79,990
Granted		10,000			80.00		148.47
Forfeited		(60,000	)		93.33		151.19
Outstanding as of August 31, 2019		70,000			91.43		150.80		39,687
Granted		-			-		-
Forfeited		-			-		-
Exercised		(70,000	)		91.43		150.80
Outstanding as of August 31, 2020		-			-		-		-
Vested and expected to vest as of August 31, 2020		-			-		-		-

The aggregate intrinsic value is calculated as the difference between the exercise price of the awards and the fair value of the underlying ordinary shares at each reporting date, for those awards that had exercise price below the estimated fair value of the relevant ordinary shares.

Under the Amended 2015 Plan, the outstanding unvested awards including share options and Restricted Shares resulted in an aggregate intrinsic value of RMB 8,872 and total unrecognized share-based compensation expense related to the unvested awards was RMB 44,532 (US$6,893) as of August 31, 2021. The expense is expected to be recognized over a weighted-average period of 1.25 years.

We recognized total share-based compensation expenses of RMB71.5 million, RMB138.0 million and RMB42.9 million (US$6.6 million), for the years ended August 31, 2019, 2020 and 2021, respectively.

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Results of Operations

The following table sets forth a summary of our consolidated results of operations for the periods presented, both in absolute amount and as a percentage of our revenues for the periods presented. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The results of operations in any period are not necessarily indicative of our future trends.

	Year Ended August 31,
	2019						2020						2021
	RMB			%			RMB			%			RMB			US$			%
	(in thousands, except for percentages)
Net revenues
OneSmart VIP business		3,167,525			79.3			2,625,179			76.3			2,780,106			430,330			81.2
OneSmart Young Children Education business		706,672			17.7			599,414			17.4			546,487			84,590			16.0
OneSmart Online		-			-			103,848			3.1			48,076			7,442			1.4
Other		119,676			3.0			110,440			3.2			48,741			7,545			1.4
Total net revenues		3,993,873			100.0			3,438,881			100.0			3,423,410			529,907			100.0
Cost of revenues		(2,072,067	)		(51.9	)		(2,169,739	)		(63.1	)		(2,093,743	)		(324,089	)		(61.2	)
Gross profit		1,921,806			48.1			1,269,142			36.9			1,329,667			205,818			38.8
Operating expenses(1)
Selling and marketing expenses		(816,658	)		(20.5	)		(820,883	)		(23.9	)		(930,140	)		(143,976	)		(27.2	)
General and administrative expenses		(876,609	)		(21.9	)		(810,936	)		(23.6	)		(5,261,978	)		(814,497	)		(153.7	)
Total operating expenses		(1,693,267	)		(42.4	)		(1,631,819	)		(47.5	)		(6,192,118	)		(958,473	)		(180.9	)
Operating income/(loss)		228,539			5.7			(362,677	)		(10.5	)		(4,862,451	)		(752,655	)		(142.0	)
Interest income		81,207			2.0			37,393			1.1			9,443			1,462			0.3
Interest expense		(60,637	)		(1.5	)		(103,600	)		(3.0	)		(98,302	)		(15,217	)		(2.9	)
Other income		82,836			2.1			93,894			2.7			99,335			15,376			2.9
Other expenses		(15,738	)		(0.4	)		(453,391	)		(13.2	)		(135,239	)		(20,934	)		(4.0	)
Foreign exchange gain/(loss)		(138	)		(0.0	)		(69	)		(0.0	)		3,295			510			0.1
Income/(loss) before income tax and share of net (loss)/income from equity interests		316,069			7.9			(788,450	)		(22.9	)		(4,983,919	)		(771,458	)		(145.6	)
Income tax (expense)/benefit		(121,541	)		(3.0	)		37,785			1.1			(30,870	)		(4,778	)		(0.9	)
Income/(loss) before share of net (loss)/income from equity investees		194,528			4.9			(750,665	)		(21.8	)		(5,014,789	)		(776,236	)		(146.5	)
Share of net (loss)/income from equity investees		(28,325	)		(0.7	)		(17,977	)		(0.5	)		(10,705	)		(1,657	)		(0.3	)
Net income/(loss)		166,203			4.2			(768,642	)		(22.3	)		(5,025,494	)		(777,893	)		(146.8	)

Note:

(1). Including share-based compensation expenses as set forth below:

	Year Ended August 31,
	2019		2020		2021
	RMB		RMB		RMB		US$
	(in thousands)
Allocation of Share-based Compensation Expenses
Selling and marketing		906		674		110		17
General and administrative		70,626		137,312		42,752		6,618
Total		71,532		137,986		42,862		6,635

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Fiscal Year Ended August 31, 2021 compared to Fiscal Year Ended August 31, 2020

Net Revenues. Our net revenues maintained from RMB3.4 billion in the fiscal year 2020 to RMB3.4 billion (US$529.9 million) in the fiscal year 2021. Our average monthly enrollment decreased from 170,995 for the fiscal year 2020 to 170,854 for the fiscal year 2021. Our total number of consumed class units maintained from 20.1 million for the fiscal year 2020 to 20.1 million for the fiscal year 2021.

Net revenues from Unsmart VIP business: The increase of the revenues was primarily due to the increase in student enrollments in our premium tutoring programs and OneSmart International Education.

Revenues from OneSmart Young Children Education business: The decrease of the revenues was primarily due to the decrease of the student attendance to class as a result of COVID-19.

Revenues from OneSmart Online: The decrease of the revenues was primarily due to the offline class units consumed which offset the online courses in the second half of fiscal year 2021.

Revenues from other: The decrease of the revenues was primarily due to the decrease of student attendance to class during COVID-19 period.

Cost of Revenues. Our cost of revenues decreased by 3.5% from RMB2.2 billion in the fiscal year 2020 to RMB2.1 billion (US$324.1 million) in the fiscal year 2021, primarily due to operating efficiency of our learning centers and program offerings.

Gross Profit and Gross Margin. As a result of the factors set out above, our gross profit increased by 4.8% from RMB1.27 billion in the fiscal year 2020 to RMB1.33 billion (US$205.8 million) in the fiscal year 2021 as revenue was mainly fixed while the costs were decreased by continued internal cost control and operating efficiency of our learning centers and program offering.

Selling and Marketing Expenses. Our selling and marketing expenses increased by 13.3% from RMB820.9 million in the fiscal year 2020 to RMB930.1 million (US$144.0 million) in the fiscal year 2021. This increase was primarily due to the increase in (i) the selling and marketing personnel and staff related costs, and (ii) sales and marketing activities to support new student enrollments growth and adoption of more effective sales and marketing channel during COVID 19 pandemic period.

General and Administrative Expenses. Our general and administrative expenses increased by 548.9% from RMB810.9 million in the fiscal year 2020 to RMB5.3 billion (US$814.5 million) in the fiscal year 2021. This increase was primarily due to impairment loss accrued with amount of RMB4.4 billion (US$ 677.1 million) according to the Opinion and a related series of notice, administrative measures or circular and the compliance measures taken by the Company.

Operating Loss. As a result of the factors set out above, we had RMB362.7 million operating loss in the fiscal year 2020 and RMB4.9 billion (US$752.7 million) operating loss in the fiscal year 2021.

Interest Income. We had interest income of RMB37.4 million and RMB9.4 million (US$1.5 million) in the fiscal year 2020 and 2021, respectively, which consisted primarily of interest earned from our cash and cash equivalents and short-term investments.

Other Income. We recorded other income of RMB93.9 million and RMB99.3 million (US$15.4 million) in the fiscal year 2020 and 2021, respectively. Other income in the fiscal year 2021 was mainly attributable to government subsidies in the form of cash and taxation award during COVID 19 pandemic period, and gains from disposals of investment. However, government subsidies in the form of cash and taxation award is discretionary in nature and we do not believe that the increase in government subsidies during the referenced period is reflective of a known trend.

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Other Expense. We recorded other expense of RMB453.4 million and RMB135.2 million (US$20.9 million) in the fiscal year 2020 and 2021, respectively. The decrease was primarily due to more operating efficiency of our learning centers and program offerings..

Income Tax (Expenses)/Benefit. Our income tax benefit was RMB37.8 million in the fiscal year 2020, our income tax expenses was RMB30.9 million (US$4.8 million) in the fiscal year 2021.

Net Loss. As a result of the foregoing, we had net loss of RMB768.6 million in the fiscal year 2020 and net loss of RMB5.0 billion (US$777.9 million) in the fiscal year 2021.

Fiscal Year Ended August 31, 2020 compared to Fiscal Year Ended August 31, 2019

Net Revenues. Our net revenues decreased by 13.9% from RMB4.0 billion in the fiscal year 2019 to RMB3.4 billion (US$532.3 million) in the fiscal year 2020. This decrease was primarily attributable to the decrease of the student attendance to class for our education programs during COVID-caused learning center shutdown period and corresponding decrease of total number of consumed class units. Our average monthly enrollment increased from 158,346 for the fiscal year 2019 to 170,995 for the fiscal year 2020. Our total number of consumed class units decreased from 22.2 million for the fiscal year 2019 to 20.1 million for the fiscal year 2020.

Net revenues from OneSmart VIP business: The decrease of the revenues was primarily due to the decrease of student attendance to class in our premium tutoring programs during COVID-caused learning center shutdown period.

Revenues from OneSmart Young Children Education business: The decrease of the revenues was primarily due to the decrease of the student attendance to class as a result of COVID-19.

Revenues from OneSmart Online: The increase of the revenues was primarily due to the class units consumed by students in the newly-launched business line.

Revenues from other: The decrease of the revenues was primarily due to the decrease of student attendance to class in Tianjin Huaying business during COVID-caused learning center shutdown period.

Cost of Revenues. Our cost of revenues increased by 4.7% from RMB2.1 billion in the fiscal year 2019 to RMB2.2 billion (US$335.9 million) in the fiscal year 2020, primarily due to an increase of RMB46.4 million in rental costs of our learning centers and an increase of RMB58.9 million in depreciation and amortization of leasehold improvements and property and equipment.

Gross Profit and Gross Margin. As a result of the factors set out above, our gross profit decreased by 34.0% from RMB1.9 billion in the fiscal year 2019 to RMB1.3 billion (US$196.5 million) in the fiscal year 2020 as revenue was stricken by COVID-19 while the costs were mainly fixed. Gross margin decreased from 48.1% in the fiscal year 2019 to 36.9% in the fiscal year 2020, which was primarily attributable to the COVID-stricken revenue decline.

Selling and Marketing Expenses. Our selling and marketing expenses increased by 0.5% from RMB816.7 million in the fiscal year 2019 to RMB820.9 million (US$127.1 million) in the fiscal year 2020. This increase was primarily due to the increase in (i) the selling and marketing personnel and staff related costs, and (ii) sales and marketing activities to support new student enrollments growth and adoption of more effective sales and marketing channel.

General and Administrative Expenses. Our general and administrative expenses decreased by 7.5% from RMB876.6 million in the fiscal year 2019 to RMB810.9 million (US$125.5 million) in the fiscal year 2020. This decrease was primarily due to general and administrative staff compensation decrease by the cost control measures during the period stricken by COVID-19.

Operating Income/(Loss). As a result of the factors set out above, we had RMB228.5 million operating income in the fiscal year 2019 and RMB362.7 million (US$56.1 million) operating loss in the fiscal year 2020.

Interest Income. We had interest income of RMB81.2 million and RMB37.4 million (US$5.8 million) in the fiscal year 2019 and 2020, respectively, which consisted primarily of interest earned from our cash and cash equivalents and short-term investments.

Other Income. We recorded other income of RMB82.8 million and RMB93.9 million (US$14.5 million) in the fiscal year 2019 and 2020, respectively. Other income in the fiscal year 2020 was mainly attributable to government subsidies in the form of cash award and gains from disposals of investment. However, government subsidies in the form of cash award is discretionary in nature and we do not believe that the increase in government subsidies during the referenced period is reflective of a known trend.

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Recent Accounting Pronouncements

A list of recently issued accounting pronouncements that are relevant to us is included in “Summary of Significant Accounting Policies-(ae) Recent accounting pronouncements” of our audited consolidated financial statements included elsewhere in this annual report.

B. Liquidity and Capital Resources

Cash Flows and Working Capital

In assessing our liquidity and substantial doubt about our ability to continue as a going concern, we monitor and analyze cash on-hand and operating expenditure commitments. Our liquidity needs are to meet working capital requirements and operating expense obligations. To date, we financed our operations primarily through cash generated by operating activities, IPO proceeds, equity or convertible securities financing activities and commercial bank loan.

Our management has considered whether there is substantial doubt about our ability to continue as a going concern due to (1) loss from operations of approximately RMB5.0 billion (US$777.9 million) for the year ended August 31, 2021, (2) accumulated deficit of approximately RMB10.1 billion (US$1.6 billion) including impairment loss RMB4.4 billion (US$677.1 million) as of August 31, 2021; (3) the working capital deficit of approximately RMB4.3 billion (US$ 658.1 million) as of August 31, 2021; (4) net operating cash provided of approximately RMB138.3 million (US$21.4 million) for the year ended August 31, 2021; and the cash and cash equivalents were RMB29.6 million (US$4.6 million) with the reclassification adjustment RMB343.0 million (US$53.1 million) to restricted cash as of August 31, 2021. Cash and cash equivalents primarily consist of cash in bank. Based on the above considerations, the Company’s management is of the opinion that we will probably not having sufficient funds to meet our working capital requirements and debt obligations as they become due starting from one year from the date of this report. As a result, the Company’s management has determined there is substantial doubt about our ability to continue as a going concern.

In evaluating if there is substantial doubt about the ability to continue as a going concern, we are trying to alleviate the going concern risk through (1) equity or debt financing, (2) increasing cash generated from new business model operations, and (3) Debt divestiture, to meet our anticipated working capital requirements for at least the next 12 months. We may, however, need additional capital in the future to fund our operation. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result in further dilution to our shareholders.

We entered into certain securities purchase agreement on January 24, 2022 (the “SPA”) with certain non-affiliated and accredited “non-U.S. Persons”, (the “Purchasers”) as defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to which the Company agreed to sell 8,000,000,000 Class A ordinary shares, (the “Shares”) par value $0.000001 per share, at a per share purchase price $0.0035625 (the “Offering”), which is 90% of the average NYSE official closing price of the ADS divided by 1,000, the current conversion ratio of ADS, for the three trading days immediately preceding the execution of the SPA. On February 11, 2022, the Offering closed as all the conditions of the SPA have been satisfied and we issued the Shares to the Purchasers. The gross proceeds to the Company from the Offering was $28.5 million.

We plan to restructure our business by selling tutoring services and then focus on smart education services. The sale of the tutoring services has not been determined as of the date of the issuance of these financial statements. We have carried out product iterations on our original business: shifting from education and training to education and technology, using the original channels to carry out quality education and technology output, including 5G technology, smart campus system, virtual training system based on Metaverse, etc. The Company’s new business is using the six core technologies of Metaverse and artificial intelligence, blockchain, network computing, interaction, game technology, and the Internet of Things as the company’s core technologies, building a new type of blockchain smart student card and global smart employment quality Educational virtual world (new type of artificial intelligence employment training), combination of virtual and real prediction world (digital education, risk prediction, computing power output), VR shopping world (new e-commerce) and other products provide global customers with a new digital world experience. As of May 2022, we have signed a series of strategic cooperation agreements with six non-affiliated companies to pre-launch smart education training business.

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The Company has recruited a global management team and technology research and development team to develop new products and new business directions that combine education and technology. In order to diversify the negative impact from local regulation, the Company has also decided to expend its business outside China.

Although we consolidate the results of our consolidated VIEs and their subsidiaries, we only have access to the assets or earnings of our VIEs and their subsidiaries through our contractual arrangements with our VIEs and their shareholders. See “Item 4. Information on the Company-C. Organizational Structure-Contractual Arrangements with Shanghai OneSmart, Rui Si and their respective shareholders” and “-Contractual Arrangements with Xiangyuan and its shareholders.” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “Item 5. Operating and Financial Review and Prospects-B. Liquidity and Capital Resources-Holding Company Structure.”

Substantially all of our future revenues are likely to continue to be in the form of Renminbi. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled. Therefore, our PRC subsidiary is allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain routine procedural requirements. However, current PRC regulations permit our PRC subsidiary to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Our PRC subsidiary is required to set aside at least 10% of its after-tax profits after making up previous years’ accumulated losses each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. These reserves are not distributable as cash dividends. Furthermore, capital account transactions, which include foreign direct investment and loans, must be approved by and/or registered with SAFE and its local branches. See “Item 3. Key Information-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.”

The following table sets forth a summary of our cash flows for the periods presented:

	Year Ended August 31,
	2019			2020			2021
	RMB			RMB			RMB			US$
	(in thousands)
Summary Consolidated Cash Flow:
Net cash provided by operating activities		345,374			240,692			138,343			21,412
Net cash used in investing activities		(1,392,335	)		(906,931	)		(147,947	)		(22,900	)
Net cash provided by financing activities		988,358			648,759			(935,190	)		(144,756	)
Effect of exchange rate changes		34,268			(23,647	)		(15,848	)		(2,453	)
Net increase/(decrease) in cash and cash equivalents and restricted cash		(24,335	)		(41,127	)		(960,642	)		(148,697	)
Cash and cash equivalents and restricted cash, at beginning of year		1,410,747			1,386,412			1,345,285			208,236
Cash and cash equivalents and restricted cash, at end of year		1,386,412			1,345,285			384,643			59,539

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Operating Activities

Net cash generated from operating activities in the fiscal year ended August 31, 2021 was RMB138.3 million (US$21.4 million). The difference between our net loss of RMB5,025.5 million (US$777.9 million) and the net cash generated from operating activities was primarily due to (i) an adjustment of RMB4,590.2 million (US$710.5 million) in non-cash items, which mainly consisted of depreciation and amortization of RMB173.3 million (US$26.8 million), share-based compensation of RMB42.9 million (US$6.6 million), impairments of long-lived assets and goodwill of RMB4,374.0 million (US$677.1 million), (ii) a decrease of prepayments and other current assets of RMB281.9 million (US$43.6 million), and (iii) an increase of prepayments from customers of RMB210.9 million (US$32.7 million), and was partially offset by a decrease of accrued expenses and other current liabilities of RMB24.6 million (US$3.8 million).

Net cash generated from operating activities in the fiscal year ended August 31, 2020 was RMB240.7 million (US$37.3 million). The difference between our net loss of RMB768.6 million (US$119 million) and the net cash generated from operating activities was primarily due to (i) an adjustment of RMB717.0 million (US$111 million) in non-cash items, which mainly consisted of depreciation and amortization of RMB248.0 million (US$38.4 million), share-based compensation of RMB138.0 million (US$21.4 million), impairments of long-term investments and losses on extinguishment of a debt security RMB314.7 million (US$48.7 million), (ii) a decrease of prepayments and other current assets of RMB166.3 million (US$25.7 million), and (iii) an increase of prepayments from customers of RMB239.6 million (US$37.1 million), and was partially offset by a decrease of accrued expenses and other current liabilities of RMB85.3 million (US$13.2 million).

Net cash generated from operating activities in the fiscal year ended August 31, 2019 was RMB345.4 million (US$53.5 million). The difference between our net income of RMB166.2 million (US$25.7 million) and the net cash generated from operating activities was primarily due to (i) an adjustment of RMB202.1 million (US$31.3 million) in non-cash items, which mainly consisted of depreciation and amortization of RMB175.9 million (US$27.2 million) and share-based compensation of RMB71.5 million (US$11.1 million), and (ii) an increase of accrued expenses and other current liabilities of RMB297.3 million (US$46 million), and was partially offset by an increase in prepayments and other current assets of RMB257.3 million (US$39.8 million).

Investing Activities

Net cash used in investing activities was RMB147.9 million (US$140.4 million) in the fiscal year ended August 31, 2021, primarily due to (i) purchase of long-term investments of RMB89.0 million (US$13.8 million), (ii) purchase of short-term investments of RMB104.0 million (US$16.1 million), (iii) purchase of property and equipment of RMB20.5 million (US$3.2 million) as we expanded our existing learning centers and opened new learning centers, partially offset by the proceeds from sales of short-term investments of RMB65.0 million (US$10.1 million).

Net cash used in investing activities was RMB906.9 million (US$140.4 million) in the fiscal year ended August 31, 2020, primarily due to (i) purchase of long-term investments of RMB181.0 million (US$28 million), (ii) purchase of short-term investments of RMB582.6 million (US$90.2 million), (iii) purchase of property and equipment of RMB193.2 million (US$29.9 million) as we expanded our existing learning centers and opened new learning centers, (iv) due from third parties of RMB284.6 million (US$44.1 million), and (v) acquisition and disposal of subsidiaries of RMB75.9 million (US$11.7 million), partially offset by the proceeds from sales of short-term investments of RMB404.9 million (US$62.7 million).

Net cash used in investing activities was RMB1,392.3 million (US$215.5 million) in the fiscal year ended August 31, 2019, primarily due to (i) purchase of long-term investments of RMB1.1 billion (US$170.3 million), (ii) purchase of short-term investments of RMB820.0 million (US$126.9 million), (iii) purchase of property and equipment of RMB284.0 million (US$44 million) as we expanded our existing learning centers and opened new learning centers, (iv) due from third parties of RMB237.1 million (US$36.7 million), and (v) acquisition and disposal of subsidiaries of RMB196.3 million (US$30.4 million), partially offset by (i) proceeds from sales of short-term investments of RMB1.2 billion (US$185.7 million), (ii) proceeds from disposal of long-term investments of RMB64.4 million (US$10.0 million), and (iii) income from short-term investments of RMB11.5 million (US$1.8 million).

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Financing Activities

Net cash used in financing activities in the fiscal year ended August 31, 2021 was RMB935.2 million (US$144.8 million), primarily due to (i) an increase in the proceeds from bank loan of RMB498.6 million (US$77.2 million), partially offset by repayments of bank loans of RMB1,440.0 million (US$222.9 million).

Net cash provided by financing activities in the fiscal year ended August 31, 2020 was RMB648.8 million (US$100.4 million), primarily due to (i) an increase in the proceeds from bank loan of RMB803.8 million (US$124.4 million), and (ii) an increase in the proceeds from convertible senior notes, net of issuance costs of RMB246.1 million (US$38.1 million), partially offset by share repurchases of RMB70.9 million (US$11.0 million), repayments of bank loans of RMB322.4 million (US$49.9 million).

Net cash provided by financing activities in the fiscal year ended August 31, 2019 was RMB988.4 million (US$153.0 million), primarily due to (i) an increase in the proceeds from bank loan of RMB1.3 billion (US$201.2 million), and (ii) an increase in the proceeds from disposal of partial interests in subsidiaries of RMB98.1 million (US$15.2 million), partially offset by an increase in share repurchase of RMB203.8 million (US$31.5 million), repayments of bank loans of RMB95.0 million (US$14.7 million) and acquisition of non-controlling interests of RMB65.6 million (US$10.2 million).

Capital Expenditures

Our capital expenditures are incurred mainly for renovation of our learning centers. We made capital expenditures of RMB284.0 million, RMB193.2 million and RMB20.5 million (US$3.1 million) in the fiscal year 2019, 2020 and 2021, respectively. The decrease of capital expenditures in the fiscal year 2021 was mainly due to the slow-down of learning center expansion caused by COVID-19 during the fiscal year 2021. Our capital expenditures have been primarily funded by cash generated from our operations.

Holding Company Structure

Meta Data Limited is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiary, our VIEs and their subsidiaries in China. As a result, our ability to pay dividends depends upon dividends paid by our PRC subsidiaries. In addition, our wholly foreign-owned subsidiaries in China are permitted to pay dividends to us only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, each of our subsidiaries and our VIEs in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of their registered capital. In addition, our wholly foreign-owned subsidiaries in China may allocate a portion of their after-tax profits based on PRC accounting standards to enterprise expansion funds and staff bonus and welfare funds at their discretion, and our VIEs may allocate a portion of its after-tax profits based on PRC accounting standards to a surplus fund at their discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by SAFE. Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds.

C. Research and Development

See “Item 4. Information on the Company-B. Business Overview-Technology.” and “Item 4. Information on the Company-B. Business Overview-Intellectual Property.”

D. Trend Information

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the fiscal year ended August 31, 2020 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions.

E. Critical Accounting Estimates

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.

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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

The following table sets forth information regarding our directors and executive officers as of the date of this annual report.

Directors and Executive Officers	Age	Position/Title
Xiaoming Li	39	Chairman and Chief Executive Officer
Chee Jiong Ng	50	Chief Financial Officer
Dr. Robert Angell	60	Independent Director
Dr. Mengchu Zhou	58	Independent Director
Yanyi Tang	38	Independent Director
Shengcong Ma	48	Chief Operating Officer

Mr. Xiaoming Li, aged 39, has served as the CEO of Henan Shenglong Culture Communication Co., Ltd. since December 2019. From December 2016 to May 2019, he served as the chief technical officer of Shenzhen Aladdin Technology Development Co., Ltd. Mr. Li served as a professor at Henan Agricultural University’s enterprise, Henan Big Feed Technology Co., Ltd., where he taught in the teaching and research department, as well as actively researching the development and direction of contemporary education and new educational technology systems. Mr. Li graduated from Henan University of Economics and Law, China, with a bachelor’s degree in software engineering with a concentration in IT and education.

Mr. Chee Jiong Ng, served as chief financial officer of Dunxin Financial Holdings Ltd (NASDAQ:DXF) from June 2010 to May 2021. Mr. Ng has more than 20 years of experience in the finance sector and has served in various management roles at several companies before joining the Company. Mr. Ng has been qualified as a Certified Public Accountant of the Australian Society of Certified Public Accountants since 1999. Mr. Ng received his bachelor’s degree in Economics from the University of Sydney, Australia and his master’s degree in Commerce from the University of New South Wales, Australia.

Mr. Shengcong Ma served as the vice president of Aier Medical Investment Group CO., Ltd. from March 2017 to March 2021. From October 2016 to March 2021, he served as the general manager of Aier Health Insurance Co., Ltd. Mr. Ma was a member of the Technology Committee of Anbang Insurance Group and also the general manager of its Community Finance Business Department from October 2014 to March 2017. From October 2010 to October 2014, Mr. Ma served as the deputy general manager of theShandong Banking Insurance Division of Centennial Life Corporation. Mr. Ma received his bachelor’s degree in Industrial and Foreign Trade from the Beijing Technology and Business University, a MBA from The Open University of Hong Kong, and an Executive MBA from Peking University National Development Research Institute.

Ms. Yanyi Tang has served as Project Manager at Shanghai Jiaan Certified Public Accountants since December 2010. From January 2007 to November 2010, she served as Assistant Manager at KPMG Huazhen Accounting Firm. Ms. Tang received her bachelor’s degree in Economics and Business from Shanghai University, China and University of Technology, Sydney, respectively. Ms. Tang is a certified public accountant in China (CICPA) and also a certified public accountant in the United States (AICPA) in the State of Texas.

Dr. Mengchu Zhou has been the Distinguished Professor of electrical and computer engineering in the Helen and John C. Hartmann Dept. of Electrical and Computer Engineering at New Jersey Institute of Technology (NJIT) since 2013. He is a Fellow of the Institute of Electrical and Electronics Engineers (IEEE), a Fellow of the International Federation of Automatic Control (IFAC), a Fellow of the American Association for the Advancement of Science (AAAS) and a Fellow of the Chinese Association of Automation (CAA). Zhou is the Founding Editor-in-Chief of the IEEE/Wiley Book Series on Systems Science and Engineering and the Editor-in-Chief of the IEEE/CAA Journal of Automatica Sinica. In 2015, he received the Norbert Wiener Award for “fundamental contributions to the area of Petri net theory and applications to discrete event systems,” from the IEEE Systems, Man, and Cybernetics Society which also awarded him the Franklin V. Taylor Memorial Award for Best Paper award in 2010. Dr, Zhou earned his Ph.D. in Computer & Systems Engineering, Rensselaer Polytechnic Institute in 1990. He completed his M. S. in Automatic Control, Beijing Institute of Technology in, 1986 following the completion of his B. S. in Control Engineering, Nanjing University of Science & Technology in 1983.

Dr. Robert Angell is an expert in healthcare AI, predictive analytics, temporal medicine, and data science. Since May 2019, he has been the principal and founder of Applied Data Sciences, LLC, a data science company, and CoMorbus, a public health provider. Dr. Angell was a data scientist at the division of cardiovascular genetics in University of Utah, where he provided support to all data science activities from 2014 to 2018. Dr. Angell was an adjunct faculty at Salt Lake Community College from 2009 to 2014, where he taught computer science related courses. Dr. Angell received her Ph.D. degree in biomedical informatics and Bachelor’s degree in industrial engineering from University of Utah.

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Employment Agreements and Indemnification Agreements

We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed for a specified time period. We may terminate employment for cause, at any time, without advance notice or remuneration, for certain acts of the executive officer, such as conviction or plea of guilty to a felony or any crime involving moral turpitude, negligent or dishonest acts to our detriment, or misconduct or a failure to perform agreed duties. We may also terminate an executive officer’s employment without cause upon three-month advance written notice. In such case of termination by us, we will provide severance payments to the executive officer as expressly required by applicable law of the jurisdiction where the executive officer is based. The executive officer may resign at any time with a three-month advance written notice.

Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any of our confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective clients, or the confidential or proprietary information of any third party received by us and for which we have confidential obligations. The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer’s employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets.

In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and typically for one year following the last date of employment. Specifically, each executive officer has agreed not to (i) approach our suppliers, clients, customers or contacts or other persons or entities introduced to the executive officer in his or her capacity as a representative of us for the purpose of doing business with such persons or entities that will harm our business relationships with these persons or entities; (ii) assume employment with or provide services to any of our competitors, or engage, whether as principal, partner, licensor or otherwise, any of our competitors, without our express consent; or (iii) seek directly or indirectly, to solicit the services of any of our employees who is employed by us on or after the date of the executive officer’s termination, or in the year preceding such termination, without our express consent.

We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company.

B. Compensation

For the fiscal year ended August 31, 2021, we paid an aggregate of RMB3.5 million (US$0.5 million) in cash to our directors and officers. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors. Our PRC subsidiaries and variable interest entities are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund.

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Amended and Restated 2015 Plan

To attract and retain the best available personnel, provide additional incentives to employees, directors and consultants and promote the success of our business, we, through our predecessor Cayman Islands company, initially adopted an employee stock incentive plan in March 2013, which was subsequently replaced by a domestic share incentive plan of Shanghai OneSmart approved in February 2015. As part of the 2017 Restructuring, we adopted an amended and restated 2015 Share Incentive Plan in April 2017, which was further amended on February 5, 2018, or the Amended and Restated 2015 Plan. The maximum aggregated number of our ordinary shares which may be issued pursuant to all awards under the Amended and Restated 2015 Plan is 336,642,439 Class A ordinary shares, plus an annual 2.0% increase of the total number of ordinary shares outstanding on August 31 of the preceding calendar year on the first day of each the following nine fiscal years of the Company commencing on September 1, 2018. As of the date of this annual report, the maximum aggregate number of shares which may be issued pursuant to all awards under the Amended and Restated 2015 Plan is 727,674,893 and options to purchase 581,844,440 Class A ordinary shares have been granted and outstanding, excluding awards that were forfeited or cancelled after the relevant grant dates.

The following paragraphs describe the principal terms of the Amended and Restated 2015 Plan.

Types of Awards. The Amended and Restated 2015 Plan permits the awards of options, restricted share purchase rights or any other type of awards approved by the committee or the board of directors.

Plan Administration. Our board of directors or a committee appointed by our board will administer the Amended and Restated 2015 Plan. The committee or the full board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each award grant.

Award Agreement. Awards granted under the Amended and Restated 2015 Plan are evidenced by an award agreement that sets forth terms, conditions and limitations for each award, which may include the number of shares subject to the award, the exercise price or the purchase price, the provisions applicable in the event of the grantee’s employment or service terminates (if applicable). The plan administrator may amend the terms of any award, provided that no such amendment may impair the rights of any grantee without his or her consent.

Eligibility. We may grant awards to our employees, directors, consultants and qualified former employees. However, we may grant options that are intended to qualify as incentive share options only to our employees.

Acceleration of Awards upon Change in Control. If a change in control of our company occurs, each outstanding awards shall be assumed and substituted by or assigned to the successor or its parent or subsidiary. If the outstanding awards are not assumed by the successor, all the awards shall become fully vested and exercisable immediately and each participant has the right to exercise the vested awards during a specific period of time.

Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement.

Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the award agreement. No option shall become exercisable unless we have consummated the initial public offering. The vested portion of option will expire if not exercised prior to the time as the plan administrator determines at the time of its grant. However, the maximum exercisable term is the tenth anniversary after the date of a grant.

Transfer Restrictions. Awards may not be transferred in any manner by the recipient other than by will or the laws of descent and distribution, except as otherwise provided by the plan administrator.

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Termination of the Amended and Restated 2015 Plan. Unless terminated earlier, the Amended and Restated 2015 Plan will terminate automatically in April, 2027. Our board of directors has the authority to amend or terminate the plan subject to shareholder approval to the extent necessary and desirable to comply with applicable law, but no amendment or termination shall be made if such amendment or termination would materially impair the rights of a grantee with respect to an outstanding award without such grantee’s consent.

As of the date of this annual report, there are no outstanding options granted under the Amended and Restated 2015 Plan to our current directors and executive officers, excluding awards that were forfeited or cancelled after the relevant grant dates.

As of the date of this annual report, other employees, including certain former employees, as a group held outstanding options awarded to purchase 343,088,045 Class A ordinary shares of our company, with exercise price of US$0.0003 - 0.2225 per share.

Domestic Employee Share Incentive Scheme

In March 2017, Shanghai OneSmart adopted an employee share incentive scheme under which additional incentives are provided to the regional heads and management of the company. According to the scheme, certain subsidiaries of Shanghai OneSmart may grant in total up to 10% or 30% equity interests of those subsidiaries if the performance targets of the regional heads and management are met. As of the date of this annual report, two subsidiaries implemented the scheme and have granted certain regional heads 13,000 options to subscribe a total of 9% and 8% equity interests in the two subsidiaries, respectively.The granted option will be forfeited if the grantee’s employment terminates. None of the equity interests held by the grantees enjoys the right to vote. Half of the incentive equity in one subsidiary has vested interest while the other half was forfeited. 55.6% of the incentive equity in the other subsidiary has vested interest while the remaining 44.4% was forfeited.

Restricted shares issued to the founding shareholders of Shanghai Yimi

On February 1, 2020, we granted 9,677,288 restricted shares to the founding shareholders of Shanghai Yimi in connection with Yimi transactions. The vesting of the restricted shares is subject to the achievement of certain online tutoring business from Yimi Cayman and Shanghai Yimi. If performance target is achieved, 50% of the restricted shares shall vest on January 1, 2021 and remaining 50% shall vest on January 1, 2022. The restricted shares are measured at their fair values on February 1, 2020, the grant date. Given the achievement of the performance conditions were determined to be probable, each of the two tranches was accounted for as a separate award with its own service inception date and requisite service period.

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C. Board Practices

Board of Directors

Our board of directors consists of six directors. A director is not required to hold any shares in our company to qualify to serve as a director. A director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with our company is required to declare the nature of his interest at a meeting of our directors. A director may vote in respect of any contract, proposed contract, or arrangement notwithstanding that he may be interested therein, and if he does so his vote shall be counted and he may be counted in the quorum at any meeting of our directors at which any such contract or proposed contract or arrangement is considered. The directors may exercise all the powers of the company to borrow money, mortgage its undertaking, property and uncalled capital, and issue debentures or other securities whenever money is borrowed or as security for any obligation of the company or of any third party. None of our non-executive directors has a service contract with us that provides for benefits upon termination of service.

Committees of the Board of Directors

We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below.

Audit Committee. Our audit committee consists of Dr. Robert Angell, Dr. Mengchu Zhou and Ms. Yanyi Tang. Ms. Yanyi Tang is the chairwoman of our audit committee. We have determined that Dr. Robert Angell, Dr. Mengchu Zhou and Ms. Yanyi Tang satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange and Rule 10A-3 under the Exchange Act. We have determined that Ms. Yanyi Tang qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:

● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors;

● reviewing with the independent auditors any audit problems or difficulties and management’s response;

● discussing the annual audited financial statements with management and the independent auditors;

● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures;

● reviewing and approving all proposed related party transactions;

● meeting separately and periodically with management and the independent auditors; and

● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

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Compensation Committee. Our compensation committee consists of Dr. Robert Angell, Dr. Mengchu Zhou and Ms. Yanyi Tang. Dr. Mengchu Zhou is the chairman of our compensation committee. We have determined that Dr. Robert Angell, Dr. Mengchu Zhou and Ms. Yanyi Tang satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee is responsible for, among other things:

● reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers;

● reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors;

● reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and

● selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management.

Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Dr. Robert Angell, Dr. Mengchu Zhou and Ms. Yanyi Tang. Dr. Robert Angell is the chairman of our nominating and corporate governance committee. We have determined that Dr. Robert Angell, Dr. Mengchu Zhou and Ms. Yanyi Tang satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange. The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee is responsible for, among other things:

● selecting and recommending to the board nominees for election by the shareholders or appointment by the board;

● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity;

● making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and

● advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken.

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Duties of Directors

Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty to act honestly, and a duty to act in what they consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose. Our directors also have a duty to act with skills they actually possess and exercise the care and diligence that a reasonably prudent person would exercise in comparable circumstances. It was previously acknowledged that a director does not need to act with skills greater than those expected to be processed by a reasonable person. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skills and care and these authorities are likely to be followed in the Cayman Islands. In fulfilling their duty of care to us, our directors must ensure compliance with our sixth amended and restated memorandum and articles of association, as amended and restated from time to time, and the class rights vested thereunder in the holders of the shares. Our directors owe their fiduciary duties to our company and not to our company’s individual shareholders, and our company has the right to seek damages if a duty owed by our directors is breached. In certain limited exceptional circumstances, a shareholder may have the right to seek damages in our name if a duty owed by our directors is breached.

Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The functions and powers of our board of directors include, among others:

● convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings;

● declaring dividends and distributions;

● appointing officers and determining the term of office of the officers;

● exercising the borrowing powers of our company and mortgaging the property of our company; and

● approving the transfer of shares in our company, including the registration of such shares in our share register.

Terms of Directors and Officers

Our directors may be elected by a resolution of our board of directors, or by an ordinary resolution of our shareholders. Our directors are not subject to a term of office and hold office until such time as they are removed from office by ordinary resolution of the shareholders. A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) is found by our company to be or becomes of unsound mind; (iii) resigns his office by notice in writing to the company; or (iv) without special leave of absence from our board, is absent from three consecutive board meetings and our directors resolve that his office be vacated. Our officers are elected by and serve at the discretion of the board of directors.

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D. Employees

As of August 31, 2019, 2020 and 2021, we had a total of 14,741, 12,667 and 13,497 employees, respectively. Almost all of our employees are located in China.

The following table sets forth the numbers of our employees, categorized by function, as of August 31, 2021:

Functions:	Number of Employees
Teachers		6,508
Study advisors		1,357
Sales and marketing		1,604
Research Technology Center		121
General and administrative		3,907
Total		13,497

We believe we offer our employees competitive compensation packages and a merit-based work environment and, as a result, we have generally been able to attract and retain qualified personnel.

As required by PRC regulations, we participate in various government statutory employee benefit plans, including social insurance funds, namely a pension contribution plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan, a maternity insurance plan, and a housing provident fund. We are required by PRC law to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government from time to time.

We enter into standard labor agreements with our employees; in addition, we enter into confidentiality and intellectual property rights agreements with our key employees. We believe that we have maintained a good working relationship with our employees, and we have not experienced any major labor disputes.

E. Share Ownership

Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares as of May 23, 2022 by:

● each of our directors and executive officers; and

● each person known to us owning beneficially 5% or more of our ordinary shares.

The calculations in the table below are based on 14,611,659,561 ordinary shares outstanding as of May 23, 2022, including (i) 14,611,659,561 Class A ordinary shares, excluding 20,065 Class A ordinary shares as treasury shares or treasury ADSs, and (ii) 0 Class B ordinary shares.

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Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option, warrant or other right or the conversion of any other security, subject to certain conditions. These shares, however, are not included in the computation of the percentage ownership of any other person.

	Class A ordinary		Class B ordinary		Total ordinary shares on an as converted				% of aggregate voting
	shares		shares		basis		%		power
Directors and Executive Officers**:
Xiaoming Li		-		-		-		-		-
Chee Jiong Ng		-		-		-		-		-
Dr. Robert Angell		-		-		-		-		-
Dr. Mengchu Zhou		-		-		-		-		-
Yanyi Tang		-		-		-		-		-
Shengcong Ma		-		-		-		-		-
All Directors and Executive Officers as a Group		-		-		-		-		-
Principal Shareholders:
Metaverse Digital Investment Co., Limited (1)		2,290,430,016		-		2,290,430,016		15.68		15.68
Origin Investment Holdings Limited and its affiliates (2)		1,240,685,677		-		1,240,685,677		8.49		8.49

* Less than 1% of our total outstanding shares.

** Except as otherwise indicated below, the business address of our directors and executive officers is 2161 North Zhongshan Road Putuo District, Shanghai, China.

† For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class. Each holder of Class A ordinary shares is entitled to one vote per share and each holder of our Class B ordinary shares is entitled to twenty votes per share on all matters submitted to them for a vote. Our Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of our shareholders, except as may otherwise be required by law. Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one basis.

(1) Represents 2,290,430,016 Class A ordinary shares held by Metaverse Digital Investment Co., Limited, a Hong Kong corporation. The registered address of Metaverse Digital Investment Co., Limited is Rm 517, New City Centre, 2 Lei Yue Mun Road, Kwun Tong, Kowloon, Hong Kong SAR.

(2) Represents 1,240,685,677 Class A ordinary shares (including 314,400,000 Class A ordinary shares in the form of ADSs) held by Origin Investment Holdings Limited, is an exempted company incorporated in the Cayman Islands, and its affiliates. The registered address of Origin Investment Holdings Limited is 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands.

To our knowledge, as of May 23, 2022,  3,044,889,040 of our ordinary shares (including 130,370,520 Class A ordinary shares as treasury ADSs) were held by record holder in the United States, which was Deutsche Bank Trust Company Americas, the depositary of our ADS program. The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States.

Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to twenty votes per share.

We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

Please refer to “Item 6. Directors, Senior Management and Employees-E. Share Ownership.”

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B. Related Party Transactions

Transaction with Shareholders and Affiliates

In the fiscal year 2017, we provided an interest-free, unsecured loan of RMB16.5 million, payable within five years from draw down in April 2017 to Shanghai Ya Qiao Education Investment Co., Ltd., or Ya Qiao Education, for its operation purposes. In April 2019, we and Ya Qiao Education entered into an agreement to convert the loan into 75% equity interests in Ya Qiao Education. As of August 31, 2021, such conversion was not completed and we recorded RMB20.4 million (US$3.2 million) as amounts due from the related parties in connection with the loan extended to Ya Qiao Education. The loan extended to Ya Qiao Education is outstanding as of the date of this annual report.

In October 2018, we acquired a strategic minority equity stake in Tus-Juren. From November 2018 to February 2019, we provided management consulting services and receive licensing fee from Tus-Juran of RMB6.8 million (US$1.1 million). From November 2018 to February 2020, we extended a series of five-year convertible loan in an aggregate principal amount of RMB721.2 million to Tus-Juren. Such convertible loan bear a 10% annual coupon and we have the option to convert the principal and any unpaid interests of such convertible loan into new equity interest of Tus-Juren at a pre-determined valuation at any time after either the third or fourth anniversary from the borrowing date. On February 18, 2020, the annual coupon rate of these convertible loans was adjusted to nil, applicable to the outstanding loan period starting from December 1, 2019. As a part of the Yutang transactions in December 2020, we have the option to convert the principal and any unpaid interests of the convertible loans to Tus-Juren into new equity interests of Yutang Inc. at any time within five years starting from December 15, 2020. During the fiscal year 2020, we made a series of 12-month loan available to Tus-Juren and its subsidiaries in an aggregate amount of RMB170.9 million. A majority of such loans bear a 4.35% annual interest rate.

In December 2020, we entered into certain agreements to establish a sizable and stronger small-class business by merging a number of small-class K-12 after-school education businesses that OneSmart has invested in for a few years into Yutang Inc., or Yutang. The foregoing transactions are collectively referred to as the “Yutang transactions.” In connection with Yutang transactions, we entered into a share sale and purchase agreement with Yutang, Tus-Juren related parties, pursuant to which, Yutang has agreed to issue 100,340,631 ordinary shares of Yutang to us as share consideration in exchange for all the equity interest of JUREN Education & Technology Group Inc. held by us. We also entered into a share subscription agreement with Yutang Inc. and its shareholder, Tus-Juren related parties and Tianjin Huaying Education Consulting Co., Ltd. to acquire certain equity interest in Yutang. Pursuant to which, Yutang has agreed to (i) issue 36,762,505 ordinary shares of Yutang to us at a purchase price of US$0.0001 per share as consideration to acquire all the equity interests of Tianjin Huaying Education Consulting Co., Ltd. indirectly held by us through VIE contractual arrangement, and (ii) issue 2,188,244 ordinary shares to us at a purchase price of US$0.0001 per share as consideration to acquire our equity interest in Tus-Juren online business. After the Yutang transactions, we will become a minority shareholder of Yutang.

Contractual Arrangements with our VIEs and their Respective Shareholders

See “Item 4. Information on the Company-C. Organizational Structure-Contractual Arrangements with Shanghai OneSmart, Rui Si and their respective shareholders “and”-Contractual Arrangements with Xiangyuan and its shareholders.”

Shareholders Agreement

We entered into our shareholders agreement on April 21, 2017 and amended the shareholders agreement on December 11, 2017. Pursuant to shareholders agreement and amendment to the shareholders agreement, or the Shareholders Agreement, we have granted registration rights to holders of our registrable securities, which include (i) our ordinary shares issued or issuable upon conversion of the preferred shares, (ii) our ordinary shares issued or issuable as a dividend or other distribution with respect to, in exchange for, or in replacement of, the shares referenced in (i) herein, and (iii) any ordinary shares owned or hereafter acquired by the holders; excluding those acquired in violation of the shareholders agreement. Set forth below is a description of the registration rights granted under the agreement.

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Demand Registration Rights. At any time or from time to time after the earlier of (i) the third (3rd) anniversary of the Shareholders Agreement or (ii) the date that is six (6) months after the consummation of the IPO, any holder of 50% of the registrable securities or holders of 50% of the registrable securities then outstanding has the right to demand in writing that we effect a registration of registrable securities (together with the registrable securities which the other holders elect to include in such registration). We, however, are not obligated to consummate a registration if we have consummated three registrations. We have the right to defer filing of a registration statement for a period of not more than 90 days if our board of directors determines in good faith judgment that filing of a registration in the near future will be materially detrimental to us, but we cannot exercise the deferral right more than once in any 12 month period and cannot register any other securities during such period. Further, if the registrable securities are offered by means of an underwriting and the underwriter advises us in writing that marketing factors require a limitation of the number of securities to be underwritten, a maximum of 75% of such registrable securities may be first reduced as required by the underwriters and the number of the registrable securities will be allocated among the holders on a pro rata basis according to the number of registrable securities then outstanding held by each holder requesting registration, provided that in no event may any registrable securities be excluded from such underwriting unless all other securities are first excluded.

Registration on From F-3 or Form S-3s. Any holder of 15% of registrable securities of holders of 15% of the registrable securities then outstanding have the right to request us to file a registration statement on Form F-3 or Form S-3 if we qualify for registration on Form F-3 or Form S-3. We, however, are not obligated to consummate a registration (i) if we have consummated two registrations within any twelve month period; and (ii) if the aggregate offering price to the public of such registration is less than US$2,000,000. We have the right to defer filing of a registration statement for a period of not more than 90 days if our board of directors determines in good faith judgment that filing of a registration in the near future will be materially detrimental to us, but we cannot exercise the deferral right more than once in any 12 month period and cannot register any other securities during such period.

Piggyback Registration Rights. If we propose to register for a public offering or our securities other than relating to any share incentive plan or a corporate reorganization, we must offer holders of our registrable securities an opportunity to be included in such registration. If the underwriters advise that market factors require a limitation of the number of registrable securities to be underwritten, the underwriters may decide to exclude shares from and to allocate among all non-excluded holders in proportion.

Expenses of Registration. We will bear all registration expenses, other than the underwriting discounts and selling commissions applicable to the sale of registrable securities, incurred in connection with registrations, filings or qualification pursuant to the shareholders agreement.

Termination of Obligations. We have no obligation to effect any demand, piggyback or Form F-3 registration upon the earlier of (i) the fifth anniversary from the date of closing of a qualified IPO as defined in the Shareholders Agreement, and (ii) with respect to any holder, the date on which such holder may sell all of such holder’s registrable securities under Rule 144 of the Securities Act in any 90-day period.

Employment Agreements and Indemnification Agreements

See “Item 6. Directors, Senior Management and Employees-A. Directors and Senior Management-Employment Agreements and Indemnification Agreements.”

Share Incentive Plans

See “Item 6. Directors, Senior Management and Employees-B. Compensation-Amended and Restated 2015 Plan” and “Item 6. Directors, Senior Management and Employees-B. Compensation-Domestic Employee Share Incentive Scheme.”

C. Interests of Experts and Counsel

Not applicable.

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ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

We have appended consolidated financial statements filed as part of this annual report.

Legal Proceedings

Except as listed below, we are currently not a party to any material legal or administrative proceedings. We may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of business. Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including our management’s time and attention.

As of the date of this annual report, the Company has been named in a number of lawsuits due to cessation of business in October 2021 which was caused by a series of rules, regulations and administrative measures for after-school tutoring for primary and secondary school students issued by the General Office of Ministry of Education of PRC from July 2021 to September 2021.

The following table presents the total number of the lawsuits by category, the amount involved in thousands, and the scope of the amount per case in each category:

	Numbers		Total amount involved (thousands)		Amount involved scope per case (thousands)
Amounts in thousands of Renminbi (“RMB”) except for number of cases			RMB		RMB
Lease		5		2,167	From 371 to 797
Advertisement		1		3,968	3,968
Technology Service		2		503	From 237 to 266
Education Service		310		13,653	From 1 to 386
Purchase		4		2,424	From 49 to 1,298
Property Preservation		2		2,440	From 62 to 2,377
Decoration		3		4,020	From 680 to 2,540
Other		85		933	From 40 to 80
Total		412		30,108

As of the date of this annual report, the Company is using all commercially reasonable efforts to defend itself in these proceedings and is still undergoing on-going discussion with regulatory authorities.

Dividend Policy

Our board of directors has discretion on whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. In either case, all dividends are subject to certain restrictions under Cayman Islands law, namely that our company may only pay dividends out of profits or share premium, and provided always that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business. Even if we decide to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.

We do not have any present plan to pay any cash dividends on our Class A ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

We are a holding company incorporated in the Cayman Islands. We may rely on dividends from our subsidiaries in China for our cash requirements, including any payment of dividends to our shareholders. PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us. See “Item 4. Information on the Company-B. Business Overview-Regulation-Regulations on Foreign Exchange-Dividend Distribution.”

If we pay any dividends on our Class A ordinary shares, we will pay those dividends which are payable in respect of the Class A ordinary shares underlying our ADSs to the depositary, as the registered holder of such Class A ordinary shares, and the depositary then will pay such amounts to our ADS holders in proportion to Class A ordinary shares underlying the ADSs held by such ADS holders, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. Cash dividends on our Class A ordinary shares, if any, will be paid in U.S. dollars.

B. Significant Changes

Except as otherwise disclosed in this report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report.

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ITEM 9 THE OFFER AND LISTING

A. Offering and Listing Details

Our ADSs, each representing 1,000 of our Class A ordinary shares, have been listed on the NYSE since March 28, 2018. Our ADSs trade under the symbol “AIU.”

B. Plan of Distribution

Not applicable.

C. Markets

Our ADSs, each representing 1,000 of our Class A ordinary shares, have been listed on the NYSE since March 28, 2018. Our ADSs trade under the symbol “AIU.”

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

We have adopted a sixth amended and restated memorandum and articles of association. The following are summaries of material provisions of the amended and restated memorandum and articles of association that we adopt and of the Companies Act, insofar as they relate to the material terms of our ordinary shares.

Objects of Our Company

Under our sixth amended and restated memorandum and articles of association, the objects of our company are unrestricted and we have the full power and authority to carry out any object not prohibited by the law of the Cayman Islands.

Ordinary Shares

Our authorized share capital is US$50,000 consisting of 50,000,000,000 shares comprising of (i) 37,703,157,984 Class A ordinary shares of a par value of US$0.000001 each, (ii) 2,296,842,016 Class B ordinary shares of a par value of US$0.000001 each and (iii) 10,000,000,000 shares of a par value of US$0.000001 each of such class or classes (however designated) as our board of directors may determine in accordance with our sixth amended and restated memorandum and articles of association. All of our issued and outstanding ordinary shares are fully paid and non-assessable. Our ordinary shares are issued in registered form, and are issued when registered in our register of members. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their ordinary shares. Under our sixth amended and restated memorandum and articles of association, our company may not issue bearer shares.

Dividends

The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors. Dividends may be declared and paid out of our profits, share premium account or any other fund or account which can be authorized for this purpose in accordance with the Companies Act. Under the laws of the Cayman Islands, our company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business.

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Voting Rights

Voting at any shareholders’ meeting is by show of hands unless a poll is demanded. A poll may be demanded by the chairman of such meeting or any shareholder present in person or by proxy at the meeting.

An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the ordinary shares cast at a meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes cast attaching to the outstanding ordinary shares at a meeting. A special resolution will be required for important matters such as a change of name or making changes to our sixth amended and restated memorandum and articles of association. Holders of our ordinary shares may effect certain changes by ordinary resolution, including increasing the amount of our authorized share capital, consolidating all or any of our share capital into shares of larger amount than our existing shares, sub-dividing our shares or any of them into shares of an amount smaller than that fixed by our memorandum, and cancelling any unissued shares. Both ordinary resolution and special resolution may also be passed by an unanimous written resolution signed by all the shareholders of our company, as permitted by the Companies Act and our sixth amended and restated memorandum and articles of association.

Appointment and Removal of Directors

Our board of directors may, by the affirmative vote of a simple majority of the directors present and voting at a board meeting, appoint any person as a director, to fill a casual vacancy on the board or as an addition to the existing board. Directors may be removed by ordinary resolution of our shareholders.

General Meetings of Shareholders

As a Cayman Islands exempted company, we are not obliged by the Companies Act to call shareholders’ annual general meetings. Our sixth amended and restated memorandum and articles of association provide that we may (but are not obliged to) in each year hold a general meeting as our annual general meeting in which case we shall specify the meeting as such in the notices calling it, and the annual general meeting shall be held at such time and place as may be determined by our directors.

Shareholders’ general meetings may be convened by the chairman of board of directors or a majority of our board of directors. Advance notice of at least ten days is required for the convening of our annual general shareholders’ meeting (if any) and any other general meeting of our shareholders. A quorum required for any general meeting of shareholders consists of at least one shareholder present or by proxy, representing not less than one-third of all votes attaching to all of our shares in issue and entitled to vote.

The Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our sixth amended and restated memorandum and articles of association provide that upon the requisition of shareholders representing in aggregate not less than one-third of the votes attaching to the outstanding shares of our company entitled to vote at general meetings, our board will convene an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting. However, our sixth amended and restated memorandum and articles of association do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings not called by such shareholders.

Transfer of Ordinary Shares

Subject to the restrictions set out below, any of our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.

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Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which we have a lien. Our board of directors may also decline to register any transfer of any ordinary share unless:

● the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer;

● the instrument of transfer is in respect of only one class of ordinary shares;

● the instrument of transfer is properly stamped, if required;

● in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; and

● a fee of such maximum sum as the New York Stock Exchange may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof.

If our directors refuse to register a transfer they shall, within three months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.

The registration of transfers may, after compliance with any notice required of the New York Stock Exchange, be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year as our board may determine.

Liquidation

On the winding up of our company, if the assets available for distribution amongst our shareholders shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst our shareholders in proportion to the par value of the shares held by them at the commencement of the winding up, subject to a deduction from those shares in respect of which there are monies due, of all monies payable to our company for unpaid calls or otherwise. If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by our shareholders in proportion to the par value of the shares held by them.

Calls on Shares and Forfeiture of Shares

Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares in a notice served to such shareholders at least 14 days prior to the specified time and place of payment. The shares that have been called upon and remain unpaid are subject to forfeiture.

Redemption, Repurchase and Surrender of Shares

We may issue shares on terms that such shares are subject to redemption, at our option or at the option of the holders of these shares, on such terms and in such manner as may be determined by our board of directors or by the shareholders by special resolution. Our Company may also repurchase any of our shares on such terms and in such manner as have been approved by our board of directors or by an ordinary resolution of our shareholders. Under the Companies Act, the redemption or repurchase of any share may be paid out of our Company’s profits or out of the proceeds of a new issue of shares made for the purpose of such redemption or repurchase, or out of capital (including share premium account and capital redemption reserve) if our company can, immediately following such payment, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no such share may be redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there being no shares outstanding or (c) if the company has commenced liquidation. In addition, our company may accept the surrender of any fully paid share for no consideration.

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Variations of Rights of Shares

If at any time, out share capital is divided into different classes or series of shares, the rights attached to any class or series of shares (unless otherwise provided by the terms of issue of the shares of that class or series), whether or not our company is being wound-up, may be varied with the consent in writing of the holders of two-thirds of the issued shares of that class or series or with the sanction of a resolution passed by a two-thirds majority of the votes cast at a separate meeting of the holders of the shares of the class or series. The rights conferred upon the holders of the shares of any class issued shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu with such existing class of shares.

Issuance of Additional Shares

Our amended and restated amended and restated memorandum of association authorizes our board of directors to issue additional ordinary shares from time to time as our board of directors shall determine, to the extent of available authorized but unissued shares.

Our amended and restated amended and restated memorandum of association also authorizes our board of directors to establish from time to time one or more series of preference shares and to determine, with respect to any series of preference shares, the terms and rights of that series, including:

● the designation of the series;

● the number of shares of the series;

● the dividend rights, dividend rates, conversion rights, voting rights; and

● the rights and terms of redemption and liquidation preferences.

Our board of directors may issue preference shares without action by our shareholders to the extent authorized but unissued. Issuance of these shares may dilute the voting power of holders of ordinary shares.

Inspection of Books and Records

Holders of our ordinary shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records (other than copies of our memorandum and articles of association, our register of mortgage and charges, and any special resolution passed by our shareholders). However, we will provide our shareholders with annual audited financial statements.

Changes in Capital

Our shareholders may from time to time by ordinary resolution to:

● increase our share capital by such sum, to be divided into shares of such classes and amount, as the resolution shall prescribe;

● consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares;

● sub-divide our existing shares, or any of them into shares of a smaller amount, provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is derived; or

● cancel any shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the amount of the shares so cancelled.

Our shareholders may, by special resolution and subject to confirmation by the Grand Court of the Cayman Islands on an application by our company for an order confirming such reduction, reduce our share capital and any capital redemption reserve in any manner authorized by law.

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Anti-Takeover Provisions

Some provisions of our sixth amended and restated memorandum and articles of association may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable, including provisions that:

● authorize our board of directors to issue preference shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preference shares without any further vote or action by our shareholders; and

● limit the ability of shareholders to requisition and convene general meetings of shareholders.

However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our sixth amended and restated memorandum and articles of association for a proper purpose and for what they believe in good faith to be in the best interests of our company.

Exempted Company

We are an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company:

● does not have to file an annual return of its shareholders with the Registrar of Companies;

● is not required to open its register of members for inspection;

● does not have to hold an annual general meeting;

● may issue negotiable or bearer shares or shares with no par value;

● may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);

● may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;

● may register as a limited duration company; and

● may register as a segregated portfolio company.

“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).

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Differences Between the Law of Different Jurisdictions

The Companies Act is modeled after that of England but does not follow recent English statutory enactments and differs from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated in the United States and their shareholders.

Mergers and Similar Arrangements. The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (a) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (b) a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association. The plan must be filed with the Registrar of Companies of the Cayman Islands together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.

A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman subsidiary if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees otherwise. For this purpose a company is a “parent” of a subsidiary if it holds issued shares that together represent at least ninety percent (90%) of the votes at a general meeting of the subsidiary.

The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman Islands.

Save in certain limited circumstances, a shareholder of a Cayman constituent company who dissents from the merger or consolidation is entitled to payment of the fair value of his shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting to the merger or consolidation, provide the dissenting shareholder complies strictly with the procedures set out in the Companies Act. The exercise of dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.

Separate from the statutory provisions relating to mergers and consolidations, the Companies Act also contains statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:

● the statutory provisions as to the required majority vote have been met;

● the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class;

● the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and

● the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act.

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The Companies Act also contains a statutory power of compulsory acquisition which may facilitate the “squeeze out” of dissentient minority shareholder upon a tender offer. When a tender offer is made and accepted by holders of 90% of the shares affected within four months, the offeror may, within a two-month period commencing on the expiration of such four month period, require the holders of the remaining shares to transfer such shares to the offeror on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.

If an arrangement and reconstruction is thus approved, or if a tender offer is made and accepted, a dissenting shareholder would have no rights comparable to appraisal rights, save that objectors to a takeover offer may apply to the Grand Court of the Cayman Islands for various orders that the Grand Court of the Cayman Islands has a broad discretion to make, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.

Shareholders’ Suits. In principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company and as a general rule, a derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, there are exceptions to the foregoing principle which permit a minority shareholder to commence a class action against, or derivative actions in the name of, a company, including when:

● a company acts or proposes to act illegally or ultra vires;

● the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and

● those who control the company are perpetrating a “fraud on the minority.”

Indemnification of Directors and Executive Officers and Limitation of Liability. Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our sixth amended and restated memorandum and articles of association permit indemnification of officers and directors for losses, damages, cost and expenses incurred in their capacities as such unless such losses or damages arise from dishonesty or fraud of such directors or officers. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation.

In addition, we have entered into indemnification agreements with our directors and executive officers that provide such persons with additional indemnification beyond that provided in our sixth amended and restated memorandum and articles of association.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

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Anti-Takeover Provisions in the Memorandum and Articles of Association. Some provisions of our current memorandum and articles of association may discourage, delay or prevent a change in control of our company or management that shareholders may consider favorable, including provisions that authorize our board of directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by our shareholders.

However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our sixth amended and restated memorandum and articles of association, as amended and restated from time to time, for a proper purpose and for what they believe in good faith to be in the best interests of our company.

Directors’ Fiduciary Duties. Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director acts in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must prove the procedural fairness of the transaction and that the transaction was of fair value to the corporation.

As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the company - a duty to act bona fide in the best interests of the company, a duty not to make a profit based on his position as director (unless the company permits him to do so) and a duty not to put himself in a position where the interests of the company conflict with his personal interest or his duty to a third party. A director of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.

Shareholder Action by Written Consent. Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. Our sixth amended and restated memorandum and articles of association do not allow our shareholders to approve matters to be determined at shareholders’ meetings by way of written resolutions without a meeting.

Shareholder Proposals. Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.

The Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our sixth amended and restated memorandum and articles of association do not allow our shareholders to requisition an extraordinary general meeting of our shareholders and do not provide our shareholders with any other right to put proposals before annual general meetings or extraordinary general meetings. As a Cayman Islands exempted company, we are not obliged by law to call shareholders’ annual general meetings.

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Cumulative Voting. Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power with respect to electing such director. While there is nothing under the laws of the Cayman Islands which specifically prohibits or restricts the creation of cumulative voting rights for the election of directors of our company, it is not a concept that is accepted as a common practice in the Cayman Islands, and our company has made no provisions in our sixth amended and restated memorandum and articles of association to allow cumulative voting for such elections. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.

Removal of Directors. Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our sixth amended and restated memorandum and articles of association, a director may be removed by a special resolution of our shareholders.

Transactions with Interested Shareholders. The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting share within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.

Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and not with the effect of constituting a fraud on the minority shareholders.

Dissolution; Winding up. Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board.

Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.

Variation of Rights of Shares. Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under our sixth amended and restated memorandum and articles of association, all or any of the special rights for the time being attached to the shares or any class of shares may, unless otherwise provided by the terms of issue of the shares of that class, from time to time be varied, modified or abrogated by a special resolution passed at a separate general meeting of the holders of the shares of that class. The special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to or the terms of issue of such shares, be deemed to be varied, modified or abrogated by the creation or issue of further shares ranking pari passu with such existing class of shares.

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Amendment of Governing Documents. Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by Cayman Islands law and our sixth amended and restated memorandum and articles of association, our sixth amended and restated memorandum and articles of association may only be amended with a special resolution of our shareholders.

Rights of Non-resident or Foreign Shareholders. There are no limitations imposed by our sixth amended and restated memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our sixth amended and restated memorandum and articles of association which require our company to disclose shareholder ownership above any particular ownership threshold.

Exempted Company. The Companies Act in the Cayman Islands distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except for the exemptions and privileges listed below:

● an exempted company does not have to file an annual return of its shareholders with the Registrar of Companies;

● an exempted company’s register of members is not required to be open to inspection;

● an exempted company does not have to hold an annual general meeting;

● an exempted company may issue no par value shares;

● an exempted company may obtain an undertaking against the imposition of taxation on profits, capital gains or inheritance (such undertakings are usually given for 20 years in the first instance);

● an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;

● an exempted company may register as a limited duration company; and

● an exempted company may register as a segregated portfolio company.

“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on that shareholder’s shares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).

C. Material Contracts

We have not entered into any material contracts other than in the ordinary course of business and other than those described in “Item 4. Information on the Company,” “Item 7. Major Shareholders and Related Party Transactions,” or elsewhere in this annual report on Form 20-F.

D. Exchange Controls

See “Item 4. Information on the Company-B. Business Overview-Regulation-Regulation on Foreign Exchange-Foreign Currency Exchange.”

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E. Taxation

The following summary of the material Cayman Islands, PRC and U.S. federal income tax consequences of an investment in our ADSs or ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in our ADSs or ordinary shares, such as the tax consequences under U.S. state and local tax laws or under the tax laws of jurisdictions other than the Cayman Islands, the People’s Republic of China and the United States.

Cayman Islands Taxation

According to Maples and Calder (Hong Kong) LLP, our Cayman Islands counsel, the Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.

Payments of dividends and capital in respect of our ordinary shares and ADSs will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our ordinary shares or ADSs, nor will gains derived from the disposal of our ordinary shares or ADSs be subject to Cayman Islands income or corporation tax.

People’s Republic of China Taxation

Although we are incorporated in the Cayman Islands, we may be treated as a PRC resident enterprise for PRC tax purposes under the Enterprise Income Tax Law. The Enterprise Income Tax Law provides that an enterprise established under the laws of a foreign country or region but whose “de facto management body” is located in the PRC is treated as a PRC resident enterprise for PRC tax purposes. The implementing rules of the Enterprise Income Tax Law merely define the location of the “de facto management body” as the “body that exercises full and substantial control over and overall management of the business, productions, personnel, accounts and properties of an enterprise.” Based on a review of the facts and circumstances, we do not believe that Meta Data Limited or OneSmart Edu (HK) Limited should be considered a PRC resident enterprise for PRC tax purposes. However, there is limited guidance and implementation history of the Enterprise Income Tax Law. If Meta Data Limited were to be considered a PRC resident enterprise, any gain realized on the sale or other disposition of our ADSs or Class A ordinary shares by investors that are non-PRC enterprises and any interest or dividends payable by us to such investors is subject to PRC income tax at a rate of 10%. In case of investors that are non-PRC individuals, the applicable PRC income tax rate is 20%. See “Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in China-If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.”

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United States Federal Income Tax Considerations

The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of our ADSs or Class A ordinary shares by a U.S. Holder (as defined below) and holds our ADSs or Class A ordinary shares as “capital assets” (generally, property held for investment) under the U.S. Internal Revenue Code of 1986, as amended, or the Code. This discussion is based upon existing U.S. federal tax law, which is subject to differing interpretations or change, possibly with retroactive effect. There can be no assurance that the IRS or a court will not take a contrary position. This discussion, moreover, does not address the U.S. federal estate, gift, Medicare net investment income and alternative minimum tax considerations, or any state, local and non-U.S. tax considerations, relating to the ownership or disposition of our ADSs or Class A ordinary shares. The following summary does not address all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances or to persons in special tax situations such as:

● banks and other financial institutions;

● insurance companies;

● pension plans;

● cooperatives;

● regulated investment companies;

● real estate investment trusts;

● broker-dealers;

● traders that elect to use a mark-to-market method of accounting;

● certain former U.S. citizens or long-term residents;

● tax-exempt entities (including private foundations);

● persons liable for alternative minimum tax;

● holders who acquire their ADSs or Class A ordinary shares pursuant to any employee share option or otherwise as compensation;

● investors that will hold their ADSs or Class A ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes;

● investors that have a functional currency other than the U.S. dollar;

● persons that actually or constructively own 10% or more of our stock by vote or value; or

● partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding ADSs or Class A ordinary shares through such entities.

All of such persons in special tax situations may be subject to tax rules that differ significantly from those discussed below.

Each U.S. Holder is urged to consult its tax advisor regarding the application of U.S. federal taxation to its particular circumstances, and the state, local, non-U.S. and other tax considerations of the ownership and disposition of our ADSs or Class A ordinary shares.

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General

For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our ADSs or Class A ordinary shares that is, for U.S. federal income tax purposes:

● an individual who is a citizen or resident of the United States;

● a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created in, or organized under the law of the United States or any state thereof or the District of Columbia;

● an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or

● a trust (A) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a U.S. person under the Code.

If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our ADSs or Class A ordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding our ADSs or Class A ordinary shares and their partners are urged to consult their tax advisors regarding an investment in our ADSs or Class A ordinary shares.

For U.S. federal income tax purposes, it is generally expected that a U.S. Holder of ADSs will be treated as the beneficial owner of the underlying shares represented by the ADSs. The remainder of this discussion assumes that a U.S. Holder of our ADSs will be treated in this manner. Accordingly, deposits or withdrawals of Class A ordinary shares for ADSs will generally not be subject to U.S. federal income tax.

Passive Foreign Investment Company Considerations

A non-U.S. corporation, such as our company, will be classified as a PFIC, for U.S. federal income tax purposes for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income. For this purpose, cash and assets readily convertible into cash are categorized as a passive asset and the company’s goodwill and other unbooked intangibles are taken into account. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock.

Although the law in this regard is not entirely clear, we treat our consolidated VIEs as being owned by us for U.S. federal income tax purposes because we control their management decisions, we are entitled to substantially all of the economic benefits associated with these entities, and, as a result, we consolidate their results of operations in our consolidated U.S. GAAP financial statements. If it were determined, however, that we are not the owner of the consolidated VIEs for U.S. federal income tax purposes, we may be treated as a PFIC for the current taxable year and any subsequent taxable year.

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Assuming that we are the owner of the VIEs for U.S. federal income tax purposes, we do not believe that we were a PFIC for the taxable year ended August 31, 2020 and do not anticipate becoming a PFIC for the foreseeable future. While we do not anticipate becoming a PFIC in the foreseeable future, no assurance can be given in this regard because the determination of whether we will be or become a PFIC is a factual determination made annually that will depend, in part, upon the composition of our income and assets. Fluctuations in the market price of our ADSs may cause us to be classified as a PFIC for the current or future taxable years because the value of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, may be determined by reference to the market price of our ADSs from time to time (which may be volatile). If our market capitalization subsequently declines, we may be or become classified as a PFIC for the current taxable year or future taxable years. Furthermore, the composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets. Under circumstances where our revenue from activities that produce passive income significantly increases relative to our revenue from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming classified as a PFIC may substantially increase.

If we are classified as a PFIC for any year during which a U.S. Holder holds our ADSs or Class A ordinary shares, the PFIC rules discussed below under “Passive Foreign Investment Company Rules” generally will apply to such U.S. Holder for such taxable year, and unless the U.S. Holder makes certain elections, will apply in future years even if we cease to be a PFIC.

The discussion below under “Dividends” and “Sale or Other Disposition” is written on the basis that we will not be or become classified as a PFIC for U.S. federal income tax purposes. The U.S. federal income tax rules that apply generally if we are treated as a PFIC are discussed below under “Passive Foreign Investment Company Rules.”

Dividends

Any cash distributions (including the amount of any PRC tax withheld) paid on our ADSs or Class A ordinary shares out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles, will generally be includible in the gross income of a U.S. Holder as dividend income on the day actually or constructively received by the U.S. Holder, in the case of Class A ordinary shares, or by the depositary, in the case of ADSs. Because we do not intend to determine our earnings and profits on the basis of U.S. federal income tax principles, any distribution we pay will generally be treated as a “dividend” for U.S. federal income tax purposes. Dividends received on our ADSs or Class A ordinary shares will not be eligible for the dividends received deduction allowed to corporations. A non-corporate U.S. Holder will be subject to tax at the lower capital gain tax rate applicable to “qualified dividend income,” provided that certain conditions are satisfied, including that (1) the ADSs or ordinary shares on which the dividends are paid are readily tradable on an established securities market in the United States, or, in the event that we are deemed to be a PRC resident enterprise under the PRC tax law, we are eligible for the benefit of the United States-PRC income tax treaty, (2) we are neither a PFIC nor treated as such with respect to a U.S. Holder (as discussed below) for the taxable year in which the dividend was paid or the preceding taxable year, and (3) certain holding period requirements are met. Our ADSs are listed on the New York Stock Exchange, which is an established securities market in the United States, and are expected to be readily tradable. There can be no assurance, however, that our ADSs will continue to be considered readily tradable on an established securities market in later years.

In the event that we are deemed to be a PRC resident enterprise under the PRC Enterprise Income Tax Law (see “Item 10. Additional Information-E. Taxation-People’s Republic of China Taxation”), we may be eligible for the benefits of the United States-PRC income tax treaty. If we are eligible for such benefits, dividends we pay on our Class A ordinary shares, regardless of whether such shares are represented by the ADSs, would be eligible for the reduced rates of taxation described in the preceding paragraph (subject to clauses (2) and (3) of such paragraph). U.S. Holders are urged to consult their tax advisors regarding the availability of the reduced tax rate on dividends in their particular circumstances.

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Dividends will generally be treated as income from foreign sources for U.S. foreign tax credit purposes and will generally constitute passive category income. Depending on the U.S. Holder’s individual facts and circumstances, a U.S. Holder may be eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of any non-refundable foreign withholding taxes imposed on dividends received on our ADSs or Class A ordinary shares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction, for U.S. federal income tax purposes, in respect of such withholding, but only for a year in which such holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex and their outcome depends in large part on the U.S. Holder’s individual facts and circumstances. Accordingly, U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

Sale or Other Disposition

A U.S. Holder will generally recognize capital gain or loss upon the sale or other disposition of ADSs or Class A ordinary shares in an amount equal to the difference between the amount realized upon the disposition and the holder’s adjusted tax basis in such ADSs or Class A ordinary shares. Any capital gain or loss will be long-term if the ADSs or Class A ordinary shares have been held for more than one year and will generally be U.S.-source gain or loss for U.S. foreign tax credit purposes. In the event that gain from the disposition of the ADSs or Class A ordinary shares is subject to tax in the PRC, a U.S. Holder may elect to treat such gain as PRC source gain under the United States-PRC income tax treaty (assuming such holder is eligible for benefits under that treaty). If a U.S. Holder does not make this election, such holder may not be able to credit any PRC tax imposed upon the disposition of the ADSs or Class A ordinary shares unless such holder has other income from foreign sources in the appropriate category for purposes of the foreign tax credit rules. U.S. Holders are urged to consult their tax advisors regarding the tax consequences if a foreign tax is imposed on a disposition of our ADSs or Class A ordinary shares, including the availability of the foreign tax credit under their particular circumstances. The deductibility of a capital loss may be subject to limitations.

Passive Foreign Investment Company Rules

If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our ADSs or Class A ordinary shares, and unless the U.S. Holder makes a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules on (i) any excess distribution that we make to the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than 125 percent of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder’s holding period for the ADSs or Class A ordinary shares), and (ii) any gain realized on the sale or other disposition of ADSs or Class A ordinary shares. Under the PFIC rules:

● the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or Class A ordinary shares;

● the amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC (each, a “pre-PFIC year”), will be taxable as ordinary income;

● the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year; and

● the interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year.

If we are a PFIC for any taxable year during which a U.S. Holder holds our ADSs or Class A ordinary shares and any of our subsidiaries, variable interest entities or any of the subsidiaries of our variable interest entities is also a PFIC, such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. U.S. Holders are urged to consult their tax advisors regarding the application of the PFIC rules to any of our subsidiaries, variable interest entities or any of the subsidiaries of our variable interest entities.

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As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” in a PFIC may make a mark-to-market election with respect to such stock, provided that such stock is regularly traded. Our ADSs are expected to qualify as being regularly traded, but no assurances may be given in this regard. If a U.S. Holder makes this election, the holder will generally (i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of ADSs held at the end of the taxable year over the adjusted tax basis of such ADSs and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the ADSs over the fair market value of such ADSs held at the end of the taxable year, but such deduction will only be allowed to the extent of the net amount previously included in income as a result of the mark-to-market election. The U.S. Holder’s adjusted tax basis in the ADSs would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes a mark-to-market election in respect of a corporation classified as a PFIC and such corporation ceases to be classified as a PFIC, the holder will not be required to take into account the gain or loss described above during any period that such corporation is not classified as a PFIC. If a U.S. Holder makes a mark-to-market election, any gain such U.S. Holder recognizes upon the sale or other disposition of our ADSs in a year when we are a PFIC will be treated as ordinary income and any loss will be treated as ordinary loss, but such loss will only be treated as ordinary loss to the extent of the net amount previously included in income as a result of the mark-to-market election.

Because a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to the PFIC rules with respect to such U.S. Holder’s indirect interest in any investments held by us that are treated as an equity interests in a PFIC for U.S. federal income tax purposes.

We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available, would result in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs described above.

If a U.S. Holder owns our ADSs or Class A ordinary shares during any taxable year that we are a PFIC, the holder must generally file an annual IRS Form 8621. You should consult your tax advisors regarding the U.S. federal income tax consequences of owning and disposing of our ADSs or Class A ordinary shares if we are or become a PFIC.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

We are subject to the periodic reporting and other informational requirements of the Exchange Act. Under the Exchange Act, we are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F no later than four months after the close of each fiscal year. Copies of reports and other information, when so filed, may be inspected without charge and may be obtained at prescribed rates at the public reference facilities maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549.

The public may obtain information regarding the Washington, D.C. Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site at www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR system.

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As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we will furnish Deutsche Bank Trust Company Americas, the depositary of our ADSs, with our annual reports, which will include a review of operations and annual audited consolidated financial statements prepared in conformity with U.S. GAAP, and all notices of shareholders’ meetings and other reports and communications that are made generally available to our shareholders. The depositary will make such notices, reports and communications available to holders of ADSs and, upon our request, will mail to all record holders of ADSs the information contained in any notice of a shareholders’ meeting received by the depositary from us.

I. Subsidiary Information

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Inflation

To date, inflation in China has not materially impacted our results of operations. According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for December 2020 and 2021 were increases of 2.5% and 0.9%, respectively. Although we have not been materially affected by inflation in the past, we can provide no assurance that we will not be affected by higher rates of inflation in China in the future.

Market Risks

Foreign Exchange Risk

Foreign currency risk arises from future commercial transactions and recognized assets and liabilities. A significant portion of our revenue-generating transactions and expense-related transactions are denominated in Renminbi, which is the functional currency of our subsidiaries, VIE and its subsidiaries and schools in China. We do not hedge against currency risk.

The value of Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the PRC government. On July 21, 2005, the PRC government changed its policy of pegging the value of the Renminbi to the U.S. dollar. Following the removal of the U.S. dollar peg, the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, the PRC government has allowed the Renminbi to appreciate slowly against the U.S. dollar again, and it has appreciated more than 10% since June 2010. On August 11, 2015, the PBOC announced plans to improve the central parity rate of the Renminbi against the U.S. dollar by authorizing market-makers to provide parity to the China Foreign Exchange Trading Center operated by the PBOC with reference to the interbank foreign exchange market closing rate of the previous day, the supply and demand for foreign currencies as well as changes in exchange rates of major international currencies. Effective from October 1, 2016, the International Monetary Fund added Renminbi to its Special Drawing Rights currency basket. Such change and additional future changes may increase volatility in the trading value of the Renminbi against foreign currencies. In the fourth quarter of 2016, the Renminbi has depreciated significantly in the backdrop of a surging U.S. dollar and persistent capital outflows from China. The PRC government may adopt further reforms of its exchange rate system, including making the Renminbi freely convertible in the future. Accordingly, it is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between Renminbi and the U.S. dollar in the future.

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To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of Renminbi against the U.S. dollar would reduce the Renminbi amount we receive from the conversion. Conversely, if we decide to convert Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or ADSs, servicing our outstanding debt, or for other business purposes, appreciation of the U.S. dollar against the Renminbi would reduce the U.S. dollar amounts available to us.

As of August 31, 2021, we had Renminbi-denominated cash and cash equivalents of RMB343 million. A 10% depreciation of Renminbi against the U.S. dollar based on the foreign exchange rate on August 31, 2021 would result in a decrease of US$4.8 million in cash and cash equivalents.

Interest Rate Risk

Our exposure to interest rate risk primarily relates to the interest income generated by excess cash, which is mostly held in interest-bearing bank deposits and bank loans that bear floating interest rates. In March 2019, we entered into a US$139 million term facility agreement with a group of arrangers led by UBS AG, Singapore Branch. Pursuant to the agreement, we were entitled to borrow US$139 million term facility with a floating interest rate of LIBOR+2.7%. In April 2020, we entered into an €10 million term facility agreement with China Everbright Bank, Seoul Branch. Pursuant to the agreement, we were entitled to borrow €10 million term facility with a floating interest rate of EURIBOR+1.7%. The interest rate risk may result from many factors, including government monetary and tax policies, domestic and international economic and political considerations, and other factors that are beyond our control. We may incur additional loans or other financing facilities in the future. The objective of interest rate risk management is to minimize financial costs and uncertainties associated with interest rate changes. We strive to effectively manage our interest rate risk by periodic monitoring and responding to risk factors on a timely basis, improve the structure of long-term and short-term borrowings and maintain the appropriate balance between loans with floating interest rates and fixed interest rates.

We are subject to interest rate sensitivity on our outstanding convertible notes and loans. We account for our convertible notes on fair value basis and convertible loans on an amortized cost basis. Also, because convertible notes and loans we have issued and extended either bear interest at a fixed rate or bear no interest, we have not incurred financial statement impact resulting from changes in interest rates. However, changes in market interest rates impact the fair value of the convertible notes and loans along with other variables such as our credit spreads and the market price and volatility of our ADSs and ordinary shares. Increases in market interest rates would result in a decrease in the fair value of our outstanding convertible notes and loans and decreases in market interest rates would result in an increase in the fair value of our outstanding convertible notes and loans. For information on the maturities and other contractual terms of our convertible notes and loans, see “Item 4. Information on the Company-A. History and Development of the Company” and “Item 7. Major Shareholders and Related Party Transactions-B. Related Party Transactions-Transaction with Shareholders and Affiliates.”

With regard to interest rate sensitivity on our loans, we present the sensitivity analysis below based on the exposure to interest rates for interest bearing loans with variable interest rates as of August 31, 2020. The analysis is prepared assuming that those balances outstanding as of August 31, 2020 were outstanding for the whole financial year. A 1.0% increase or decrease which represents the management’s assessment of the reasonably possible change in interest rates is used. Assuming no change in the outstanding balance of our existing interest bearing loans balances with floating interest rates as of August 31, 2020, a 1.0% increase or decrease in each applicable interest rate would add or deduct RMB9.7 million (US$1.5 million) to our interest expense for the fiscal year ended August 31, 2020.

In addition, we may from time to time invest in interest-earning instruments. Investments in both fixed rate and floating rate interest-earning instruments carry certain interest rate risk associated with our investment return. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall.

We have not been exposed to material risks due to changes in interest rates, and we have not used any derivative financial instruments to manage our interest risk exposure. However, our future interest income may fall short of expectations due to changes in market interest rates.

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ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

A. Debt Securities

Not applicable.

B. Warrants and Rights

Not applicable.

C. Other Securities

Not applicable.

D. American Depositary Shares

Fees and Charges Our ADS Holders May Have to Pay

As an ADS holder, you will be required to pay the following service fees to the depositary bank and certain taxes and governmental charges (in addition to any applicable fees, expenses, taxes and other governmental charges payable on the deposited securities represented by any of your ADSs):

Service	Fees
To any person to which ADSs are issued or to any person to which a distribution is made in respect of ADS distributions pursuant to stock dividends or other free distributions of stock, bonus distributions, stock splits or other distributions (except where converted to cash)	Up to US$0.05 per ADS issued
Cancellation of ADSs, including the case of termination of the deposit agreement	Up to US$0.05 per ADS cancelled
Distribution of cash dividends	Up to US$0.05 per ADS held
Distribution of cash entitlements (other than cash dividends) and/or cash proceeds from the sale of rights, securities and other entitlements	Up to US$0.05 per ADS held
Distribution of ADSs pursuant to exercise of rights	Up to US$0.05 per ADS held
Distribution of securities other than ADSs or rights to purchase additional ADSs	Up to US$0.05 per ADS held
Depositary services	Up to US$0.05 per ADS held on the applicable record date(s) established by the depositary bank

As an ADS holder, you will also be responsible to pay certain fees and expenses incurred by the depositary bank and certain taxes and governmental charges (in addition to any applicable fees, expenses, taxes and other governmental charges payable on the deposited securities represented by any of your ADSs) such as:

● Fees for the transfer and registration of Class A ordinary shares charged by the registrar and transfer agent for the Class A ordinary shares in the Cayman Islands (i.e., upon deposit and withdrawal of Class A ordinary shares).

● Expenses incurred for converting foreign currency into U.S. dollars.

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● Expenses for cable, telex and fax transmissions and for delivery of securities.

● Taxes and duties upon the transfer of securities, including any applicable stamp duties, any stock transfer charges or withholding taxes (i.e., when Class A ordinary shares are deposited or withdrawn from deposit).

● Fees and expenses incurred in connection with the delivery or servicing of Class A ordinary shares on deposit.

● Fees and expenses incurred in connection with complying with exchange control regulations and other regulatory requirements applicable to Class A ordinary shares, deposited securities, ADSs and ADRs.

● Any applicable fees and penalties thereon.

The depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary bank by the brokers (on behalf of their clients) receiving the newly issued ADSs from the depositary bank and by the brokers (on behalf of their clients) delivering the ADSs to the depositary bank for cancellation. The brokers in turn charge these fees to their clients. Depositary fees payable in connection with distributions of cash or securities to ADS holders and the depositary services fee are charged by the depositary bank to the holders of record of ADSs as of the applicable ADS record date.

The depositary fees payable for cash distributions are generally deducted from the cash being distributed or by selling a portion of distributable property to pay the fees. In the case of distributions other than cash (i.e., share dividends, rights), the depositary bank charges the applicable fee to the ADS record date holders concurrent with the distribution. In the case of ADSs registered in the name of the investor (whether certificated or uncertificated in direct registration), the depositary bank sends invoices to the applicable record date ADS holders. In the case of ADSs held in brokerage and custodian accounts (via DTC), the depositary bank generally collects its fees through the systems provided by DTC (whose nominee is the registered holder of the ADSs held in DTC) from the brokers and custodians holding ADSs in their DTC accounts. The brokers and custodians who hold their clients’ ADSs in DTC accounts in turn charge their clients’ accounts the amount of the fees paid to the depositary banks.

In the event of refusal to pay the depositary fees, the depositary bank may, under the terms of the deposit agreement, refuse the requested service until payment is received or may set off the amount of the depositary fees from any distribution to be made to the ADS holder.

The depositary may make payments to us or reimburse us for certain costs and expenses, by making available a portion of the ADS fees collected in respect of the ADR program or otherwise, upon such terms and conditions as we and the depositary bank agree from time to time.

Fees and Other Payments Made by the Depositary to US

The depositary anticipates to make payments to us or reimburse us for certain costs and expenses, by making available a portion of the ADS fees collected in respect of the ADR program or otherwise, upon such terms and conditions as we and the depositary bank agree from time to time. We did not receive such reimbursement from the depositary in the fiscal year ended August 31, 2021.

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PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Material Modifications to the Rights of Security Holders

See “Item 10. Additional Information-B. Memorandum and Articles of Association-Ordinary Shares” for a description of the rights of securities holders, which remain unchanged.

Use of Proceeds

As of August 31, 2019, we have used up the net proceeds from our initial public offering.

ITEM 15. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, we carried out an evaluation of the effectiveness of our disclosure controls and procedures, which is defined in Rules 13a-15(e) of the Exchange Act, as of August 31, 2021. Based upon that evaluation, our management has concluded that, due to the material weakness identified below, our disclosure controls and procedures were not effective in ensuring that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act was recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with Generally Accepted Accounting Principles (GAAP) in the United States of America and includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that receipts and expenditures of our company are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of the unauthorized acquisition, use or disposition of our company’s assets that could have a material effect on the consolidated financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect all potential misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As required by Section 404 of the Sarbanes-Oxley Act of 2002 and related rules as promulgated by the Securities and Exchange Commission, our management, including our chief executive officer and chief financial officer, assessed the effectiveness of internal control over financial reporting as of August 31, 2021 using the criteria set forth in the report “Internal Control—Integrated Framework (2013)” published by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, the management concluded that our internal control over financial reporting was ineffective as of August 31, 2021 because of the material weakness described below.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our company’s annual consolidated financial statements will not be prevented or detected on a timely basis. The material weakness identified relate to (i) a lack of accounting staff and resources with appropriate knowledge of generally accepted accounting principles in the United States (“U.S. GAAP”) and SEC reporting and compliance requirements; (ii) a lack of sufficient documented financial closing policies and procedures; (iii) lack of risk assessment in accordance with the requirement of COSO 2013 framework; (iv) a lack of an effective review process by the accounting manager which led to material audit adjustments to the financial statements; and (v) Leaving of many management personnel.

To remedy our identified material weakness subsequent to August 31, 2021, we plan to undertake steps to strengthen our internal control over financial reporting, including (i) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework; (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel; (iii) setting up an internal audit function as well as engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal control, (iv) hiring professional management personnel. However, we cannot assure you that we will remediate our material weaknesses in a timely manner, or at all. See “Item 3. Key Information—Risk Factors—Risks Relating to Our Business—If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately or timely report our results of operations or prevent fraud, and investor confidence and the market price of our Ordinary Shares may be materially and adversely affected.”

Attestation Report of the Registered Public Accounting Firm

This annual report on Form 20-F does not include an attestation report of our registered public accounting firm due to rules of the SEC where domestic and foreign registrants that are non-accelerated filers, which we are, and “emerging growth companies” which we also are, are not required to provide the auditor attestation report.

Changes in Internal Control

Other than as described above, there were no changes in our internal controls over financial reporting that occurred during the period covered by this annual report on Form 20-F that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

See “Item 6. Directors, Senior Management and Employees-C. Board Practices.”

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ITEM 16B. CODE OF ETHICS

Our board of directors adopted a code of business conduct and ethics that applies to our directors, officers, employees and advisors in March 2018. We have posted a copy of our code of business conduct and ethics on our website at www.onesmart.investorroom.com.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets forth the aggregate fees billed by Ernst & Young Hua Ming LLP including its affiliates and OneStop Assurance PAC, our independent registered public accounting firms, for the periods indicated. We did not pay any other fees to our independent registered public accounting firms during the periods indicated below.

Ernst & Young Hua Ming LLP and its affiliates

	Year Ended August 31,
	2020		2021
	(in US$ thousands)
Audit fees(1)		832		-
All other fees(2)		-		-
Tax fees(3)		-		-

OneStop Assurance PAC

	Year Ended August 31,
	2020		2021
	(in US$ thousands)
Audit fees(1)		300		380
All other fees(2)		-		-
Tax fees(3)		-		-

(1) “Audit fees” means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our principal auditors for the audit of our annual financial statements, net of out-of-pocket expenses incurred and taxes.

(2) “All other fees” represents the aggregate fees billed listed for services rendered by our principal auditors associated with certain due diligence project and review of our financial statements and not reported under “Audit fees” in the fiscal year of 2020 and 2021, respectively, net of out-of-pocket expenses incurred and taxes.

(3) “Tax fees” represents the aggregate fees billed listed for the professional tax services rendered by our principal auditors.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

On October 5, 2018, our board of directors authorized a share repurchase program, under which we may purchase up to US$30.0 million worth of our shares over the next 12 months from October 5, 2018. The US$30.0 share repurchase program was publicly announced on October 5, 2018. This share repurchase program expired on October 4, 2019.

On April 29, 2019, our board of directors authorized a share repurchase program, under which we may purchase up to US$50.0 million worth of our shares over the next 12 months from April 29, 2019 through April 28, 2020. The US$50.0 share repurchase program was publicly announced on April 29, 2019.

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The table below summarizes the repurchases we made in the periods indicated.

Month	Total Number of Ordinary Shares Purchased		Average Price Paid Per Ordinary Share (US$)		Total Number of Ordinary Shares Purchased as Part of Share Repurchase Program		Approximate Dollar Value of Ordinary Shares that May Yet Be Purchased Under Share Repurchase Program (US$, in millions)
September 2019		-		-		-		55.01
October 2019		-		-		-		55.01
November 2019		-		-		-		55.01
December 2019		-		-		-		55.01
January 2020		-		-		-		55.01
February 2020		5,513,240		0.14		5,513,240		54.24
March 2020		48,793,800		0.13		48,793,800		47.79
April 2020		-		-		-		47.79
May 2020		22,633,560		0.12		22,633,560		45.01
June 2020		-		-		-		45.01
July 2020		-		-		-		45.01
August 2020		-		-		-		45.01

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G. CORPORATE GOVERNANCE

As a Cayman Islands company listed on the NYSE, we are subject to the NYSE corporate governance listing standards. However, NYSE rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the NYSE corporate governance listing standards. Under the New York Stock Exchange Listed Company Manual, or the NYSE Manual, U.S. domestic listed companies are required to have a majority independent board, which is not required under the Companies Act of the Cayman Islands. Currently, our board of directors is composed of five members, three of whom are independent directors. In addition, the NYSE Manual requires U.S. domestic listed companies to have a compensation committee and a nominating/corporate governance committee, each composed entirely of independent directors, which are not required under the Companies Act of the Cayman Islands. Currently, our compensation committee is composed of three members, all of whom are independent directors. Our nominating and corporate governance committee is composed of three members, all of whom are independent directors. In addition, the NYSE Manual requires shareholder approval for certain matters, including (i) requiring that shareholders must be given the opportunity to vote on all equity compensation plans and material revisions to those plans, and (ii) requiring that shareholder approval is required prior to the issuance of common stock, or of securities convertible into or exercisable for common stock in certain transaction or series of related transactions, which is not required under the Cayman Islands law. We intend to comply with the requirements of Cayman Islands law only in determining whether shareholder approval is required.

As a result of our choice to follow home country practice in those matters, our shareholders may be afforded less protection than they otherwise would under the NYSE corporate governance listing standards applicable to U.S. domestic issuers. See “Item 3. Key Information-D. Risk Factors- Risks Related to Our ADSs-As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the New York Stock Exchange corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the NYSE corporate governance listing standards “and”-We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.”

ITEM 16H. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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PART III

ITEM 17. FINANCIAL STATEMENTS

We have elected to provide financial statements pursuant to Item 18.

ITEM 18. FINANCIAL STATEMENTS

The consolidated financial statements of Meta Data Limited, its subsidiaries and its consolidated affiliated entities are included at the end of this annual report.

ITEM 19. EXHIBITS

Exhibit Number	Description of Document
1.1*	Sixth amended and Restated Memorandum and Articles of Association of the Registrant, effective April 28, 2022
2.1	Registrant’s Specimen American Depositary Receipt (included in Exhibit 2.3) (incorporated herein by reference to Exhibit 4.1 to the registration statement on Form F-1 filed on March 16, 2018 (File No. 333-223406))
2.2	Registrant’s Specimen Certificate for ordinary shares (incorporated herein by reference to Exhibit 4.2 to the registration statement on Form F-1 filed on March 16, 2018 (File No. 333-223406))
2.3	Form of Deposit Agreement among the Registrant, the depositary and holder of the American Depositary Receipts (incorporated herein by reference to Exhibit 4.3 to the registration statement on Form F-1 filed on March 16, 2018 (File No. 333-223406))
2.4	Description of Securities (incorporated herein by reference to Exhibit 2.4 to the annual report on Form 20-F filed with the SEC on December 31, 2020)
4.1	Share Sale and Purchase Agreement among OneSmart Edu Inc., Yutang Inc., Jiia Qin Limited, and JR Online Limited dated December 15, 2020 (incorporated herein by reference to Exhibit 4.32 to the annual report on Form 20-F filed with the SEC on December 31, 2020)
4.2	Share Subscription Agreement among OneSmart Edu Inc., Yutang Inc., Jiia Qin Limited, Luomoming Limited, Tianjin Huaying Education Consulting Co., Ltd. and Beijing Juyou Network Technology Co., Ltd dated December 15, 2020 (incorporated herein by reference to Exhibit 4.33 to the annual report on Form 20-F filed with the SEC on December 31, 2020)
8.1*	Principal subsidiaries of the Registrant
11.1	Code of Business Conduct and Ethics of the Registrant (incorporated herein by reference to Exhibit 99.1 to the registration statement on Form F-1 filed on March 2, 2018 (File No. 333-223406))
12.1*	Certification by the Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
12.2*	Certification by the Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
13.1**	Certification by the Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2**	Certification by the Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1*	Consent of Onestop Assurance PAC, an independent registered public accounting firm
101.INS*	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*	Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Exhibit 101 Inline XBRL document set

* Filed with this annual report on Form 20-F

** Furnished with this annual report on Form 20-F

133

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	Meta Data Limited
	By:	/s/ Xiaoming Li
		Name:	Xiaoming Li
		Title:	Chief Executive Officer
Date: May 23, 2022

134

META DATA LIMITED

Index to Consolidated Financial Statements

Contents	Page(s)
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of August 31, 2020 and 2021	F-3
Consolidated Statements of Income/(Loss) for the Years Ended August 31, 2019, 2020 and 2021	F-4
Consolidated Statements of Comprehensive Income/(Loss) for the Years Ended August 31, 2019, 2020 and 2021	F-5
Consolidated Statements of Shareholders’ Equity for the Years Ended August 31, 2019, 2020 and 2021	F-6 - F-8
Consolidated Statements of Cash Flows for the Years Ended August 31, 2019, 2020 and 2021	F-9
Notes to the Consolidated Financial Statements	F-10 - F-70

F-1

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of

Meta Data Limited (formerly known as “OneSmart International Education Group Limited)

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Meta Data Limited (formerly known as “OneSmart International Education Group Limited) (the “Company”) and subsidiaries as of August 31, 2021 and 2020, the related consolidated statements of income/(loss), comprehensive income/(loss), shareholders’ equity/(deficit) and cash flows for each of the three years in the period ended August 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial positions of the Company at August 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended August 31, 2021, in conformity with U.S. generally accepted accounting principles.

Going Concern Uncertainty

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2(b) to the consolidated financial statements, the Company has suffered recurring losses from operations, is in default of its debt obligations and as of August 31, 2021 was in net liability and shareholders’ deficit position. Between July 2021 and September 2021, the General Office of Ministry of Education issued a series of rules, regulations, notices and circulars on further alleviating the burden of homework and after-school tutoring for students in compulsory education. In order to comply with all applicable rules and regulations in providing educational services, the Company ceased all the domestic education programs and learning centers operations in China on October 12, 2021. The above matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2(b). The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ OneStop Assurance PAC

We have served as the Company’s auditor since 2021.

Singapore

May 23, 2022

PCAOB ID#: 6732

F-2

META DATA LIMITED

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

			As of August 31,
	Notes		2020			2021			2021
			RMB			RMB			US$
ASSETS
Current assets:
Cash and cash equivalents		6		1,158,044			29,626			4,586
Restricted cash		6		187,241			355,017			54,953
Amount due from a related party		17		491			-			-
Short-term investments		7		486,756			81,575			12,627
Prepayments and other current assets		8		344,870			-			-
Total current assets				2,177,402			466,218			72,166
Non-current assets:
Property and equipment, net		9		581,248			36,955			5,720
Intangible assets, net		10		277,953			-			-
Long-term investments		11		1,048,178			-			-
Goodwill		12		1,481,401			-			-
Deferred tax assets		15		191,721			-			-
Amount due from a related party		17		20,400			-			-
Operating lease right-of-use assets				1,481,196			-			-
Other non-current assets		18		638,892			-			-
Total non-current assets				5,720,989			36,955			5,720
Total assets				7,898,391			503,173			77,886
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIEs without recourse to the Group of RMB642,674 and RMB 838,675 (US$129,818) as of August 31, 2020 and 2021, respectively)		13		889,055			868,464			134,429
Income taxes payable (including income taxes payable of the consolidated VIEs without recourse to the Group of RMB93,156 and 59,995 (US$9,287) as of August 31, 2020 and 2021, respectively)				97,720			48,216			7,463
Prepayments from customers (including prepayments from customers of the consolidated VIEs without recourse to the Group of RMB2,547,444 and 2,786,961 (US$431,391) as of August 31, 2020 and 2021, respectively)				2,547,493			2,787,686			431,504
Amounts due to related parties (including amount due to a related party of the consolidated VIEs without recourse to the Group of RMB14,447 and RMB1,205 (US$187) as of August 31, 2020 and 2021, respectively)		17		14,447			1,205			187
Short-term loans (including short-term loans of the consolidated VIEs without recourse to the Group of RMB789,550 and 498,574 (US$77,174) as of August 31, 2020 and 2021, respectively)		19		789,550			498,574			77,174
Operating lease liabilities, current portion (including operating lease liabilities, current portion of the consolidated VIEs without recourse to the Group of RMB483,056 and nil as of August 31, 2020 and 2021, respectively)				483,056			-			-
Long-term loans, current portion (including long-term loans, current portion of the consolidated VIEs without recourse to the Group of RMB98,280 and RMB112,500 (US$17,414) as of August 31, 2020 and 2021, respectively)		19		295,433			513,432			79,474
Total current liabilities				5,116,754			4,717,577			730,231
Non-current liabilities:
Deferred tax liabilities (including deferred tax liabilities of the consolidated VIEs without recourse to the Group of RMB71,021 and nil as of August 31, 2020 and 2021, respectively)		15		71,025			-			-
Long-term loans (including long-term loans of the consolidated VIEs without recourse to the Group of RMB291,780 and MB135,000 (US$20,897) as of August 31, 2020 and 2021, respectively)		19		1,023,151			135,000			20,897
Convertible senior notes (including convertible senior notes of the consolidated VIEs without recourse to the Group of nil as of August 31, 2020 and 2021, respectively)		20		239,659			226,114			35,000
Unrecognized tax benefit (including unrecognized tax benefit of the consolidated VIEs without recourse to the Group of RMB29,610 and nil as of August 31, 2020 and 2021, respectively)				29,610			-			-
Operating lease liabilities, non-current portion (including operating lease liabilities, non-current portion of the consolidated VIEs without recourse to the Group of RMB929,135 and nil as of August 31, 2020 and 2021, respectively)				929,135			-			-
Other non-current liabilities (including other non-current liabilities of the consolidated VIEs without recourse to the Group of RMB23,084 and RMB23,083 (US$3,573) as of August 31, 2020 and 2021, respectively)				47,084			45,727			7,078
Total non-current liabilities				2,339,664			406,841			62,975
Total liabilities				7,456,418			5,124,418			793,206
Commitments and contingencies		26
Shareholders’ equity:
Class A ordinary shares (US$0.000001 par value; 37,703,157,984 shares authorized; 4,146,103,947 issued and outstanding as of August 31, 2020 and 4,321,229,545 issued and outstanding as of August 31, 2021, respectively)				26			26			4
Class B ordinary shares (US$0.000001 par value; 2,296,842,016 issued and outstanding as of August 31, 2020 and 2,290,430,016 issued and outstanding as of August 31, 2021, respectively)				16			16			2
Treasury stock		16		(274,648	)		(344	)		(53	)
Additional paid-in capital				5,598,978			5,337,962			826,259
Statutory reserves		24		12,270			16,427			2,543
Accumulated deficit				(5,035,172	)		(10,078,429	)		(1,560,032	)
Accumulated other comprehensive income		22		99,167			92,693			14,346
Total Meta Data Limited shareholders’ equity				400,637			(4,631,649	)		(716,931	)
Non-controlling interests				41,336			10,404			1,611
Total shareholders’ equity				441,973			(4,621,245	)		(715,320	)
Total liabilities, non-controlling interests and shareholders’ equity				7,898,391			503,173			77,886

The accompanying notes are an integral part of these consolidated financial statements.

F-3

META DATA LIMITED

CONSOLIDATED STATEMENTS OF INCOME/(LOSS)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

			For the years ended August 31,
	Notes		2019			2020			2021			2021
			RMB			RMB			RMB			US$
Net revenues		5		3,993,873			3,438,881			3,423,410			529,907
Cost of revenues				(2,072,067	)		(2,169,739	)		(2,093,743	)		(324,089	)
Gross profit				1,921,806			1,269,142			1,329,667			205,818
Operating expenses:
Selling and marketing				(816,658	)		(820,883	)		(930,140	)		(143,976	)
General and administrative				(876,609	)		(810,936	)		(5,261,978	)		(814,497	)
Total operating expenses				(1,693,267	)		(1,631,819	)		(6,192,118	)		(958,473	)
Operating income/(loss)				228,539			(362,677	)		(4,862,451	)		(752,655	)
Interest income				81,207			37,393			9,443			1,462
Interest expense				(60,637	)		(103,600	)		(98,302	)		(15,217	)
Other income				82,836			93,894			99,335			15,376
Other expense				(15,738	)		(453,391	)		(135,239	)		(20,934	)
Foreign exchange gain/(loss)				(138	)		(69	)		3,295			510
Income/(loss) before income tax and share of net income/(loss) from equity investees				316,069			(788,450	)		(4,983,919	)		(771,458	)
Income tax (expense)/benefit		15		(121,541	)		37,785			(30,870	)		(4,778	)
Income/(loss) before share of net income/(loss) from equity investees				194,528			(750,665	)		(5,014,789	)		(776,236	)
Share of net loss from equity investees				(28,325	)		(17,977	)		(10,705	)		(1,657	)
Net income/(loss)				166,203			(768,642	)		(5,025,494	)		(777,893	)
Add: Net loss attributable to non-controlling interests				79,165			38,813			37,927			5,871
Net income/(loss) attributable to Meta Data Limited’s shareholders				245,368			(729,829	)		(4,987,567	)		(772,022	)
Net (loss)/income attributable to ordinary shareholders of Meta Data Limited				245,368			(729,829	)		(4,987,567	)		(772,022	)
(Loss)/earnings per share:
Basic		21		0.0380			(0.1131	)		(0.7543	)		(0.1168	)
Diluted		21		0.0366			(0.1131	)		(0.7543	)		(0.1168	)
Shares used in (loss)/earnings per share computation (in millions of shares):
Basic		21		6,460			6,451			6,612			6,612
Diluted		21		6,709			6,451			6,612			6,612

The accompanying notes are an integral part of these consolidated financial statements.

F-4

META DATA LIMITED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

	For the years ended August 31,
	2019			2020			2021			2021
	RMB			RMB			RMB			US$
Net income/(loss)		166,203			(768,642	)		(5,025,494	)		(777,893	)
Other comprehensive income/(loss):
Unrealized gain/(loss) on available-for-sale investments, net of tax		(35,161	)		1,676			4,009			621
Foreign currency translation adjustment		(6,591	)		10,343			5,221			808
Comprehensive income/(loss)		124,451			(756,623	)		(5,016,264	)		(776,464	)
Add: Comprehensive loss attributable to non-controlling interests		79,165			38,813			37,927			5,871
Comprehensive income/(loss) attributable to Meta Data Limited’s shareholders		203,616			(717,810	)		(4,978,337	)		(770,593	)

The accompanying notes are an integral part of these consolidated financial statements.

F-5

META DATA LIMITED

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY/(DEFICIT)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

	Number of					Additional											Accumulated other			Meta Data Limited			Non-			Total
	ordinary			Ordinary		paid-in			Treasury			Statutory		Accumulated			comprehensive			shareholders’			controlling			shareholders’
	shares			shares		capital			Stock			reserves		deficit			income			equity			interests			equity
				RMB		RMB			RMB			RMB		RMB			RMB			RMB			RMB			RMB
Balance as of August 31, 2018		6,517,207,561			42		5,426,503			-			4,272		(4,535,042	)		128,900			1,024,675			70,568			1,095,243
Comprehensive income		-			-		-			-			-		245,368			(41,752	)		203,616			(79,165	)		124,451
Appropriation of statutory reserves		-			-		-			-			2,808		(2,808	)		-			-			-			-
Share repurchase (Note 16)		(145,762,478	)		-		-			(203,759	)		-		-			-			(203,759	)		-			(203,759	)
Exercise of employee stock options		55,658,760			-		2,744			-			-		-			-			2,744			-			2,744
Acquisition of subsidiaries		-			-		-			-			-		-			-			-			11,067			11,067
Disposal of subsidiaries		-			-		-			-			-		-			-			-			(18,892	)		(18,892	)
Acquisition of non-controlling interests		-			-		(10,808	)		-			-		-			-			(10,808	)		1,048			(9,760	)
Distribution to a non-controlling interest		-			-		-			-			-		-			-			-			(980	)		(980	)
Disposal of non-controlling interests		-			-		12,021			-			-		-			-			12,021			86,079			98,100
Capital contribution		-			-		-			-			-		-			-			-			(4,602	)		(4,602	)
Share-based compensation (Note 14)		-			-		71,532			-			-		-			-			71,532			-			71,532
Cumulative-effect upon adoption of ASC 606 (Note 2)		-			-		-			-			-		(7,671	)		-			(7,671	)		-			(7,671	)
Balance as of August 31, 2019		6,427,103,843			42		5,501,992			(203,759	)		7,080		(4,300,153	)		87,148			1,092,350			65,123			1,157,473

F-6

META DATA LIMITED

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY/(DEFICIT) (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

																		Accumulated		Meta Data
	Number of						Additional											other		Limited			Non-			Total
	ordinary			Ordinary			paid-in			Treasury			Statutory		Accumulated			comprehensive		shareholders’			controlling			shareholders’
	shares			shares			capital			Stock			reserves		deficit			income		equity			interests			equity
				RMB			RMB			RMB			RMB		RMB			RMB		RMB			RMB			RMB
Balance as of August 31, 2019		6,427,103,843			42			5,501,992			(203,759	)		7,080		(4,300,153	)		87,148		1,092,350			65,123			1,157,473
Comprehensive loss		-			-			-			-			-		(729,829	)		12,019		(717,810	)		(38,813	)		(756,623	)
Appropriation of statutory reserves		-			-			-			-			5,190		(5,190	)		-		-			-			-
Share repurchase (Note 16)		(76,586,600	)		(1	)		-			(70,889	)		-		-			-		(70,890	)		-			(70,890	)
Exercise of employee stock options		92,428,720			1			7,774			-			-		-			-		7,775			-			7,775
Acquisition of subsidiaries (Note 4)		-			-			-			-			-		-			-		-			39,198			39,198
Disposal of interests in subsidiaries		-			-			25			-			-		-			-		25			(25	)		-
Disposal of subsidiaries		-			-			-			-			-		-			-		-			3,944			3,944
Acquisition of non-controlling interests (Note 16)		-			-			(48,799	)		-			-		-			-		(48,799	)		(21,285	)		(70,084	)
Distribution to non-controlling interests		-			-			-			-			-		-			-		-			(7,056	)		(7,056	)
Capital contribution		-			-			-			-			-		-			-		-			250			250
Share-based compensation (Note 14)		-			-			137,986			-			-		-			-		137,986			-			137,986
Balance as of August 31, 2020		6,442,945,963			42			5,598,978			(274,648	)		12,270		(5,035,172	)		99,167		400,637			41,336			441,973
Balance as of August 31, 2020 in US$		6,442,945,963			6			817,679			(40,110	)		1,792		(735,341	)		14,482		58,508			6,037			64,545

F-7

META DATA LIMITED

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY/(DEFICIT) (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

																Accumulated			Meta Data
	Number of				Additional											other			Limited			Non-			Total
	ordinary		Ordinary		paid-in			Treasury			Statutory		Accumulated			comprehensive			shareholders’			controlling			shareholders’
	shares		shares		capital			Stock			reserves		deficit			income			equity			interests			equity
			RMB		RMB			RMB			RMB		RMB			RMB			RMB			RMB			RMB
Balance as of August 31, 2020		6,442,945,963		42		5,598,978			(274,648	)		12,270		(5,035,172	)		99,167			400,637			41,336			441,973
Comprehensive loss		-		-		-			-			-		(5,043,257	)		(6,474	)		(5,049,731	)		(30,932	)		(5,080,663	)
Appropriation of statutory reserves		-		-		-			-			4,157		-			-			4,157			-			4,157
Share repurchase (Note 16)		-		-		-			-			-		-			-			-			-			-
Exercise of employee stock options		168,713,598		-		(303,878	)		274,304			-		-			-			(29,574	)		-			(29,574)
Acquisition of subsidiaries (Note 4)		-		-		-			-			-		-			-			-			-			-
Disposal of interests in subsidiaries		-		-		-			-			-		-			-			-			-			-
Disposal of subsidiaries		-		-		-			-			-		-			-			-			-			-
Acquisition of non-controlling interests (Note 16)		-		-		-			-			-		-			-			-			-			-
Distribution to non-controlling interests		-		-		-			-			-		-			-			-			-			-
Capital contribution		-		-		-			-			-		-			-			-			-			-
Share-based compensation (Note 14)		-		-		42,862			-			-		-			-			42,862			-			42,862
Balance as of August 31, 2021		6,611,659,561		42		5,337,962			(344	)		16,427		(10,078,429	)		92,693			(4,631,649	)		10,404			(4,621,245	)
Balance as of August 31, 2021 in US$		6,611,659,561		6		826,259			(53	)		2,543		(1,560,032	)		14,346			(716,931	)		1,611			(715,320	)

The accompanying notes are an integral part of these consolidated financial statements.

F-8

META DATA LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

	For the years ended August 31,
	2019			2020			2021			2021
	RMB			RMB			RMB			US$
Cash flows from operating activities
Net income/(loss)		166,203			(768,642	)		(5,025,494	)		(777,893	)
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Depreciation		152,801			209,663			161,703			25,030
Amortization		23,081			38,302			11,549			1,788
Share-based compensation		71,532			137,986			42,862			6,635
Lease expense to reduce operating lease right-of -use assets		-			461,423			-			-
Income from investments		(50,746	)		(24,831	)		-			-
Share of net (income)/loss from equity investees		28,325			17,977			-			-
Gain from disposal of long-term investments		(15,403	)		(50,407	)		-			-
Gain from disposal of subsidiaries		(8,805	)		(9,390	)		-			-
Loss from disposal of a business		-			21,699			-			-
Impairment of other receivables		-			52,428			552,159			85,468
Losses on extinguishment of debt securities		-			153,061			-			-
Impairment of long-term investments		10,000			161,605			3,821,885			591,586
Investments fair value change		(12,854	)		-			-			-
Gain from step acquisitions		(1,897	)		(594	)		-			-
Contingent consideration fair value change		5,124			3,644			-			-
Loss on disposal of property and equipment		940			5,889			-			-
Changes in operating assets and liabilities:
Prepayments and other current assets		(257,262	)		166,339			281,943			43,642
Amount due from a related party		-			(491	)		-			-
Deferred tax assets		(38,355	)		(86,521	)		191,721			29,676
Other non-current assets		(68,782	)		31,901			(36,842	)		(5,703	)
Accrued expenses and other current liabilities		297,288			(85,284	)		(11,331	)		(1,754	)
Income taxes payable		36,924			16,323			(49,503	)		(7,663	)
Prepayments from customers		(4,497	)		239,557			210,933			32,650
Operating lease liabilities		-			(451,916	)		-			-
Amount due to a related party		-			803			(13,242	)		(2,050	)
Unrecognized tax benefit		11,757			168			-			-
Net cash provided by operating activities		345,374			240,692			138,343			21,412
Cash flows from investing activities
Purchase of short-term investments		(820,005	)		(582,573	)		(104,000	)		(16,098	)
Proceeds from disposal of short-term investments		1,191,505			404,859			65,042			10,068
Income from short-term investments		11,451			7,110			242			37
Purchase of long-term investments		(1,120,706	)		(180,983	)		(88,975	)		(13,772	)
Proceeds from disposal of long-term investments		64,432			-			-			-
Purchase of property and equipment		(283,964	)		(193,166	)		(20,508	)		(3,174	)
Proceeds from disposal of property and equipment		518			-			252			39
Amounts due from third parties		(237,059	)		(284,618	)		-			-
Amount due from a related party		(2,250	)		(1,650	)		-			-
Acquisition of subsidiaries, net of cash acquired		(138,749	)		(87,926	)		-			-
Disposal of subsidiaries, net of cash disposed		(57,508	)		12,016			-			-
Net cash used in investing activities		(1,392,335	)		(906,931	)		(147,947	)		(22,900	)
Cash flows from financing activities
Proceeds from bank loans		1,257,472			803,817			498,574			77,174
Repayment of bank loans		(95,000	)		(322,418	)		(1,439,972	)		(222,892	)
Proceeds from issuance of convertible senior notes, net of issuance costs		-			246,113			-			-
Acquisition of non-controlling interests		(70,908	)		(8,834	)		-			-
Disposal of non-controlling interests		98,100			-			-			-
Capital contributed from non-controlling interests		690			250			2,000			310
Distribution to non-controlling interests		(980	)		(7,056	)		(3,362	)		(520	)
Distribution to shareholders		-			-			-			-
Proceeds from exercise of share options		2,744			7,776			7,570			1,172
Share repurchase		(203,760	)		(70,889	)		-			-
Net cash provided by financing activities		988,358			648,759			(935,190	)		(144,756	)
Effect of exchange rate changes		34,268			(23,647	)		(15,848	)		(2,453	)
Net increase/(decrease) in cash and cash equivalents and restricted cash		(24,335	)		(41,127	)		(960,642	)		(148,697	)
Cash and cash equivalents and restricted cash, at the beginning of year		1,410,747			1,386,412			1,345,285			208,236
Cash and cash equivalents and restricted cash, at the end of year		1,386,412			1,345,285			384,643			59,539
Supplemental disclosure of cash flow information:
Interest paid		40,682			107,184			87,711			13,577
Income tax paid		98,114			29,826			53,532			8,286
Supplemental disclosure of non-cash activities:
Operating lease liabilities arising from obtaining right-of-use assets					313,225			-			-
Supplemental disclosure of non-cash investing activities:
Acquisition of subsidiaries with conversion of previously held long-term investments in and loans to the subsidiaries		-			556,891			-			-
Purchase of property and equipment included in accrued expenses and other current liabilities		29,467			36,363			1,188			184
Purchase of long-term investments included in accrued expenses and other current liabilities		37,093			1,336			-			-
Contingent consideration for business acquisition included in other non-current liabilities		91,440			47,084			-			-

The accompanying notes are an integral part of these consolidated financial statements.

F-9

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

1. Organization and Principal Activities

Meta Data Limited (the “Company”, formerly known as “OneSmart International Education Group Limited (“OneSmart“)) is a limited company incorporated under the laws of Cayman Islands on March 10, 2017. The Company through its consolidated subsidiaries, variable interest entities (the “VIEs”) and the VIEs’ subsidiaries (collectively, the “Group”) are principally engaged in the provision of premium tutoring services for students of kindergarten and primary, middle and high schools (“K12”) and premium young children education services in the People’s Republic of China (the “PRC”). Due to the PRC legal restrictions on foreign ownership and investment in the education business, the Company conducts its primary business operations through its VIEs. The Company’s Board adopts resolutions approving, and recommends to the shareholders for their approval to change the Company’s corporate name from “OneSmart International Education Group Ltd” to “Meta Data Limited” on its annual general meeting held on April 28, 2022.

The Company undergone a reorganization in 2017 whereby the Company became the ultimate parent entity of its subsidiaries, the VIEs and the VIEs’ subsidiaries. As part of the reorganization, the business operations of the consolidated subsidiaries, the VIEs and the VIEs’ subsidiaries were transferred to the Company. In return, the Company issued 2,439,484,566 of Class B ordinary shares to Happy Edu Inc., a company wholly owned by Mr. Zhang Xi (“the Founder”), as well as 94,897,359 of Class A ordinary shares, 1,890,686,563 of Series A redeemable convertible preferred shares and 35,757,200 of Series A-1 redeemable convertible preferred shares to the shareholders of the VIEs (“the Reorganization”). The Company also paid RMB2,242,914 (US$347,179) to certain shareholders of the VIEs in full in January 2018.

In September 2017, immediately following the Reorganization, the Company issued 1,840,535,677 Series A-1 redeemable convertible preferred shares to new investors for gross cash consideration of RMB1,840,536 (US$284,895). The Series A-1 redeemable convertible preferred shares carried the same terms and conditions as those issued during the Reorganization (Note 23). The Company initially recorded the Series A-1 redeemable convertible preferred shares at fair value less issuance costs of RMB241 (US$37), and chose to recognize changes in the redemption value immediately and adjusted the redeemable convertible preferred share carrying value to equal their redemption value.

In September 2017, immediately following the Reorganization, the Company also repurchased an aggregate of 94,897,359 Class A ordinary shares for cash consideration of US$13,028 and an aggregate of 341,256,445 Series A redeemable convertible preferred shares for cash consideration of US$46,850 from three shareholders (the “Then Shareholders”). The Company made the payments to the Then Shareholders in full in January 2018.

In December 2017, the Founder transferred 142,642,550 of his Class B ordinary shares to a new investor for cash consideration of RMB163,023 (US$25,234) and each of such transferred ordinary share was re-designated as a Series A-1 redeemable convertible preferred share.

As the Company, its subsidiaries, VIEs and the VIEs’ subsidiaries were all under the control of the Founder, the Reorganization was accounted for as a transaction under common control in a manner similar to a pooling of interests. Therefore, the accompanying consolidated financial statements have been prepared as if the corporate structure of the Company had been in existence since the beginning of the periods presented.

On March 28, 2018, the Company completed its an initial public offering (“IPO”) on the New York Stock Exchange. The Company offered 16,300,000 ADSs representing 652,000,000 Class A ordinary shares at US$11.00 per ADS. Net proceeds from the IPO deducting underwriting discount and other expenses were RMB1,048,660 (US$162,321). IPO costs of RMB26,752 (US$4,141) were recorded as reduction of the proceeds from the IPO in shareholders’ equity.

F-10

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

1. Organization and Principal Activities (continued)

Details of the Group’s subsidiaries, the VIEs and the major subsidiaries of the VIEs as of August 31, 2021 are as follows:

			Percentage
			of direct or
			indirect
	Date of		ownership
	incorporation/	Place of	by the
Entity	acquisition	incorporation	Company	Principal activities
			Direct
Subsidiaries:
OneSmart Edu Inc. (“OneSmart BVI”)	June 16, 2016	BVI	100%	Holding company
OneSmart Edu (HK) Limited (“OneSmart HK”)	July 11, 2017	Hong Kong	100%	Holding company
OneSmart Great Edu (HK) Limited (“Great EDU”)	Sept 11, 2018	Hong Kong	100%	Holding company
OneSmart Online Edu Inc. (“OneSmart Online”)	December 4, 2019	Cayman	90%	Holding company
Yimi Education Technology Inc. (“Yimi Cayman”)	February 1, 2020	Cayman	90%	Holding company
Yimi Education Technology (HK) Limited (“Yimi HK”)	February 1, 2020	Hong Kong	90%	Holding company
Shanghai Jing Xue Rui Information and Technology Co., Ltd. (“Shanghai Jing Xue Rui” or “WFOE”)	September 28, 2011	PRC	100%	Educational technology research and development
Yimi Education Technology (Shanghai) Co., Ltd (“Yimi Shanghai” or “WFOE”)	February 1, 2020	PRC	90%	Educational technology research and development
			Indirect
VIEs:
Shanghai OneSmart Education and Training Co., Ltd. (“Shanghai OneSmart”)	September 11, 2007	PRC	100%	K12 post-class education program services
Shanghai Rui Si Technology Information Consulting Co., Ltd. (“Shanghai Rui Si”)	June 8, 2009	PRC	100%	Early childhood education services
Xiangyuan (Shanghai) Education Technology Co., Ltd. (“Shanghai Xiangyuan”)	December 6, 2019	PRC	100%	K12 post-class online education program services
Subsidiaries of VIEs:
Beijing Jingrui Peiyou Education Consulting Co., Ltd. (“Beijing Jingrui Peiyou”)	July 5, 2010	PRC	100%	K12 post-class education program services
Nanjing Jingrui Education Information Consulting Co., Ltd. (“Nanjing Jingrui”)	March 31, 2011	PRC	100%	K12 post-class education program services
Hangzhou OneSmart Education Information Consulting Co., Ltd. (“Hangzhou OneSmart”)	April 2, 2011	PRC	100%	K12 post-class education program services
Guangzhou Jingxuerui Education Information Consulting Co., Ltd. (“Guangzhou OneSmart”)	June 27, 2012	PRC	100%	K12 post-class education program services
Shenzhen Jingrui Education Training Centers (“Shenzhen Jingrui”)	September 7, 2012	PRC	100%	K12 post-class education program services
Changzhou Jingrui Education Information Consulting Co., Ltd. (“Changzhou Jingrui”)	May 27, 2014	PRC	100%	K12 post-class education program services
Shanghai Jing Yu Investment Co., Ltd. (“Shanghai Jing Yu”)	October 23, 2015	PRC	100%	Investment holding
Wuxi Jingzhirui Education Training Centers (“Wuxi Jingzhirui”)	November 9, 2018	PRC	100%	K12 post-class education program services
Shanghai Jingsirui Education Training Centers (“Shanghai Jingsirui”)	December 7, 2015	PRC	100%	K12 post-class education program services
Shanghai FasTrack English Education Training Co., Ltd. (“FasTrack English”)	January 1, 2018	PRC	75.61%	Early childhood education services
Shanghai OneSmart Education Investment Co., Ltd. (“Shanghai OneSmart Education Investment”)	November 25, 2014	PRC	100%	Investment holding

F-11

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

1. Organization and Principal Activities (continued)

The VIE arrangements

PRC laws and regulations currently require any foreign entity that invests in the education business in China to be an educational institution with relevant experience in providing educational services outside China. The Group’s offshore holding companies are not educational institutions and do not provide educational services outside China. Accordingly, the Group’s offshore holding companies are not allowed to directly engage in the education business in China. To comply with PRC laws and regulations, the Group conducts all of its business in China through the VIEs. The VIEs hold the requisite licenses and permits necessary to conduct the Group’s premium tutoring services and premium young children education services business. In addition, the VIEs hold leases and other assets necessary to operate the Group’s study centers, employ teachers and generate substantially all of the Group’s revenues. Despite the lack of technical majority ownership, the Company has effective control of the VIEs through a series of contractual arrangements (the “Contractual Agreements”) and a parent-subsidiary relationship exists between the Company and the VIEs. The equity interests of the VIEs are legally held by PRC individuals (the “Nominee Shareholders”). Through the Contractual Agreements, the Nominee Shareholders of the VIEs effectively assign all their voting rights underlying their equity interests in the VIEs to the Company, and therefore, the Company has the power to direct the activities of the VIEs that most significantly impact its economic performance. The Company also has the right to receive economic benefits and obligations to absorb losses from the VIEs that potentially could be significant to the VIEs. Based on the above, the Company consolidates the VIEs in accordance with SEC Regulation SX-3A-02 and ASC810-10, Consolidation: Overall.

The following is a summary of the Contractual Agreements:

Shareholders’ Voting Rights Agreements Pursuant to the Shareholders’ Voting Rights Agreements signed between the respective Nominee Shareholders and the WFOE, the Nominee Shareholders agreed to entrust the Company through the WFOE an irrevocable proxy to exercise all of their voting rights as shareholders of the VIEs and approve on behalf of the Nominee Shareholders, all related legal documents pertinent to the exercise of their rights in their capacity as the shareholders of the VIEs. The WFOE is also entitled to re-authorize or assign its voting rights to any other person or entity at its own discretion and without giving prior notice to the Nominee Shareholders or obtaining their consent. The Shareholders’ Voting Rights Agreements remain valid for as long as at least one of the Nominee Shareholders remains a shareholder of the VIEs.

Loan Agreements Pursuant to the Loan Agreements between the respective Nominee Shareholders and the WFOE, the WFOE granted interest-free loans to the Nominee Shareholders for the purpose of providing capital to the VIEs to develop their business. The loans have terms of ten years and the WFOE has the sole discretion to extend the loans. The Nominee Shareholders are not allowed to repay the loans in advance of the maturity date without the WFOE’s prior written consent. The timing of the repayment must be made within 30 days after receiving the written consent and the repayment shall be in the form of transferring the VIEs’ equity interests to the WFOE or its designees unless the Nominee Shareholders are in breach of the agreements, in which the WFOE can request immediate repayment of the loans. Pursuant to the Loan Agreements, the Company agreed to provide unlimited financial support for the VIEs’ daily operating activities and agree to forgo the right to seek repayments.

F-12

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

1. Organization and Principal Activities (continued)

The VIE arrangements (continued)

Exclusive Purchase Right Agreements Pursuant to the Exclusive Purchase Right Agreements entered into between the Nominee Shareholders, the VIEs and the WFOE, the Nominee Shareholders granted to the WFOE or its designees proxy of shareholders’ rights and voting rights of their respective equity interests in the VIEs. The WFOE has the sole discretion as to when to exercise the options, whether in part or full. The exercise price of the options to purchase all or part of the equity interests in the VIEs will be higher of RMB1.00 or the minimum amount of consideration permitted by the applicable PRC laws. Any proceeds received by the Nominee Shareholders from the exercise of the options exceeding the loan amounts, distribution of profits or dividends, shall be remitted to the WFOE, to the extent permitted under PRC laws. The Exclusive Purchase Right Agreements will remain in effect until all the equity interests held by the VIEs are transferred to the WFOE or its designated party. The WFOE may terminate the Exclusive Purchase Right Agreements at its sole discretion, whereas under no circumstances may the VIEs or the Nominee Shareholders terminate in accordance with the agreements.

Equity Pledge Agreement Pursuant to the Equity Pledge Agreement entered into among the WFOE, the Nominee Shareholders and the VIEs, the Nominee Shareholders pledged all of their equity interests in the VIEs to the WFOE as collateral to secure their obligations under the above agreements. The Nominee Shareholders further undertake that they will remit any distributions in connection with such shareholder’s equity interests in the VIEs to the WFOE, to the extent permitted by PRC laws. If the VIEs or any of their Nominee Shareholders breach any of their respective contractual obligations under the above agreements, the WFOE, as the pledgee, will be entitled to certain rights, including the right to sell, transfer or dispose of the pledged equity interest. The Nominee Shareholders of the VIEs agree not to create any encumbrance on or otherwise transfer or dispose of their respective equity interest in the VIEs, without the prior consent of the WFOE. The Equity Pledge Agreement will be valid until the VIEs and their respective shareholders fulfill all the contractual obligations under the above agreements in full and the pledged equity interests have been transferred to the WFOE and/or its designees.

Exclusive Technology and Consultation Service Agreements Pursuant to the Exclusive Technology and Consultation Service Agreements, WFOE retains exclusive right to provide to the VIEs the technology support and consulting services included but not limited to the system technology support service, business professional consulting service, human resource, technical and business operation staff training, marketing research, planning and development service, business plan and strategy consulting service and client based support and development consulting service. WFOE owns the intellectual property rights developed in the performance of these agreements. However, if there are clearly definitions which do not allow WFOE to own certain intellectual property rights under the applicable PRC laws, VIEs should own them initially and grant their exclusive use rights to WFOE with minimum consideration. In exchange for these services, WFOE is entitled to charge the VIEs annual service fees which typically amount to what would be substantially all of the VIEs’ pre-tax profits (after offset prior year losses, if applicable), resulting in a transfer of substantially all of the profits from the VIEs to the WFOE.

Based on the opinion of the Company’s PRC legal counsel, (i) the ownership structure of the Group, including its subsidiaries in the PRC and VIEs are not in violation with any applicable PRC laws and regulations; and (ii) each of the Contractual Agreements among the WFOE, the VIEs and the Nominee Shareholders governed by PRC laws, are legal, valid and binding, enforceable against such parties.

F-13

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

1. Organization and Principal Activities (continued)

The VIE arrangements (continued)

However, uncertainties in the PRC legal system could cause the relevant regulatory authorities to find the current Contractual Agreements and businesses to be in violation of any existing or future PRC laws or regulations. If the Company, the WFOE or any of its current or future VIEs are found in violation of any existing or future laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion in dealing with such violations, which may include, but not limited to, revocation of business and operating licenses, being required to discontinue or restrict its business operations, restriction of the Group’s right to collect revenues, being required to restructure its operations, imposition of additional conditions or requirements with which the Group may not be able to comply, or other regulatory or enforcement actions against the Group that could be harmful to its business. The imposition of any of these or other penalties may result in a material and adverse effect on the Group’s ability to conduct its business. In addition, if the imposition of any of these penalties causes the Company to lose the rights to direct the activities of the VIEs or the right to receive their economic benefits, the Company would no longer be able to consolidate the VIEs.

The Group’s business has been directly operated by the VIEs and their subsidiaries. For the years ended August 31, 2019 , 2020 and 2021, the VIEs contributed 99%,100% and 100% of the Group’s consolidated revenues, respectively. As of August 31, 2020 and 2021, the VIEs accounted for an aggregate of 91% and 63%, respectively, of the consolidated total assets, and 81% and 87%, respectively, of the consolidated total liabilities.

There are no consolidated VIEs’ assets that are pledged or collateralized for the VIEs’ obligations and which can only be used to settle the VIEs’ obligations, except for registered capital and the PRC statutory reserves and certain property with carrying amounts of RMB10,000 (US$1,548) that were pledged to secure banking borrowings granted to the Company (Note 19). Relevant PRC laws and regulations restrict the VIEs from transferring a portion of their net assets, equivalent to the balance of their statutory reserves and its share capital, to the Company in the form of loans and advances or cash dividends. Please refer to Note 24 for disclosure of the restricted net assets. As the VIEs are incorporated as limited liability companies under the PRC Company Law, creditors of the VIEs do not have recourse to the general credit of the Company for any of the liabilities of the VIEs. There were no other pledges or collateralization of the VIEs’ assets.

F-14

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

2. Summary of Significant Accounting Policies

(a) Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”).

(b) Liquidity

In assessing the Company’s liquidity and substantial doubt about its ability to continue as a going concern, the Company monitors and analyzes cash on-hand and operating expenditure commitments. The Company’s liquidity needs are to meet working capital requirements and operating expense obligations. To date, the Company financed its operations primarily through cash generated by operating activities, IPO proceeds, equity or convertible securities financing activities and commercial bank loan.

The accompanying financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern. The accompanying financial statements have been prepared on a basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has suffered recurring losses from operations, is in default of its debt obligations and as of August 31, 2021 was net liability and shareholders’ deficit position. Between July 2021 and September 2021, the General Office of Ministry of Education issued a series of rules, regulations, notices and circulars on further alleviating the burden of homework and after-school tutoring for students in compulsory education. To comply with all applicable rules and regulations in providing educational services, the Company ceased all the domestic education programs and learning centers operations in China on October 12, 2021. The above matters raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. As shown in the accompanying financial statements as of August 31, 2021, the Company had net cash decreased of RMB960,642 (US$148,697), RMB41,127 and RMB24,335 for the years ended August 31, 2021, 2020 and 2019, respectively. As of August 2021, the Company had cash balance of RMB29,626 (US$4,586) and restricted cash of RMB355,017 (US$54,953).

The Company has historically met its cash needs through a combination of cash flows from operating activities, proceeds from bank loans and proceeds from disposal of short-term investments. The cash requirements of the Company are generally for operating activities, repayments of bank loans, purchase of property and equipment and excess cash was used in the purchase of short-term and long-term investments. Between July 2021 and September 2021, the General Office of Ministry of Education issued a series of rules, regulations, notices and circulars on further alleviating the burden of homework and after-school tutoring for students in compulsory education (“the Opinion”). In order to comply with all applicable rules and regulations in providing educational services, the Company ceased all the domestic education programs and learning centers operations in China on October 12, 2021. As a result, this raises substantial doubt about its ability to continue as a going concern.

In evaluating if there is substantial doubt about the ability to continue as a going concern, the Group is trying to alleviate the going concern risk through (1) equity or debt financing, (2) increasing cash generated from new business model operations, and (3) debt divestiture, to meet our anticipated working capital requirements for at least the next 12 months. The Group may, however, need additional capital in the future to fund our further expansion. If the Group determines that its cash requirements exceed the amount of cash and cash equivalents it has on hand at the time, the Group may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result in further dilution to shareholders of the Group.

F-15

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

2. Summary of Significant Accounting Policies (continued)

(b) Liquidity (continued)

The Company entered into certain securities purchase agreement on January 24, 2022 (the “SPA”) with certain non-affiliated and accredited “non-U.S. Persons”, (the “Purchasers”) as defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to which the Company agreed to sell 8,000,000,000 Class A ordinary shares, (the “Shares”) par value $0.000001 per share, at a per share purchase price $0.0035625 (the “Offering”), which is 90% of the average NYSE official closing price of the ADS divided by 1,000, the current conversion ratio of ADS, for the three trading days immediately preceding the execution of the SPA. On February 11, 2022, the Offering closed as all the conditions of the SPA have been satisfied and the Company issued the Shares to the Purchasers. The gross proceeds to the Company from the Offering was US$28.5 million.

The Company plans to restructure its business by selling tutoring services and then focus on smart education services. The sale of the tutoring services has not been determined as of the date of the issuance of these financial statements. The Company have carried out product iterations on our original business: shifting from education and training to education and technology, using the original channels to carry out quality education and technology output, including 5G technology, smart campus system, virtual training system based on Metaverse, etc. The new business is using the six core technologies of Metaverse and artificial intelligence, blockchain, network computing, interaction, game technology, and the Internet of Things as the company’s core technologies, building a new type of blockchain smart student card and global smart employment quality Educational virtual world (new type of artificial intelligence employment training), combination of virtual and real prediction world (digital education, risk prediction, computing power output), VR shopping world (new e-commerce) and other products provide global customers with a new digital world experience. As of May 2022, the Company has signed a series of strategic cooperation agreements with six non-affiliated companies to pre-launch smart education training business.

The Company have recruited a global management team and technology research and development team to develop new products and new business directions that combine education and technology. In order to diversify the negative impact from local regulation, the Company has also decided to expend its business outside China.

As a result, the Company prepared the consolidated financial statements assuming the Company will continue as a going concern. However, there is no assurance that the measures above can be achieved as planned. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

(c) Principles of consolidation

The consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIEs and the subsidiaries of the VIEs. All significant inter-company transactions and balances between the Company, its subsidiaries and the VIEs have been eliminated upon consolidation. Results of subsidiaries, businesses acquired from third parties and the VIEs are consolidated from the date on which control is transferred to the Company.

(d) Consolidation of variable interest entities

In accordance with accounting standards regarding consolidation of variable interest entities (“VIEs”), VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision-making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

The Company determined that Shanghai Onesmart, Shanghai Rui Si and Shanghai Xiangyuan are VIEs because the Company is the primary beneficiary of risks and rewards of those VIEs.

F-16

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

2. Summary of Significant Accounting Policies (continued)

(d) Consolidation of variable interest entities (continued)

The condensed consolidating table below disaggregated the Consolidated Balance Sheets of the Company into Onesmart, the VIE and its subsidiaries, the WFOE that is the primary beneficiary of the VIEs and an aggregation of other entities that are consolidated as of August 31, 2021 and 2020.

	As of August 31, 2021
	Other entities that are			WFOE that is the primary beneficiary		VIE and its						Consolidated
	consolidated			of the VIE		subsidiaries			Onesmart			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	)

	As of August 31, 2020
	Other entities		WFOE that is the primary
	that are		beneficiary		VIE and its					Consolidated
	consolidated		of the VIE		subsidiaries		Onesmart			total
	RMB		RMB		RMB		RMB			RMB
Intercompany receivables		100,400		-		11,107,310		2,287,588			-
Current assets excluding intercompany receivables		13,751		31,297		1,559,409		572,945			2,177,402
Current assets		114,151		31,297		12,666,719		2,860,533			2,177,402
Investment in subsidiaries		2,046,413		289		992,652		872,756			-
Non-current assets excluding investment in subsidiaries		1,052,138		23,771		4,644,477		603			5,720,989
Non-current assets		1,052,138		23,771		4,644,477		603			5,720,989
Total assets		1,065,889		55,068		6,203,886		573,548			7,898,391
Intercompany payables		1,819,347		1,634,862		9,990,619		50,470			-
Current liabilities excluding intercompany payables		175,896		-		4,668,607		272,251			5,116,754
Current liabilities		1,995,243		1,634,862		14,659,226		322,721			5,116,754
Non-current liabilities		-		-		1,344,630		995,034			2,339,664
Total liabilities		175,896		-		6,013,237		1,267,285			7,456,418
Total shareholders’ equity (net assets)		889,993		55,068		190,649		(693,737	)		441,973

F-17

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

2. Summary of Significant Accounting Policies (continued)

(d) Consolidation of variable interest entities (continued)

The condensed consolidating table below disaggregated the Consolidated Statements of Operations and Comprehensive Income (Loss) of the Company into Onesmart, the VIE and its 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 31, 2020 and 2021.

	For the years ended August 31, 2021
				WFOE
	Other entities			that is the primary
	that are			beneficiary			VIE and its						Consolidated
	consolidated			of the VIE			subsidiaries			Onesmart			total
	RMB			RMB			RMB			RMB			RMB
Net revenues		1,125			1,016			3,421,269			-			3,423,410
Cost of revenues		-			-			(2,093,743	)		-			(2,093,743	)
Gross profit		1,125			1,016			1,327,526			-			1,329,667
Operating expenses		(3,323	)		(134,500	)		(5,991,693	)		(62,602	)		(6,192,118	)
Income (loss) from operations		(2,198	)		(133,484	)		(4,664,167	)		(62,602	)		(4,862,451	)
Other expenses		(244	)		(30,494	)		(63,503	)		(27,227	)		(121,468	)
Income (loss) before income taxes		(2,442	)		(163,978	)		(4,727,670	)		(89,829	)		(4,983,919	)
Provision for income taxes		-			(1,405	)		(29,465	)		-			(30,870	)
Net income (loss)		(2,442	)		(165,383	)		(4,757,135	)		(89,829	)		(5,014,789	)

	For the years ended August 31, 2020
				WFOE
	Other entities			that is the primary
	that are			beneficiary			VIE and its						Consolidated
	consolidated			of the VIE			subsidiaries			Onesmart			total
	RMB			RMB			RMB			RMB			RMB
Net revenues		1,955			-			3,436,926			-			3,438,881
Cost of revenues		(2,862	)		-			(2,166,877	)		-			(2,169,739	)
Gross profit		(907	)		-			1,270,049			-			1,269,142
Operating expenses		(4,028	)		(6,978	)		(1,619,319	)		(1,495	)		(1,631,819	)
Income (loss) from operations		(4,935	)		(6,978	)		(349,270	)		(1,495	)		(362,677	)
Other expenses		(1	)		(1,078	)		(372,255	)		(52,439	)		(425,773	)
Income (loss) before income taxes		(4,937	)		(8,055	)		(721,525	)		(53,933	)		(788,450	)
Provision for income taxes		-			-			37,785			-			37,785
Net income (loss)		(4,937	)		(8,055	)		(683,740	)		(53,933	)		(750,665	)

F-18

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

2. Summary of Significant Accounting Policies (continued)

(d) Consolidation of variable interest entities (continued)

The condensed consolidating table below disaggregated the Consolidated Statements of Cash Flows of the Company into Onesmart, the VIE and its 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, 2020 and 2021.

	For the years ended August 31, 2021
				WFOE
	Other			that is the
	entities			primary
	that are			beneficiary		VIE and its						Consolidated
	consolidated			of the VIE		subsidiaries			Onesmart			total
	RMB			RMB		RMB			RMB			RMB
Net cash provided by (used in) operating activities		(1,167	)		29,266		110,244			-			138,343
Net cash used in investing activities		-			15		(147,962	)		-			(147,947	)
Net cash provided by (used in) financing activities		-			-		(704,874	)		(230,316	)		(935,190	)
Effect of exchange rate changes on cash and restricted cash		-			-		-			(15,848	)		(15,848	)
Net increase (decrease) in cash and restricted cash		(1,167	)		29,281		(742,592	)		(246,164	)		(960,642	)
Cash and restricted cash from continuing operations, beginning of year		11,677			28,645		1,019,603			285,360			1,345,285
Cash and restricted cash from continuing operations, end of year		10,510			57,926		277,011			39,196			384,643

	For the years ended August 31, 2020
				WFOE
	Other			that is the
	entities			primary
	that are			beneficiary			VIE and its						Consolidated
	consolidated			of the VIE			subsidiaries			Onesmart			total
	RMB			RMB			RMB			RMB			RMB
Net cash provided by (used in) operating activities		23,974			(71,511	)		607,495			(319,266	)		240,692
Net cash used in investing activities		(33,581	)		45,593			(801,909	)		(117,034	)		(906,931	)
Net cash provided by (used in) financing activities		-			-			472,213			176,546			648,759
Effect of exchange rate changes on cash and restricted cash		-			-			-			(23,647	)		(23,647	)
Net increase (decrease) in cash and restricted cash		(9,607	)		(25,918	)		277,799			(283,401	)		(41,127	)
Cash and restricted cash from continuing operations, beginning of year		21,284			54,564			741,803			568,761			1,386,412
Cash and restricted cash from continuing operations, end of year		11,677			28,645			1,019,603			285,360			1,345,285

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 VIE’s earnings after eliminating VIE’s accumulated losses and making appropriation of VIE’s 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 VIE’s earnings will be through payment of service fees to Onesmart, 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 VIE, amount owed by VIE to the Company should be first settled. Cash transfers were mainly for the purpose of providing working capital between Onesmart and its subsidiaries, VIE and its subsidiaries and WFOE that is the primary beneficiary of the VIE.

F-19

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

2. Summary of Significant Accounting Policies (continued)

(e) Use of estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and revenue and expenses during the reporting periods. Significant accounting estimates reflected in the Group’s consolidated financial statements include, but not limited to valuation allowance for deferred tax assets, uncertain tax position, the initial valuation of the assets acquired and liabilities assumed in a business combination, economic lives and impairment of long-lived assets, impairment of goodwill, the valuation of short-term and long-term investments and share-based compensation. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements.

(f) Foreign currency

The functional currency of the Company, OneSmart BVI, and OneSmart HK is the United States Dollars (“US$”). The Company’s PRC subsidiaries and the VIEs determined their functional currency to be Renminbi (the “RMB”). The Group uses the RMB as its reporting currency.

Transactions denominated in foreign currencies are re-measured into the functional currency at the exchange rates prevailing on the transaction dates. Monetary assets and liabilities denominated in foreign currencies are re-measured at the exchange rates prevailing at the balance sheet date. Non-monetary items that are measured in terms of historical cost in foreign currency are re-measured using the exchange rates at the dates of the initial transactions. Exchange gains and losses are included in the consolidated statements of income.

The Company uses the average exchange rate for the year and the exchange rate at the balance sheet date to translate the operating results and financial position, respectively. Translation differences are recorded in accumulated other comprehensive income, a component of shareholders’ equity.

(g) Convenience translation

Amounts in US$ are presented for the convenience of the reader and are translated at the noon buying rate of US$1.00 to RMB6.4604 on August 31, 2021 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate.

(h) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments which are unrestricted as to withdrawal or use.

(i) Restricted cash

Restricted cash primarily represents deposits held in a designated bank account as pledged security for the principle, interest payments on the Group’s long-term or short-term loans and restricted cash with banks. The restricted cash related to the frozen cash in the bank accounts by court order is disclosed in Note 6, the restricted cash related to deposits held in designated bank accounts as pledge of long-term or short-term loans are disclosed in Note 19.

F-20

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

2. Summary of Significant Accounting Policies (continued)

(j) Short-term investments

The Group accounts for all investments in accordance with ASC topic 320 (“ASC 320”), Investments - Debt and Equity Securities. The Group classifies the investments in debt and equity securities as “held-to-maturity”, “trading” or “available-for-sale”, whose classification determines the respective accounting methods stipulated by ASC 320. All investments with original maturities of greater than three months not exceeding twelve months are classified as short-term investments, while those of more than twelve months are classified as long-term investments (Note 11). Investments that are expected to be realized in cash during the next twelve months are also included in short-term investments. Dividend and interest income, including amortization of the premium and discount arising at acquisition, for all categories of investments in securities, are included in earnings. Any realized gains or losses on the sale of the short-term investments, are determined on a specific identification method, and such gains and losses are reflected in earnings during the period in which gains or losses are realized.

The securities that the Group has the positive intent and the ability to hold to maturity are classified as held-to-maturity securities and stated at amortized cost.

The securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities. Unrealized holding gains and losses for trading securities are included in earnings.

Investments not classified as trading or as held-to-maturity are classified as available-for-sale securities. Available-for-sale investments are reported at fair value, with unrealized gains and losses recorded in accumulated other comprehensive income. Realized gains or losses are included in earnings during the period in which the gain or loss is realized. An impairment loss on the available-for-sale securities is recognized in the consolidated statements of income when the decline in value is determined to be other-than-temporary. As of August 31, 2021, all investments classified as available-for-sale securities have been recognized fully impairment loss because of the termination of the tutoring service business by the Company, which is in compliance with the changes in the regulatory environment on the private education industry in China.

(k) Property and equipment, net

Property and equipment are stated at cost less accumulated depreciation and impairment. Depreciation is calculated on a straight-line basis over the following estimated useful lives:

Category	Estimated Useful Lives
Furniture	3-5 years
Electronic equipment	3 years
Vehicles	4-5 years
Buildings	20 years
Leasehold improvement	Over the shorter of the lease term or the estimated useful lives

Repair and maintenance costs are charged to expense as incurred, whereas the cost of renewals and betterments that extend the useful lives of property and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the cost and accumulated depreciation from the asset and accumulated depreciation accounts with any resulting gain or loss reflected in the consolidated statements of income.

Direct costs that are related to the construction of property and equipment and incurred in connection with bringing the assets to their intended use are capitalized as construction in progress. Construction in progress is transferred to specific property and equipment, and the depreciation of these assets commences when the assets are ready for their intended use.

F-21

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

2. Summary of Significant Accounting Policies (continued)

(l) Impairment of long-lived assets other than goodwill

The Group evaluates its long-lived assets, including fixed assets and intangible assets with finite lives, for impairment whenever events or changes in circumstances, such as a significant adverse change to market conditions that will impact the future use of the assets, indicate that the carrying amount of an asset may not be fully recoverable. When these events occur, the Group evaluates the recoverability of long-lived assets by comparing the carrying amount of the assets to the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Group recognizes an impairment loss based on the excess of the carrying amount of the assets over their fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the assets, when the market prices are not readily available. During the fiscal year ended August 31, 2019 and 2020, there was no impairment of any of our long-lived assets. However, the Opinion and a related series of notice, administrative measures or circular and the compliance measures taken by the Company have material adverse impact on our after-school tutoring services related to academic subjects in China’s compulsory education system, which in turn have adversely affected the Company’s results of operations and prospect. We have gradually terminated our after-school tutoring services related to academic subjects business since August 2021, and officially ceased our business in October 2021. As a result, the Company recognized an impairment loss with amount of RMB849,246 (US$131,454) for long-lived assets other than goodwill.

(m) Business combination

The Group accounts for its business combinations using the purchase method of accounting in accordance with ASC 805 (“ASC 805”), Business Combinations. The purchase method of accounting requires that the consideration transferred to be allocated to the assets, including separately identifiable assets and liabilities the Group acquired, based on their estimated fair values. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and all contractual contingencies as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of cost of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the businesses acquired, the difference is recognized directly in earnings.

In a business combination achieved in stages, the Group remeasures the previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the remeasurement gain or loss, if any, is recognized in the consolidated statements of income.

The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and non-controlling interests is based on various assumptions and valuation methodologies requiring considerable judgment from management. The most significant variables in these valuations are discount rates, terminal values, the number of years on which the cash flow projections are based, as well as the assumptions and estimates used to determine the cash inflows and outflows. The Group determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons. Terminal values are based on the expected life of assets, forecasted life cycle and forecasted cash flows over that period. There is no additional business combination by the Company in fiscal year of 2021.

(n) Goodwill

The Group assesses goodwill for impairment in accordance with ASC 350-20, Intangibles-Goodwill and Other: Goodwill (“ASC 350-20”), which requires that goodwill be tested for impairment at the reporting unit level at least annually and more frequently upon the occurrence of certain events, as defined by ASC 350-20.

F-22

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

2. Summary of Significant Accounting Policies (continued)

(n) Goodwill (continued)

The Group has determined it has five reporting units. Goodwill was allocated to five reporting units as of August 31, 2019 and 2020. The Group has the option to assess qualitative factors first to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. In the qualitative assessment, the Group considers primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. Based on the qualitative assessment, if it is more likely than not that the fair value of each reporting unit is less than the carrying amount, the quantitative impairment test is performed.

Specifically, the quantitative impairment test is determined using a two-step process. The first step compares the fair value of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of the affected reporting unit’s goodwill to the carrying value of that goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. An impairment loss is recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill. Estimating fair value is performed by utilizing various valuation techniques, with the primary technique being a discounted cash flow.

Affected by the changes in the regulatory environment on the private education industry in China., all subsidiaries acquired by the Company also terminated their education programs and learning centers from August 2021 gradually. As of August 31, 2021, the Company recognized impairment loss with amount of RMB1,076,560 (US$166,640) for goodwill.

(o) Intangible assets

Intangible assets with finite lives are carried at cost less accumulated amortization. Amortization of finite-lived intangible assets is computed using the straight-line method over the estimated useful lives. The estimated useful lives of intangible assets from the date of purchase are as follows:

Category	Estimated Useful Lives
Student base	5 years
Customer relationship	1-9 years
Trademark	10-20 years
License	30 years
Franchise agreements	6 years
Technology and system	5 years

As of August 31, 2021, affected by the changes in the regulatory environment on the private education industry in China., the Company recognized impairment loss with amount of RMB197,328 (US$30,544) for intangible assets.

F-23

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

2. Summary of Significant Accounting Policies (continued)

(p) Long-term investments

The Group’s long-term investments consist of equity securities without readily determinable fair value, investment in debt securities accounted for at fair value and equity method investments.

The Group adopted ASC Topic 321, Investments-Equity Securities (“ASC 321”) from September 1, 2018. Pursuant to ASC 321, for equity securities measured at fair value with changes in fair value record in earnings, the Group does not assess whether those investments are impaired. For those equity securities that the Group selects to use the measurement alternative, the Group uses the measurement alternative to measure those investments at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The Group makes a qualitative assessment of whether the investment is impaired at each reporting date. If a qualitative assessment indicates that the investment is impaired, the Group has to estimate the investment’s fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, (“ASC 820”). If the fair value is less than the investment’s carrying value, the Group recognizes an impairment loss in net income equal to the difference between the carrying value and fair value.

Investments in equity investees represent investments in entities in which the Group can exercise significant influence but does not own a majority equity interest or control are accounted for using the equity method of accounting in accordance with ASC 323-10 (“ASC 323-10”), Investments-Equity Method and Joint Ventures: Overall. Under the equity method, the Group initially records its investment at cost and prospectively recognizes its proportionate share of each equity investee’s net profit or loss into its consolidated statements of income. The difference between the cost of the equity investee and the amount of the underlying equity in the net assets of the equity investee is recognized as equity method goodwill included in equity method investments on the consolidated balance sheets. The Group evaluates its equity method investment for impairment under ASC 323-10. An impairment loss on the equity method investment is recognized in the consolidated statements of income when the decline in value is determined to be other-than-temporary.

Investment in debt securities accounted for at fair value with original maturities of greater than twelve months are classified as long-term investments. As investment in debt securities classified as available for sale in accordance with ASC 320 are reported at fair value. Any unrealized gains and losses on available-for-sale investments are included in other comprehensive income. Interest income are recognized in earnings. When a decline in value is determined to be other-than-temporary, the impairment loss on the long-term available-for-sale investments would be recognized in the consolidated statements of comprehensive income.

In 2019, 2020 and 2021, we evaluated our investments, taking into consideration, including, but not limited to, the duration, degree and causes of the decline in financial results, its intent and ability to hold the investment and the invested companies’ financial performance and near-term prospects. Based on the evaluation, the Company recognized impairment loss of RMB10,000, RMB161,600 and RMB1,652,308 (US$255,759) for the years ended August 31, 2019, 2020 and 2021, respectively.

(q) Fair value of financial instruments

Financial instruments include cash and cash equivalents, restricted cash, short-term and long-term investments, due from third party payment platforms, due from third parties, amount due from a related party, redeemable convertible preferred shares, short-term and long-term loans, and convertible senior notes.

F-24

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

2. Summary of Significant Accounting Policies (continued)

(q) Fair value of financial instruments (continued)

The carrying amounts of these financial instruments, except for the short-term and long-term investments, redeemable convertible preferred shares (Note 23), long-term loans and convertible senior notes, approximate their fair values because of their short-term maturities. Available-for-sale investments are adjusted to fair value at each reporting date. The redeemable convertible preferred shares were initially recognized at fair value upon issuance and immediately accreted to their full redemption value as of redemption occurred at the end of the reporting periods. If a beneficial conversion feature exists as of the commitment date, its intrinsic value is bifurcated from the carrying value of the redeemable convertible preferred shares as a contribution to additional paid in capital. The discount resulting from the beneficial conversion feature is amortized from the date of issuance to the earliest conversion date. The carrying amount of the long-term loan and convertible senior notes approximate their fair value due to the fact that the related interest rates approximate the interest rates currently offered by financial institutions for similar debt instruments with comparable maturities.

(r) Revenue recognition

On September 1, 2018, the Group adopted ASC Topic 606 Revenue from Contracts with Customers (“Topic 606”), applying the modified retrospective method to all contracts that were not completed as of September 1, 2018. Results for the year ended August 31, 2019,2020 and 2021 are presented under Topic 606, while revenues for the years ended August 31, 2018 are not adjusted and continue to be reported under ASC Topic 605, Revenue Recognition (“Topic 605”).

Revenue is recognized when control of promised services are transferred to the Group’s customers in amounts of consideration to which the Group expects to be entitled to in exchange for those services. The Group follows the five steps approach for revenue recognition under Topic 606: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue as the Group satisfies a performance obligation.

The Group generates revenues primarily through tuition fees from personalized and small class premium tutoring services with individual students in the PRC. In addition, the Group generates revenues from other services such as franchise, licensing, and study tours. The following table presents the Group’s revenues disaggregated by revenue sources for the years ended August 31, 2020 and 2021.

Disaggregation of net revenues	Personalized and small class premium tutoring services RMB		Others RMB		For the year ended August 31, 2021 RMB
OneSmart VIP		2,767,502		12,604		2,780,106
HappyMath		363,143		-		363,143
FasTrack		183,344		-		183,344
Other		96,817		-		96,817
		3,410,806		12,604		3,423,410

F-25

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

2. Summary of Significant Accounting Policies (continued)

(r) Revenue recognition (continued)

Disaggregation of net revenues	Personalized and small class premium tutoring services RMB		Others RMB		For the year ended August 31, 2020 RMB
OneSmart VIP		2,616,057		9,122		2,625,179
HappyMath		422,944		-		422,944
FasTrack		170,707		5,763		176,470
OneSmart Online		103,848		-		103,848
Other		110,440		-		110,440
		3,423,996		14,885		3,438,881

Primary sources of the Group’s revenues are as follows:

1) Personalized premium tutoring services is referring to OneSmart VIP one-on-one and one-on-three tutoring services. Small class premium tutoring services primarily consist of HappyMath, FasTrack, and other after-school small classes tutoring. The Group launched OneSmart Online in February 2020 as a complement to its offline business providing online courses to the existing student base from OneSmart VIP, HappyMath and FasTrack English programs through an online platform. OneSmart Online also integrated the online tutoring business from Shanghai Yimi after the acquisition (Note 4). Each contract of personalized premium service and small class tutoring service is accounted for as a single performance obligation which is satisfied proportionately over the stated service period. Tuition fees are generally collected in advance and are initially recorded as prepayments from customers. Tuition revenues are recognized proportionately as the tutoring sessions are delivered.

Refunds are provided to students who decide to withdraw from contracts for remaining undelivered tutoring sessions. A refund is equal to and limited to the amount related to the undelivered classes. The Group estimates and records a refund liability for the potion of tuition fees collected in advance that it does not expect to be entitled to.

2) Other revenues included franchise revenues derived from franchise agreements where the franchisees operating under the OneSmart or FasTrack brand are required to pay an initial one-time non-refundable franchise fee and recurring franchise fees, which mainly consist of on-going management and service fees based on a certain percentage of the franchisees’ monthly tuition received. Each franchise contract is accounted for as a single performance obligation to provide the franchisee the license to its OneSmart or FasTrack intellectual property. The one-time franchise fees are fixed consideration payable upon submission of a franchise application or renewal and are recognized on a straight-line basis over the initial or renewal term of the franchise contracts. The continuing fees represent variable consideration that are recognized on a monthly basis.

The Group’s contract assets consisted of accounts receivable for other services. The balance of contract assets amounted to nil as of August 31, 2020 and August 31, 2021. The Group’s contract liabilities mainly consisted of prepayments from customers, with a balance of RMB2,547,493 and RMB2,787,686 (US$431,504) as of August 31, 2020 and August 31, 2021, respectively. A majority of contract liabilities at the beginning of the year ended August 31, 2021 were recognized as revenues during the year ended August 31, 2021 and a majority of contract liabilities as of August 31, 2021 might be refunded to our customers in the following year affected by the Opinion and a related series of notice, administrative measures or circular. The difference between the opening and closing balances of the Group’s contract liabilities primarily results from the timing difference between the Group’s satisfaction of performance obligation and the customers’ payments.

F-26

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

2. Summary of Significant Accounting Policies (continued)

(r) Revenue recognition (continued)

Refund liabilities mainly related to the estimated refunds that are expected to be provided to students if they decide they no longer want to attend tutoring. The refund liability estimation is based on historical refund ratio on a portfolio basis using the most likely amount method. As of August 31, 2020 and August 31, 2021, refund liability amounted to RMB333,045 and RMB364,447 (US$56,412), respectively, is recorded in prepayments from customers.

(s) Cost of revenues

Cost of revenues consist primarily of salaries and other personnel expenses, rental expenses, depreciation expenses, utilities and other expenses directly attributable to the Group’s revenues.

(t) Advertising expenditures

Advertising expenditures are expensed when incurred and are included in selling and marketing expenses, which amounted to RMB383,306, RMB378,198 and RMB463,324 (US$71,718) for the years ended August 31, 2019 , 2020 and 2021, respectively.

(u) Government grants

The Group receives government subsidies at the discretion of the local government. Government grants are recognized when it is probable that the Group will comply with the conditions attached to them, and the grants are received. Government grants without attached conditions are recognized when received. When the grant relates to an expense item, it is recognized in the consolidated statement of income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate, as a reduction of the related operating expense. When the grant relates to an asset, it is recognized as a deferred government grant and released to the consolidated statement of income in equal amounts over the expected useful life of the related asset, when operational, as a reduction of the related depreciation expense.

For the years ended August 31, 2019, 2020 and 2021, government grants in the amounts of RMB31,937, RMB24,238 and RMB86,206 (US$13,344) were recognized as other income in the consolidated statements of income, respectively.

(v) Leases

The Group adopted ASU No. 2016-02, Leases (Topic 842) (“ASC 842”) from September 1, 2019 by using the modified retrospective method and did not restate the comparable periods. The Group has elected the package of practical expedients, which allows the Group not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any expired or existing leases as of the adoption date. The Group also elected the short-term lease exemption for all contracts with lease terms of 12 months or less. The Group have lease agreements with lease and non-lease components, which are generally accounted for separately.

F-27

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

2. Summary of Significant Accounting Policies (continued)

(v) Leases (continued)

The Group determines if an arrangement is a lease or contains a lease at lease inception. For operating leases, the Group recognizes a right-of-use (“ROU”) asset and a lease liability based on the present value of the lease payments over the lease term on the consolidated balance sheets at commencement date. As most of the Group’s leases do not provide an implicit rate, the Group estimates its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The ROU assets also include any lease payments made, net of lease incentives. Lease expense is recorded on a straight-line basis over the lease term. The Company’s leases often include options to extend and lease terms include such extended terms when the Company is reasonably certain to exercise those options. Lease terms also include periods covered by options to terminate the leases when the Company is reasonably certain not to exercise those options.

Upon adoption, the Group recognized ROU assets of RMB1,632,236 and total lease liabilities (including current and non-current) RMB1,550,882 for operating leases, based on the present value of the remaining minimum rental payments under existing operating leases. The difference between the lease liabilities and ROU assets represented the prepaid rent balances of RMB81,354. The impact of adopting ASC 842 on the Group’s opening accumulated deficit, current year net income and current year cash flow was insignificant. As of August 31, 2020, the Group recognized operating lease ROU assets of RMB1,481,196 (US$229,273) and total lease liabilities RMB1,412,191 (US$218,592), including current portion of RMB483,056 (US$74,772) for operating leases.

However, the Opinion and a related series of notice, administrative measures or circular and the compliance measures taken by the Company have material adverse impact on our after-school tutoring services related to academic subjects in China’s compulsory education system, which in turn have adversely affected the Company’s results of operations and prospect. We have gradually terminated our after-school tutoring services related to academic subjects business since August 2021, and officially ceased our all business in October 2021. All of the Company’s operating leases mainly related to offices and classroom facilities were gradually terminated since August 2021. The Company removed the right-of-use asset and the lease liability, with loss recognized of RMB45,368 (US$7,022) for the difference in accordance with ASC842-20-40-1. By the end of August 31, 2021, all rental deposits related to those early terminated lease contracts have been expensed as the early termination penalty by the Company.

(w) Income taxes

The Group follows the liability method of accounting for income taxes in accordance with ASC 740 (“ASC 740”), Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Group records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in tax expense in the period that includes the enactment date of the change in tax rate.

The Group accounted for uncertainties in income taxes in accordance with ASC 740. Interest and penalties related to unrecognized tax benefit recognized in accordance with ASC 740 are classified in the consolidated statements of income as income tax expense.

(x) Share-based compensation

The Group applies ASC 718 (“ASC 718”), Compensation - Stock Compensation, to account for its employee share-based payments. In accordance with ASC 718, the Group determines whether an award should be classified and accounted for as a liability award or an equity award. All the Group’s share-based awards to employees were classified as equity awards.

F-28

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

2. Summary of Significant Accounting Policies (continued)

(x) Share-based compensation (continued)

In accordance with ASC 718, the Group recognizes share-based compensation cost for equity awards to employees with a performance condition based on the probable outcome of that performance condition. Compensation cost is recognized if it is probable that the performance condition will be achieved.

A change in any of the terms or conditions of the awards is accounted for as a modification of the awards. Incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified, measured based on the fair value of the awards and other pertinent factors at the modification date. For vested awards, the Group recognizes incremental compensation cost in the period the modification occurs. For unvested awards, the Group recognizes over the remaining requisite service period, the sum of the incremental compensation cost and the remaining unrecognized compensation cost for the original award on the modification date. If the fair value of the modified award is lower than the fair value of the original award immediately before modification, the minimum compensation cost the Group recognizes is the cost of the original award. When the vesting conditions (or other terms) of the equity awards granted to employees are modified, the Group first determines on the modification date whether the original vesting conditions were expected to be satisfied, regardless of the entity’s policy election for accounting for forfeitures. If the original vesting conditions were not expected to be satisfied, the grant date fair value of the original equity awards are ignored and the fair value of the equity awards measured at the modification date are recognized if the modified awards ultimately vest.

The Group uses the accelerated method to recognize compensation expense for all awards granted. The Group, with the assistance of an independent third-party valuation firm, determined the fair value of the awards granted to employees. The Group adopted ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, (“ASU 2016-09”) and elected to account for forfeitures as they occur.

(y) Employee benefit expenses

All eligible employees of the Group are entitled to staff welfare benefits including medical care, welfare subsidies, unemployment insurance and pension benefits through a PRC government-mandated multi-employer defined contribution plan. The Group is required to make contributions to the plan and accrues for these benefits based on certain percentages of the qualified employees’ salaries. The Group recorded employee benefit expenses of RMB336,067, RMB305,649 and RMB228,255 (US$35,331) for the years ended August 31, 2019, 2020 and 2021, respectively.

(z) Comprehensive income/(loss)

Comprehensive income/(loss) is defined as the changes in equity of the Group during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. Among other disclosures, ASC 220, Comprehensive Income, requires that all items that are required to be recognized under current accounting standards as components of comprehensive income/(loss) be reported in a financial statement that is displayed with the same prominence as other financial statements. For each of the periods presented, the Group’s comprehensive income/(loss) includes net income and unrealized gain on available-for-sale investments, net of tax and is presented in the consolidated statements of comprehensive income/(loss).

F-29

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

2. Summary of Significant Accounting Policies (continued)

(aa) Earnings/(Loss) per share

Basic earnings/(loss) per share is computed by dividing net income/(loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period using the two-class method. Under the two-class method, net income/(loss) is allocated between ordinary shares and other participating securities based on their participating rights. Diluted earnings/(loss) per share is calculated by dividing net income/(loss) attributable to ordinary shareholders by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinary equivalent shares consist of the ordinary shares issuable upon the conversion of the Group’s redeemable convertible preferred shares and convertible senior notes using the if-converted method and ordinary shares issuable upon the exercise of share options and restricted Class A ordinary shares (“Restricted Shares”) using the treasury stock method. Ordinary equivalent shares are not included in the denominator of the diluted loss per share calculation when inclusion of such shares would be anti-dilutive.

Basic and diluted earnings/(loss) per share are not reported separately for Class A or Class B ordinary shares (the “Ordinary Shares”) as each class of shares has the same rights to undistributed and distributed earnings.

(ab) Segment reporting

In accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision making group, in deciding how to allocate resources and in assessing performance. The Group has only one reportable segment since the Group does not distinguish revenues, costs and expenses by operating segments in its internal reporting, and reports costs and expenses by nature as a whole. The Group’s CODM, who has been identified as the CEO, reviews the consolidated results when making decisions about allocating resources and assessing performance of the Group as a whole. As the Group generates all of its revenue in the PRC, no geographical segments are presented.

(ac) Comparative information

Certain of the prior year comparative figures have been reclassified to conform to the current year’s presentation.

(ad) Non-controlling interests

For certain subsidiaries, a non-controlling interest is recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Group. Consolidated net loss or income on the consolidated statements of income includes the net loss or income attributable to non-controlling interests. The cumulative results of operations attributable to non-controlling interests are recorded as non-controlling interests in the Group’s consolidated balance sheets.

In January 2020, the FASB issued ASU No. 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendments also clarify that for the purpose of applying paragraph 815-10-15-141(a) an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option in accordance with the financial instruments guidance in Topic 825. An entity also would evaluate the remaining characteristics in paragraph 815-10-15-141 to determine the accounting for those forward contracts and purchased options. The amendments are effective for fiscal years beginning September 1, 2021, and interim periods within those fiscal years. The Group does not expect to early adopt this guidance and is in the process of evaluating the impact of adoption of this guidance on the Group’s consolidated financial statements.

F-30

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

2. Summary of Significant Accounting Policies (continued)

(ae) Recent accounting pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The amendments are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, with early adoption permitted. The Group is currently evaluating the impact of the new guidance on our consolidated financial statements.

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Group is currently evaluating the impact of the new guidance on our consolidated financial statements.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606, Revenue from Contracts with Customers The new amendments are effective for us are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption permitted. The Group is currently evaluating the impact of the new guidance on our consolidated financial statements.

3. Concentration of Risks

(a) Concentration of credit risk

Financial instruments that potentially subject the Group to significant concentration of credit risk consist primarily of cash and cash equivalents, restricted cash, due from third party payment platform, due from third parties, amount due from a related party, and short-term and long-term investments. As of August 31, 2021, all of the Group’s cash and cash equivalents, restricted cash, certain short-term investments were deposited with financial institutions with high-credit ratings and quality. There has been no recent history of default in relation to these financial institutions.

The Group manages credit risk of due from third party payment platform, due from third parties, amount due from a related party and certain short-term and long-term available-for-sale investments by performing credit assessments on its borrowers and its ongoing monitoring of the outstanding balances.

(b) Business, customer, political, social and economic risks

The Group believes that changes in any of the following areas could have a material adverse effect on the Group’s future financial position, results of operations or cash flows: changes in the overall demand for services; competitive pressures due to new entrants; advances and new trends in new industry standards; changes in certain strategic relationships or customer relationships; regulatory considerations; and risks associated with the Group’s ability to attract and retain employees necessary to support its growth. The Group’s operations could be also adversely affected by significant political, economic and social uncertainties in the PRC. From July 2021 and September 2021, the General Office of Ministry of Education issued a series of rules, regulations, notices and circulars on further alleviating the burden of homework and after-school tutoring for students in compulsory education. The Company complies with all applicable rules and regulations in providing educational services. On October 12, 2021, the Company ceased all the domestic education programs and learning centers in China. The Company plans to sell its original tutoring service business and restructure to smart education business.

No single customer or supplier accounted for more than 10% of revenues or costs of revenues for the years ended August 31, 2019, 2020 and 2021.

F-31

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

3. Concentration of Risks (continued)

(c) Foreign currency exchange rate risk

From July 21, 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. For RMB against US$, there was appreciation of approximately 4.7%, depreciation of approximately 4.3% and depreciation of approximately 5.7% during the years ended August 31, 2019, 2020 and 2021. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the US$ in the future.

(d) Currency convertibility risk

The Group transacts all of its business in RMB, which is not freely convertible into foreign currencies. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the People’s Bank of China (the “PBOC”). However, the unification of the exchange rates does not imply that the RMB may be readily convertible into US$ or other foreign currencies. All foreign exchange transactions continue to take place either through the PBOC or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC. Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts.

4. Business Combinations

During the years ended August 31, 2019, 2020 and 2021, the Group completed twenty-six, six and nil acquisitions, respectively. These acquisitions are expected to strengthen the Group’s current market and to generate synergy with the Group’s organic business. The results of the acquired entities’ operations have been included in the Company’s consolidated financial statements since their respective dates of acquisition. The Group completed the valuation necessary to assess the fair value of the acquired assets and liabilities and the non-controlling interests, resulting from which the amounts of goodwill were determined and recognized as of the respective acquisition dates.

Goodwill arising from the business combinations, which are not tax deductible, are mainly attributable to synergies expected to be achieved from the acquisitions. Pro forma financial information of the acquirees are not presented as the effects of the acquisitions on the Group’s consolidated financial statements were not material.

(a) Acquisition of Yuhan (Shanghai) Information Technology Co., Ltd. (“Yuhan”)

Yuhan provides offline English tutoring services under the brand, “FasTrack English”. FasTrack English offers English tutoring to students from three to twelve years old in one-to-two to one-to-fourteen teacher-to-student based classroom settings which aim to improve the comprehensive English capacities of young children.

F-32

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

4. Business Combinations (continued)

In July 2017, the Group acquired 20% equity interest in Yuhan and the investment was accounted for under the equity method given the Group’s ability to exercise significant influence over the operations of Yuhan. In January 2018, the Group entered into a share purchase agreement to purchase an additional 55.6% equity interest in Yuhan for cash consideration of RMB140,000 (US$21,670). The acquisition closed on January 2, 2018 when the Company obtained control of Yuhan holding in aggregate 75.6% of its equity interest.

The allocation of the purchase price as of the date of acquisition is summarized as follows:

	For the year ended August 31,
	2018			2018
	RMB			US$
Intangible assets (i) (Note 10)		97,870			15,149
Net tangible assets (ii)		(24,331	)		(3,766	)
Goodwill (Note 12)		161,001			24,921
Total fair value of purchase price allocation		234,540			36,304
Cash consideration		140,000			21,670
Fair value of ownership interests previously held in the acquiree		42,595			6,593
Fair value of non-controlling interest		51,945			8,041

(i) The acquired intangible assets consisted of trademark, license use right, customer relationship, student base as well as franchise agreements. These intangible assets have estimated amortization periods of five to thirty years.

(ii) Net tangible assets acquired primarily included cash and cash equivalent of RMB6,381 (US$988), short-term investment of RMB46,000 (US$7,120), prepayment and other current assets of RMB20,175 (US$3,123), property and equipment of RMB7,662 (US$1,186), accrued expenses and other current liabilities of RMB18,979 (US$2,938), deferred tax liabilities of RMB24,268 (US$3,756) and prepayments from customers of RMB62,668 (US$9,700) as of the date of acquisition.

A gain of RMB1,481 in relation to the revaluation of the previously held equity interest was recorded in other income, net in the consolidated statement of income for the year ended August 31, 2018. The fair value of the previously held equity interest was determined using an income approach. As Yuhan was a private company, the fair value measurements for the non-controlling interest and previously held equity interest were estimated based on certain factors including discount rate, terminal growth rate, revenue growth rate, EBIT margin and adjustments for the lack of control or lack of marketability, as relevant, that market participants would consider when estimating the fair value of the noncontrolling interest and the previously held equity interest in Yuhan.

F-33

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

4. Business Combinations (continued)

(b) Acquisition of Tianjin Huaying

In September 2018, the Group entered into share purchase agreements to purchase an 100% equity interest in Tianjin Huaying Education Consulting Co., Ltd. and its subsidiaries and related party Tianjin Hedong Hua Ying Training School (“collectively referred to as “Tianjin Huaying”), under the common control of the same selling shareholder, having operated K-12 after-school education services in Tianjin, China for cash consideration of RMB144,000 (US$22,290) and contingent consideration of RMB86,316 (US$13,361), in total of RMB230,316 (US$35,650). The acquisition closed on September 5, 2018 when the Company obtained control of 100% of Tianjin Huaying equity interest.

The allocation of the purchase price as of the date of acquisition is summarized as follows:

	For the year ended August 31,
	2019			2019
	RMB			US$
Intangible assets (i) (Note 10)		59,800			9,256
Net tangible assets (ii)		6,582			1,019
Deferred tax liabilities, net		(14,179	)		(2,195	)
Goodwill (Note 12)		178,113			27,570
Total fair value of purchase price allocation		230,316			35,650
Consideration		230,316			35,650

(i) The acquired intangible assets consisted of trademark, customer relationship and franchise agreements. These intangible assets have estimated amortization periods of five to ten years.

(ii) Net tangible assets acquired primarily included cash and cash equivalent of RMB16,917 (US$2,619), short-term investments of RMB16,350 (US$2,531), prepayment and other current assets of RMB10,366 (US$1,605), property and equipment of RMB1,621 (US$251), accrued expenses and other current liabilities of RMB9,940 (US$1,539) and prepayments from customers of RMB28,732 (US$4,447) as of the date of acquisition.

The consideration comprised of RMB144,000 in cash and RMB86,316 of contingent consideration payable in cash. The contingent consideration is driven by the Tianjin Huaying’s net profit targets for the fiscal year ended August 31, 2019 , 2020 and the fiscal year ended August 31, 2021. The Group determined the fair value of the contingent cash consideration as of the acquisition date and as of August 31, 2021, Tianjin Huaying has met the aforementioned targets. The outstanding contingent consideration was recorded in the “Other non-current liabilities”, and has been paid in subsequent period.

The purchase price allocation for the acquisitions was based on a valuation determined by the Group with the assistance of an independent third-party valuation firm. The significant inputs used in the purchase price allocations were revenue growth rates, gross margin rates, weighted-average cost of capital, discount rate, and terminal values.

(c) Acquisition of Yimi Online Tutoring

From 2018 to 2020, the Group provided loans with total principal and related interests amounting to RMB51,374 (US$7,952) to Shanghai Yimi. Shanghai Yimi has fully repaid the loans to the Company in the fiscal year of 2021.

F-34

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

4. Business Combinations (continued)

In 2019, the Group completed investments in preferred shares issued by Yimi Cayman for total amount of RMB196,693 (US$ 30,446). The investment was accounted for available-for-sale investments (Note 11).

In 2020, the Group invested in convertible loans issued by Yimi Cayman for total amount of RMB51,995 (US$8,048). The investment was accounted for available-for-sale investments (Note 11).

On February 1, 2020, OneSmart Online Edu Inc. (“OneSmart Online”) entered into a share swap agreement and an asset and business transfer agreement with Yimi Education Technology Inc. (” Yimi Cayman”), its affiliated companies and VIE, Shanghai Yimi Education Technology Co., Ltd. (“Shanghai Yimi”) to acquire certain technologies and business (the “Yimi’s Target Business”) for a total consideration of RMB311,149 (US$48,162) that is comprised of the acquisition-date fair value of previous held investments in preferred shares and convertible loans amounting to RMB248,688 (US$38,494) and loans and related interests provided to Shanghai Yimi amounting to RMB51,374 (US$7,952), as well as RMB11,088 (US$1,716) in cash, as part of the Company’s continuing efforts to enhance the quality and customer experience on OneSmart Online, the online platform of the Company. The foregoing transactions are collectively referred to as the “Yimi transactions”.

The acquisition was completed on February 1, 2020 when the Company obtained control of the business.

In connection with the acquisition, OneSmart Online granted restricted shares to the founding shareholders of Shanghai Yimi. The restricted shares are vested over agreed requisite service periods subsequent to the acquisition and dependent on the achievement of certain performance target of Yimi’s Target Business, which is accounted for as share-based compensation in accordance with ASC 718 (Note 14).

The allocation of the purchase price as of the date of acquisition is summarized as follows:

	For the year ended August 31,
	2020			2020
	RMB			US$
Intangible assets (i) (Note 10)		50,800			7,863
Net tangible assets (ii)		(56,523	)		(8,749	)
Deferred tax liabilities, net		(3,211	)		(497	)
Goodwill (Note 12)		348,579			53,956
Total fair value of purchase price allocation		339,645			52,573
Consideration		311,149			48,162
Fair value of non-controlling interests		28,496			4,411

(i) The acquired intangible assets consisted of technology and system. These intangible assets have estimated amortization periods of five years.

F-35

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

4. Business Combinations (continued)

(ii) Net tangible assets acquired primarily included cash and cash equivalent of RMB832 (US$129), prepayment and other current assets of RMB6,429 (US$995), property and equipment of RMB4,805 (US$744), accrued expenses and other current liabilities of RMB2,669 (US$413) and prepayments from customers of RMB65,920 (US$10,204) as of the date of acquisition.

The purchase price allocation for the acquisitions was based on a valuation determined by the Group with the assistance of an independent third-party valuation firm. The significant inputs used in the purchase price allocations were revenue growth rates, gross margin rates, weighted-average cost of capital, discount rate, and terminal values.

The acquisition-date fair value of previous held investments in preferred shares and convertible loans was determined using an income approach, and a gain of RMB46,343 (US$7,173) in relation to the revaluation was recorded in other income, net in the consolidated statement of loss for the year ended August 31, 2020. As the acquiree is a private company, the fair value measurements for the non-controlling interests were estimated based on certain factors including discount rate, terminal growth rate, revenue growth rate, EBIT margin and adjustments for the lack of control and lack of marketability, as relevant, that market participants would consider when estimating the fair value of the noncontrolling interest.

(d) Acquisition of Yousheng

Shanghai Yousheng Education and Technology Co., Ltd. (“Yousheng”) provides online English tutoring services to young children from four to twelve years old in one-on-one or one-on-four teacher-to-student based classroom settings which aim to improve the comprehensive English capacities of young children.

In September 2019, the Group acquired 15% equity interest in Yousheng and the investment was accounted for as equity investment without readily determinable fair value, using measurement alternative (Note 11). In June 2020, the Group step-acquired 85% equity interest in Yousheng for a total consideration of RMB145,352 (US$22,499). The consideration comprised of the acquisition-date fair value of previously held convertible loans and loans that were previously provided to Yousheng amounting to RMB109,225 (US$16,907) and RMB14,527 (US$2,249), respectively, as well as prepayments for long-term investments amounting to RMB21,600 (US$3,343). The acquisition was completed on June 4, 2020 when the Company obtained control of Yousheng holding in aggregate 100% of its equity interest.

F-36

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

4. Business Combinations (continued)

The allocation of the purchase price as of the date of acquisition is summarized as follows:

	For the year ended August 31,
	2020			2020
	RMB			US$
Intangible assets (i) (Note 10)		72,000			11,145
Net tangible assets (ii)		(22,862	)		(3,539	)
Deferred tax liabilities, net		(264	)		(41	)
Goodwill (Note 12)		116,919			18,098
Total fair value of purchase price allocation		165,793			25,663
Consideration		145,352			22,499
Fair value of ownership interests previously held in the acquiree		20,441			3,164

(i) The acquired intangible assets consisted of technology and system. These intangible assets have estimated amortization periods of five years.

(ii) Net tangible assets acquired primarily included cash and cash equivalent of RMB2,604 (US$403), prepayment and other current assets of RMB2,767 (US$428), property and equipment of RMB2,893 (US$448), accrued expenses and other current liabilities of RMB15,655 (US$2,423), and prepayments from customers of RMB15,471 (US$2,395) as of the date of acquisition.

The purchase price allocation for the acquisitions was based on a valuation determined by the Group with the assistance of an independent third-party valuation firm. The significant inputs used in the purchase price allocations were revenue growth rates, gross margin rates, weighted-average cost of capital, discount rate, and terminal values.

A loss of RMB2,782 (US$431) in relation to the revaluation of the previously held equity interest and convertible loans were recorded in other income, net in the consolidated statement of loss for the year ended August 31, 2020. The acquisition-date fair value of previously held convertible loans was determined using an income approach, and the fair value of the previously held equity interest were also determined using an income approach. As Yousheng is a private company, the fair value measurements for previously held equity interest was estimated based on certain factors including discount rate, terminal growth rate, revenue growth rate, EBIT margin and adjustments for the lack of control and lack of marketability, as relevant, that market participants would consider when estimating the fair value of previously held equity interest.

The business combination did not have a material impact on the Company’s consolidated statements of operations and therefore pro forma disclosures have not been presented.

(e) Acquisition of Ruiyipeiyou

Beijing Ruiyipeiyou Education and Technology Co., Ltd. (“Ruiyipeiyou”) provides online math tutoring services to young children in small class, which aim to improve the comprehensive math capacities of young children.

F-37

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

4. Business Combinations (continued)

In August 2020, the Group acquired the business from Ruiyipeiyou to enhance the quality and customer experience on OneSmart Online, the online platform of the Group for a total consideration of RMB131,290 (US$20,322). The consideration comprised of the acquisition-date fair value of convertible loans that previously invested in Ruiyipeiyou amounting to RMB97,077 (US$15,026), prepayments for long-term investments amounting to RMB14,400 (US$ 2,229), as well as cash consideration amounting to RMB19,813 (US$3,067). The acquisition was completed on August 31, 2020 when the Company obtained control of the business.

The allocation of the purchase price as of the date of acquisition is summarized as follows:

	For the year ended August 31,
	2020			2020
	RMB			US$
Intangible assets (i) (Note 10)		17,000			2,631
Net tangible assets (ii)		(5,526	)		(855	)
Deferred tax liabilities, net		(4,250	)		(658	)
Goodwill (Note 12)		124,066			19,204
Total fair value of purchase price allocation		131,290			20,322
Consideration		131,290			20,322

(i) The acquired intangible assets consisted of technology and system. These intangible assets have estimated amortization periods of five years.

(ii) Net tangible assets acquired primarily included prepayments from customers of RMB5,526 (US$855) as of the date of acquisition.

The purchase price allocation for the acquisitions was based on a valuation determined by the Group with the assistance of an independent third-party valuation firm. The significant inputs used in the purchase price allocations were revenue growth rates, gross margin rates, weighted-average cost of capital, discount rate, and terminal values.

The business combination did not have a material impact on the Company’s consolidated statements of operations and therefore pro forma disclosures have not been presented.

(f) Other acquisitions that constitute business combinations are summarized as follows:

	For the years ended August 31,
	2019			2020			2021		2021
	RMB			RMB			RMB		US$
Intangible assets (i) (Note 10)		20,700			11,000			-		-
Net tangible liabilities (ii)		(174,405	)		(77,919	)		-		-
Goodwill (Note 12)		311,817			113,032			-		-
Total fair value of purchase price allocation		158,112			46,113			-		-
Cash consideration		143,740			28,000			-		-
Fair value of equity interests previously held in the acquirees		3,305			7,410			-		-
Fair value of non-controlling interests		11,067			10,703			-		-

(i) The acquired intangible assets consisted of customer relationship, with estimated amortization periods of two years.

F-38

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

4. Business Combinations (continued)

(ii) In the 2019 business acquisitions, net tangible assets acquired primarily included cash and cash equivalent of RMB17,898 (US$2,770), prepayment and other current assets of RMB14,561 (US$2,254), property and equipment of RMB7,225 (US$1,118), accrued expenses and other current liabilities of RMB23,038 (US$3,566) and prepayments from customers of RMB187,103 (US$28,962) and deferred tax liabilities, net of RMB3,948 (US$611) as of the date of acquisition. In the 2020 business acquisitions, net tangible assets acquired primarily included cash and cash equivalent of RMB24,450 (US$3,785), short-term investment of RMB20,013 (US$3,098), prepayment and other current assets of RMB116,645 (US$18,055), property and equipment of RMB24,777 (US$3,835), accrued expenses and other current liabilities of RMB208,012 (US$32,198), prepayments from customers of RMB55,340 (US$8,566) and deferred tax liabilities, net of RMB452 (US$70) as of the date of acquisition.

In relation to the revaluation of previously held equity interests, the Group recognized gain of RMB1,897, RMB594 and nil in the consolidated statement of income/(loss) for the years ended August 31, 2019, 2020 and 2021, respectively. The fair value of the previously held equity interest and non-controlling interests was determined using an income approach. As the acquirees are private companies, the fair value measurements for the non-controlling interests and previously held equity interests were estimated based on certain factors including discount rate, terminal growth rate, revenue growth rate, EBIT margin and adjustments for the lack of control and lack of marketability, as relevant, that market participants would consider when estimating the fair value of the noncontrolling interest and the previously held equity interest in acquirees.

5. Net revenues

	For the years ended August 31,
	2019		2020		2021		2021
	RMB		RMB		RMB		US$
Personalized and small class premium tutoring revenues		3,879,364		3,423,996		3,410,806		527,956
Other revenues		114,509		14,885		12,604		1,951
		3,993,873		3,438,881		3,423,410		529,907

6. Cash, cash equivalents and restricted cash

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Cash in bank		1,158,044		29,626		4,586
Restricted cash in bank <i>		187,241		355,017		54,953
		1,345,285		384,643		59,539

<i> This related to cash deposits in the bank accounts that are frozen by court order as the Company was subject to multiple legal proceedings, administrative proceedings, claims and other litigation as a result of overdue payments to service providers and loans payable to the lenders.

7. Short-term Investments

The Company’s short-term investments included cash deposits at floating rates in commercial banks and available-for-sale securities with maturities of one year or less. The following is a summary of the Company’s short-term investments:

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Commercial banks deposits		243,013		13,000		2,012
Available-for-sale securities		243,743		68,575		10,615
		486,756		81,575		12,627

For the years ended August 31, 2019, 2020 and 2021, the Group recognized interest income related to its commercial bank deposits of RMB11,679, RMB1,994 and RMB2,820 (US$437), respectively, in the consolidated statements of income/(loss).

For the years ended August 31, 2019, 2020 and 2021, the Group recognized realized gain on disposal of available-for-sale securities of RMB11,451, RMB7,110 and RMB100 (US$15), respectively, as other income in the consolidated statements of income/(loss). As of August 31, 2019, 2020 and 2021, there were unrealized gains/(loss) of RMB(1,802), RMB4,451 and RMB4,009 (US$621), respectively, and accrued interest of RMB 4,088, nil and nil, respectively.

As of August 31, 2021, all investments classified as available-for-sale securities have been recognized fully impairment loss RMB185,723 (US$28,748) because of the tutoring service business termination by the Company, which is compliance with the changes in the regulatory environment on the private education industry in China. 

F-39

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

8. Prepayments and other current assets

Prepayments and other current assets, net consisted of the following:  

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Prepaid rental expense		54,505		-		-
Loans to third parties		112,435		-		-
Receivable from a third-party payment platform		78,197		-		-
Prepayments to suppliers		42,482		-		-
Prepaid income tax, business tax, VAT and other surcharges		10,571		-		-
Deposits		18,408		-		-
Other receivables		-		-		-
Staff advances		7,610		-		-
Loans to employees		12,030		-		-
Others		8,632		-		-
Prepayments and other current assets, net		344,870		-		-

As of August 31, 2021, all prepayments and other current assets have been recognized fully impairment loss RMB605,423 (US$93,713) because of the tutoring service business termination by the Company, which is compliance with the changes in the regulatory environment on the private education industry in China.

9. Property and Equipment, Net

Property and equipment, net consisted of the following:

	As of August 31,
	2020			2021			2021
	RMB			RMB			US$
Furniture		57,051			-			-
Electronic equipment		225,749			-			-
Vehicles		3,889			1,902			294
Leasehold improvements		976,106			-			-
Buildings		44,776			47,776			7,395
		1,307,571			49,678			7,689
Less: accumulated depreciation		(741,074	)		(12,723	)		(1,969	)
Construction in progress		14,751			-			-
Property and equipment, net		581,248			36,955			5,720

For the years ended August 31, 2019, 2020 and 2021, the Group recorded depreciation expenses of RMB152,801, RMB209,663 and RMB196,168 (US$30,365), respectively.

No impairment charges were recognized on the property and equipment for the years ended August 31, 2019 and 2020.

However, the Opinion and a related series of notice, administrative measures or circular and the compliance measures taken by the Company have material adverse impact on our after-school tutoring services related to academic subjects in China’s compulsory education system, which in turn have adversely affected the Company’s results of operations and prospect. The Company have gradually terminated our after-school tutoring services related to academic subjects business since August 2021, and officially ceased our business in October 2021. As a result, the Company recognized impairment loss with net amount of RMB493,375(US$76,369) on the property and equipment for the year ended August 31, 2021.

Subsequent to the date, the Company sold two apartments, both transactions were completed in September 2021. Both transactions are disclosed in Note 28 Subsequent events.

F-40

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

10. Intangible assets, Net

Intangible assets, net consisted of the following:

	As of August 31,
	2020			2021		2021
	RMB			RMB		US$
Customer relationship		71,180			-		-
Trademark		111,450			-		-
Student base		2,390			-		-
License		23,600			-		-
Franchise agreements		9,420			-		-
Technology and system		127,600			-		-
		345,640			-		-
Less: accumulated amortization		(67,687	)		-		-
Intangible assets, net		277,953			-		-

For the years ended August 31, 2019, 2020 and 2021, the Group recorded amortization expenses of RMB23,081, RMB38,302 and RMB11,549 (US$1,788), respectively.

No impairment charges were recognized on intangible assets for years ended August 31, 2019 and 2020. The Company recognized impairment loss with amount of RMB197,328(US$30,544) on the intangible assets for the year ended August 31, 2021 because of the tutoring service business termination by the Company.

11. Long-term Investments

The Company’s long-term investments comprised of the following:

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Equity securities without readily determinable fair value		349,765		-		-
Equity method investments		84,272		-		-
Available-for-sale investments		614,141		-		-
		1,048,178		-		-

There were no impairment indicators for the investments and there were no impairment losses recognized for the year ended August 31, 2020. For the year ended August 31, 2021, the Company assessed all long-term investments for the impairment consideration. All the investments by the Company were related to the same industry which have been impacted materially by the policy directives of the Opinion. Juren Education Group and its affiliated companies, the biggest investment project with amount of RMB903,891 (US$139,913) by the Company, have announced its bankruptcy in August 2021. As a result, the Company recognized impairment loss with amount of RMB1,652,308 (US$255,759) on the long-term investments.

F-41

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

12. Goodwill

Goodwill balances as of August 31, 2020 and 2021 were as follows:

	RMB
Balance as of August 31, 2019		815,052
Goodwill acquired (Note 4)		702,596
Disposal of subsidiaries		(36,247	)
Balance as of August 31, 2020		1,481,401
Goodwill acquired (Note 4)		-
Disposal of subsidiaries		(404,841	)
Impairment charges		(1,076,560	)
Balance as of August 31, 2021		-
Balance as of August 31, 2021, in US$		-

No impairment charges were recorded during the years ended August 31, 2020. For the year ended August 31, 2021, the Company assessed all goodwill for the impairment consideration. The Company’s goodwill as of August 31, 2020 and 2021 relates to its acquisition of certain schools and companies in the same industry. which have been impacted materially by the policy directives of the Opinion. As a result, the Company recognized impairment loss with amount of RMB1,076,560 (US$166,640) on the goodwill.

13. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Salary and welfare payable		612,570		533,691		82,610
Other taxes payable		12,230		-		-
Accrued expenses		150,671		279,448		43,256
Deposits from franchisees		16,249		7,201		1,115
Payables for leasehold improvement		36,363		-		-
Payables for long-term investments		4,412		-		-
Interest payable		20,631		12,731		1,971
Others		35,929		35,393		5,477
		889,055		868,464		134,429

F-42

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

14. Share-Based Compensation

Amended and Restated 2015 Plan (the “Amended 2015 Plan”)

In connection with the Reorganization on September 17, 2017, the Company adopted the Amended and Restated 2015 Plan (the “Amended 2015 Plan”) to replace the 2015 Plan which was cancelled concurrently. Under the Amended 2015 Plan, the Board of Directors of the Company authorized to grant share options or other equity incentives to employees, directors or consultants to purchase up to an aggregate of 336,642,439 Class A ordinary shares. The employees generally received 102.10 options for each fully vested share that was outstanding as of September 17, 2017, totaling 63,880,024 fully vested options. The employees also received 16,442,655 and 49,634,837 share options at the same exchange ratio to replace the restricted shares that were vested or vesting on December 1, 2017 and 2018, respectively, as issued under the 2015 Plan. All of the share options contain a performance condition whereby no share options are exercisable until the consummation of a Qualified IPO. The share options expire 10 years from the date of grant. The Group accounted for the termination of the shares under the 2015 Plan and the concurrent issuance of options as replacement awards as a Type II modification in accordance with ASC 718, under which, the Group deferred the recognition of the incremental share-based compensation expense until the Qualified IPO occurred. Upon the IPO completion date, the Group recognized incremental share-based compensation amounting to RMB39,881 (US$6,173).

From November 2017 to immediately before IPO, the Group granted 164,865,010 share options under the Amended 2015 Plan. Whereas some of the share options carry requisite service periods of four years with: i) 50%, 25% and 25% of the share options vesting on the second, third and fourth anniversary of the vesting commencement date, respectively, or ii) 50% and 50% of the share options vesting on the second and fourth anniversary of the vesting commencement date, respectively, all of the share options contain the same IPO performance condition described in the paragraph above.

In February 2018, the Board of Directors approved an evergreen term of the Amended 2015 Plan which permits an annual 2.0% increase of the total number of ordinary shares outstanding on August 31 of the preceding calendar year of the Company on the first day of each the following nine fiscal years commencing on September 1, 2018.

F-43

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

14. Share-Based Compensation (continued)

Amended and Restated 2015 Plan (the “Amended 2015 Plan”) (continued)

During the year ended August 31, 2018, subsequent to the completion of the IPO, the Group granted 9,172,674 share options under the Amended 2015 Plan. Vesting terms included i) immediate vesting of 100% of the share options on date of grant, ii) vesting periods of 2 years, with immediate vesting of 1/3 of the share options on date of grant, first and second anniversary of the vesting commencement date, respectively; iii) a vesting period of 4 years, with 50% and 50% of the share options vesting on the second and fourth anniversary of the vesting commencement date, respectively, or iv) vesting periods of 4 years, with 25% of the share options vesting on each anniversary of the vesting commencement date.

During the year ended August 31, 2019, the Group granted 141,997,178 share options under the Amended 2015 Plan. Vesting terms included i) immediate vesting of 100% of the share options on date of grant, ii) vesting periods of 3 years, with immediate vesting of 25% of the share options on date of grant, 1/48 of the share options in the each month 1 year after the vesting commencement date, respectively; iii) vesting periods of 3 years, with 1/3 of the share options vesting on each anniversary of the vesting commencement date; iv) vesting periods of 4 years, with 50% and 50% of the share options vesting on the second and fourth anniversary of the vesting commencement date, respectively, or v) vesting periods of 4 years, with 25% of the share options vesting on each anniversary of the vesting commencement date. During the year, the Group also granted to an executive 39,669,960 options under the Amended 2015 Plan with market conditions tied to the Group’s market capitalization for specified periods while he remains employed by the Group. In addition, certain share options were modified to become fully invested immediately prior to an employee’s termination.

During the year ended August 31, 2019, the Group granted 14,556,320 restricted Class A ordinary shares (“Restricted Shares”) under the Amended 2015 Plan. Vesting terms included i) immediate vesting of 100% of the Restricted Shares after one year of the vesting commencement date, ii) vesting periods of 4 years, with 25% of the Restricted Shares vesting on each anniversary of the vesting commencement date.

During the year ended August 31, 2020, the Group granted 93,574,240 share options under the Amended 2015 Plan. Vesting terms included i) immediate vesting of 100% of the share options on date of grant, ii) vesting periods of 4 years, with 50% and 50% of the share options vesting on the second and fourth anniversary of the vesting commencement date, or iii) vesting periods of 4 years, with 25% of the share options vesting on each anniversary of the vesting commencement date, respectively.

During the year ended August 31, 2020, the Group granted 39,821,200 restricted Class A ordinary shares (“Restricted Shares”) under the Amended 2015 Plan. Vesting terms included vesting periods of 4 years, with 25% of the Restricted Shares vesting on each anniversary of the vesting commencement date.

During the fiscal year ended August 31, 2021, we granted 120,744,240 share options under the Amended and Restated 2015 Plan. Vesting terms included i) immediate vesting of 100% of the share options on date of grant, ii) vesting periods of 4 years, with 50% and 50% of the share options vesting on the second and fourth anniversary of the vesting commencement date, or iii) vesting periods of 4 years, with 25% of the share options vesting on each anniversary of the vesting commencement date, respectively.

During the year ended August 31, 2021, we granted 5,502,840 restricted Class A ordinary shares under the Amended and Restated 2015 Plan. Vesting terms included vesting periods of 4 years, with 25% of the Restricted Shares vesting on each anniversary of the vesting commencement date.

F-44

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

14. Share-Based Compensation (continued)

Amended and Restated 2015 Plan (the “Amended 2015 Plan”) (continued)

The fair value of the share options under the Amended 2015 Plan were determined on the grant dates using the binomial option pricing model with assistance from an independent valuation firm. Pre IPO, the Group determined the fair value of its ordinary shares using the income approach based on key assumptions including WACC and DLOM. The income approach involved applying appropriate discount rates to estimated cash flows that were based on earnings forecasts. The growth rates of the Group’s revenues, as well as major milestones that it achieved, contributed to the fair value of the ordinary shares. Subsequently to the IPO, fair value of the ordinary shares is the price of the Company’s publicly traded shares. The assumptions adopted to estimate the fair value of share options granted were as follows:

	Year ended	Year ended
	August 31, 2020	August 31, 2021
Risk-free interest rate	0.65%-1.92%	0.65%-1.92%
Expected volatility	51.8%-52.7%	33.27%
Suboptimal exercise factor	2.20-2.80	2.20-2.80
Fair value per ordinary share	US$0.05-US$0.12	US$0.05-US$0.12

Domestic Plan

In March 2017, the Board of Directors of Shanghai OneSmart approved an employee share incentive scheme under which, incentives are provided by certain of Shanghai OneSmart’s subsidiaries to their regional management and staff (the “Domestic Plan”). According to the scheme, the subsidiaries may grant to their employees options with independent annual performance conditions specified for each tranche of options, in four tranches, as well as an additional performance condition at the end of the fourth year based on the cumulative result of the business over the term of the four years. When vested, the options are exercisable into the subsidiaries’ equity interests. The share options expire 4 years from the date of grant.

On May 2, 2017, 120,000 options were granted to employees, accounting for 8% of the total equity interests in the subsidiaries. The exercise price ranged from RMB40 to RMB160 per option. The options are equity awards measured at their fair values on May 2, 2017, the grant date. Given only the achievement of the performance conditions of the first two tranches of the options were determined to be probable, each of the first two tranches of the options was accounted for as a separate award with its own service inception date and requisite service period. On March 31, 2019, the Group modified the annual performance condition for the fourth tranche of the options granted on May 2, 2017, however, the achievement of the third and fourth traches as well as the final cumulative result of the business over the term of four years continued to improbable. Thus, no incremental costs were incurred as a result of the modification. As of August 31, 2019 and 2020, 60,000 and nil options did not meet the performance conditions and were forfeited. The remaining 70,000 options were vested and exercised as of August 31, 2020.

On March 31, 2019, 10,000 options were granted to a certain employee, accounting for 1% of the total equity interests in a certain subsidiary. The exercise price is RMB80 per option. The options are equity awards measured at their fair values on March 31, 2019, the grant date, immediate vesting of 100% of the share options on date of grant.

F-45

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

14. Share-Based Compensation (continued)

Domestic Plan (continued)

The Group calculated the estimated fair value of the share options under the Domestic Plan on the grant date using the binomial option pricing model with assistance from an independent valuation firm. Assumptions used to determine the fair value of the share options granted under the Domestic Plan is summarized in the following table:

	For the year ended
	August 31, 2019
Risk-free interest rate	2.4%
Expected volatility	47.0%
Suboptimal exercise factor	2.80
Fair value per ordinary share	RMB351.24

Restricted shares issued to the founding shareholders of Shanghai Yimi (Note 4)

On February 1, 2020, OneSmart Online granted 9,677,288 restricted shares to the founding shareholders in connection with the acquisition of Yimi’s Target Business. The vesting of the restricted shares is subject to the achievement of certain performance target of Yimi’s Target Business. If performance target is achieved, 50% of the restricted shares shall vest on January 1, 2021 and remaining 50% shall vest on January 1, 2022. The restricted shares are measured at their fair values on February 1, 2020, the grant date. Given the achievement of the performance conditions were determined to be probable, each of the two tranches was accounted for as a separate award with its own service inception date and requisite service period.

The Group calculated the estimated fair value of the restricted shares on the grant date using the binomial option pricing model with assistance from an independent valuation firm. Assumptions used to determine the fair value of the restricted shares is summarized in the following table:

	For the year ended
	August 31, 2020
Risk-free interest rate	1.51%
Expected volatility	50.15%
Suboptimal exercise factor	2.80
Fair value per ordinary share	RMB1.41

F-46

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

14. Share-Based Compensation (continued)

Restricted shares issued to the founding shareholders of Shanghai Yimi (Note 4) (continued)

A summary of the share option activities under the Amended 2015 Plan is as follows:

										Weighted
				Weighted		Weighted				average
	Number of			average		average		Aggregate		remaining
	share			exercise		grant date		intrinsic		contractual
	options			price		fair value		value		term
				US$		US$		US$
Outstanding as of September 1, 2017		-			-		-		-		-
Granted		303,995,200			0.03		0.16
Forfeited		(2,804,550	)		0.08		0.09
Outstanding as of August 31, 2018		301,190,650			0.03		0.16		54,133		8.59
Granted		181,667,138			0.10		0.05
Forfeited		(33,355,010	)		0.17		0.08
Exercised		(55,658,760	)		0.02		0.02
Outstanding as of August 31, 2019		393,844,018			0.05		0.13		53,966		7.80
Granted		93,574,240			0.05		0.10
Forfeited		(29,876,751	)		0.11		0.11
Exercised		(65,654,200	)		0.01		0.13
Outstanding as of August 31, 2020		391,887,307			0.05		0.04		31,356		7.57
Granted		115,241,400			0.04		0.05
Forfeited		(82,902,302	)		0.03		0.14
Exercised		(81,138,360	)		0.02		0.17
Outstanding as of August 31, 2021		343,088,045			0.06		0.00		1,375		5.58
Vested and expected to vest as of August 31, 2021		343,088,045			0.06		0.00		1,375		5.58

A summary of the Restricted Shares activities under the Amended 2015 Plan is as follows:

								Weighted
				Weighted				average
	Number of			average		Aggregate		remaining
	Restricted			grant date		intrinsic		contractual
	Shares			fair value		value		term
				US$		US$
Outstanding as of September 1, 2018		-			-		-		-
Granted		14,556,320			0.21
Forfeited		(218,440	)		0.21
Outstanding as of August 31, 2019		14,337,880			0.21		2,737		2.80
Granted		39,821,200			0.20
Forfeited		(2,409,120	)		0.54
Exercised		(4,341,329	)		1.42
Outstanding as of August 31, 2020		47,408,631			0.07		5,025		0.01
Granted		5,502,840			0.11
Forfeited		(7,949,681	)		0.19
Exercised		(2,185,400	)		0.22
Outstanding as of August 31, 2021		42,776,390			0.04		596		1.61
Vested and expected to vest as of August 31, 2021		42,776,390			0.04		596		1.61

F-47

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

14. Share-Based Compensation (continued)

Restricted shares issued to the founding shareholders of Shanghai Yimi (Note 4) (continued)

A summary of the activities under the Domestic Plan is as follows:

				Weighted		Weighted
	Number of			average		average		Aggregate
	share			purchase		grant date		intrinsic
	options			price		fair value		value
				RMB		RMB		RMB
Outstanding as of September 1, 2017		120,000			93.33		151.19		7,023
Granted		-			-		-
Forfeited		-			-		-
Outstanding as of August 31, 2018		120,000			93.33		151.19		79,990
Granted		10,000			80.00		148.47
Forfeited		(60,000	)		93.33		151.19
Outstanding as of August 31, 2019		70,000			91.43		150.80		39,687
Granted		-			-		-
Forfeited		-			-		-
Exercised		(70,000	)		91.43		150.80
Outstanding as of August 31, 2020		-			-		-		-
Vested and expected to vest as of August 31, 2020		-			-		-		-

The aggregate intrinsic value is calculated as the difference between the exercise price of the awards and the fair value of the underlying ordinary shares at each reporting date, for those awards that had exercise price below the estimated fair value of the relevant ordinary shares.

Under the Amended 2015 Plan, the outstanding unvested awards including share options and Restricted Shares resulted in an aggregate intrinsic value of RMB12,734 (US$1,971) and total unrecognized share-based compensation expense related to the unvested awards was RMB44,532 (US$6,893) as of August 31, 2021. The expense is expected to be recognized over a weighted-average period of 1.25 years.

The Company recognized share-based compensation expense for the years ended August 31, 2019, 2020 and 2021 as follows:

	For the years ended August 31,
	2019		2020		2021		2021
	RMB		RMB		RMB		US$
Sales and marketing		906		674		110		17
General and administrative		70,626		137,312		42,752		6,618
Total share-based compensation expense		71,532		137,986		42,862		6,635

F-48

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

15. Income Taxes

Cayman Islands

Under the current laws of the Cayman Islands, the Company, OneSmart Online and Yimi Cayman are not subject to tax on income or capital gain arising in Cayman Islands. Additionally, upon payments of dividends by the Company, OneSmart Online and Yimi Cayman to its shareholders, no Cayman Islands withholding tax will be imposed.

British Virgin Islands

Under the current laws of the British Virgin Islands, OneSmart BVI is not subject to tax on income or capital gains. In addition, upon payments of dividends by the company to its shareholders, no British Virgin Islands withholding tax will be imposed.

Hong Kong

OneSmart HK, Great EDU and Yimi HK are incorporated in Hong Kong and are subject to Hong Kong profits tax of 16.5% on the activities conducted in Hong Kong. No provision for Hong Kong profits tax was made in the consolidated financial statements as it had no assessable income for the years ended August 31, 2019, 2020 and 2021.

PRC

The Company’s subsidiaries and VIEs in the PRC are subject to the statutory rate of 25%, in accordance with the Enterprise Income Tax law (the “EIT Law”), which was effective since January 1, 2008. Shanghai Jing Xue Rui meets the requirements of “high and new technology enterprise” (“HNTE”) and could enjoy the preferential tax rate of 15%. Shanghai Jing Xue Rui has renewed the HNTE certificate in 2020 and is subject to an enterprise income tax (“EIT”) rate of 15% from calendar years 2020 through 2022.

Dividends, interests, rent or royalties payable by the Group’s PRC subsidiaries, to non-PRC resident enterprises, and proceeds from any such non-resident enterprise investor’s disposition of assets (after deducting the net value of such assets) shall be subject to 10% withholding tax, unless the respective non-PRC resident enterprise’s jurisdiction of incorporation has a tax treaty or arrangements with China that provides for a reduced withholding tax rate or an exemption from withholding tax.

The current and deferred portions of income tax expense included in the consolidated statements of income were as follows:

	For the years ended
	August 31,
	2019			2020			2021		2021
	RMB			RMB			RMB		US$
Current		138,552			36,458			30,870		4,778
Deferred		(17,011	)		(74,243	)		-		-
Income tax expense/(benefit)		121,541			(37,785	)		30,870		4,778

F-49

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

15. Income Taxes (continued)

PRC (continued)

The reconciliations of the income tax expense for the years ended August 31, 2019, 2020 and 2021 were as follows:

	For the years ended August 31,
	2019			2020			2021			2021
	RMB			RMB			RMB			US$
Income/(loss) before income tax expense and share of net (loss)/income from equity investees		316,069			(788,450	)		(4,983,919	)		(771,458	)
PRC statutory tax rate		25	%		25	%		25	%		25	%
Income tax/(benefit) at statutory tax rate		79,017			(197,112	)		(1,245,980	)		(192,865	)
Non-deductible expenses		30,961			3,028			1,148,509			177,777
International tax rate difference		6,000			39,619			23,335			3,612
Preferential tax rate		(8,357	)		(14,306	)		(1,579	)		(244	)
Effect of income tax exemptions		(1,232	)		(538	)		-			-
Equity pick-up		(2,698	)		-			-			-
Additional tax deduction for qualified research and development expenses		(5,525	)		(4,278	)		(4,176	)		(646	)
Change in valuation allowance		11,006			134,720			110,761			17,144
Expired loss		11,905			-			-			-
Interest and penalty		1,605			1,096			-			-
Outside basis difference		(1,583	)		-			-			-
Effect of changes in tax rates on deferred taxes		442			(14	)		-			-
Income tax expense/(benefit)		121,541			(37,785	)		30,870			4,778

F-50

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

15. Income Taxes (continued)

PRC (continued)

The significant components of the Group’s deferred tax assets were as follows:

	For the years ended August 31,
	2020			2021		2021
	RMB			RMB		US$
Non-current deferred tax assets:
Tax loss carry forward		297,887			-		-
Accrued expenses and other payables		113,981			-		-
Unrecognized financing expenses of long-term payable		2,192			-		-
Fair value changes on financial assets		38,265			-		-
Leasing liability		353,048			-
Impairment of other receivables and investments		52,944			-		-
Excessive advertising expense		36,230			-		-
Others		2,050			-		-
Less: valuation allowance		(325,604	)		-		-
Non-current deferred tax assets, net		570,993			-		-
Non-current deferred tax liabilities:					-		-
Intangible assets		(67,037	)		-		-
Unrealized gain on investments		(186	)		-		-
Capitalization of bonus		(15,873	)		-		-
Fair value changes on private equity investments		(3,081	)		-		-
Accelerated depreciation of fixed assets		(9,468	)		-		-
Right-of-use Asset		(353,048	)		-		-
Equity in gain of unconsolidated investees		(1,371	)		-		-
Others		(233	)		-		-
Non-current deferred tax liabilities, net		(450,297	)		-		-
Deferred tax assets, net		120,696			-		-

The Group operates through subsidiaries, VIEs and subsidiaries of VIEs and valuation allowance is considered for each of the entities on an individual basis. The Group recorded valuation allowance against deferred tax assets of those entities that were in a 3-year cumulative loss and are not forecasting profits in the near future as of August 31, 2020 and 2021. In making such determination, the Group also evaluated a variety of factors including the Group’s operating history, accumulated deficit, existence of taxable temporary differences and reversal periods.

As of August 31, 2021, the Group had taxable losses of RMB1,303,410 (US$201,754) derived from entities in the PRC, which can be carried forward per tax regulation to offset future net profit for income tax purposes. The PRC taxable loss will expire from December 31, 2021 to 2026 if not utilized.

As of August 31, 2021, the total amount of net loss from its PRC subsidiaries as well as VIEs was RMB 2,455,436 (US$ 380,075). The amount of unrecognized deferred tax assets for temporary differences related to investments in foreign subsidiaries is not determined because such a determination is not practicable.

F-51

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

15. Income Taxes (continued)

Unrecognized Tax Benefit

As of August 31,2020 and 2021, the Group had unrecognized tax benefit of RMB25,871 and nil, of which RMB23,300 and nil, respectively, are presented on a net basis against the deferred tax assets related to tax loss carry forwards on the consolidated balance sheets. This primarily represents the estimated income tax expense the Group would pay should its income tax returns have been prepared in accordance with the current PRC tax laws and regulations. It is possible that the amount of unrecognized benefit will further change in the next 12 months; however, an estimate of the range of the possible change cannot be made at this moment. As of August 31,2020 and 2021, unrecognized tax benefits of RMB2,571 and nil, respectively, if ultimately recognized, will impact the effective tax rate. A reconciliation of the beginning and ending amount of unrecognized tax benefit was as follows:

	For the years ended August 31,
	2020			2021		2021
	RMB			RMB		US$
Balance at September 1		25,183			-		-
Increase		5,542			-		-
Decrease		(4,854	)		-		-
Balance at August 31		25,871			-		-

As of August 31, 2021, the tax years ended December 31, 2015 through period ended as of the reporting date for the WFOE, the VIEs and VIEs’ subsidiaries remain open to examination by the PRC tax authorities.

16. Shareholders’ Equity

On March 28, 2018, the Company completed its IPO on the New York Stock Exchange. The Company offered 16,300,000 ADSs representing 652,000,000 Class A ordinary shares at US$11.00 per ADS. Net proceeds from the IPO deducting underwriting discount and other expenses were RMB1,048,660 (US$162,321). IPO costs of RMB26,752 (US$4,141) were recorded as reduction of the proceeds from the IPO in shareholders’ equity.

Pursuant to the Company’s memorandum and articles of association, upon the completion of the IPO, all of the then outstanding redeemable convertible preferred shares automatically converted into 3,568,365,545 Class A ordinary shares and the related aggregate carrying value of RMB4,272,293 was reclassified from mezzanine equity to shareholders’ equity. The participating rights (liquidation and dividend rights) of the Class A and Class B ordinary shares are identical, except with respect to voting and conversion rights. Holders of Class A and Class B ordinary shares shall all time vote together as one class on all resolutions submitted to a vote by the shareholders. Each share of Class A and Class B ordinary shares entitle the holder thereof to one vote per share and twenty votes per share on all matters subject to vote at general meetings of the Company respectively. Each share of Class B ordinary share is convertible into one Class A ordinary share at any time at the option of the holder thereof. The right to convert shall be exercisable by the holder of Class B ordinary share delivering a written notice to the Company that such holders elect to convert a specified number of Class B ordinary shares into Class A ordinary shares. In no event shall Class A ordinary shares be convertible into Class B ordinary shares.

F-52

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

16. Shareholders’ Equity (continued)

As of August 31, 2020, the Company had ordinary shares outstanding comprising of 4,146,103,947 Class A ordinary shares and 2,296,842,016 Class B ordinary shares, respectively. No Class B ordinary shares were converted into Class A ordinary shares as of August 31, 2020.

As of August 31, 2021, the Company had ordinary shares outstanding comprising of 4,321,229,545 Class A ordinary shares and 2,290,430,016 Class B ordinary shares, respectively. No Class B ordinary shares were converted into Class A ordinary shares as of August 31, 2021.

During the year ended August 31, 2020, 76,586,600 treasury stock in total were repurchased by the Company from the open market at US$0.1300 per share for RMB70,889. 198,011,720 and 24,691,358 treasury stock were held by the depositary bank and the Company, respectively, as of August 31, 2020. There was no repurchase occurred on treasury stock during the year ended August 31, 2021. 9,976 and 10,089 treasury stock were held by the depositary bank and the Company, respectively, as of August 31, 2021.

On July 1, 2020, the Group acquired additional 49% noncontrolling interest of our subsidiary, Beijing Ruihuisi Education and Consulting Co., Ltd. with a total consideration of RMB61,250 (US$9,481). 

17. Related Party Transactions

The Group had the following balances with related parties as of August 31, 2020 and 2021, respectively:

Names of the related parties	Relationship with the Group
Shanghai Ya Qiao Education Investment Co., Ltd. (“Ya Qiao Education”)	Equity investee
Shanghai Luo Bo Education Technology Co.,Ltd. (“Luo Bo”)	Equity investee
Fujian Hexi Equity Investment Partnership (Limited Partnership) (“He Xi”)	Equity investee
Beijing Tus-Juren Education Technology Co., Ltd. (“Tus-Juren”)	Former equity investee

(a) Amounts due from related parties

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Ya Qiao Education		20,400		-		-
Luo Bo		491		-		-

The amounts due from Ya Qiao Education is interest-free, unsecured and payable within 5 years from draw down. In April 2019, the Group had signed an agreement with Ya Qiao Education to convert RMB16,500 (US$2,554) receivables to 75% of equity investment in Ya Qiao Education. As of August 31, 2021, the equity acquisition transaction was not yet completed. The Company recognized impairment loss RMB10,849 (US$1,679) on amounts due from related parties by the year ended August 31, 2021.

F-53

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

17. Related Party Transactions (continued)

(b) Amounts due to related parties

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
He Xi		13,644		-		-
Luo Bo		803		1,205		187

(c) Transactions with the related party

	For the years ended August 31,
	2019		2020		2021		2021
	RMB		RMB		RMB		US$
Other revenues
Tus-Juren		6,772		-		-		-

In October 2018, the Group acquired 30% of equity investment in Beijing Tus-Juren Education Technology Co., Ltd., or Tus-Juren, a leading K-12 after-school education company in China. As the Company had significant influence, Tus-Juren was accounted for as an equity method investment. In March 2019, the Group disposed 12% of equity investment in Tus-Juren and lost its significant influence over Tus-Juren. The Group recorded the balance as long-term investment using measurement alternative (Note 11) at RMB134,143 (US$20,764) as of August 31, 2020. The Group provided consulting services and charged licensing fees to Tus-Juren which were recorded as other revenues.

From November 2018 to February 2020, the Group lent five-year convertible loans in the aggregate principal amount of RMB721,210 (US$111,636) to Tus-Juren, which are recognized in available-for-sale investments (Note 11) to provide financial support for its operations. Such convertible loan bears an annual interest of 10% and the Group has the option to convert the principal and any unpaid interests into the equity interests of Tus-Juren at a pre-determined valuation at any time after either the third or fourth anniversary from the borrowing date. In February 2020, the Group signed a supplement agreement with Juren to waive the interests on the convertible loans beginning from December 1, 2019. The modifications are considered as extinguishments with RMB153,061 (US$23,692) losses recognized in 2020.

In addition, as of August 31, 2021, the Group provided RMB195,726 (US$30,296) loans to Tus-Juren and its subsidiaries. However, Tus-Juren and its subsidiaries, have announced its bankruptcy in August 2021, which is affected by the changes in the regulatory environment on the private education industry in China. As a result, as of August 31, 2021, the Company recognized fully impairment loss for the loans recorded in prepayment and other current assets to Tus-Juren and its subsidiaries.

F-54

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

18. Other non-current assets

Other non-current assets consisted of the following:

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Rental deposits		122,968		-		-
Prepayment for long-term investments		17,383		-		-
Due from third parties(a)		444,200		-		-
Deferred assets		54,341		-		-
Others		-		-		-
		638,892		-		-

(a) Due from third parties primarily consisted of loans of RMB357,040 (US$55,266)  and nil provided to a third party during the year ended August 31, 2020 and 2021, respectively.

As of August 31, 2021, all other non-current assets have been recognized fully impairment loss RMB81,024 (US$12,542) because of the tutoring service business termination by the Company, which is compliance with the changes in the regulatory environment on the private education industry in China.

19. Loans

The following table presents the Company’s outstanding loans as of August 31, 2020 and 2021:

		As of August 31,
		2020		2021		2021
		RMB		RMB		US$
Short-term loans	(a)		789,550		498,574		77,174
Long-term loans, current portion	(b)		295,433		513,432		79,474
Long-term loans	(b)		1,023,151		135,000		20,897

(a) Short-term loans

Short-term loans consisted of several bank loans mainly denominated in RMB. As of August 31, 2021, all short-term loans borrowed in 2020 were repaid in full.

In January 2020, Shanghai OneSmart entered into a banking facility agreement with China Merchants Bank, pursuant to which Shanghai OneSmart is entitled to borrow a loan of RMB95,000(US$14,705) with floating interest rate benchmarked to the one-year lending rate of PBOC. As of August 31, 2020, Shanghai OneSmart drew down the amount in full. The loan was intended for general working capital purposes and was guaranteed by Shanghai Jing Xue Rui, and the Founder, Xi Zhang. As of August 31, 2021, this loan was fully repaid.

In January, March and April 2020, Shanghai OneSmart entered into four loan agreements with Shanghai Pudong Development Bank, pursuant to which Shanghai OneSmart is entitled to borrow RMB400,000 (US$61,916) in aggregate with floating interest rate benchmarked to the one-year lending rate of PBOC. As of August 31, 2020, Shanghai OneSmart drew down the amount in full. The loans were intended for general working capital purposes and guaranteed by Shanghai Jing Xue Rui, and the Founder, Xi Zhang. One of these loans amounting to RMB200,000 (US$30,958) was secured by deposits of US$32,000, which was recorded in short-term investments as of August 31, 2020. As of August 31, 2021, this loan was fully repaid.

F-55

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

19. Loans (continued)

In February 2020, Shanghai OneSmart factored certain intercompany notes receivable to Bank of Ningbo Co., Ltd. for total proceeds of RMB26,300 (US$4,071). The loan was intended for general working capital purposes; and was guaranteed by Shanghai Jing Xue Rui, and the Founder, Xi Zhang. As of August 31, 2021, this loan was fully repaid.

In March 2020, Shanghai OneSmart entered into three loan agreements with China CITIC Bank, pursuant to which Shanghai OneSmart is entitled to borrow RMB140,000 (US$21,670) in aggregate with floating interest rate benchmarked to the one-year lending rate of PBOC. As of August 31, 2020, Shanghai OneSmart drew down the amount in full. The loans were intended for general working capital purposes and guaranteed by Shanghai Jing Xue Rui, and the Founder, Xi Zhang. The deposits in restricted cash pledged for these short-term loans was RMB40,212 (US$6,224) as of August 31, 2020. As of August 31, 2021, this loan was fully repaid.

In March 2020, Shanghai OneSmart entered into a banking facility agreement with China MinSheng Bank, pursuant to which Shanghai OneSmart is entitled to borrow loans of RMB100,000 (US$15,479) in total with an annual interest rate of 4.785%. As of August 31, 2020, Shanghai OneSmart drew down RMB50,000 (US$7,739). The loans were intended for general working capital purposes and guaranteed by the Founder, Xi Zhang. As of August 31, 2021, this loan was fully repaid.

In April 2020, Shanghai OneSmart entered into a banking facility agreement with China Everbright Bank Co. Ltd, Seoul Branch, pursuant to which Shanghai OneSmart is entitled to borrow a term loan facility of up to EUR10,000 with a floating interest rate of EURIBOR+1.7% to finance general working capital purpose. As of August 31, 2020, Shanghai OneSmart drew down EUR9,800. The deposit in restricted cash pledged for this short-term loan was RMB24,060 (US$3,724) as of August 31, 2020. As of August 31, 2021, this loan was fully repaid.

In March 2021, Shanghai OneSmart entered into a banking facility agreement with China Merchants Bank, pursuant to which Shanghai OneSmart is entitled to borrow a loan of RMB90,000(US$13,931) with floating interest rate benchmarked to the one-year lending rate of PBOC. As of August 31, 2020, Shanghai OneSmart drew down the amount RMB60,000(US$9,287). The loan was intended for general working capital purposes and was guaranteed by Shanghai Jing Xue Rui, and the Founder, Xi Zhang.

In March 2021, Shanghai OneSmart entered into three loan agreements with China CITIC Bank, pursuant to which Shanghai OneSmart is entitled to borrow RMB98,000 (US$15,169) in aggregate with floating interest rate benchmarked to the one-year lending rate of PBOC. As of August 31, 2021, Shanghai OneSmart drew down the amount in full. The loans were intended for general working capital purposes and guaranteed by Meta Data Limited, and the Founder, Xi Zhang.

(b) Long-term loans

In November 2017, Shanghai OneSmart entered into a banking facility agreement with Shanghai Pudong Development Bank, pursuant to which Shanghai OneSmart is entitled to borrow a RMB denominated loan of RMB450,000 (US$69,655) for five years with a floating interest rate benchmarked to the five-year lending rate of PBOC and adjusted every January during the five-year period. Under the terms of the agreement, the Company shall repay in fixed installments every December over 5 years. Shanghai OneSmart drew down the RMB450,000 (US$69,655) facility in full in December 2017, repaid RMB45,000 (US$6,966) in December 2018, and repaid RMB67,500 (US$10,448) in December 2019. The loan was intended for general working capital purposes; and is guaranteed by the Company, Shanghai Jing Xue Rui, and the Founder, Xi Zhang.

In March 2019, The Company entered into a banking facility agreement with UBS AG Singapore Branch, pursuant to which Shanghai OneSmart is entitled to borrow a USD denominated loan of US$139,000 term facility and US$61,000 greenshoe facility with a floating interest rate of LIBOR+2.7 %. The term facility has a three-year term from the initial drawdown date and should be repaid in installments. The Company drew down the US$139,000 term facility in full in March 2019. The proceeds from this term facility were used for the Group’s share repurchase program, working capital, capital expenditure, and other general corporate purposes; and is guaranteed by OneSmart HK and subject to certain financial covenants as defined in the facility agreement. As of August 31, 2020, the Company breached financial covenants due to the results of operations have been materially and adversely affected by the outbreak of COVID-19. The Company signed a waiver request letter and an amendment agreement with UBS AG Singapore Branch in June, 2020.

F-56

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

19. Loans (continued)

In April 2019, Shanghai OneSmart Education Investment entered into a banking facility agreement with Shanghai Pudong Development Bank, pursuant to which Shanghai OneSmart is entitled to borrow a RMB denominated loan of RMB43,200(US$6,687) for five years with a floating interest rate benchmarked to the five-year lending rate of PBOC. Under the terms of the agreement, the Group will repay in fixed installments every April over 5 years. Shanghai OneSmart Education Investment drew down the RMB43,200 (US$6,687) facility in full in April 2019 and repaid RMB4,320 (US$669) in April 2020. The loan was intended for acquisition of Tianjin Huaying, and is guaranteed by Shanghai OneSmart and the Founder, Xi Zhang. The loan was repaid fully in September 2020.

In January 2020, OneSmart Education Investment entered into a bank loan agreement with Shanghai Pudong Development Bank, pursuant to which Shanghai OneSmart is entitled to borrow a RMB denominated loan of RMB14,400 (US$2,229) for four years with a floating interest rate benchmarked to the one-year lending rate of PBOC. The loan was intended for acquisition of Tianjin Huaying, and is guaranteed by Shanghai OneSmart and the Founder, Xi Zhang. The loan was pledge by 100% equity of Tianjin Huaying. The loan was repaid fully in September 2020.

As of August 31, 2021, the maturities of the loan principals will be due according to the following schedule:

	RMB		US$
2022		1,012,007		156,648
2023		135,000		20,897
2024		-		-
2025		-		-
2026		-		-
		1,147,007		177,545

20. Convertible senior notes

On February 28, 2020 and March 16, 2020, the Company issued US$25 million and US$10 million convertible senior notes (the “Notes”) to Yiheng Capital Partners, L.P., (“Yiheng Capital”) and Keenan Capital Fund, LP, (“Keenan Capital”), respectively. Both Yiheng Capital and Keenan Capital are existing minority shareholders of the Company. Interest shall be payable semi-annually in arrears at a rate of 4.75% per annum on each August 1 and February 1, commencing on August 1, 2020 . The Notes will mature on February 28, 2025 and March 16, 2025, respectively unless repurchased or converted in accordance with their terms prior to such date.

The Notes holders have the right, at their option, to convert the outstanding principal amount of the Notes, to convert all or any portion (if the portion to be converted is US$1,000 principal amount or an integral multiple thereof) of the Notes at any time after the execution of proof of initial conversion price in form and substance prior to the close of business on the second business day immediately preceding the maturity date into fully paid Class A Shares at the applicable conversion rate. (the “Conversion Option”).

The initial conversion price is US$148.08 and US$162.52 of the Company’s ADS per US$1,000 principal amount of the Notes (which is equivalent to an initial conversion price of approximately US$6.75 and US$6.15 per ADS). The conversion rate will be subject to adjustment in some events.

The holders may require the Company to repurchase all or a portion of the Notes for cash on February 28, 2023 and March 16, 2023 at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.

F-57

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

20. Convertible Senior Notes (continued)

If certain events of default, changes in tax laws of the relevant taxing jurisdiction or fundamental change as defined in the indenture for the Notes were to occur, the outstanding obligations under the Notes could be immediately due and payable (the “Contingent Redemption Options”). The Company will pay additional interest, at its election, as the sole remedy relating to the failure to comply with certain reporting obligations as defined in the indenture of the Notes. In addition, the Notes provide its holders with additional interest equal to the fair value of any dividends received by the holders of the Company’s ordinary shares (the “Contingent Interest Features”).

The Company evaluated the embedded conversion features contained in the Notes and determined that the Conversion Option was not required to be bifurcated because it met the scope exception provided for under ASC 815-10-15-74(a).

The Company also evaluated the embedded Contingent Redemption Options and Contingent Interest Features contained in the Notes in accordance with ASC 815 to determine if these features require bifurcation. The Contingent Redemption Options were not required to be bifurcated because they are considered to be clearly and closely related to the debt host, as the Notes were not issued at a substantial discount and are redeemable at par.

The Contingent Interest Features are not considered to be clearly and closely related to the debt host and met the definition of a derivative. However, the fair value of the Contingent Interest Features on the issuance date and at December 31, 2020 was not significant. In addition, the Company assessed whether the additional interest payments need to be accrued as a liability in accordance with ASC 450. Since the likelihood of the occurrence of such default events is determined to be remote, the Company did not accrue additional interest expense for the year ended August 31, 2021. The Company will continue to assess the accrual for these additional interest payment liabilities at each reporting date.

Furthermore, no beneficial conversion feature was recognized for the Notes as the fair value per ADS at the commitment date was US$5.44 and US$5.02, which was less than the most favorable conversion price.

F-58

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

21. Earnings/(Loss) Per Share

The following table sets forth the computation of basic and diluted net income per share for the following periods:

	As of August 31,
	2019		2020			2021			2021
	RMB		RMB			RMB			US$
Numerator:
Net income/(loss) attribute to Meta Data Limited’s shareholders		245,368		(729,829	)		(4,987,567	)		(772,022	)
Accretion to redemption value of Preferred Shares		-		-			-			-
Deemed dividend-repurchase of Preferred Shares		-		-			-			-
Net income/(loss) attributable to ordinary shareholders for computing net income per ordinary share - basic and diluted		245,368		(729,829	)		(4,987,567	)		(772,022	)
Denominator:
Weighted average number of shares used in calculating net income/(loss) per ordinary share - basic (in millions of shares)		6,460		6,451			6,612			6,612
Incremental weighted-average ordinary shares from assumed exercise of share options and vesting of restricted shares using the treasury stock method (in millions of shares)		249		-			-			-
Weighted average number of shares used in calculating net income/(loss) per ordinary share - diluted (in millions of shares)		6,709		6,451			6,612			6,612
Earnings/(loss) per share - basic		0.0380		(0.1131	)		(0.7543	)		(0.1168	)
Earnings/(loss) per share - diluted		0.0366		(0.1131	)		(0.7543	)		(0.1168	)

The redeemable convertible preferred shares that were issued as part of the Reorganization and presented on a retroactive basis did not share the losses of the Company. The redeemable convertible preferred shares did not have an impact on diluted EPS for the years ended August 31, 2021 on an if-converted or two-class method, as the redeemable convertible preferred shares did not carry any preferred dividend rights and only participated in all dividends on a one-to-one per-share basis with the holders of ordinary shares.

No adjustments were made to the basic earnings/(loss) per share amounts presented for the year ended August 31, 2020 and August 31, 2021 as the impact of the outstanding share options and restricted shares and convertible senior notes in the relevant periods were anti-dilutive.

F-59

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

22. Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income were as follows:

				Foreign
	Unrealized			currency
	gains/(loss) on			translation
	investment			adjustment			Total
	RMB						RMB
Balance as of September 1, 2017		19,123			-			19,123
Other comprehensive income before reclassification, net of tax		37,157			-			37,157
Amounts reclassified from accumulated other comprehensive income, net of tax		(13,838	)		-			(13,838	)
Foreign currency translation adjustment		-			86,458			86,458
Balance as of August 31, 2018		42,442			86,458			128,900
Other comprehensive income before reclassification, net of tax		(35,150	)		-			(35,150	)
Amounts reclassified from accumulated other comprehensive income, net of tax		(11	)		-			(11	)
Foreign currency translation adjustment		-			(6,591	)		(6,591	)
Balance as of August 31, 2019		7,281			79,867			87,148
Other comprehensive income before reclassification, net of tax		(8,885	)		-			(8,885	)
Amounts reclassified from accumulated other comprehensive income, net of tax		10,561			-			10,561
Foreign currency translation adjustment		-			10,343			10,343
Balance as of August 31, 2020		8,957			90,210			99,167
Other comprehensive income before reclassification, net of tax		(15,905	)		-			(15,905	)
Amounts reclassified from accumulated other comprehensive income, net of tax		4,210			5,221			9,431
Balance as of August 31, 2021		(2,738	)		95,431			92,693
Balance as of August 31, 2021, in US$		(424	)		14,770			14,346

F-60

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

23. Redeemable Convertible Preferred Shares

The Company issued 1,890,686,563 and 35,757,200 of Series A and Series A-1 redeemable convertible preferred shares (the “Preferred Shares”) to shareholders of the VIEs in connection with the Reorganization. The Preferred Shares are recorded at fair value on the issuance date and is presented on a retroactive basis.

In September 2017, immediately following the Reorganization, the Company issued 1,840,535,677 Series A-1 redeemable convertible preferred shares to new investors for total cash consideration of RMB1,840,536 (US$284,895). Accretion charge of RMB758,898 (US$117,469), related to the Series A-1 redeemable convertible preferred shares was recorded as an increase to the net loss attributable to ordinary shareholders. The Group subsequently repurchased an aggregate of 341,256,445 Series A redeemable convertible preferred shares for cash consideration of US$46,850 from Then Shareholders.

In December 2017, the Founder transferred 142,642,550 of his Class B ordinary shares to a new investor for cash consideration of RMB163,023 (US$25,234) and each of such transferred ordinary share was re-designated as a Series A-1 redeemable convertible preferred share. Accretion charge of RMB204,007 (US$31,578), related to the Series A-1 redeemable convertible preferred shares was recorded as an increase to the net loss attributable to ordinary shareholders.

The following is a summary of the significant terms of the Preferred Shares:

Conversion rights

The holders of the Preferred Shares were entitled to convert, at the option of the holder thereof, at any time following the date of the first issuance of the respective Preferred Shares applicable of such Preferred Share, into such number of Class A ordinary shares as was determined by dividing the deemed issue price (“Adjusted Issue Price”) applicable to such series of Preferred Shares by the conversion price applicable to such series of Preferred Shares (the “Conversion Price”), in effect on the date of conversion. The initial Conversion Price shall initially equal the Adjusted Issue Price applicable to such Preferred Share, and shall be adjusted from time to time. The initial conversion ratio for Preferred Shares to Class A ordinary shares shall be 1:1.

Automatic Conversion

Each Preferred Share, shall automatically be converted into one Class A ordinary share at the then-effective conversion ratio applicable to such Preferred Share upon the closing of a firm commitment underwritten public offering in the United States on the New York Stock Exchange or the NASDAQ Global Market pursuant to an effective registration statement under the Securities Act, or on the Main Board of Hong Kong Stock Exchange or another internationally recognized stock exchange approved by the Board, including certain directors appointed by the Series A-1 redeemable convertible preferred shareholders, covering the offer and sale of Class A ordinary shares of the Company to the public, at a public offering price per share that implies a market capitalization of the Company immediately prior to such offering of not less than (i) RMB6,500,000 or its US$ equivalent if the IPO occurs within 18 months following the closing date of the Preferred Shares issuance (the “Closing Date”), (ii) RMB7,000,000 or its US$ equivalent if the IPO occurs within 18 to 27 months following the Closing Date, or (iii) RMB7,500,000 or its US$ equivalent if the IPO occurs after 27 months following the Closing Date but before the third anniversary of the Closing Date, (the “Qualified IPO”).

Dividends

The holders of the Preferred Shares shall be entitled to receive dividends when and if declared by the Board of Directors, pro rata on an as-converted basis, without preference on the ordinary shares or any other classes of shares of the Company.

No dividends were declared for the periods presented.

Voting rights

The holders of each Preferred Shares were entitled to the number of votes equal to the number of Class A ordinary shares into which such Preferred Share could be converted at the voting date.

F-61

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

23. Redeemable Convertible Preferred Shares (continued)

Redemption

The Preferred Shares were redeemable by the holders at any time after the earlier of the occurrence of the following event: (i) the Company fails to complete a Qualified IPO within 36 months after the closing of the Preferred Shares issuance (ii) relevant transactions have not been completed in accordance with the documents governing the Reorganization within 12 months following the closing of the Reorganization, and (iii) material breach of certain governing documents of the Reorganization where the breach remains un-remedied within 30 days after a written notice is delivered by certain holders of Series A-1 redeemable convertible preferred shares. Redemption were at amounts equal to the sum of the Adjusted Issue Price plus accrued daily interest at 10% per annum and all declared but unpaid dividends.

Liquidation Preference

In the event of liquidation, dissolution or winding up of the Company, the assets of the Company available for distribution shall be made as follows:

- First, the holders of Series A-1 redeemable convertible preferred shares were entitled to receive an amount equal to issue price, reduced by any and all dividends received on or before the date of such distribution and any net proceeds from any sale, transfer or other disposition of Series A-1 redeemable convertible preferred shares received by such holders of preferred shares, in preference to any distribution to the holder of the Series A redeemable convertible preferred shares and the Ordinary Shares of the Company; and

- After payment was made to the holders of the Series A-1 redeemable convertible preferred shares holders in accordance with the above, the remaining assets of the Company available for distribution to shareholders shall be distributed ratably among all shareholders according to the number of Ordinary Shares and Preferred Shares as if they had been converted into Class A ordinary shares immediately prior to such liquidation, dissolution or winding up of the Company.

Initial Measurement and Subsequent Accounting for the Preferred Shares

The Preferred Shares did not meet the criteria of mandatorily redeemable financial instruments specified in ASC 480-10-S99, and were classified as mezzanine equity in the consolidated balance sheets. The Preferred Shares were initially measured at fair value. Beneficial conversion features exist when the conversion price of the Preferred Shares is lower than the fair value of the Class A ordinary shares at the commitment date, which was the issuance date in the Company’s case. When a beneficial conversion feature exists as of the commitment date, its intrinsic value is bifurcated from the carrying value of the redeemable convertible preferred shares as a contribution to additional paid-in capital. On the commitment date, the most favorable conversion price used to measure the beneficial conversion feature of the Preferred Shares was higher than the fair value per Class A ordinary share and therefore no bifurcation of beneficial conversion feature was recognized. The Company determined the fair value of the Class A ordinary shares with the assistance of an independent third party valuation firm.

24. Restricted Net Assets

Prior to payment of dividends, pursuant to the laws applicable to the PRC’s foreign investment enterprises, the VIEs and the VIEs’ subsidiaries must make appropriations from after-tax profit to non-distributable reserve funds as determined by the board of directors of each company. These reserves include (i) general reserve and (ii) the development fund.

F-62

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

24. Restricted Net Assets (continued)

Subject to certain cumulative limits, in the event the Company’s board of directors declares dividends, the general reserve requires annual appropriations of 10% of after-tax income as determined under PRC laws and regulations at each year-end until the balance reaches 50% of the PRC entity’s registered capital; the other reserve appropriations are at the Company’s discretion. The general reserve can only be used for specific purposes of enterprise expansion and are not distributable as cash dividends. During the years ended August 31, 2019, 2020 and 2021, the Group’s appropriations to the general reserve were RMB886, RMB1,226 and RMB1,643 (US$254).

PRC laws and regulations also require private schools to make annual appropriations of no less than 25% of after-tax income plus an annual increase according to the net assets of the schools to its development fund, which is to be used for the construction or maintenance of the schools or procurement or upgrading of educational equipment. As of August 31, 2019, 2020 and 2021, total appropriation of RMB6,194, RMB11,044 and RMB14,784 (US$2,288) was made, respectively.

The general reserve and development fund cannot be transferred to the Company in the form of loans or advances and are not distributable as cash dividends except in the event of liquidation.

25. Leases

The Group’s operating leases mainly related to offices and classroom facilities. The Group has no finance leases. The Company do not assume renewals in our determination of the lease term unless the renewals are reasonably certain to be exercised at lease commencement. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Opinion and a related series of notice, administrative measures or circular and the compliance measures taken by the Company have material adverse impact on our after-school tutoring services related to academic subjects in China’s compulsory education system, which in turn have adversely affected the Company’s results of operations and prospect. We have gradually terminated our after-school tutoring services related to academic subjects business since August 2021, and officially ceased our all business in October 2021. All of the Company’s operating leases mainly related to offices and classroom facilities were gradually terminated since August 2021. The Company removed the right-of-use asset and the lease liability, with loss recognized of RMB45,368 (US$7,022) for the difference in accordance with ASC842-20-40-1. By the end of August 31, 2021, all rental deposits related to those early terminated lease contracts have been expensed as the early termination penalty by the Company.

The operating lease costs were as follows:

	For the year ended August 31, 2021
	RMB		US$
Operating Lease Costs:
Fixed		645,180		99,867
Short-term		8,365		1,295
Total		653,545		101,162

F-63

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

26. Commitments and Contingencies

(a) Capital expenditure commitments

The Group has no capital expenditure commitment as of August 31, 2021, which are expected to be paid within one year.

(b) Contingencies

The Group has been named as a defendant in a number of lawsuits arising in its ordinary course of business. As of the date of this annual report, the Company continues to use all commercially reasonable efforts to defend itself in these proceedings and is undergoing on-going discussion with regulatory authorities. The total number of the lawsuits by category, amount involved and scope of each category are presented in Note 28 – Subsequent Event.

27. Fair Value Measurement

The Group applies ASC 820 (“ASC 820”), Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 requires disclosures to be provided on fair value measurement.

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs which are supported by little or no market activity.

ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.

Assets and Liabilities Measured or Disclosed at Fair Value on a recurring basis

In accordance with ASC 820, the Group measures available-for-sale investments and contingent consideration for business acquisitions at fair value on a recurring basis. The fair value of the Group’s available-for-sale investments were measured using the income approach, based on the value indicated by current market expectations about those future amounts with the exception of one debt security, which was measured using the market approach, based on market value of comparable companies operating in similar businesses and other significant inputs derived from or corroborated by observable market data. The Company measured the fair value of contingent consideration for business combination using management’s estimates of the acquiree’s adjusted net operating profits for the years ended August 31, 2019 and 2020, as well as a discount factor which considered the time value of money and credit risk. Significant increases (decreases) in the inputs used in the fair value measurement of Level 3 available-for-sale securities and contingent consideration in isolation would result in a significant lower (higher) fair value measurement.

F-64

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

27. Fair Value Measurement (continued)

Assets and liabilities measured or disclosed at fair value on a recurring basis are summarized below (continued):

			Fair value measurement or disclosure
			at August 31, 2020 using
	Total fair value at August 31, 2020		Quoted prices in active market for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	RMB		RMB		RMB		RMB
Fair value measurement
Short-term investments:
Available-for-sale		243,743		-		-		243,743
Long-term investments:
Available-for-sale		614,141		-		-		614,141
Total assets measured at fair value		857,884		-		-		857,884
Total assets measured at fair value in US$		125,286		-		-		125,286
Fair value measurement
Contingent consideration		47,084		-		-		47,084
Total liability measured at fair value		47,084		-		-		47,084
Total liability measured at fair value in US$		7,288		-		-		7,288

			Fair value measurement or disclosure
			at August 31, 2021 using
	Total fair value at August 31, 2021		Quoted prices in active market for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	RMB		RMB		RMB		RMB
Fair value measurement
Short-term investments:
Available-for-sale		68,575		-		-		68,575
Long-term investments:
Available-for-sale		-		-		-		-
Total assets measured at fair value		68,575		-		-		68,575
Total assets measured at fair value in US$		10,615		-		-		10,615
Fair value measurement
Contingent consideration		-		-		-		-
Total liability measured at fair value		-		-		-		-
Total liability measured at fair value in US$		-		-		-		-

F-65

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

27. Fair Value Measurement (continued)

Reconciliations of assets categorized within Level 3 under the fair value hierarchy are as follow:

Available-for-sale investments:

	RMB
Balance as of August 31, 2018		485,307
Additions		1,040,581
Disposals		(262,651	)
Changes in fair value		(43,454	)
Accrued interest		52,395
Balance as of August 31, 2019		1,272,178
Additions		358,256
Disposals		(547,131	)
Changes in fair value		(12,422	)
Accrued interest		23,628
Impairment loss		(236,625	)
Balance as of August 31, 2020		857,884
Additions		64,604
Disposals		(247,617	)
Changes in fair value		3,874
Accrued interest		3,971
Impairment loss		(614,141	)
Balance as of August 31, 2021		68,575
Balance as of August 31, 2021, in US$		10,615

Assets and Liabilities Measured or Disclosed at Fair Value on a nonrecurring basis

The Group measures certain financial assets, including equity method investments and equity securities without readily determinable fair value, at fair value on a nonrecurring basis only if impairment charges were to be recognized. The Group’s non-financial assets, such as goodwill, intangible assets and property and equipment, would be measured at fair value only if they were determined to be impaired on an other-than-temporary basis.

During the years ended August 31,2021, RMB 1,372,582 (US$212,461) impairment charge was recorded for equity securities without readily determinable fair value. The valuations are classified within Level 3, using income approach based on the Group’s best estimate of the future cash flow forecast and the discount rate.

F-66

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

28. Subsequent Event

Subsequent to this reporting date, the Company breached events of default covenants due to cessation of business in October 2021 which was caused by a series of rules, regulations and administrative measures for after-school tutoring for primary and secondary school students issued by the General Office of Ministry of Education of PRC from July 2021 to September 2021. As a result, the banking facility of US$62,060 became immediately due and payable.

Subsequent to this reporting date, the Company breached event of default covenants due to the Company’s default in the payment of the banking facility which indebtedness has an aggregate outstanding principal in excess of US$10 million   and such indebtedness was due and payable prior to its stated maturity of April 2022. As a result, convertible senior notes of US$35,000 and a long-term loan of RMB135,000 (US$20,897) became due and payable.

Subsequent to this reporting date, the Company sold two properties at RMB12,750 (US$1,974) and RMB15,500 (US$2,399), both transactions were completed in September 2021 and the Company recorded gains of disposal at RMB1,601(US$248) and RMB4,997(US$773), respectively.

Subsequent to this reporting date, all the cash in the domestic bank accounts in China of the Company have been frozen by court order as the Company was subject to multiple legal proceedings, administrative proceedings, claims and other litigation as a result of overdue payments to service providers and loans payable to the lenders.

The Company entered into certain securities purchase agreement on January 24, 2022 (the “SPA”) with certain non-affiliated and accredited “non-U.S. Persons”, (the “Purchasers”) as defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to which the Company agreed to sell 8,000,000,000 Class A ordinary shares, (the “Shares”) par value $0.000001 per share, at a per share purchase price $0.0035625 (the “Offering”), which is 90% of the average NYSE official closing price of the ADS divided by 1,000, the current conversion ratio of ADS, for the three trading days immediately preceding the execution of the SPA. On February 11, 2022, the Offering closed as all the conditions of the SPA have been satisfied and the Company issued the Shares to the Purchasers. The gross proceeds to the Company from the Offering was $28.5 million.

Subsequent to this reporting date, the Group has been named in a number of lawsuits arising in its ordinary course of business. The following table presents the total number of the lawsuits by category, amount involved and scope of each category:

	Numbers		Total amount involved		Amount involved scope per case
				RMB	RMB
Amounts in thousands of Renminbi (“RMB”) except for number of cases
Lease		5		2,167	From 371 to 797
Advertisement		1		3,968	3,968
Technology Service		2		503	From 237 to 266
Education Service		310		13,653	From 1 to 386
Purchase		4		2,424	From 49 to 1,298
Property Preservation		2		2,440	From 62 to 2,377
Decoration		3		4,020	From 680 to 2,540
Other		85		933	From 40 to 80
Total		412		30,108

As of the date of this annual report, the Company is using all commercially reasonable efforts to defend itself in these proceedings and is still undergoing on-going discussion with regulatory authorities.

F-67

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

29. Condensed Financial Information of the Company

The following is the condensed financial information of the Company on a parent company only basis.

Condensed balance sheets

	As of August 31,
	2020			2021			2021
	RMB			RMB			US$
ASSETS
Current assets:
Cash and cash equivalents		162,391			27,150			4,203
Restricted cash		122,969			12,046			1,865
Short-term investments		287,585			68,575			10,615
Amounts due from subsidiaries					2,081,389			322,176
Total current assets		572,945			2,189,160			338,859
Non-current assets:
Long-term investment		872,756			-			-
Investments in subsidiaries, VIEs and VIEs’ subsidiaries		1,176,422			-			-
Total non-current assets		2,049,178			-			-
TOTAL ASSETS		2,622,123			2,189,160			338,859
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accrued expenses and other current liabilities		-			13,019			2,015
Long-term loan, current portion		-			400,932			62,060
Total current liabilities		-			413,951			64,075
Non-current liabilities:
Loss in excess of Investments in subsidiaries, VIEs and VIEs’ subsidiaries		-			5,934,617			918,614
Convertible Loan		-			226,114			35,000
Amounts due to subsidiaries		2,221,486			246,127			38,098
Total non-current liabilities		2,221,486			6,406,858			991,712
TOTAL LIABILITIES		2,221,486			6,820,809			1,055,787
Shareholder’ equity:
Class A ordinary shares (US$0.000001 par value; 37,703,157,984 shares authorized; 4,130,261,827 issued and outstanding as of August 31, 2019 and 4,146,103,947 issued and outstanding as of August 31, 2020, respectively)		26			26			4
Class B ordinary shares (US$0.000001 par value; 2,296,842,016 issued and outstanding as of August 31, 2019 and August 31, 2020, respectively)		16			16			2
Additional paid-in capital		5,598,978			5,337,962			826,259
Treasury stock		(274,648	)		(344	)		(53	)
Statutory reserves		12,270			16,427			2,543
Accumulated deficit		(5,035,172	)		(10,078,429	)		(1,560,033	)
Accumulated other comprehensive income		99,167			92,693			14,350
Total shareholders’ equity		400,637			(4,631,649	)		(716,928	)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		2,622,123			2,189,160			338,859

F-68

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

29. Condensed Financial Information of the Company (continued)

Condensed statements of income/(loss)

	For the years ended August 31,
	2019			2020			2021			2021
	RMB			RMB			RMB			US$
Operating expenses:
Selling and marketing		(906	)		(674	)		(110	)		(17	)
General and administrative		(70,258	)		(140,821	)		(62,492	)		(9,673	)
Interest income		3,905			2,083			5,678			879
Interest expense		(27,960	)		(58,857	)		(51,335	)		(7,946	)
Foreign exchange gain/(loss)		(1,526	)		4,336			(1,655	)		(256	)
Share of income/(loss) in subsidiaries, VIEs and VIEs’ subsidiaries		342,113			(535,896	)		(4,877,653	)		(755,009	)
Income/(loss) before income tax provision		245,368			(729,829	)		(4,987,567	)		(772,022	)
Provision for income tax		-			-			-			-
Net income/(loss)		245,368			(729,829	)		(4,987,567	)		(772,022	)
Accretion to redemption value of redeemable convertible preferred shares		-			-			-			-
Deemed dividend-repurchase of redeemable convertible preferred shares		-			-			-			-
Net income/(loss) attributable to ordinary shareholders of Meta Data Limited		245,368			(729,829	)		(4,987,567	)		(772,022	)

Condensed statements of comprehensive income/(loss)

	For the years ended August 31,
	2019			2020			2021			2021
	RMB			RMB			RMB			US$
Net income/(loss)		245,368			(729,829	)		(4,987,567	)		(772,022	)
Unrealized gain on available-for-sale investments, net of tax		(35,161	)		1,676			4,009			621
Foreign currency translation adjustment		(6,591	)		10,343			5,221			808
Comprehensive income/(loss)		203,616			(717,810	)		(4,978,337	)		(770,593	)

F-69

META DATA LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”),

except for number of shares and per share data)

29. Condensed Financial Information of the Company (continued)

Condensed statements of cash flows

	For the years ended August 31,
	2019			2020			2021			2021
	RMB			RMB			RMB			US$
Net cash used in by operating activities		(8,668	)		(319,227	)		-			-
Net cash used in investing activities		(1,042,665	)		(117,034	)		-			-
Net cash provided by financing activities		732,306			176,546			(230,316	)		(35,650	)
Effect of exchange rate changes		33,033			(23,063	)		(15,848	)		(2,453	)
Net increase/(decrease) in cash and cash equivalents and restricted cash		(285,994	)		(282,778	)		(246,164	)		(38,103	)
Cash and cash equivalents and restricted cash, at beginning of year		854,132			568,138			285,360			44,171
Cash and cash equivalents and restricted cash, at end of year		568,138			285,360			39,196			6,068

Basis of presentation

Condensed financial information is used for the presentation of the Company, or the parent company. The condensed financial information of the parent company has been prepared using the same accounting policies as set out in the Company’s consolidated financial statements except that the parent company used the equity method to account for investment in its subsidiaries and VIEs and the VIEs’ subsidiaries.

The parent company records its investment in its subsidiaries and VIEs and the VIEs’ subsidiaries under the equity method of accounting as prescribed in ASC 323, Investments-Equity Method and Joint Ventures. Such investments are presented on the condensed balance sheets as “Investment in subsidiaries, VIEs and VIEs’ subsidiaries” and their respective profit or loss as “Share of income/(loss) in subsidiaries, VIEs and VIEs’ subsidiaries” on the condensed statements of income. Equity method accounting ceases when the carrying amount of the investment, including any additional financial support, in a subsidiary and VIE is reduced to zero unless the parent company has guaranteed obligations of the subsidiary and VIE or is otherwise committed to provide further financial support. If the subsidiary and VIE subsequently reports net income, the parent company shall resume applying the equity method only after its share of that net income equals the share of net losses not recognized during the period the equity method was suspended.

The parent company’s condensed financial statements should be read in conjunction with the Company’s consolidated financial statements.

F-70

EX-1.1

Exhibit 1.1

THE COMPANIES ACT (AS REVISED)

OF THE CAYMAN ISLANDS

COMPANY LIMITED BY SHARES

SIXTH AMENDED AND RESTATED
MEMORANDUM OF ASSOCIATION

OF

META DATA LIMITED

(adopted by a Special Resolution passed on April 28, 2022)

1. The name of the Company is Meta Data Limited.

2. The Registered Office of the Company will be situated at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands, or at such other location within the Cayman Islands as the Directors may from time to time determine.

3. The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the Companies Act or any other law of the Cayman Islands.

4. The Company shall have and be capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit as provided by the Companies Act.

5. The Company will not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the Company carried on outside the Cayman Islands; provided that nothing in this section shall be construed as to prevent the Company effecting and concluding contracts in the Cayman Islands, and exercising in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands.

6. The liability of each Shareholder is limited to the amount, if any, unpaid on the Shares held by such Shareholder.

7. The authorised share capital of the Company is US$50,000.00 divided into 50,000,000,000 shares comprising (i) 37,703,157,984 Class A Ordinary Shares of a par value of US$0.000001 each, (ii) 2,296,842,016 Class B Ordinary Shares of a par value of US$0.000001 each and (iii) 10,000,000,000 shares of a par value of US$0.000001 each of such class or classes (however designated) as the board of directors may determine in accordance with Article 9 of the Articles. Subject to the Companies Act and the Articles, the Company shall have power to redeem or purchase any of its Shares and to increase or reduce its authorised share capital and to sub-divide or consolidate the said Shares or any of them and to issue all or any part of its capital whether original, redeemed, increased or reduced with or without any preference, priority, special privilege or other rights or subject to any postponement of rights or to any conditions or restrictions whatsoever and so that unless the conditions of issue shall otherwise expressly provide every issue of shares whether stated to be ordinary, preference or otherwise shall be subject to the powers on the part of the Company hereinbefore provided.

8. The Company has the power contained in the Companies Act to deregister in the Cayman Islands and be registered by way of continuation in some other jurisdiction.

9. Capitalized terms that are not defined in this Memorandum of Association bear the same meanings as those given in the Articles of Association of the Company.

THE COMPANIES ACT (AS REVISED)

OF THE CAYMAN ISLANDS

COMPANY LIMITED BY SHARES

SIXTH AMENDED AND RESTATED

ARTICLES OF ASSOCIATION

OF

META DATA LIMITED

(adopted by a Special Resolution passed on April 28, 2022)

TABLE A

The regulations contained or incorporated in Table ‘A’ in the First Schedule of the Companies Act shall not apply to the Company and the following Articles shall comprise the Articles of Association of the Company.

INTERPRETATION

1. In these Articles the following defined terms will have the meanings ascribed to them, if not inconsistent with the subject or context:

“ADS”	means an American Depositary Share representing Class A Ordinary Shares;
“Affiliate”	means in respect of a Person, any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person, and (i) in the case of a natural person, shall include, without limitation, such person’s spouse, parents, children, siblings, mother-in-law, father-in-law, brothers-in-law and sisters-in-law, a trust for the benefit of any of the foregoing, and a corporation, partnership or any other entity wholly or jointly owned by any of the foregoing, and (ii) in the case of an entity, shall include a partnership, a corporation or any other entity or any natural person which directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such entity. The term “control” shall mean the ownership, directly or indirectly, of shares possessing more than fifty per cent (50%) of the voting power of the corporation, partnership or other entity (other than, in the case of a corporation, securities having such power only by reason of the happening of a contingency), or having the power to control the management or elect a majority of members to the board of directors or equivalent decision-making body of such corporation, partnership or other entity;
“Articles”	means these articles of association of the Company, as amended or substituted from time to time;
“Board” and “Board of Directors” and “Directors”	means the directors of the Company for the time being, or as the case may be, the directors assembled as a board or as a committee thereof;
“Chairman”	means the chairman of the Board of Directors;
“Class” or “Classes”	means any class or classes of Shares as may from time to time be issued by the Company;

2

“Class A Ordinary Share”	means an Ordinary Share of a par value of US$0.000001 in the capital of the Company, designated as a Class A Ordinary Shares and having the rights provided for in these Articles;
“Class B Ordinary Share”	means an Ordinary Share of a par value of US$0.000001 in the capital of the Company, designated as a Class B Ordinary Share and having the rights provided for in these Articles;
“Commission”	means the Securities and Exchange Commission of the United States of America or any other federal agency for the time being administering the Securities Act;
“Company”	means Meta Data Limited, a Cayman Islands exempted company;
“Companies Act”	means the Companies Act (As Revised) of the Cayman Islands and any statutory amendment or re-enactment thereof;
“Company’s Website”	means the main corporate/investor relations website of the Company, the address or domain name of which has been disclosed in any registration statement filed by the Company with the Commission in connection with its initial public offering of ADSs, or which has otherwise been notified to Shareholders;
“Designated Stock Exchange”	means the stock exchange in the United States on which any Shares and ADSs are listed for trading;
“Designated Stock Exchange Rules”	means the relevant code, rules and regulations, as amended, from time to time, applicable as a result of the original and continued listing of any Shares or ADSs on the Designated Stock Exchange;
“electronic”	has the meaning given to it in the Electronic Transactions Act and any amendment thereto or re-enactments thereof for the time being in force and includes every other law incorporated therewith or substituted therefor;
“electronic communication”	means electronic posting to the Company’s Website, transmission to any number, address or internet website or other electronic delivery methods as otherwise decided and approved by not less than two-thirds of the vote of the Board;
“Electronic Transactions Act”	means the Electronic Transactions Act (As Revised) of the Cayman Islands and any statutory amendment or re-enactment thereof;
“electronic record”	has the meaning given to it in the Electronic Transactions Act and any amendment thereto or re-enactments thereof for the time being in force and includes every other law incorporated therewith or substituted therefor;
“Memorandum of Association”	means the memorandum of association of the Company, as amended or substituted from time to time;
“Ordinary Resolution”	means a resolution: (a)     passed by a simple majority of the votes cast by such Shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy or, in the case of corporations, by their duly authorised representatives, at a general meeting of the Company held in accordance with these Articles; or
	(b)      approved in writing by all of the Shareholders entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Shareholders and the effective date of the resolution so adopted shall be the date on which the instrument, or the last of such instruments, if more than one, is executed;

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“Ordinary Share”	means a Class A Ordinary Share or a Class B Ordinary Share;
“paid up”	means paid up as to the par value in respect of the issue of any Shares and includes credited as paid up;
“Person”	means any natural person, firm, company, joint venture, partnership, corporation, association or other entity (whether or not having a separate legal personality) or any of them as the context so requires;
“Register”	means the register of Members of the Company maintained in accordance with the Companies Act;
“Registered Office”	means the registered office of the Company as required by the Companies Act;
“Seal”	means the common seal of the Company (if adopted) including any facsimile thereof;
“Secretary”	means any Person appointed by the Directors to perform any of the duties of the secretary of the Company;
“Securities Act”	means the Securities Act of 1933 of the United States of America, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time;
“Share”	means a share in the capital of the Company. All references to “Shares” herein shall be deemed to be Shares of any or all Classes as the context may require. For the avoidance of doubt in these Articles the expression “Share” shall include a fraction of a Share;
“Shareholder” or “Member”	means a Person who is registered as the holder of one or more Shares in the Register;
“Share Premium Account”	means the share premium account established in accordance with these Articles and the Companies Act;
“signed”	means bearing a signature or representation of a signature affixed by mechanical means or an electronic symbol or process attached to or logically associated with an electronic communication and executed or adopted by a person with the intent to sign the electronic communication;
“Special Resolution”	means a special resolution of the Company passed in accordance with the Companies Act, being a resolution: (a)      passed by not less than two-thirds of the votes cast by such Shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy or, in the case of corporations, by their duly authorised representatives, at a general meeting of the Company of which notice specifying the intention to propose the resolution as a special resolution has been duly given; or (b)      approved in writing by all of the Shareholders entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Shareholders and the effective date of the special resolution so adopted shall be the date on which the instrument or the last of such instruments, if more than one, is executed;

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“Treasury Share”	means a Share held in the name of the Company as a treasury share in accordance with the Companies Act; and
“United States”	means the United States of America, its territories, its possessions and all areas subject to its jurisdiction.

2. In these Articles, save where the context requires otherwise:

(a) words importing the singular number shall include the plural number and vice versa;

(b) words importing the masculine gender only shall include the feminine gender and any Person as the context may require;

(c) the word “may” shall be construed as permissive and the word “shall” shall be construed as imperative;

(d) reference to a dollar or dollars (or US$) and to a cent or cents is reference to dollars and cents of the United States of America;

(e) reference to a statutory enactment shall include reference to any amendment or re-enactment thereof for the time being in force;

(f) reference to any determination by the Directors shall be construed as a determination by the Directors in their sole and absolute discretion and shall be applicable either generally or in any particular case;

(g) reference to “in writing” shall be construed as written or represented by any means reproducible in writing, including any form of print, lithograph, email, facsimile, photograph or telex or represented by any other substitute or format for storage or transmission for writing including in the form of an electronic record or partly one and partly another;

(h) any requirements as to delivery under the Articles include delivery in the form of an electronic record or an electronic communication;

(i) any requirements as to execution or signature under the Articles, including the execution of the Articles themselves, can be satisfied in the form of an electronic signature as defined in the Electronic Transaction Law; and

(j) Sections 8 and 19(3) of the Electronic Transactions Act shall not apply.

3. Subject to the last two preceding Articles, any words defined in the Companies Act shall, if not inconsistent with the subject or context, bear the same meaning in these Articles.

PRELIMINARY

4. The business of the Company may be conducted as the Directors see fit.

5. The Registered Office shall be at such address in the Cayman Islands as the Directors may from time to time determine. The Company may in addition establish and maintain such other offices and places of business and agencies in such places as the Directors may from time to time determine.

6. The expenses incurred in the formation of the Company and in connection with the offer for subscription and issue of Shares shall be paid by the Company. Such expenses may be amortized over such period as the Directors may determine and the amount so paid shall be charged against income and/or capital in the accounts of the Company as the Directors shall determine.

5

7. The Directors shall keep, or cause to be kept, the Register at such place as the Directors may from time to time determine and, in the absence of any such determination, the Register shall be kept at the Registered Office.

SHARES

8. Subject to these Articles, all Shares for the time being unissued shall be under the control of the Directors who may, in their absolute discretion and without the approval of the Members, cause the Company to:

(a) issue, allot and dispose of Shares (including, without limitation, preferred shares) (whether in certificated form or non-certificated form) to such Persons, in such manner, on such terms and having such rights and being subject to such restrictions as they may from time to time determine;

(b) grant rights over Shares or other securities to be issued in one or more classes or series as they deem necessary or appropriate and determine the designations, powers, preferences, privileges and other rights attaching to such Shares or securities, including dividend rights, voting rights, conversion rights, terms of redemption and liquidation preferences, any or all of which may be greater than the powers, preferences, privileges and rights associated with the then issued and outstanding Shares, at such times and on such other terms as they think proper; and

(c) grant options with respect to Shares and issue warrants or similar instruments with respect thereto.

9. The Directors may authorise the division of Shares into any number of Classes and the different Classes shall be authorised, established and designated (or re-designated as the case may be) and the variations in the relative rights (including, without limitation, voting, dividend and redemption rights), restrictions, preferences, privileges and payment obligations as between the different Classes (if any) may be fixed and determined by the Directors or by a Special Resolution. The Directors may issue Shares with such preferred or other rights, all or any of which may be greater than the rights of Ordinary Shares, at such time and on such terms as they may think appropriate. Notwithstanding Article 17, the Directors may issue from time to time, out of the authorised share capital of the Company (other than the authorised but unissued Ordinary Shares), series of preferred shares in their absolute discretion and without approval of the Members; provided, however, before any preferred shares of any such series are issued, the Directors shall by resolution of Directors determine, with respect to any series of preferred shares, the terms and rights of that series, including:

(a) the designation of such series, the number of preferred shares to constitute such series and the subscription price thereof if different from the par value thereof;

(b) whether the preferred shares of such series shall have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights, which may be general or limited;

(c) the dividends, if any, payable on such series, whether any such dividends shall be cumulative, and, if so, from what dates, the conditions and dates upon which such dividends shall be payable, and the preference or relation which such dividends shall bear to the dividends payable on any shares of any other class or any other series of shares;

(d) whether the preferred shares of such series shall be subject to redemption by the Company, and, if so, the times, prices and other conditions of such redemption;

(e) whether the preferred shares of such series shall have any rights to receive any part of the assets available for distribution amongst the Members upon the liquidation of the Company, and, if so, the terms of such liquidation preference, and the relation which such liquidation preference shall bear to the entitlements of the holders of shares of any other class or any other series of shares;

6

(f) whether the preferred shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the preferred shares of such series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof;

(g) whether the preferred shares of such series shall be convertible into, or exchangeable for, shares of any other class or any other series of preferred shares or any other securities and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchange;

(h) the limitations and restrictions, if any, to be effective while any preferred shares of such series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Company of, the existing shares or shares of any other class of shares or any other series of preferred shares;

(i) the conditions or restrictions, if any, upon the creation of indebtedness of the Company or upon the issue of any additional shares, including additional shares of such series or of any other class of shares or any other series of preferred shares; and

(j) any other powers, preferences and relative, participating, optional and other special rights, and any qualifications, limitations and restrictions thereof;

and, for such purposes, the Directors may reserve an appropriate number of Shares for the time being unissued. The Company shall not issue Shares to bearer.

10. The Company may insofar as may be permitted by law, pay a commission to any Person in consideration of his subscribing or agreeing to subscribe whether absolutely or conditionally for any Shares. Such commissions may be satisfied by the payment of cash or the lodgement of fully or partly paid-up Shares or partly in one way and partly in the other. The Company may also pay such brokerage as may be lawful on any issue of Shares.

11. The Directors may refuse to accept any application for Shares, and may accept any application in whole or in part, for any reason or for no reason.

CLASS A ORDINARY SHARES AND CLASS B ORDINARY SHARES

12. Holders of Class A Ordinary Shares and Class B Ordinary Shares shall at all times vote together as one class on all resolutions submitted to a vote by the Members. Each Class A Ordinary Share shall entitle the holder thereof to one (1) vote on all matters subject to vote at general meetings of the Company, and each Class B ordinary share shall entitle the holder thereof to twenty (20) votes on all matters subject to vote at general meetings of the Company.

13. Each Class B Ordinary Share is convertible into one (1) Class A Ordinary Share at any time at the option of the holder thereof. The right to convert shall be exercisable by the holder of the Class B Ordinary Share delivering a written notice to the Company that such holder elects to convert a specified number of Class B Ordinary Shares into Class A Ordinary Shares. In no event shall Class A Ordinary Shares be convertible into Class B Ordinary Shares. Each Class B Ordinary Share shall automatically be re-designated into one Class A Ordinary Share without any action being required by the holders of Class B Ordinary Shares and whether or not the certificates representing such shares are surrendered to the Company or its transfer agent, if at any time Mr. Xi Zhang and his respective affiliates collectively hold less than five percent (5%) of the issued Shares in the capital of the Company, and no Class B Ordinary Shares shall be issued by the Company thereafter.

14. Any conversion of Class B Ordinary Shares into Class A Ordinary Shares pursuant to these Articles shall be effected by means of the re-designation of each relevant Class B Ordinary Share as a Class A Ordinary Share. Such conversion shall become effective forthwith upon entries being made in the Register to record the re-designation of the relevant Class B Ordinary Shares as Class A Ordinary Shares.

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15. Upon any sale, transfer, assignment or disposition of any Class B Ordinary Share by a Shareholder to any person who is not an Affiliate of such Shareholder, or upon a change of ultimate beneficial ownership of any Class B Ordinary Share to any Person who is not an Affiliate of the registered shareholder of such Share, such Class B Ordinary Share shall be automatically and immediately converted into one Class A Ordinary Share. For the avoidance of doubt, (i) a sale, transfer, assignment or disposition shall be effective upon the Company’s registration of such sale, transfer, assignment or disposition in its Register; and (ii) the creation of any pledge, charge, encumbrance or other third party right of whatever description on any Class B Ordinary Shares to secure a holder’s contractual or legal obligations shall not be deemed as a sale, transfer, assignment or disposition unless and until any such pledge, charge, encumbrance or other third party right is enforced and results in the third party holding legal title to the relevant Class B Ordinary Shares, in which case all the related Class B Ordinary Shares shall be automatically converted into the same number of Class A Ordinary Shares. For purpose of this Article 15, beneficial ownership shall have the meaning set forth in Rule 13d-3 under the United States Securities Exchange Act of 1934, as amended.

16. Save and except for voting rights and conversion rights as set out in Articles 12 to 16 (inclusive), the Class A Ordinary Shares and the Class B Ordinary Shares shall rank pari passu with one another and shall have the same rights, preferences, privileges and restrictions.

MODIFICATION OF RIGHTS

17. Whenever the capital of the Company is divided into different Classes the rights attached to any such Class may, subject to any rights or restrictions for the time being attached to any Class, only be materially adversely varied with the consent in writing of the holders of two-thirds of the issued Shares of that Class or with the sanction of a Special Resolution passed at a separate meeting of the holders of the Shares of that Class. To every such separate meeting all the provisions of these Articles relating to general meetings of the Company or to the proceedings thereat shall, mutatis mutandis, apply, except that the necessary quorum shall be one or more Persons holding or representing by proxy at least one-third in nominal or par value amount of the issued Shares of the relevant Class (but so that if at any adjourned meeting of such holders a quorum as above defined is not present, those Shareholders who are present shall form a quorum) and that, subject to any rights or restrictions for the time being attached to the Shares of that Class, every Shareholder of the Class shall on a poll have one vote for each Share of the Class held by him. For the purposes of this Article the Directors may treat all the Classes or any two or more Classes as forming one Class if they consider that all such Classes would be affected in the same way by the proposals under consideration, but in any other case shall treat them as separate Classes.

18. The rights conferred upon the holders of the Shares of any Class issued with preferred or other rights shall not, subject to any rights or restrictions for the time being attached to the Shares of that Class, be deemed to be materially adversely varied by, inter alia, the creation, allotment or issue of further Shares ranking pari passu with or subsequent to them or the redemption or purchase of any Shares of any Class by the Company. The rights of the holders of Shares shall not be deemed to be materially adversely varied by the creation or issue of Shares with preferred or other rights including, without limitation, the creation of Shares with enhanced or weighted voting rights.

CERTIFICATES

19. Every Person whose name is entered as a Member in the Register may, without payment and upon its written request, request a certificate within two calendar months after allotment or lodgement of transfer (or within such other period as the conditions of issue shall provide) in the form determined by the Directors. All certificates shall specify the Share or Shares held by that Person, provided that in respect of a Share or Shares held jointly by several persons the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a Share to one of several joint holders shall be sufficient delivery to all. All certificates for Shares shall be delivered personally or sent through the post addressed to the Member entitled thereto at the Member’s registered address as appearing in the Register.

20. Every share certificate of the Company shall bear legends required under the applicable laws, including the Securities Act.

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21. Any two or more certificates representing Shares of any one Class held by any Member may at the Member’s request be cancelled and a single new certificate for such Shares issued in lieu on payment (if the Directors shall so require) of one dollar (US$1.00) or such smaller sum as the Directors shall determine.

22. If a share certificate shall be damaged or defaced or alleged to have been lost, stolen or destroyed, a new certificate representing the same Shares may be issued to the relevant Member upon request, subject to delivery up of the old certificate or (if alleged to have been lost, stolen or destroyed) compliance with such conditions as to evidence and indemnity and the payment of out-of-pocket expenses of the Company in connection with the request as the Directors may think fit.

23. In the event that Shares are held jointly by several persons, any request may be made by any one of the joint holders and if so made shall be binding on all of the joint holders.

FRACTIONAL SHARES

24. The Directors may issue fractions of a Share and, if so issued, a fraction of a Share shall be subject to and carry the corresponding fraction of liabilities (whether with respect to nominal or par value, premium, contributions, calls or otherwise), limitations, preferences, privileges, qualifications, restrictions, rights (including, without prejudice to the generality of the foregoing, voting and participation rights) and other attributes of a whole Share. If more than one fraction of a Share of the same Class is issued to or acquired by the same Shareholder such fractions shall be accumulated.

LIEN

25. The Company has a first and paramount lien on every Share (whether or not fully paid) for all amounts (whether presently payable or not) payable at a fixed time or called in respect of that Share. The Company also has a first and paramount lien on every Share registered in the name of a Person indebted or under liability to the Company (whether he is the sole registered holder of a Share or one of two or more joint holders) for all amounts owing by him or his estate to the Company (whether or not presently payable). The Directors may at any time declare a Share to be wholly or in part exempt from the provisions of this Article. The Company’s lien on a Share extends to any amount payable in respect of it, including but not limited to dividends.

26. The Company may sell, in such manner as the Directors in their absolute discretion think fit, any Share on which the Company has a lien, but no sale shall be made unless an amount in respect of which the lien exists is presently payable nor until the expiration of fourteen calendar days after a notice in writing, demanding payment of such part of the amount in respect of which the lien exists as is presently payable, has been given to the registered holder for the time being of the Share, or the Persons entitled thereto by reason of his death or bankruptcy.

27. For giving effect to any such sale the Directors may authorise a Person to transfer the Shares sold to the purchaser thereof. The purchaser shall be registered as the holder of the Shares comprised in any such transfer and he shall not be bound to see to the application of the purchase money, nor shall his title to the Shares be affected by any irregularity or invalidity in the proceedings in reference to the sale.

28. The proceeds of the sale after deduction of expenses, fees and commission incurred by the Company shall be received by the Company and applied in payment of such part of the amount in respect of which the lien exists as is presently payable, and the residue shall (subject to a like lien for sums not presently payable as existed upon the Shares prior to the sale) be paid to the Person entitled to the Shares immediately prior to the sale.

CALLS ON SHARES

29. Subject to the terms of the allotment, the Directors may from time to time make calls upon the Shareholders in respect of any moneys unpaid on their Shares, and each Shareholder shall (subject to receiving at least fourteen calendar days’ notice specifying the time or times of payment) pay to the Company at the time or times so specified the amount called on such Shares. A call shall be deemed to have been made at the time when the resolution of the Directors authorising such call was passed.

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30. The joint holders of a Share shall be jointly and severally liable to pay calls in respect thereof.

31. If a sum called in respect of a Share is not paid before or on the day appointed for payment thereof, the Person from whom the sum is due shall pay interest upon the sum at the rate of eight percent per annum from the day appointed for the payment thereof to the time of the actual payment, but the Directors shall be at liberty to waive payment of that interest wholly or in part.

32. The provisions of these Articles as to the liability of joint holders and as to payment of interest shall apply in the case of non-payment of any sum which, by the terms of issue of a Share, becomes payable at a fixed time, whether on account of the amount of the Share, or by way of premium, as if the same had become payable by virtue of a call duly made and notified.

33. The Directors may make arrangements with respect to the issue of partly paid Shares for a difference between the Shareholders, or the particular Shares, in the amount of calls to be paid and in the times of payment.

34. The Directors may, if they think fit, receive from any Shareholder willing to advance the same all or any part of the moneys uncalled and unpaid upon any partly paid Shares held by him, and upon all or any of the moneys so advanced may (until the same would, but for such advance, become presently payable) pay interest at such rate (not exceeding without the sanction of an Ordinary Resolution, eight percent per annum) as may be agreed upon between the Shareholder paying the sum in advance and the Directors. No such sum paid in advance of calls shall entitle the Member paying such sum to any portion of a dividend declared in respect of any period prior to the date upon which such sum would, but for such payment, become presently payable.

FORFEITURE OF SHARES

35. If a Shareholder fails to pay any call or instalment of a call in respect of partly paid Shares on the day appointed for payment, the Directors may, at any time thereafter during such time as any part of such call or instalment remains unpaid, serve a notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued.

36. The notice shall name a further day (not earlier than the expiration of fourteen calendar days from the date of the notice) on or before which the payment required by the notice is to be made, and shall state that in the event of non-payment at or before the time appointed, the Shares in respect of which the call was made will be liable to be forfeited.

37. If the requirements of any such notice as aforesaid are not complied with, any Share in respect of which the notice has been given may at any time thereafter, before the payment required by notice has been made, be forfeited by a resolution of the Directors to that effect.

38. A forfeited Share may be sold or otherwise disposed of on such terms and in such manner as the Directors think fit, and at any time before a sale or disposition the forfeiture may be cancelled on such terms as the Directors think fit.

39. A Person whose Shares have been forfeited shall cease to be a Shareholder in respect of the forfeited Shares, but shall, notwithstanding, remain liable to pay to the Company all moneys which at the date of forfeiture were payable by him to the Company in respect of the Shares forfeited, but his liability shall cease if and when the Company receives payment in full of the amount unpaid on the Shares forfeited.

40. A certificate in writing under the hand of a Director that a Share has been duly forfeited on a date stated in the certificate shall be conclusive evidence of the facts in the declaration as against all Persons claiming to be entitled to the Share.

41. The Company may receive the consideration, if any, given for a Share on any sale or disposition thereof pursuant to the provisions of these Articles as to forfeiture and may execute a transfer of the Share in favour of the Person to whom the Share is sold or disposed of and that Person shall be registered as the holder of the Share and shall not be bound to see to the application of the purchase money, if any, nor shall his title to the Shares be affected by any irregularity or invalidity in the proceedings in reference to the disposition or sale.

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42. The provisions of these Articles as to forfeiture shall apply in the case of non-payment of any sum which by the terms of issue of a Share becomes due and payable, whether on account of the amount of the Share, or by way of premium, as if the same had been payable by virtue of a call duly made and notified.

TRANSFER OF SHARES

43. The instrument of transfer of any Share shall be in writing and in any usual or common form or such other form as the Directors may, in their absolute discretion, approve and be executed by or on behalf of the transferor and if in respect of a nil or partly paid up Share, or if so required by the Directors, shall also be executed on behalf of the transferee and shall be accompanied by the certificate (if any) of the Shares to which it relates and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer. The transferor shall be deemed to remain a Shareholder until the name of the transferee is entered in the Register in respect of the relevant Shares.

44. (a) The Directors may in their absolute discretion decline to register any transfer of Shares which is not fully paid up or on which the Company has a lien.

(b) The Directors may also decline to register any transfer of any Share unless:

(i) the instrument of transfer is lodged with the Company, accompanied by the certificate for the Shares to which it relates and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer;

(ii) the instrument of transfer is in respect of only one Class of Shares;

(iii) the instrument of transfer is properly stamped, if required;

(iv) in the case of a transfer to joint holders, the number of joint holders to whom the Share is to be transferred does not exceed four; and

(v) a fee of such maximum sum as the Designated Stock Exchange may determine to be payable, or such lesser sum as the Board of Directors may from time to time require, is paid to the Company in respect thereof.

45. The registration of transfers may, on ten calendar days’ notice being given by advertisement in such one or more newspapers, by electronic means or by any other means in accordance with the Designated Stock Exchange Rules, be suspended and the Register closed at such times and for such periods as the Directors may, in their absolute discretion, from time to time determine, provided always that such registration of transfer shall not be suspended nor the Register closed for more than thirty calendar days in any calendar year.

46. All instruments of transfer that are registered shall be retained by the Company. If the Directors refuse to register a transfer of any Shares, they shall within three calendar months after the date on which the transfer was lodged with the Company send notice of the refusal to each of the transferor and the transferee.

TRANSMISSION OF SHARES

47. The legal personal representative of a deceased sole holder of a Share shall be the only Person recognised by the Company as having any title to the Share. In the case of a Share registered in the name of two or more holders, the survivors or survivor, or the legal personal representatives of the deceased survivor, shall be the only Person recognised by the Company as having any title to the Share.

48. Any Person becoming entitled to a Share in consequence of the death or bankruptcy of a Shareholder shall, upon such evidence being produced as may from time to time be required by the Directors, have the right either to be registered as a Shareholder in respect of the Share or, instead of being registered himself, to make such transfer of the Share as the deceased or bankrupt Person could have made; but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the deceased or bankrupt Person before the death or bankruptcy.

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49. A Person becoming entitled to a Share by reason of the death or bankruptcy of a Shareholder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered Shareholder, except that he shall not, before being registered as a Shareholder in respect of the Share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company, provided however, that the Directors may at any time give notice requiring any such person to elect either to be registered himself or to transfer the Share, and if the notice is not complied with within ninety calendar days, the Directors may thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the Share until the requirements of the notice have been complied with.

REGISTRATION OF EMPOWERING INSTRUMENTS

50. The Company shall be entitled to charge a fee not exceeding one dollar (US$1.00) on the registration of every probate, letters of administration, certificate of death or marriage, power of attorney, notice in lieu of distringas, or other instrument.

ALTERATION OF SHARE CAPITAL

51. The Company may from time to time by Ordinary Resolution increase the share capital by such sum, to be divided into Shares of such Classes and amount, as the resolution shall prescribe.

52. The Company may by Ordinary Resolution:

(a) increase its share capital by new Shares of such amount as it thinks expedient;

(b) consolidate and divide all or any of its share capital into Shares of a larger amount than its existing Shares;

(c) subdivide its Shares, or any of them, into Shares of an amount smaller than that fixed by the Memorandum, provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced Share shall be the same as it was in case of the Share from which the reduced Share is derived; and

(d) cancel any Shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any Person and diminish the amount of its share capital by the amount of the Shares so cancelled.

53. The Company may by Special Resolution reduce its share capital and any capital redemption reserve in any manner authorised by law.

REDEMPTION, PURCHASE AND SURRENDER OF SHARES

54. Subject to the provisions of the Companies Act and these Articles, the Company may:

(a) issue Shares that are to be redeemed or are liable to be redeemed at the option of the Shareholder or the Company. The redemption of Shares shall be effected in such manner and upon such terms as may be determined, before the issue of such Shares, by either the Board or by the Shareholders by Special Resolution;

(b) purchase its own Shares (including any redeemable Shares) on such terms and in such manner and terms as have been approved by the Board or by the Members by Ordinary Resolution, or are otherwise authorised by these Articles; and

(c) make a payment in respect of the redemption or purchase of its own Shares in any manner permitted by the Companies Act, including out of capital.

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55. The purchase of any Share shall not oblige the Company to purchase any other Share other than as may be required pursuant to applicable law and any other contractual obligations of the Company.

56. The holder of the Shares being purchased shall be bound to deliver up to the Company the certificate(s) (if any) thereof for cancellation and thereupon the Company shall pay to him the purchase or redemption monies or consideration in respect thereof.

57. The Directors may accept the surrender for no consideration of any fully paid Share.

TREASURY SHARES

58. The Directors may, prior to the purchase, redemption or surrender of any Share, determine that such Share shall be held as a Treasury Share.

59. The Directors may determine to cancel a Treasury Share or transfer a Treasury Share on such terms as they think proper (including, without limitation, for nil consideration).

GENERAL MEETINGS

60. All general meetings other than annual general meetings shall be called extraordinary general meetings.

61. (a) The Company may (but shall not be obliged to) in each calendar year hold a general meeting as its annual general meeting and shall specify the meeting as such in the notices calling it. The annual general meeting shall be held at such time and place as may be determined by the Directors.

(b) At these meetings the report of the Directors (if any) shall be presented.

62. (a) The Chairman or a majority of the Directors may call general meetings, and they shall on a Shareholders’ requisition forthwith proceed to convene an extraordinary general meeting of the Company.

(b) A Shareholders’ requisition is a requisition of Members holding at the date of deposit of the requisition Shares which carry in aggregate not less than one-third (1/3) of all votes attaching to all issued and outstanding Shares of the Company that as at the date of the deposit carry the right to vote at general meetings of the Company.

(c) The requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the Registered Office, and may consist of several documents in like form each signed by one or more requisitionists.

(d) If there are no Directors as at the date of the deposit of the Shareholders’ requisition, or if the Directors do not within twenty-one calendar days from the date of the deposit of the requisition duly proceed to convene a general meeting to be held within a further twenty-one calendar days, the requisitionists, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene a general meeting, but any meeting so convened shall not be held after the expiration of three calendar months after the expiration of the said twenty-one calendar days.

(e) A general meeting convened as aforesaid by requisitionists shall be convened in the same manner as nearly as possible as that in which general meetings are to be convened by Directors.

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NOTICE OF GENERAL MEETINGS

63. At least ten (10) calendar days’ notice shall be given for any general meeting. Every notice shall be exclusive of the day on which it is given or deemed to be given and of the day for which it is given and shall specify the place, the day and the hour of the meeting and the general nature of the business and shall be given in the manner hereinafter mentioned or in such other manner if any as may be prescribed by the Company, provided that a general meeting of the Company shall, whether or not the notice specified in this Article has been given and whether or not the provisions of these Articles regarding general meetings have been complied with, be deemed to have been duly convened if it is so agreed:

(a) in the case of an annual general meeting, by all the Shareholders (or their proxies) entitled to attend and vote thereat; and

(b) in the case of an extraordinary general meeting, by two-thirds (2/3rd ) of the Shareholders having a right to attend and vote at the meeting, present in person or by proxy or, in the case of a corporation or other non-natural person, by its duly authorised representative or proxy.

64. The accidental omission to give notice of a meeting to or the non-receipt of a notice of a meeting by any Shareholder shall not invalidate the proceedings at any meeting.

PROCEEDINGS AT GENERAL MEETINGS

65. No business except for the appointment of a chairman for the meeting shall be transacted at any general meeting unless a quorum of Shareholders is present at the time when the meeting proceeds to business. One or more Shareholders holding Shares which carry in aggregate (or representing by proxy) not less than one-third of all votes attaching to all Shares in issue and entitled to vote at such general meeting, present in person or by proxy or, if a corporation or other non-natural person, by its duly authorised representative, shall be a quorum for all purposes.

66. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting shall be dissolved.

67. If the Directors wish to make this facility available for a specific general meeting or all general meetings of the Company, participation in any general meeting of the Company may be by means of a telephone or similar communication equipment by way of which all Persons participating in such meeting can communicate with each other and such participation shall be deemed to constitute presence in person at the meeting.

68. The Chairman, if any, of the Board of Directors shall preside as chairman at every general meeting of the Company.

69. If there is no such Chairman of the Board of Directors, or if at any general meeting he is not present within fifteen minutes after the time appointed for holding the meeting or is unwilling to act as chairman of the meeting, any Director or Person nominated by the Directors shall preside as chairman of that meeting, failing which the Shareholders present in person or by proxy shall choose any Person present to be chairman of that meeting.

70. The chairman may with the consent of any general meeting at which a quorum is present (and shall if so directed by the meeting) adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a meeting, or adjourned meeting, is adjourned for fourteen calendar days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Save as aforesaid it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.

71. The Directors may cancel or postpone any duly convened general meeting at any time prior to such meeting, except for general meetings requisitioned by the Shareholders in accordance with these Articles, for any reason or for no reason, upon notice in writing to Shareholders. A postponement may be for a stated period of any length or indefinitely as the Directors may determine.

72. At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by the chairman of the meeting or any Shareholder present in person or by proxy, and unless a poll is so demanded, a declaration by the chairman of the meeting that a resolution has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book of the proceedings of the Company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of, or against, that resolution.

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73. If a poll is duly demanded it shall be taken in such manner as the chairman of the meeting directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.

74. All questions submitted to a meeting shall be decided by an Ordinary Resolution except where a greater majority is required by these Articles or by the Companies Act. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded, shall be entitled to a second or casting vote.

75. A poll demanded on the election of a chairman of the meeting or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such time as the chairman of the meeting directs.

VOTES OF SHAREHOLDERS

76. Subject to any rights and restrictions for the time being attached to any Share, on a show of hands every Shareholder present in person or by proxy (or, if a corporation or other non-natural person, by its duly authorised representative or proxy) shall, at a general meeting of the Company, each have one vote and on a poll every Shareholder present in person or by proxy (or, if a corporation or other non-natural person, by its duly authorised representative or proxy) shall have one vote for each Class A Ordinary Share and twenty votes for each Class B Ordinary Share of which he is the holder.

77. In the case of joint holders the vote of the senior who tenders a vote whether in person or by proxy (or, if a corporation or other non-natural person, by its duly authorised representative or proxy) shall be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register.

78. Shares carrying the right to vote that are held by a Shareholder of unsound mind, or in respect of whom an order has been made by any court having jurisdiction in lunacy, may be voted, whether on a show of hands or on a poll, by his committee, or other Person in the nature of a committee appointed by that court, and any such committee or other Person may vote in respect of such Shares by proxy.

79. No Shareholder shall be entitled to vote at any general meeting of the Company unless all calls, if any, or other sums presently payable by him in respect of Shares carrying the right to vote held by him have been paid.

80. On a poll votes may be given either personally or by proxy.

81. Each Shareholder, other than a recognised clearing house (or its nominee(s)) or depositary (or its nominee(s)), may only appoint one proxy on a show of hand. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under Seal or under the hand of an officer or attorney duly authorised. A proxy need not be a Shareholder.

82. An instrument appointing a proxy may be in any usual or common form or such other form as the Directors may approve.

83. The instrument appointing a proxy shall be deposited at the Registered Office or at such other place as is specified for that purpose in the notice convening the meeting, or in any instrument of proxy sent out by the Company:

(a) not less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote; or

(b) in the case of a poll taken more than 48 hours after it is demanded, be deposited as aforesaid after the poll has been demanded and not less than 24 hours before the time appointed for the taking of the poll; or

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(c) where the poll is not taken forthwith but is taken not more than 48 hours after it was demanded be delivered at the meeting at which the poll was demanded to the chairman or to the secretary or to any director;

provided that the Directors may in the notice convening the meeting, or in an instrument of proxy sent out by the Company, direct that the instrument appointing a proxy may be deposited at such other time (no later than the time for holding the meeting or adjourned meeting) at the Registered Office or at such other place as is specified for that purpose in the notice convening the meeting, or in any instrument of proxy sent out by the Company. The Chairman may in any event at his discretion direct that an instrument of proxy shall be deemed to have been duly deposited. An instrument of proxy that is not deposited in the manner permitted shall be invalid.

84. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll.

85. A resolution in writing signed by all the Shareholders for the time being entitled to receive notice of and to attend and vote at general meetings of the Company (or being corporations by their duly authorised representatives) shall be as valid and effective as if the same had been passed at a general meeting of the Company duly convened and held.

CORPORATIONS ACTING BY REPRESENTATIVES AT MEETINGS

86. Any corporation which is a Shareholder or a Director may by resolution of its directors or other governing body authorise such Person as it thinks fit to act as its representative at any meeting of the Company or of any meeting of holders of a Class or of the Directors or of a committee of Directors, and the Person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual Shareholder or Director.

DEPOSITARY AND CLEARING HOUSES

87. If a recognised clearing house (or its nominee(s)) or depositary (or its nominee(s)) is a Member of the Company it may, by resolution of its directors or other governing body or by power of attorney, authorise such Person(s) as it thinks fit to act as its representative(s) at any general meeting of the Company or of any Class of Shareholders provided that, if more than one Person is so authorised, the authorisation shall specify the number and Class of Shares in respect of which each such Person is so authorised. A Person so authorised pursuant to this Article shall be entitled to exercise the same powers on behalf of the recognised clearing house (or its nominee(s)) or depositary (or its nominee(s)) which he represents as that recognised clearing house (or its nominee(s)) or depositary (or its nominee(s)) could exercise if it were an individual Member holding the number and Class of Shares specified in such authorisation, including the right to vote individually on a show of hands.

DIRECTORS

88. (a) Unless otherwise determined by the Company in general meeting, the number of Directors shall not be less than three (3) Directors, the exact number of Directors to be determined from time to time by the Board of Directors.

(b) The Board of Directors shall have a Chairman elected and appointed by a majority of the Directors then in office. The period for which the Chairman will hold office will also be determined by a majority of all of the Directors then in office. The Chairman shall preside as chairman at every meeting of the Board of Directors. To the extent the Chairman is not present at a meeting of the Board of Directors within fifteen minutes after the time appointed for holding the same, the attending Directors may choose one of their number to be the chairman of the meeting.

(c) The Company may by Ordinary Resolution appoint any person to be a Director.

(d) The Board may, by the affirmative vote of a simple majority of the remaining Directors present and voting at a Board meeting, appoint any person as a Director, to fill a vacancy on the Board arising from the office of any Director being vacated in any of the circumstances described in Article 109. In the event of a vacancy arising from the office of an independent director being vacated, the Board may only appoint another independent director to fill such vacancy.

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(e) An appointment of a Director may be on terms that the Director shall automatically retire from office (unless he has sooner vacated office) at the next or a subsequent annual general meeting or upon any specified event or after any specified period in a written agreement between the Company and the Director, if any; but no such term shall be implied in the absence of express provision. Each Director whose term of office expires shall be eligible for re-election at a meeting of the Shareholders or re-appointment by the Board.

89. A Director may be removed from office by Ordinary Resolution of the Company, notwithstanding anything in these Articles or in any agreement between the Company and such Director (but without prejudice to any claim for damages under such agreement). A vacancy on the Board created by the removal of a Director under the previous sentence may be filled by Ordinary Resolution or by the affirmative vote of a simple majority of the remaining Directors present and voting at a Board meeting. The notice of any meeting at which a resolution to remove a Director shall be proposed or voted upon must contain a statement of the intention to remove that Director and such notice must be served on that Director not less than ten (10) calendar days before the meeting. Such Director is entitled to attend the meeting and be heard on the motion for his removal.

90. The Board may, from time to time, and except as required by applicable law or Designated Stock Exchange Rules, adopt, institute, amend, modify or revoke the corporate governance policies or initiatives of the Company and determine on various corporate governance related matters of the Company as the Board shall determine by resolution of Directors from time to time.

91. A Director shall not be required to hold any Shares in the Company by way of qualification. A Director who is not a Member of the Company shall nevertheless be entitled to attend and speak at general meetings.

92. The remuneration of the Directors may be determined by the Directors or by Ordinary Resolution.

93. The Directors shall be entitled to be paid their travelling, hotel and other expenses properly incurred by them in going to, attending and returning from meetings of the Directors, or any committee of the Directors, or general meetings of the Company, or otherwise in connection with the business of the Company, or to receive such fixed allowance in respect thereof as may be determined by the Directors from time to time, or a combination partly of one such method and partly the other.

ALTERNATE DIRECTOR OR PROXY

94. Any Director may in writing appoint another Person to be his alternate and, save to the extent provided otherwise in the form of appointment, such alternate shall have authority to sign written resolutions on behalf of the appointing Director, but shall not be required to sign such written resolutions where they have been signed by the appointing director, and to act in such Director’s place at any meeting of the Directors at which the appointing Director is unable to be present. Every such alternate shall be entitled to attend and vote at meetings of the Directors as a Director when the Director appointing him is not personally present and where he is a Director to have a separate vote on behalf of the Director he is representing in addition to his own vote. A Director may at any time in writing revoke the appointment of an alternate appointed by him. Such alternate shall be deemed for all purposes to be a Director of the Company and shall not be deemed to be the agent of the Director appointing him. The remuneration of such alternate shall be payable out of the remuneration of the Director appointing him and the proportion thereof shall be agreed between them.

95. Any Director may appoint any Person, whether or not a Director, to be the proxy of that Director to attend and vote on his behalf, in accordance with instructions given by that Director, or in the absence of such instructions at the discretion of the proxy, at a meeting or meetings of the Directors which that Director is unable to attend personally. The instrument appointing the proxy shall be in writing under the hand of the appointing Director and shall be in any usual or common form or such other form as the Directors may approve, and must be lodged with the chairman of the meeting of the Directors at which such proxy is to be used, or first used, prior to the commencement of the meeting.

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POWERS AND DUTIES OF DIRECTORS

96. Subject to the Companies Act, these Articles and to any resolutions passed in a general meeting, the business of the Company shall be managed by the Directors, who may pay all expenses incurred in setting up and registering the Company and may exercise all powers of the Company. No resolution passed by the Company in general meeting shall invalidate any prior act of the Directors that would have been valid if that resolution had not been passed.

97. Subject to these Articles, the Directors may from time to time appoint any natural person or corporation, whether or not a Director to hold such office in the Company as the Directors may think necessary for the administration of the Company, including but not limited to, chief executive officer, one or more other executive officers, president, one or more vice-presidents, treasurer, assistant treasurer, manager or controller, and for such term and at such remuneration (whether by way of salary or commission or participation in profits or partly in one way and partly in another), and with such powers and duties as the Directors may think fit. Any natural person or corporation so appointed by the Directors may be removed by the Directors. The Directors may also appoint one or more of their number to the office of managing director upon like terms, but any such appointment shall ipso facto terminate if any managing director ceases for any cause to be a Director, or if the Company by Ordinary Resolution resolves that his tenure of office be terminated.

98. The Directors may appoint any natural person or corporation to be a Secretary (and if need be an assistant Secretary or assistant Secretaries) who shall hold office for such term, at such remuneration and upon such conditions and with such powers as they think fit. Any Secretary or assistant Secretary so appointed by the Directors may be removed by the Directors or by the Company by Ordinary Resolution.

99. The Directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on it by the Directors.

100. The Directors may from time to time and at any time by power of attorney (whether under Seal or under hand) or otherwise appoint any company, firm or Person or body of Persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys or authorised signatory (any such person being an “Attorney” or “Authorised Signatory”, respectively) of the Company for such purposes and with such powers, authorities and discretion (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such power of attorney or other appointment may contain such provisions for the protection and convenience of Persons dealing with any such Attorney or Authorised Signatory as the Directors may think fit, and may also authorise any such Attorney or Authorised Signatory to delegate all or any of the powers, authorities and discretion vested in him.

101. The Directors may from time to time provide for the management of the affairs of the Company in such manner as they shall think fit and the provisions contained in the three next following Articles shall not limit the general powers conferred by this Article.

102. The Directors from time to time and at any time may establish any committees, local boards or agencies for managing any of the affairs of the Company and may appoint any natural person or corporation to be a member of such committees or local boards and may appoint any managers or agents of the Company and may fix the remuneration of any such natural person or corporation.

103. The Directors from time to time and at any time may delegate to any such committee, local board, manager or agent any of the powers, authorities and discretions for the time being vested in the Directors and may authorise the members for the time being of any such local board, or any of them to fill any vacancies therein and to act notwithstanding vacancies and any such appointment or delegation may be made on such terms and subject to such conditions as the Directors may think fit and the Directors may at any time remove any natural person or corporation so appointed and may annul or vary any such delegation, but no Person dealing in good faith and without notice of any such annulment or variation shall be affected thereby.

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104. Any such delegates as aforesaid may be authorised by the Directors to sub-delegate all or any of the powers, authorities, and discretion for the time being vested in them.

BORROWING POWERS OF DIRECTORS

105. The Directors may from time to time at their discretion exercise all the powers of the Company to raise or borrow money and to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital or any part thereof, to issue debentures, debenture stock, bonds and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.

THE SEAL

106. The Seal shall not be affixed to any instrument except by the authority of a resolution of the Directors provided always that such authority may be given prior to or after the affixing of the Seal and if given after may be in general form confirming a number of affixings of the Seal. The Seal shall be affixed in the presence of a Director or a Secretary (or an assistant Secretary) or in the presence of any one or more Persons as the Directors may appoint for the purpose and every Person as aforesaid shall sign every instrument to which the Seal is so affixed in their presence.

107. The Company may maintain a facsimile of the Seal in such countries or places as the Directors may appoint and such facsimile Seal shall not be affixed to any instrument except by the authority of a resolution of the Directors provided always that such authority may be given prior to or after the affixing of such facsimile Seal and if given after may be in general form confirming a number of affixings of such facsimile Seal. The facsimile Seal shall be affixed in the presence of such Person or Persons as the Directors shall for this purpose appoint and such Person or Persons as aforesaid shall sign every instrument to which the facsimile Seal is so affixed in their presence and such affixing of the facsimile Seal and signing as aforesaid shall have the same meaning and effect as if the Seal had been affixed in the presence of and the instrument signed by a Director or a Secretary (or an assistant Secretary) or in the presence of any one or more Persons as the Directors may appoint for the purpose.

108. Notwithstanding the foregoing, a Secretary or any assistant Secretary shall have the authority to affix the Seal, or the facsimile Seal, to any instrument for the purposes of attesting authenticity of the matter contained therein but which does not create any obligation binding on the Company.

DISQUALIFICATION OF DIRECTORS

109. The office of Director shall be vacated, if the Director:

(a) becomes bankrupt or makes any arrangement or composition with his creditors;

(b) dies or is found to be or becomes of unsound mind;

(c) resigns his office by notice in writing to the Company;

(d) without special leave of absence from the Board, is absent from meetings of the Board for three consecutive meetings and the Board resolves that his office be vacated; or

(e) is removed from office pursuant to any other provision of these Articles.

PROCEEDINGS OF DIRECTORS

110. The Directors may meet together (either within or without the Cayman Islands) for the despatch of business, adjourn, and otherwise regulate their meetings and proceedings as they think fit. Questions arising at any meeting shall be decided by a majority of votes. At any meeting of the Directors, each Director present in person or represented by his proxy or alternate shall be entitled to one vote. In case of an equality of votes the Chairman shall have a second or casting vote. A Director may, and a Secretary or assistant Secretary on the requisition of a Director shall, at any time summon a meeting of the Directors.

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111. A Director may participate in any meeting of the Directors, or of any committee appointed by the Directors of which such Director is a member, by means of telephone or similar communication equipment by way of which all Persons participating in such meeting can communicate with each other and such participation shall be deemed to constitute presence in person at the meeting.

112. The quorum necessary for the transaction of the business of the Board may be fixed by the Directors, and unless so fixed, the quorum shall be a majority of Directors then in office. A Director represented by proxy or by an alternate Director at any meeting shall be deemed to be present for the purposes of determining whether or not a quorum is present.

113. A Director who is in any way, whether directly or indirectly, interested in a contract or transaction or proposed contract or transaction with the Company shall declare the nature of his interest at a meeting of the Directors. A general notice given to the Directors by any Director to the effect that he is a member of any specified company or firm and is to be regarded as interested in any contract or transaction which may thereafter be made with that company or firm shall be deemed a sufficient declaration of interest in regard to any contract so made or transaction so consummated. A Director may vote in respect of any contract or transaction or proposed contract or transaction notwithstanding that he may be interested therein and if he does so his vote shall be counted and he may be counted in the quorum at any meeting of the Directors at which any such contract or transaction or proposed contract or transaction shall come before the meeting for consideration.

114. A Director may hold any other office or place of profit under the Company (other than the office of auditor) in conjunction with his office of Director for such period and on such terms (as to remuneration and otherwise) as the Directors may determine and no Director or intending Director shall be disqualified by his office from contracting with the Company either with regard to his tenure of any such other office or place of profit or as vendor, purchaser or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company in which any Director is in any way interested be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement by reason of such Director holding that office or of the fiduciary relation thereby established. A Director, notwithstanding his interest, may be counted in the quorum present at any meeting of the Directors whereat he or any other Director is appointed to hold any such office or place of profit under the Company or whereat the terms of any such appointment are arranged and he may vote on any such appointment or arrangement.

115. Any Director may act by himself or through his firm in a professional capacity for the Company, and he or his firm shall be entitled to remuneration for professional services as if he were not a Director; provided that nothing herein contained shall authorise a Director or his firm to act as auditor to the Company.

116. The Directors shall cause minutes to be made for the purpose of recording:

(a) all appointments of officers made by the Directors;

(b) the names of the Directors present at each meeting of the Directors and of any committee of the Directors; and

(c) all resolutions and proceedings at all meetings of the Company, and of the Directors and of committees of Directors.

117. When the chairman of a meeting of the Directors signs the minutes of such meeting the same shall be deemed to have been duly held notwithstanding that all the Directors have not actually come together or that there may have been a technical defect in the proceedings.

118. A resolution in writing signed by all the Directors or all the members of a committee of Directors entitled to receive notice of a meeting of Directors or committee of Directors, as the case may be (an alternate Director, subject as provided otherwise in the terms of appointment of the alternate Director, being entitled to sign such a resolution on behalf of his appointer), shall be as valid and effectual as if it had been passed at a duly called and constituted meeting of Directors or committee of Directors, as the case may be. When signed a resolution may consist of several documents each signed by one or more of the Directors or his duly appointed alternate.

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119. The continuing Directors may act notwithstanding any vacancy in their body but if and for so long as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of Directors, the continuing Directors may act for the purpose of increasing the number, or of summoning a general meeting of the Company, but for no other purpose.

120. Subject to any regulations imposed on it by the Directors, a committee appointed by the Directors may elect a chairman of its meetings. If no such chairman is elected, or if at any meeting the chairman is not present within fifteen minutes after the time appointed for holding the meeting, the committee members present may choose one of their number to be chairman of the meeting.

121. A committee appointed by the Directors may meet and adjourn as it thinks proper. Subject to any regulations imposed on it by the Directors, questions arising at any meeting shall be determined by a majority of votes of the committee members present and in case of an equality of votes the chairman shall have a second or casting vote.

122. All acts done by any meeting of the Directors or of a committee of Directors, or by any Person acting as a Director, shall notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such Director or Person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such Person had been duly appointed and was qualified to be a Director.

PRESUMPTION OF ASSENT

123. A Director who is present at a meeting of the Board of Directors at which an action on any Company matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent from such action with the person acting as the chairman or secretary of the meeting before the adjournment thereof or shall forward such dissent by registered post to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favour of such action.

DIVIDENDS

124. Subject to any rights and restrictions for the time being attached to any Shares, the Directors may from time to time declare dividends (including interim dividends) and other distributions on Shares in issue and authorise payment of the same out of the funds of the Company lawfully available therefor.

125. Subject to any rights and restrictions for the time being attached to any Shares, the Company by Ordinary Resolution may declare dividends, but no dividend shall exceed the amount recommended by the Directors.

126. The Directors may, before recommending or declaring any dividend, set aside out of the funds legally available for distribution such sums as they think proper as a reserve or reserves which shall, in the absolute discretion of the Directors, be applicable for meeting contingencies or for equalising dividends or for any other purpose to which those funds may be properly applied, and pending such application may in the absolute discretion of the Directors, either be employed in the business of the Company or be invested in such investments (other than Shares of the Company) as the Directors may from time to time think fit.

127. Any dividend payable in cash to the holder of Shares may be paid in any manner determined by the Directors. If paid by cheque it will be sent by mail addressed to the holder at his address in the Register, or addressed to such person and at such addresses as the holder may direct. Every such cheque or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first on the Register in respect of such Shares, and shall be sent at his or their risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute a good discharge to the Company.

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128. The Directors may determine that a dividend shall be paid wholly or partly by the distribution of specific assets (which may consist of the shares or securities of any other company) and may settle all questions concerning such distribution. Without limiting the generality of the foregoing, the Directors may fix the value of such specific assets, may determine that cash payment shall be made to some Shareholders in lieu of specific assets and may vest any such specific assets in trustees on such terms as the Directors think fit.

129. Subject to any rights and restrictions for the time being attached to any Shares, all dividends shall be declared and paid according to the amounts paid up on the Shares, but if and for so long as nothing is paid up on any of the Shares dividends may be declared and paid according to the par value of the Shares. No amount paid on a Share in advance of calls shall, while carrying interest, be treated for the purposes of this Article as paid on the Share.

130. If several Persons are registered as joint holders of any Share, any of them may give effective receipts for any dividend or other moneys payable on or in respect of the Share.

131. No dividend shall bear interest against the Company.

132. Any dividend unclaimed after a period of six calendar years from the date of declaration of such dividend may be forfeited by the Board of Directors and, if so forfeited, shall revert to the Company.

ACCOUNTS, AUDIT AND ANNUAL RETURN AND DECLARATION

133. The books of account relating to the Company’s affairs shall be kept in such manner as may be determined from time to time by the Directors.

134. The books of account shall be kept at the Registered Office, or at such other place or places as the Directors think fit, and shall always be open to the inspection of the Directors.

135. The Directors may from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Shareholders not being Directors, and no Shareholder (not being a Director) shall have any right to inspect any account or book or document of the Company except as conferred by law or authorised by the Directors or by Ordinary Resolution.

136. The accounts relating to the Company’s affairs shall be audited in such manner and with such financial year end as may be determined from time to time by the Directors or failing any determination as aforesaid shall not be audited.

137. The Directors may appoint an auditor of the Company who shall hold office until removed from office by a resolution of the Directors and may fix his or their remuneration.

138. Every auditor of the Company shall have a right of access at all times to the books and accounts and vouchers of the Company and shall be entitled to require from the Directors and officers of the Company such information and explanation as may be necessary for the performance of the duties of the auditors.

139. The auditors shall, if so required by the Directors, make a report on the accounts of the Company during their tenure of office at the next annual general meeting following their appointment, and at any time during their term of office, upon request of the Directors or any general meeting of the Members.

140. The Directors in each calendar year shall prepare, or cause to be prepared, an annual return and declaration setting forth the particulars required by the Companies Act and deliver a copy thereof to the Registrar of Companies in the Cayman Islands.

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CAPITALISATION OF RESERVES

141. Subject to the Companies Act, the Directors may:

(a) resolve to capitalise an amount standing to the credit of reserves (including a Share Premium Account, capital redemption reserve and profit and loss account), which is available for distribution;

(b) appropriate the sum resolved to be capitalised to the Shareholders in proportion to the nominal amount of Shares (whether or not fully paid) held by them respectively and apply that sum on their behalf in or towards:

(i) paying up the amounts (if any) for the time being unpaid on Shares held by them respectively, or

(ii) paying up in full unissued Shares or debentures of a nominal amount equal to that sum,

and allot the Shares or debentures, credited as fully paid, to the Shareholders (or as they may direct) in those proportions, or partly in one way and partly in the other, but the Share Premium Account, the capital redemption reserve and profits which are not available for distribution may, for the purposes of this Article, only be applied in paying up unissued Shares to be allotted to Shareholders credited as fully paid;

(c) make any arrangements they think fit to resolve a difficulty arising in the distribution of a capitalised reserve and in particular, without limitation, where Shares or debentures become distributable in fractions the Directors may deal with the fractions as they think fit;

(d) authorise a Person to enter (on behalf of all the Shareholders concerned) into an agreement with the Company providing for either:

(i) the allotment to the Shareholders respectively, credited as fully paid, of Shares or debentures to which they may be entitled on the capitalisation, or

(ii) the payment by the Company on behalf of the Shareholders (by the application of their respective proportions of the reserves resolved to be capitalised) of the amounts or part of the amounts remaining unpaid on their existing Shares,

and any such agreement made under this authority being effective and binding on all those Shareholders; and

(e) generally do all acts and things required to give effect to the resolution.

142. Notwithstanding any provisions in these Articles, the Directors may resolve to capitalise an amount standing to the credit of reserves (including the share premium account, capital redemption reserve and profit and loss account) or otherwise available for distribution by applying such sum in paying up in full unissued Shares to be allotted and issued to:

(a) employees (including Directors) or service providers of the Company or its Affiliates upon exercise or vesting of any options or awards granted under any share incentive scheme or employee benefit scheme or other arrangement which relates to such persons that has been adopted or approved by the Directors or the Members;

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(b) any trustee of any trust or administrator of any share incentive scheme or employee benefit scheme to whom shares are to be allotted and issued by the Company in connection with the operation of any share incentive scheme or employee benefit scheme or other arrangement which relates to such persons that has been adopted or approved by the Directors or Members; or

(c) any depositary of the Company for the purposes of the issue, allotment and delivery by the depositary of ADSs to employees (including Directors) or service providers of the Company or its Affiliates upon exercise or vesting of any options or awards granted under any share incentive scheme or employee benefit scheme or other arrangement which relates to such persons that has been adopted or approved by the Directors or the Members.

SHARE PREMIUM ACCOUNT

143. The Directors shall in accordance with the Companies Act establish a Share Premium Account and shall carry to the credit of such account from time to time a sum equal to the amount or value of the premium paid on the issue of any Share.

144. There shall be debited to any Share Premium Account on the redemption or purchase of a Share the difference between the nominal value of such Share and the redemption or purchase price provided always that at the discretion of the Directors such sum may be paid out of the profits of the Company or, if permitted by the Companies Act, out of capital.

NOTICES

145. Except as otherwise provided in these Articles, any notice or document may be served by the Company or by the Person entitled to give notice to any Shareholder either personally, or by posting it by airmail or a recognized courier service in a prepaid letter addressed to such Shareholder at his address as appearing in the Register, or by electronic mail to any electronic mail address such Shareholder may have specified in writing for the purpose of such service of notices, or by facsimile to any facsimile number such Shareholder may have specified in writing for the purpose of such service of notices, or by placing it on the Company’s Website should the Directors deem it appropriate. In the case of joint holders of a Share, all notices shall be given to that one of the joint holders whose name stands first in the Register in respect of the joint holding, and notice so given shall be sufficient notice to all the joint holders.

146. Notices sent from one country to another shall be sent or forwarded by prepaid airmail or a recognized courier service.

147. Any Shareholder present, either personally or by proxy, at any meeting of the Company shall for all purposes be deemed to have received due notice of such meeting and, where requisite, of the purposes for which such meeting was convened.

148. Any notice or other document, if served by:

(a) post, shall be deemed to have been served five calendar days after the time when the letter containing the same is posted;

(b) facsimile, shall be deemed to have been served upon production by the transmitting facsimile machine of a report confirming transmission of the facsimile in full to the facsimile number of the recipient;

(c) recognized courier service, shall be deemed to have been served 48 hours after the time when the letter containing the same is delivered to the courier service; or

(d) electronic means, shall be deemed to have been served immediately (i) upon the time of the transmission to the electronic mail address supplied by the Shareholder to the Company or (ii) upon the time of its placement on the Company’s Website.

In proving service by post or courier service it shall be sufficient to prove that the letter containing the notice or documents was properly addressed and duly posted or delivered to the courier service.

149. Any notice or document delivered or sent by post to or left at the registered address of any Shareholder in accordance with the terms of these Articles shall notwithstanding that such Shareholder be then dead or bankrupt, and whether or not the Company has notice of his death or bankruptcy, be deemed to have been duly served in respect of any Share registered in the name of such Shareholder as sole or joint holder, unless his name shall at the time of the service of the notice or document have been removed from the Register as the holder of the Share, and such service shall for all purposes be deemed a sufficient service of such notice or document on all Persons interested (whether jointly with or as claiming through or under him) in the Share.

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150. Notice of every general meeting of the Company shall be given to:

(a) all Shareholders holding Shares with the right to receive notice and who have supplied to the Company an address for the giving of notices to them; and

(b) every Person entitled to a Share in consequence of the death or bankruptcy of a Shareholder, who but for his death or bankruptcy would be entitled to receive notice of the meeting.

No other Person shall be entitled to receive notices of general meetings.

INFORMATION

151. No Member shall be entitled to require discovery of any information in respect of any detail of the Company’s trading or any information which is or may be in the nature of a trade secret or secret process which may relate to the conduct of the business of the Company and which in the opinion of the Board would not be in the interests of the Members of the Company to communicate to the public.

152. The Board shall be entitled to release or disclose any information in its possession, custody or control regarding the Company or its affairs to any of its Members including, without limitation, information contained in the Register and transfer books of the Company.

INDEMNITY

153. Every Director (including for the purposes of this Article any alternate Director appointed pursuant to the provisions of these Articles), Secretary, assistant Secretary, or other officer for the time being and from time to time of the Company (but not including the Company’s auditors) and the personal representatives of the same (each an “Indemnified Person”) shall be indemnified and secured harmless against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such Indemnified Person, other than by reason of such Indemnified Person’s own dishonesty, wilful default or fraud, in or about the conduct of the Company’s business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such Indemnified Person in defending (whether successfully or otherwise) any civil proceedings concerning the Company or its affairs in any court whether in the Cayman Islands or elsewhere.

154. No Indemnified Person shall be liable:

(a) for the acts, receipts, neglects, defaults or omissions of any other Director or officer or agent of the Company; or

(b) for any loss on account of defect of title to any property of the Company; or

(c) on account of the insufficiency of any security in or upon which any money of the Company shall be invested; or

(d) for any loss incurred through any bank, broker or other similar Person; or

(e) for any loss occasioned by any negligence, default, breach of duty, breach of trust, error of judgement or oversight on such Indemnified Person’s part; or

(f) for any loss, damage or misfortune whatsoever which may happen in or arise from the execution or discharge of the duties, powers, authorities, or discretions of such Indemnified Person’s office or in relation thereto;

unless the same shall happen through such Indemnified Person’s own dishonesty, willful default or fraud.

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FINANCIAL YEAR

155. Unless the Directors otherwise prescribe, the financial year of the Company shall end on August 31 in each calendar year and shall begin on September 1st in each calendar year.

NON-RECOGNITION OF TRUSTS

156. No Person shall be recognised by the Company as holding any Share upon any trust and the Company shall not, unless required by law, be bound by or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any Share or (except only as otherwise provided by these Articles or as the Companies Act requires) any other right in respect of any Share except an absolute right to the entirety thereof in each Shareholder registered in the Register.

WINDING UP

157. If the Company shall be wound up the liquidator may, with the sanction of a Special Resolution of the Company and any other sanction required by the Companies Act, divide amongst the Members in species or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for that purpose value any assets and determine how the division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Members as the liquidator, with the like sanction, shall think fit, but so that no Member shall be compelled to accept any asset upon which there is a liability.

158. If the Company shall be wound up, and the assets available for distribution amongst the Members shall be insufficient to repay the whole of the share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members in proportion to the par value of the Shares held by them. If in a winding up the assets available for distribution amongst the Members shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst the Members in proportion to the par value of the Shares held by them at the commencement of the winding up subject to a deduction from those Shares in respect of which there are monies due, of all monies payable to the Company for unpaid calls or otherwise. This Article is without prejudice to the rights of the holders of Shares issued upon special terms and conditions.

AMENDMENT OF ARTICLES OF ASSOCIATION

159. Subject to the Companies Act, the Company may at any time and from time to time by Special Resolution alter or amend these Articles in whole or in part.

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CLOSING OF REGISTER OR FIXING RECORD DATE

160. For the purpose of determining those Shareholders that are entitled to receive notice of, attend or vote at any meeting of Shareholders or any adjournment thereof, or those Shareholders that are entitled to receive payment of any dividend, or in order to make a determination as to who is a Shareholder for any other purpose, the Directors may provide that the Register shall be closed for transfers for a stated period which shall not exceed in any case thirty calendar days in any calendar year.

161. In lieu of or apart from closing the Register, the Directors may fix in advance a date as the record date for any such determination of those Shareholders that are entitled to receive notice of, attend or vote at a meeting of the Shareholders and for the purpose of determining those Shareholders that are entitled to receive payment of any dividend the Directors may, at or within ninety calendar days prior to the date of declaration of such dividend, fix a subsequent date as the record date for such determination.

162. If the Register is not so closed and no record date is fixed for the determination of those Shareholders entitled to receive notice of, attend or vote at a meeting of Shareholders or those Shareholders that are entitled to receive payment of a dividend, the date on which notice of the meeting is posted or the date on which the resolution of the Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Shareholders. When a determination of those Shareholders that are entitled to receive notice of, attend or vote at a meeting of Shareholders has been made as provided in this Article, such determination shall apply to any adjournment thereof.

REGISTRATION BY WAY OF CONTINUATION

163. The Company may by Special Resolution resolve to be registered by way of continuation in a jurisdiction outside the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing. In furtherance of a resolution adopted pursuant to this Article, the Directors may cause an application to be made to the Registrar of Companies to deregister the Company in the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing and may cause all such further steps as they consider appropriate to be taken to effect the transfer by way of continuation of the Company.

DISCLOSURE

164. The Directors, or any service providers (including the officers, the Secretary and the registered office agent of the Company) specifically authorised by the Directors, shall be entitled to disclose to any regulatory or judicial authority any information regarding the affairs of the Company including without limitation information contained in the Register and books of the Company.

27

EX-8.1

Exhibit 8.1

List of Principal Subsidiaries and Variable Interest Entities

of Meta Data Limited

 

EX-12.1

Exhibit 12.1

Certification by the Principal Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Xiaoming Li, certify that:

1. I have reviewed this annual report on Form 20-F of Meta Data Limited (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: May 23, 2022

By:	/s/ Xiaoming Li
Name:	Xiaoming Li
Title:	Chief Executive Officer

EX-12.2

Exhibit 12.2

Certification by the Principal Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Chee Jiong Ng, certify that:

1. I have reviewed this annual report on Form 20-F of Meta Data Limited (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: May 23, 2022

By:	/s/ Chee Jiong Ng
Name:	Chee Jiong Ng
Title:	Chief Financial Officer

EX-13.1

Exhibit 13.1

Certification by the Principal Executive Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Meta Data Limited (the “Company”) on Form 20-F for the fiscal year ended August 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Xiaoming Li, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 23, 2022
By:	/s/ Xiaoming Li
Name:	Xiaoming Li
Title:	Chief Executive Officer

EX-13.2

Exhibit 13.2

Certification by the Principal Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Meta Data Limited (the “Company”) on Form 20-F for the fiscal year ended August 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Chee Jiong Ng, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 23, 2022
By:	/s/ Chee Jiong Ng
Name:	Chee Jiong Ng
Title:	Chief Financial Officer

EX-15.1

Exhibit 15.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-228068) pertaining to the Amended and Restated 2015 Share Incentive Plan of Meta Data Limited (formerly known as “OneSmart International Education Group Limited”) of our report dated May 23, 2022, with respect to the consolidated financial statements of Meta Data Limited (formerly known as “OneSmart International Education Group Limited”) included in this Annual Report (Form 20-F) for the year ended August 31, 2021.

/s/ Audit OneStop Assurance PAC

Singapore

May 23, 2022

XML

Document And Entity Information	12 Months Ended
	Aug. 31, 2021 shares
Document Information Line Items
Entity Registrant Name	Meta Data Limited
Document Type	20-F
Current Fiscal Year End Date	--08-31
Amendment Flag	false
Entity Central Index Key	0001722380
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Aug. 31, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	FY
Entity Emerging Growth Company	true
Entity Shell Company	false
Entity Ex Transition Period	true
ICFR Auditor Attestation Flag	false
Document Registration Statement	false
Document Annual Report	true
Document Transition Report	false
Document Shell Company Report	false
Entity File Number	001-38430
Entity Incorporation, State or Country Code	E9
Entity Address, Address Line One	2161 North Zhongshan Road
Entity Address, Address Line Two	Putuo District
Entity Address, City or Town	Shanghai
Entity Address, Postal Zip Code	200333
Entity Address, Country	CN
Entity Interactive Data Current	Yes
Document Accounting Standard	U.S. GAAP
Auditor Name	OneStop Assurance PAC
Auditor Location	Singapore
Auditor Firm ID	6732
Business Contact [Member]
Document Information Line Items
Entity Address, Address Line One	2161 North Zhongshan Road
Entity Address, Address Line Two	Putuo District
Entity Address, City or Town	Shanghai
Entity Address, Postal Zip Code	200333
Entity Address, Country	CN
Contact Personnel Name	Chee Jiong Ng
City Area Code	+86-21-
Local Phone Number	2250-5999
Contact Personnel Email Address	cj@onesmart.org
American Depositary Shares [Member]
Document Information Line Items
Trading Symbol	AIU
Title of 12(b) Security	American depositary shares, each American depositary share representing 1,000 Class A ordinary shares Class A ordinary shares
Security Exchange Name	NYSE
Class A Ordinary Shares
Document Information Line Items
Entity Common Stock, Shares Outstanding	4,321,229,545
Title of 12(b) Security	Class A ordinary shares, par value US$0.000001 per share
No Trading Symbol Flag	true
Ordinary Shares
Document Information Line Items
Entity Common Stock, Shares Outstanding	6,611,659,561
Class B Ordinary Shares
Document Information Line Items
Entity Common Stock, Shares Outstanding	2,290,430,016

XML

Consolidated Balance Sheets ¥ in Thousands, $ in Thousands	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)
Current assets:
Cash and cash equivalents	¥ 29,626	$ 4,586	¥ 1,158,044
Restricted cash	355,017	54,953	187,241
Amount due from a related party			491
Short-term investments	81,575	12,627	486,756
Prepayments and other current assets			344,870
Total current assets	466,218	72,166	2,177,402
Non-current assets:
Property and equipment, net	36,955	5,720	581,248
Intangible assets, net			277,953
Long-term investments			1,048,178
Goodwill			1,481,401
Deferred tax assets			191,721
Amount due from a related party			20,400
Operating lease right-of-use assets			1,481,196
Other non-current assets			638,892
Total non-current assets	36,955	5,720	5,720,989
Total assets	503,173	77,886	7,898,391
Current liabilities:
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIEs without recourse to the Group of RMB642,674 and RMB 838,675 (US$129,818) as of August 31, 2020 and 2021, respectively)	868,464	134,429	889,055
Income taxes payable (including income taxes payable of the consolidated VIEs without recourse to the Group of RMB93,156 and 59,995 (US$9,287) as of August 31, 2020 and 2021, respectively)	48,216	7,463	97,720
Prepayments from customers (including prepayments from customers of the consolidated VIEs without recourse to the Group of RMB2,547,444 and 2,786,961 (US$431,391) as of August 31, 2020 and 2021, respectively)	2,787,686	431,504	2,547,493
Amounts due to related parties (including amount due to a related party of the consolidated VIEs without recourse to the Group of RMB14,447 and RMB1,205 (US$187) as of August 31, 2020 and 2021, respectively)	1,205	187	14,447
Short-term loans (including short-term loans of the consolidated VIEs without recourse to the Group of RMB789,550 and 498,574 (US$77,174) as of August 31, 2020 and 2021, respectively)	498,574	77,174	789,550
Operating lease liabilities, current portion (including operating lease liabilities, current portion of the consolidated VIEs without recourse to the Group of RMB483,056 and nil as of August 31, 2020 and 2021, respectively)			483,056
Long-term loans, current portion (including long-term loans, current portion of the consolidated VIEs without recourse to the Group of RMB98,280 and RMB112,500 (US$17,414) as of August 31, 2020 and 2021, respectively)	513,432	79,474	295,433
Total current liabilities	4,717,577	730,231	5,116,754
Non-current liabilities:
Deferred tax liabilities (including deferred tax liabilities of the consolidated VIEs without recourse to the Group of RMB71,021 and nil as of August 31, 2020 and 2021, respectively)			71,025
Long-term loans (including long-term loans of the consolidated VIEs without recourse to the Group of RMB291,780 and MB135,000 (US$20,897) as of August 31, 2020 and 2021, respectively)	135,000	20,897	1,023,151
Convertible senior notes (including convertible senior notes of the consolidated VIEs without recourse to the Group of nil as of August 31, 2020 and 2021, respectively)	226,114	35,000	239,659
Unrecognized tax benefit (including unrecognized tax benefit of the consolidated VIEs without recourse to the Group of RMB29,610 and nil as of August 31, 2020 and 2021, respectively)			29,610
Operating lease liabilities, non-current portion (including operating lease liabilities, non-current portion of the consolidated VIEs without recourse to the Group of RMB929,135 and nil as of August 31, 2020 and 2021, respectively)			929,135
Other non-current liabilities (including other non-current liabilities of the consolidated VIEs without recourse to the Group of RMB23,084 and RMB23,083 (US$3,573) as of August 31, 2020 and 2021, respectively)	45,727	7,078	47,084
Total non-current liabilities	406,841	62,975	2,339,664
Total liabilities	5,124,418	793,206	7,456,418
Commitments and contingencies
Shareholders’ equity:
Treasury stock	(344)	(53)	(274,648)
Additional paid-in capital	5,337,962	826,259	5,598,978
Statutory reserves	16,427	2,543	12,270
Accumulated deficit	(10,078,429)	(1,560,032)	(5,035,172)
Accumulated other comprehensive income	92,693	14,346	99,167
Total Meta Data Limited shareholders’ equity	(4,631,649)	(716,931)	400,637
Non-controlling interests	10,404	1,611	41,336
Total shareholders’ equity	(4,621,245)	(715,320)	441,973
Total liabilities, non-controlling interests and shareholders’ equity	503,173	77,886	7,898,391
Class A ordinary shares
Shareholders’ equity:
Ordinary shares	26	4	26
Class B ordinary shares
Shareholders’ equity:
Ordinary shares	¥ 16	$ 2	¥ 16

XML

Consolidated Balance Sheets (Parentheticals) ¥ in Thousands, $ in Thousands	Aug. 31, 2021 CNY (¥) shares	Aug. 31, 2021 USD ($) $ / shares shares	Aug. 31, 2020 CNY (¥) shares
Consolidated VIEs without recourse to the Group
Accrued expenses and other current liabilities	¥ 838,675	$ 129,818	¥ 642,674
Income taxes payable	59,995	9,287	93,156
Prepayments from customers	2,786,961	431,391	2,547,444
Amounts due to a related party	1,205	187	14,447
Short-term loans	498,574	77,174	789,550
Operating lease liabilities-current | ¥			483,056
Long-term bank loan, current portion	112,500	17,414	98,280
Deferred tax liabilities | ¥			71,021
Long-term bank loans	135,000	20,897	291,780
Convertible Senior Notes | ¥
Unrecognized tax benefit | ¥			29,610
Operating lease liabilities-non current | ¥			929,135
Other Liabilities, Noncurrent	¥ 23,083	$ 3,573	¥ 23,084
Class A ordinary shares
Par value (in dollars per share) (in Dollars per share and Yuan Renminbi per share) | $ / shares		$ 0.000001
Ordinary shares, shares authorized (in shares) (in Shares) | shares	37,703,157,984	37,703,157,984	37,703,157,984
Ordinary shares, shares issued (in shares) (in Shares) | shares	4,321,229,545	4,321,229,545	4,146,103,947
Ordinary shares, shares outstanding (in shares) (in Shares) | shares	4,321,229,545	4,321,229,545	4,146,103,947
Class B ordinary shares
Par value (in dollars per share) (in Dollars per share and Yuan Renminbi per share) | $ / shares		$ 0.000001
Ordinary shares, shares issued (in shares) (in Shares) | shares	2,290,430,016	2,290,430,016	2,296,842,016
Ordinary shares, shares outstanding (in shares) (in Shares) | shares	2,290,430,016	2,290,430,016	2,296,842,016

XML

Consolidated Statements of Income/(Loss) ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥) ¥ / shares shares	Aug. 31, 2021 USD ($) $ / shares shares	Aug. 31, 2020 CNY (¥) ¥ / shares shares	Aug. 31, 2019 CNY (¥) ¥ / shares shares
Income Statement [Abstract]
Net revenues	¥ 3,423,410	$ 529,907	¥ 3,438,881	¥ 3,993,873
Cost of revenues	(2,093,743)	(324,089)	(2,169,739)	(2,072,067)
Gross profit	1,329,667	205,818	1,269,142	1,921,806
Operating expenses:
Selling and marketing	(930,140)	(143,976)	(820,883)	(816,658)
General and administrative	(5,261,978)	(814,497)	(810,936)	(876,609)
Total operating expenses	(6,192,118)	(958,473)	(1,631,819)	(1,693,267)
Operating income/(loss)	(4,862,451)	(752,655)	(362,677)	228,539
Interest income	9,443	1,462	37,393	81,207
Interest expense	(98,302)	(15,217)	(103,600)	(60,637)
Other income	99,335	15,376	93,894	82,836
Other expense	(135,239)	(20,934)	(453,391)	(15,738)
Foreign exchange gain/(loss)	3,295	510	(69)	(138)
Income/(loss) before income tax and share of net income/(loss) from equity investees	(4,983,919)	(771,458)	(788,450)	316,069
Income tax (expense)/benefit	(30,870)	(4,778)	37,785	(121,541)
Income/(loss) before share of net income/(loss) from equity investees	(5,014,789)	(776,236)	(750,665)	194,528
Share of net loss from equity investees	(10,705)	(1,657)	(17,977)	(28,325)
Net income/(loss)	(5,025,494)	(777,893)	(768,642)	166,203
Add: Net loss attributable to non-controlling interests	37,927	5,871	38,813	79,165
Net income/(loss) attributable to Meta Data Limited’s shareholders	(4,987,567)	(772,022)	(729,829)	245,368
Net (loss)/income attributable to ordinary shareholders of Meta Data Limited	¥ (4,987,567)	$ (772,022)	¥ (729,829)	¥ 245,368
(Loss)/earnings per share:
Basic (in Dollars per share and Yuan Renminbi per share) | (per share)	¥ (0.7543)	$ (0.1168)	¥ (0.1131)	¥ 0.038
Diluted (in Dollars per share and Yuan Renminbi per share) | (per share)	¥ (0.7543)	$ (0.1168)	¥ (0.1131)	¥ 0.0366
Shares used in (loss)/earnings per share computation (in millions of shares):
Basic (in Shares)	6,612	6,612	6,451	6,460
Diluted (in Shares)	6,612	6,612	6,451	6,709

XML

Consolidated Statements of Comprehensive Income/(Loss) ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)
Statement of Comprehensive Income [Abstract]
Net income/(loss)	¥ (5,025,494)	$ (777,893)	¥ (768,642)	¥ 166,203
Other comprehensive income/(loss):
Unrealized gain/(loss) on available-for-sale investments, net of tax	4,009	621	1,676	(35,161)
Foreign currency translation adjustment	5,221	808	10,343	(6,591)
Comprehensive income/(loss)	(5,016,264)	(776,464)	(756,623)	124,451
Add: Comprehensive loss attributable to non-controlling interests	37,927	5,871	38,813	79,165
Comprehensive income/(loss) attributable to Meta Data Limited’s shareholders	¥ (4,978,337)	$ (770,593)	¥ (717,810)	¥ 203,616

XML

Consolidated Statements of Shareholders’ Equity (Deficit) ¥ in Thousands, $ in Thousands	Number of ordinary shares shares	Ordinary shares CNY (¥)	Additional paid-in capital CNY (¥)	Treasury Stock CNY (¥)	Statutory reserves CNY (¥)	Accumulated deficit CNY (¥)	Accumulated other comprehensive income CNY (¥)	Meta Data Limited shareholders’ equity CNY (¥)	Non-controlling interests CNY (¥)	CNY (¥) shares	USD ($) shares
Balance at Aug. 31, 2018		¥ 42	¥ 5,426,503		¥ 4,272	¥ (4,535,042)	¥ 128,900	¥ 1,024,675	¥ 70,568	¥ 1,095,243
Balance (in Shares) at Aug. 31, 2018 | shares	6,517,207,561
Comprehensive income (loss)						245,368	(41,752)	203,616	(79,165)	124,451
Appropriation of statutory reserves					2,808	(2,808)
Share repurchase (Note 16)				(203,759)				(203,759)		(203,759)
Share repurchase (Note 16) (in Shares) | shares	(145,762,478)
Exercise of employee stock options			2,744					2,744		2,744
Exercise of employee stock options (in Shares) | shares	55,658,760
Acquisition of subsidiaries (Note 4)									11,067	11,067
Disposal of subsidiaries									(18,892)	(18,892)
Acquisition of non-controlling interests (Note 16)			(10,808)					(10,808)	1,048	(9,760)
Distribution to non-controlling interests									(980)	(980)
Disposal of non-controlling interests			12,021					12,021	86,079	98,100
Capital contribution									(4,602)	(4,602)
Share-based compensation (Note 14)			71,532					71,532		71,532
Cumulative-effect upon adoption of ASC 606 (Note 2)						(7,671)		(7,671)		(7,671)
Balance at Aug. 31, 2019		42	5,501,992	(203,759)	7,080	(4,300,153)	87,148	1,092,350	65,123	1,157,473
Balance (in Shares) at Aug. 31, 2019 | shares	6,427,103,843
Comprehensive income (loss)						(729,829)	12,019	(717,810)	(38,813)	(756,623)
Appropriation of statutory reserves					5,190	(5,190)
Share repurchase (Note 16)		(1)		(70,889)				(70,890)		(70,890)
Share repurchase (Note 16) (in Shares) | shares	(76,586,600)
Exercise of employee stock options		1	7,774					7,775		7,775
Exercise of employee stock options (in Shares) | shares	92,428,720
Acquisition of subsidiaries (Note 4)									39,198	39,198
Disposal of interests in subsidiaries			25					25	(25)
Disposal of subsidiaries									3,944	3,944
Acquisition of non-controlling interests (Note 16)			(48,799)					(48,799)	(21,285)	(70,084)
Distribution to non-controlling interests									(7,056)	(7,056)
Capital contribution									250	250
Share-based compensation (Note 14)			137,986					137,986		137,986
Balance at Aug. 31, 2020		42	5,598,978	(274,648)	12,270	(5,035,172)	99,167	400,637	41,336	441,973
Balance (in Shares) at Aug. 31, 2020 | shares	6,442,945,963
Balance at Aug. 31, 2020		6	817,679	(40,110)	1,792	(735,341)	14,482	58,508	6,037	64,545
Balance (in Shares) at Aug. 31, 2020 | shares	6,442,945,963
Comprehensive income (loss)						(5,043,257)	(6,474)	(5,049,731)	(30,932)	(5,080,663)
Appropriation of statutory reserves					4,157			4,157		4,157
Share repurchase (Note 16)
Share repurchase (Note 16) (in Shares) | shares										76,586,600	76,586,600
Exercise of employee stock options			(303,878)	274,304				(29,574)		¥ (29,574)
Exercise of employee stock options (in Shares) | shares	168,713,598
Acquisition of subsidiaries (Note 4)
Disposal of interests in subsidiaries
Disposal of subsidiaries
Acquisition of non-controlling interests (Note 16)
Distribution to non-controlling interests
Capital contribution
Share-based compensation (Note 14)			42,862					42,862		42,862
Balance at Aug. 31, 2021		42	5,337,962	(344)	16,427	(10,078,429)	92,693	(4,631,649)	10,404	(4,621,245)	$ (715,320)
Balance (in Shares) at Aug. 31, 2021 | shares	6,611,659,561
Balance at Aug. 31, 2021		¥ 6	¥ 826,259	¥ (53)	¥ 2,543	¥ (1,560,032)	¥ 14,346	¥ (716,931)	¥ 1,611	¥ (715,320)
Balance (in Shares) at Aug. 31, 2021 | shares	6,611,659,561

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Consolidated Statements of Cash Flows ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)
Cash flows from operating activities
Net income/(loss)	¥ (5,025,494)	$ (777,893)	¥ (768,642)	¥ 166,203
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Depreciation	161,703	25,030	209,663	152,801
Amortization	11,549	1,788	38,302	23,081
Share-based compensation	42,862	6,635	137,986	71,532
Lease expense to reduce operating lease right-of -use assets			461,423
Income from investments			(24,831)	(50,746)
Share of net (income)/loss from equity investees			17,977	28,325
Gain from disposal of long-term investments			(50,407)	(15,403)
Gain from disposal of subsidiaries			(9,390)	(8,805)
Loss from disposal of a business			21,699
Impairment of other receivables	552,159	85,468	52,428
Losses on extinguishment of debt securities			153,061
Impairment of long-term investments	3,821,885	591,586	161,605	10,000
Investments fair value change				(12,854)
Gain from step acquisitions			(594)	(1,897)
Contingent consideration fair value change			3,644	5,124
Loss on disposal of property and equipment			5,889	940
Changes in operating assets and liabilities:
Prepayments and other current assets	281,943	43,642	166,339	(257,262)
Amount due from a related party			(491)
Deferred tax assets	191,721	29,676	(86,521)	(38,355)
Other non-current assets	(36,842)	(5,703)	31,901	(68,782)
Accrued expenses and other current liabilities	(11,331)	(1,754)	(85,284)	297,288
Income taxes payable	(49,503)	(7,663)	16,323	36,924
Prepayments from customers	210,933	32,650	239,557	(4,497)
Operating lease liabilities			(451,916)
Amount due to a related party	(13,242)	(2,050)	803
Unrecognized tax benefit			168	11,757
Net cash provided by operating activities	138,343	21,412	240,692	345,374
Cash flows from investing activities
Purchase of short-term investments	(104,000)	(16,098)	(582,573)	(820,005)
Proceeds from disposal of short-term investments	65,042	10,068	404,859	1,191,505
Income from short-term investments	242	37	7,110	11,451
Purchase of long-term investments	(88,975)	(13,772)	(180,983)	(1,120,706)
Proceeds from disposal of long-term investments				64,432
Purchase of property and equipment	(20,508)	(3,174)	(193,166)	(283,964)
Proceeds from disposal of property and equipment	252	39		518
Amounts due from third parties			(284,618)	(237,059)
Amount due from a related party			(1,650)	(2,250)
Acquisition of subsidiaries, net of cash acquired			(87,926)	(138,749)
Disposal of subsidiaries, net of cash disposed			12,016	(57,508)
Net cash used in investing activities	(147,947)	(22,900)	(906,931)	(1,392,335)
Cash flows from financing activities
Proceeds from bank loans	498,574	77,174	803,817	1,257,472
Repayment of bank loans	(1,439,972)	(222,892)	(322,418)	(95,000)
Proceeds from issuance of convertible senior notes, net of issuance costs			246,113
Acquisition of non-controlling interests			(8,834)	(70,908)
Disposal of non-controlling interests				98,100
Capital contributed from non-controlling interests	2,000	310	250	690
Distribution to non-controlling interests	(3,362)	(520)	(7,056)	(980)
Distribution to shareholders
Proceeds from exercise of share options	7,570	1,172	7,776	2,744
Share repurchase			(70,889)	(203,760)
Net cash provided by financing activities	(935,190)	(144,756)	648,759	988,358
Effect of exchange rate changes	(15,848)	(2,453)	(23,647)	34,268
Net increase/(decrease) in cash and cash equivalents and restricted cash	(960,642)	(148,697)	(41,127)	(24,335)
Cash and cash equivalents and restricted cash, at the beginning of year	1,345,285	208,236	1,386,412	1,410,747
Cash and cash equivalents and restricted cash, at the end of year	384,643	59,539	1,345,285	1,386,412
Supplemental disclosure of cash flow information:
Interest paid	87,711	13,577	107,184	40,682
Income tax paid	53,532	8,286	29,826	98,114
Supplemental disclosure of non-cash activities:
Operating lease liabilities arising from obtaining right-of-use assets			313,225
Supplemental disclosure of non-cash investing activities:
Acquisition of subsidiaries with conversion of previously held long-term investments in and loans to the subsidiaries			556,891
Purchase of property and equipment included in accrued expenses and other current liabilities	1,188	184	36,363	29,467
Purchase of long-term investments included in accrued expenses and other current liabilities			1,336	37,093
Contingent consideration for business acquisition included in other non-current liabilities			¥ 47,084	¥ 91,440

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Organization and Principal Activities

12 Months Ended

Aug. 31, 2021

Organization and Principal Activities [Abstract]

Organization and Principal Activities

1. Organization and Principal Activities

Meta Data Limited (the “Company”, formerly known as “OneSmart International Education Group Limited (“OneSmart“)) is a limited company incorporated under the laws of Cayman Islands on March 10, 2017. The Company through its consolidated subsidiaries, variable interest entities (the “VIEs”) and the VIEs’ subsidiaries (collectively, the “Group”) are principally engaged in the provision of premium tutoring services for students of kindergarten and primary, middle and high schools (“K12”) and premium young children education services in the People’s Republic of China (the “PRC”). Due to the PRC legal restrictions on foreign ownership and investment in the education business, the Company conducts its primary business operations through its VIEs. The Company’s Board adopts resolutions approving, and recommends to the shareholders for their approval to change the Company’s corporate name from “OneSmart International Education Group Ltd” to “Meta Data Limited” on its annual general meeting held on April 28, 2022.

The Company undergone a reorganization in 2017 whereby the Company became the ultimate parent entity of its subsidiaries, the VIEs and the VIEs’ subsidiaries. As part of the reorganization, the business operations of the consolidated subsidiaries, the VIEs and the VIEs’ subsidiaries were transferred to the Company. In return, the Company issued 2,439,484,566 of Class B ordinary shares to Happy Edu Inc., a company wholly owned by Mr. Zhang Xi (“the Founder”), as well as 94,897,359 of Class A ordinary shares, 1,890,686,563 of Series A redeemable convertible preferred shares and 35,757,200 of Series A-1 redeemable convertible preferred shares to the shareholders of the VIEs (“the Reorganization”). The Company also paid RMB2,242,914 (US$347,179) to certain shareholders of the VIEs in full in January 2018.

In September 2017, immediately following the Reorganization, the Company issued 1,840,535,677 Series A-1 redeemable convertible preferred shares to new investors for gross cash consideration of RMB1,840,536 (US$284,895). The Series A-1 redeemable convertible preferred shares carried the same terms and conditions as those issued during the Reorganization (Note 23). The Company initially recorded the Series A-1 redeemable convertible preferred shares at fair value less issuance costs of RMB241 (US$37), and chose to recognize changes in the redemption value immediately and adjusted the redeemable convertible preferred share carrying value to equal their redemption value.

In September 2017, immediately following the Reorganization, the Company also repurchased an aggregate of 94,897,359 Class A ordinary shares for cash consideration of US$13,028 and an aggregate of 341,256,445 Series A redeemable convertible preferred shares for cash consideration of US$46,850 from three shareholders (the “Then Shareholders”). The Company made the payments to the Then Shareholders in full in January 2018.

In December 2017, the Founder transferred 142,642,550 of his Class B ordinary shares to a new investor for cash consideration of RMB163,023 (US$25,234) and each of such transferred ordinary share was re-designated as a Series A-1 redeemable convertible preferred share.

As the Company, its subsidiaries, VIEs and the VIEs’ subsidiaries were all under the control of the Founder, the Reorganization was accounted for as a transaction under common control in a manner similar to a pooling of interests. Therefore, the accompanying consolidated financial statements have been prepared as if the corporate structure of the Company had been in existence since the beginning of the periods presented.

On March 28, 2018, the Company completed its an initial public offering (“IPO”) on the New York Stock Exchange. The Company offered 16,300,000 ADSs representing 652,000,000 Class A ordinary shares at US$11.00 per ADS. Net proceeds from the IPO deducting underwriting discount and other expenses were RMB1,048,660 (US$162,321). IPO costs of RMB26,752 (US$4,141) were recorded as reduction of the proceeds from the IPO in shareholders’ equity.

Details of the Group’s subsidiaries, the VIEs and the major subsidiaries of the VIEs as of August 31, 2021 are as follows:

			Percentage
			of direct or
			indirect
	Date of		ownership
	incorporation/	Place of	by the
Entity	acquisition	incorporation	Company	Principal activities
			Direct
Subsidiaries:
OneSmart Edu Inc. (“OneSmart BVI”)	June 16, 2016	BVI	100%	Holding company
OneSmart Edu (HK) Limited (“OneSmart HK”)	July 11, 2017	Hong Kong	100%	Holding company
OneSmart Great Edu (HK) Limited (“Great EDU”)	Sept 11, 2018	Hong Kong	100%	Holding company
OneSmart Online Edu Inc. (“OneSmart Online”)	December 4, 2019	Cayman	90%	Holding company
Yimi Education Technology Inc. (“Yimi Cayman”)	February 1, 2020	Cayman	90%	Holding company
Yimi Education Technology (HK) Limited (“Yimi HK”)	February 1, 2020	Hong Kong	90%	Holding company
Shanghai Jing Xue Rui Information and Technology Co., Ltd. (“Shanghai Jing Xue Rui” or “WFOE”)	September 28, 2011	PRC	100%	Educational technology research and development
Yimi Education Technology (Shanghai) Co., Ltd (“Yimi Shanghai” or “WFOE”)	February 1, 2020	PRC	90%	Educational technology research and development
			Indirect
VIEs:
Shanghai OneSmart Education and Training Co., Ltd. (“Shanghai OneSmart”)	September 11, 2007	PRC	100%	K12 post-class education program services
Shanghai Rui Si Technology Information Consulting Co., Ltd. (“Shanghai Rui Si”)	June 8, 2009	PRC	100%	Early childhood education services
Xiangyuan (Shanghai) Education Technology Co., Ltd. (“Shanghai Xiangyuan”)	December 6, 2019	PRC	100%	K12 post-class online education program services
Subsidiaries of VIEs:
Beijing Jingrui Peiyou Education Consulting Co., Ltd. (“Beijing Jingrui Peiyou”)	July 5, 2010	PRC	100%	K12 post-class education program services
Nanjing Jingrui Education Information Consulting Co., Ltd. (“Nanjing Jingrui”)	March 31, 2011	PRC	100%	K12 post-class education program services
Hangzhou OneSmart Education Information Consulting Co., Ltd. (“Hangzhou OneSmart”)	April 2, 2011	PRC	100%	K12 post-class education program services
Guangzhou Jingxuerui Education Information Consulting Co., Ltd. (“Guangzhou OneSmart”)	June 27, 2012	PRC	100%	K12 post-class education program services
Shenzhen Jingrui Education Training Centers (“Shenzhen Jingrui”)	September 7, 2012	PRC	100%	K12 post-class education program services
Changzhou Jingrui Education Information Consulting Co., Ltd. (“Changzhou Jingrui”)	May 27, 2014	PRC	100%	K12 post-class education program services
Shanghai Jing Yu Investment Co., Ltd. (“Shanghai Jing Yu”)	October 23, 2015	PRC	100%	Investment holding
Wuxi Jingzhirui Education Training Centers (“Wuxi Jingzhirui”)	November 9, 2018	PRC	100%	K12 post-class education program services
Shanghai Jingsirui Education Training Centers (“Shanghai Jingsirui”)	December 7, 2015	PRC	100%	K12 post-class education program services
Shanghai FasTrack English Education Training Co., Ltd. (“FasTrack English”)	January 1, 2018	PRC	75.61%	Early childhood education services
Shanghai OneSmart Education Investment Co., Ltd. (“Shanghai OneSmart Education Investment”)	November 25, 2014	PRC	100%	Investment holding

The VIE arrangements

PRC laws and regulations currently require any foreign entity that invests in the education business in China to be an educational institution with relevant experience in providing educational services outside China. The Group’s offshore holding companies are not educational institutions and do not provide educational services outside China. Accordingly, the Group’s offshore holding companies are not allowed to directly engage in the education business in China. To comply with PRC laws and regulations, the Group conducts all of its business in China through the VIEs. The VIEs hold the requisite licenses and permits necessary to conduct the Group’s premium tutoring services and premium young children education services business. In addition, the VIEs hold leases and other assets necessary to operate the Group’s study centers, employ teachers and generate substantially all of the Group’s revenues. Despite the lack of technical majority ownership, the Company has effective control of the VIEs through a series of contractual arrangements (the “Contractual Agreements”) and a parent-subsidiary relationship exists between the Company and the VIEs. The equity interests of the VIEs are legally held by PRC individuals (the “Nominee Shareholders”). Through the Contractual Agreements, the Nominee Shareholders of the VIEs effectively assign all their voting rights underlying their equity interests in the VIEs to the Company, and therefore, the Company has the power to direct the activities of the VIEs that most significantly impact its economic performance. The Company also has the right to receive economic benefits and obligations to absorb losses from the VIEs that potentially could be significant to the VIEs. Based on the above, the Company consolidates the VIEs in accordance with SEC Regulation SX-3A-02 and ASC810-10, Consolidation: Overall.

The following is a summary of the Contractual Agreements:

Shareholders’ Voting Rights Agreements Pursuant to the Shareholders’ Voting Rights Agreements signed between the respective Nominee Shareholders and the WFOE, the Nominee Shareholders agreed to entrust the Company through the WFOE an irrevocable proxy to exercise all of their voting rights as shareholders of the VIEs and approve on behalf of the Nominee Shareholders, all related legal documents pertinent to the exercise of their rights in their capacity as the shareholders of the VIEs. The WFOE is also entitled to re-authorize or assign its voting rights to any other person or entity at its own discretion and without giving prior notice to the Nominee Shareholders or obtaining their consent. The Shareholders’ Voting Rights Agreements remain valid for as long as at least one of the Nominee Shareholders remains a shareholder of the VIEs.

Loan Agreements Pursuant to the Loan Agreements between the respective Nominee Shareholders and the WFOE, the WFOE granted interest-free loans to the Nominee Shareholders for the purpose of providing capital to the VIEs to develop their business. The loans have terms of ten years and the WFOE has the sole discretion to extend the loans. The Nominee Shareholders are not allowed to repay the loans in advance of the maturity date without the WFOE’s prior written consent. The timing of the repayment must be made within 30 days after receiving the written consent and the repayment shall be in the form of transferring the VIEs’ equity interests to the WFOE or its designees unless the Nominee Shareholders are in breach of the agreements, in which the WFOE can request immediate repayment of the loans. Pursuant to the Loan Agreements, the Company agreed to provide unlimited financial support for the VIEs’ daily operating activities and agree to forgo the right to seek repayments.

The VIE arrangements (continued)

Exclusive Purchase Right Agreements Pursuant to the Exclusive Purchase Right Agreements entered into between the Nominee Shareholders, the VIEs and the WFOE, the Nominee Shareholders granted to the WFOE or its designees proxy of shareholders’ rights and voting rights of their respective equity interests in the VIEs. The WFOE has the sole discretion as to when to exercise the options, whether in part or full. The exercise price of the options to purchase all or part of the equity interests in the VIEs will be higher of RMB1.00 or the minimum amount of consideration permitted by the applicable PRC laws. Any proceeds received by the Nominee Shareholders from the exercise of the options exceeding the loan amounts, distribution of profits or dividends, shall be remitted to the WFOE, to the extent permitted under PRC laws. The Exclusive Purchase Right Agreements will remain in effect until all the equity interests held by the VIEs are transferred to the WFOE or its designated party. The WFOE may terminate the Exclusive Purchase Right Agreements at its sole discretion, whereas under no circumstances may the VIEs or the Nominee Shareholders terminate in accordance with the agreements.

Equity Pledge Agreement Pursuant to the Equity Pledge Agreement entered into among the WFOE, the Nominee Shareholders and the VIEs, the Nominee Shareholders pledged all of their equity interests in the VIEs to the WFOE as collateral to secure their obligations under the above agreements. The Nominee Shareholders further undertake that they will remit any distributions in connection with such shareholder’s equity interests in the VIEs to the WFOE, to the extent permitted by PRC laws. If the VIEs or any of their Nominee Shareholders breach any of their respective contractual obligations under the above agreements, the WFOE, as the pledgee, will be entitled to certain rights, including the right to sell, transfer or dispose of the pledged equity interest. The Nominee Shareholders of the VIEs agree not to create any encumbrance on or otherwise transfer or dispose of their respective equity interest in the VIEs, without the prior consent of the WFOE. The Equity Pledge Agreement will be valid until the VIEs and their respective shareholders fulfill all the contractual obligations under the above agreements in full and the pledged equity interests have been transferred to the WFOE and/or its designees.

Exclusive Technology and Consultation Service Agreements Pursuant to the Exclusive Technology and Consultation Service Agreements, WFOE retains exclusive right to provide to the VIEs the technology support and consulting services included but not limited to the system technology support service, business professional consulting service, human resource, technical and business operation staff training, marketing research, planning and development service, business plan and strategy consulting service and client based support and development consulting service. WFOE owns the intellectual property rights developed in the performance of these agreements. However, if there are clearly definitions which do not allow WFOE to own certain intellectual property rights under the applicable PRC laws, VIEs should own them initially and grant their exclusive use rights to WFOE with minimum consideration. In exchange for these services, WFOE is entitled to charge the VIEs annual service fees which typically amount to what would be substantially all of the VIEs’ pre-tax profits (after offset prior year losses, if applicable), resulting in a transfer of substantially all of the profits from the VIEs to the WFOE.

Based on the opinion of the Company’s PRC legal counsel, (i) the ownership structure of the Group, including its subsidiaries in the PRC and VIEs are not in violation with any applicable PRC laws and regulations; and (ii) each of the Contractual Agreements among the WFOE, the VIEs and the Nominee Shareholders governed by PRC laws, are legal, valid and binding, enforceable against such parties.

However, uncertainties in the PRC legal system could cause the relevant regulatory authorities to find the current Contractual Agreements and businesses to be in violation of any existing or future PRC laws or regulations. If the Company, the WFOE or any of its current or future VIEs are found in violation of any existing or future laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion in dealing with such violations, which may include, but not limited to, revocation of business and operating licenses, being required to discontinue or restrict its business operations, restriction of the Group’s right to collect revenues, being required to restructure its operations, imposition of additional conditions or requirements with which the Group may not be able to comply, or other regulatory or enforcement actions against the Group that could be harmful to its business. The imposition of any of these or other penalties may result in a material and adverse effect on the Group’s ability to conduct its business. In addition, if the imposition of any of these penalties causes the Company to lose the rights to direct the activities of the VIEs or the right to receive their economic benefits, the Company would no longer be able to consolidate the VIEs.

The Group’s business has been directly operated by the VIEs and their subsidiaries. For the years ended August 31, 2019 , 2020 and 2021, the VIEs contributed 99%,100% and 100% of the Group’s consolidated revenues, respectively. As of August 31, 2020 and 2021, the VIEs accounted for an aggregate of 91% and 63%, respectively, of the consolidated total assets, and 81% and 87%, respectively, of the consolidated total liabilities.

There are no consolidated VIEs’ assets that are pledged or collateralized for the VIEs’ obligations and which can only be used to settle the VIEs’ obligations, except for registered capital and the PRC statutory reserves and certain property with carrying amounts of RMB10,000 (US$1,548) that were pledged to secure banking borrowings granted to the Company (Note 19). Relevant PRC laws and regulations restrict the VIEs from transferring a portion of their net assets, equivalent to the balance of their statutory reserves and its share capital, to the Company in the form of loans and advances or cash dividends. Please refer to Note 24 for disclosure of the restricted net assets. As the VIEs are incorporated as limited liability companies under the PRC Company Law, creditors of the VIEs do not have recourse to the general credit of the Company for any of the liabilities of the VIEs. There were no other pledges or collateralization of the VIEs’ assets.

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Summary of Significant Accounting Policies

12 Months Ended

Aug. 31, 2021

Organization and Principal Activities [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

(a) Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”).

(b) Liquidity

In assessing the Company’s liquidity and substantial doubt about its ability to continue as a going concern, the Company monitors and analyzes cash on-hand and operating expenditure commitments. The Company’s liquidity needs are to meet working capital requirements and operating expense obligations. To date, the Company financed its operations primarily through cash generated by operating activities, IPO proceeds, equity or convertible securities financing activities and commercial bank loan.

The accompanying financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern. The accompanying financial statements have been prepared on a basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has suffered recurring losses from operations, is in default of its debt obligations and as of August 31, 2021 was net liability and shareholders’ deficit position. Between July 2021 and September 2021, the General Office of Ministry of Education issued a series of rules, regulations, notices and circulars on further alleviating the burden of homework and after-school tutoring for students in compulsory education. To comply with all applicable rules and regulations in providing educational services, the Company ceased all the domestic education programs and learning centers operations in China on October 12, 2021. The above matters raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. As shown in the accompanying financial statements as of August 31, 2021, the Company had net cash decreased of RMB960,642 (US$148,697), RMB41,127 and RMB24,335 for the years ended August 31, 2021, 2020 and 2019, respectively. As of August 2021, the Company had cash balance of RMB29,626 (US$4,586) and restricted cash of RMB355,017 (US$54,953).

The Company has historically met its cash needs through a combination of cash flows from operating activities, proceeds from bank loans and proceeds from disposal of short-term investments. The cash requirements of the Company are generally for operating activities, repayments of bank loans, purchase of property and equipment and excess cash was used in the purchase of short-term and long-term investments. Between July 2021 and September 2021, the General Office of Ministry of Education issued a series of rules, regulations, notices and circulars on further alleviating the burden of homework and after-school tutoring for students in compulsory education (“the Opinion”). In order to comply with all applicable rules and regulations in providing educational services, the Company ceased all the domestic education programs and learning centers operations in China on October 12, 2021. As a result, this raises substantial doubt about its ability to continue as a going concern.

In evaluating if there is substantial doubt about the ability to continue as a going concern, the Group is trying to alleviate the going concern risk through (1) equity or debt financing, (2) increasing cash generated from new business model operations, and (3) debt divestiture, to meet our anticipated working capital requirements for at least the next 12 months. The Group may, however, need additional capital in the future to fund our further expansion. If the Group determines that its cash requirements exceed the amount of cash and cash equivalents it has on hand at the time, the Group may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result in further dilution to shareholders of the Group.

The Company entered into certain securities purchase agreement on January 24, 2022 (the “SPA”) with certain non-affiliated and accredited “non-U.S. Persons”, (the “Purchasers”) as defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to which the Company agreed to sell 8,000,000,000 Class A ordinary shares, (the “Shares”) par value $0.000001 per share, at a per share purchase price $0.0035625 (the “Offering”), which is 90% of the average NYSE official closing price of the ADS divided by 1,000, the current conversion ratio of ADS, for the three trading days immediately preceding the execution of the SPA. On February 11, 2022, the Offering closed as all the conditions of the SPA have been satisfied and the Company issued the Shares to the Purchasers. The gross proceeds to the Company from the Offering was US$28.5 million.

The Company plans to restructure its business by selling tutoring services and then focus on smart education services. The sale of the tutoring services has not been determined as of the date of the issuance of these financial statements. The Company have carried out product iterations on our original business: shifting from education and training to education and technology, using the original channels to carry out quality education and technology output, including 5G technology, smart campus system, virtual training system based on Metaverse, etc. The new business is using the six core technologies of Metaverse and artificial intelligence, blockchain, network computing, interaction, game technology, and the Internet of Things as the company’s core technologies, building a new type of blockchain smart student card and global smart employment quality Educational virtual world (new type of artificial intelligence employment training), combination of virtual and real prediction world (digital education, risk prediction, computing power output), VR shopping world (new e-commerce) and other products provide global customers with a new digital world experience. As of May 2022, the Company has signed a series of strategic cooperation agreements with six non-affiliated companies to pre-launch smart education training business.

The Company have recruited a global management team and technology research and development team to develop new products and new business directions that combine education and technology. In order to diversify the negative impact from local regulation, the Company has also decided to expend its business outside China.

As a result, the Company prepared the consolidated financial statements assuming the Company will continue as a going concern. However, there is no assurance that the measures above can be achieved as planned. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

(c) Principles of consolidation

The consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIEs and the subsidiaries of the VIEs. All significant inter-company transactions and balances between the Company, its subsidiaries and the VIEs have been eliminated upon consolidation. Results of subsidiaries, businesses acquired from third parties and the VIEs are consolidated from the date on which control is transferred to the Company.

(d) Consolidation of variable interest entities

In accordance with accounting standards regarding consolidation of variable interest entities (“VIEs”), VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision-making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

The Company determined that Shanghai Onesmart, Shanghai Rui Si and Shanghai Xiangyuan are VIEs because the Company is the primary beneficiary of risks and rewards of those VIEs.

The condensed consolidating table below disaggregated the Consolidated Balance Sheets of the Company into Onesmart, the VIE and its subsidiaries, the WFOE that is the primary beneficiary of the VIEs and an aggregation of other entities that are consolidated as of August 31, 2021 and 2020.

	As of August 31, 2021
	Other entities that are			WFOE that is the primary beneficiary		VIE and its						Consolidated
	consolidated			of the VIE		subsidiaries			Onesmart			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	)

	As of August 31, 2020
	Other entities		WFOE that is the primary
	that are		beneficiary		VIE and its					Consolidated
	consolidated		of the VIE		subsidiaries		Onesmart			total
	RMB		RMB		RMB		RMB			RMB
Intercompany receivables		100,400		-		11,107,310		2,287,588			-
Current assets excluding intercompany receivables		13,751		31,297		1,559,409		572,945			2,177,402
Current assets		114,151		31,297		12,666,719		2,860,533			2,177,402
Investment in subsidiaries		2,046,413		289		992,652		872,756			-
Non-current assets excluding investment in subsidiaries		1,052,138		23,771		4,644,477		603			5,720,989
Non-current assets		1,052,138		23,771		4,644,477		603			5,720,989
Total assets		1,065,889		55,068		6,203,886		573,548			7,898,391
Intercompany payables		1,819,347		1,634,862		9,990,619		50,470			-
Current liabilities excluding intercompany payables		175,896		-		4,668,607		272,251			5,116,754
Current liabilities		1,995,243		1,634,862		14,659,226		322,721			5,116,754
Non-current liabilities		-		-		1,344,630		995,034			2,339,664
Total liabilities		175,896		-		6,013,237		1,267,285			7,456,418
Total shareholders’ equity (net assets)		889,993		55,068		190,649		(693,737	)		441,973

The condensed consolidating table below disaggregated the Consolidated Statements of Operations and Comprehensive Income (Loss) of the Company into Onesmart, the VIE and its 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 31, 2020 and 2021.

	For the years ended August 31, 2021
				WFOE
	Other entities			that is the primary
	that are			beneficiary			VIE and its						Consolidated
	consolidated			of the VIE			subsidiaries			Onesmart			total
	RMB			RMB			RMB			RMB			RMB
Net revenues		1,125			1,016			3,421,269			-			3,423,410
Cost of revenues		-			-			(2,093,743	)		-			(2,093,743	)
Gross profit		1,125			1,016			1,327,526			-			1,329,667
Operating expenses		(3,323	)		(134,500	)		(5,991,693	)		(62,602	)		(6,192,118	)
Income (loss) from operations		(2,198	)		(133,484	)		(4,664,167	)		(62,602	)		(4,862,451	)
Other expenses		(244	)		(30,494	)		(63,503	)		(27,227	)		(121,468	)
Income (loss) before income taxes		(2,442	)		(163,978	)		(4,727,670	)		(89,829	)		(4,983,919	)
Provision for income taxes		-			(1,405	)		(29,465	)		-			(30,870	)
Net income (loss)		(2,442	)		(165,383	)		(4,757,135	)		(89,829	)		(5,014,789	)

	For the years ended August 31, 2020
				WFOE
	Other entities			that is the primary
	that are			beneficiary			VIE and its						Consolidated
	consolidated			of the VIE			subsidiaries			Onesmart			total
	RMB			RMB			RMB			RMB			RMB
Net revenues		1,955			-			3,436,926			-			3,438,881
Cost of revenues		(2,862	)		-			(2,166,877	)		-			(2,169,739	)
Gross profit		(907	)		-			1,270,049			-			1,269,142
Operating expenses		(4,028	)		(6,978	)		(1,619,319	)		(1,495	)		(1,631,819	)
Income (loss) from operations		(4,935	)		(6,978	)		(349,270	)		(1,495	)		(362,677	)
Other expenses		(1	)		(1,078	)		(372,255	)		(52,439	)		(425,773	)
Income (loss) before income taxes		(4,937	)		(8,055	)		(721,525	)		(53,933	)		(788,450	)
Provision for income taxes		-			-			37,785			-			37,785
Net income (loss)		(4,937	)		(8,055	)		(683,740	)		(53,933	)		(750,665	)

The condensed consolidating table below disaggregated the Consolidated Statements of Cash Flows of the Company into Onesmart, the VIE and its 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, 2020 and 2021.

	For the years ended August 31, 2021
				WFOE
	Other			that is the
	entities			primary
	that are			beneficiary		VIE and its						Consolidated
	consolidated			of the VIE		subsidiaries			Onesmart			total
	RMB			RMB		RMB			RMB			RMB
Net cash provided by (used in) operating activities		(1,167	)		29,266		110,244			-			138,343
Net cash used in investing activities		-			15		(147,962	)		-			(147,947	)
Net cash provided by (used in) financing activities		-			-		(704,874	)		(230,316	)		(935,190	)
Effect of exchange rate changes on cash and restricted cash		-			-		-			(15,848	)		(15,848	)
Net increase (decrease) in cash and restricted cash		(1,167	)		29,281		(742,592	)		(246,164	)		(960,642	)
Cash and restricted cash from continuing operations, beginning of year		11,677			28,645		1,019,603			285,360			1,345,285
Cash and restricted cash from continuing operations, end of year		10,510			57,926		277,011			39,196			384,643

	For the years ended August 31, 2020
				WFOE
	Other			that is the
	entities			primary
	that are			beneficiary			VIE and its						Consolidated
	consolidated			of the VIE			subsidiaries			Onesmart			total
	RMB			RMB			RMB			RMB			RMB
Net cash provided by (used in) operating activities		23,974			(71,511	)		607,495			(319,266	)		240,692
Net cash used in investing activities		(33,581	)		45,593			(801,909	)		(117,034	)		(906,931	)
Net cash provided by (used in) financing activities		-			-			472,213			176,546			648,759
Effect of exchange rate changes on cash and restricted cash		-			-			-			(23,647	)		(23,647	)
Net increase (decrease) in cash and restricted cash		(9,607	)		(25,918	)		277,799			(283,401	)		(41,127	)
Cash and restricted cash from continuing operations, beginning of year		21,284			54,564			741,803			568,761			1,386,412
Cash and restricted cash from continuing operations, end of year		11,677			28,645			1,019,603			285,360			1,345,285

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 VIE’s earnings after eliminating VIE’s accumulated losses and making appropriation of VIE’s 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 VIE’s earnings will be through payment of service fees to Onesmart, 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 VIE, amount owed by VIE to the Company should be first settled. Cash transfers were mainly for the purpose of providing working capital between Onesmart and its subsidiaries, VIE and its subsidiaries and WFOE that is the primary beneficiary of the VIE.

(e) Use of estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and revenue and expenses during the reporting periods. Significant accounting estimates reflected in the Group’s consolidated financial statements include, but not limited to valuation allowance for deferred tax assets, uncertain tax position, the initial valuation of the assets acquired and liabilities assumed in a business combination, economic lives and impairment of long-lived assets, impairment of goodwill, the valuation of short-term and long-term investments and share-based compensation. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements.

(f) Foreign currency

The functional currency of the Company, OneSmart BVI, and OneSmart HK is the United States Dollars (“US$”). The Company’s PRC subsidiaries and the VIEs determined their functional currency to be Renminbi (the “RMB”). The Group uses the RMB as its reporting currency.

Transactions denominated in foreign currencies are re-measured into the functional currency at the exchange rates prevailing on the transaction dates. Monetary assets and liabilities denominated in foreign currencies are re-measured at the exchange rates prevailing at the balance sheet date. Non-monetary items that are measured in terms of historical cost in foreign currency are re-measured using the exchange rates at the dates of the initial transactions. Exchange gains and losses are included in the consolidated statements of income.

The Company uses the average exchange rate for the year and the exchange rate at the balance sheet date to translate the operating results and financial position, respectively. Translation differences are recorded in accumulated other comprehensive income, a component of shareholders’ equity.

(g) Convenience translation

Amounts in US$ are presented for the convenience of the reader and are translated at the noon buying rate of US$1.00 to RMB6.4604 on August 31, 2021 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate.

(h) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments which are unrestricted as to withdrawal or use.

(i) Restricted cash

Restricted cash primarily represents deposits held in a designated bank account as pledged security for the principle, interest payments on the Group’s long-term or short-term loans and restricted cash with banks. The restricted cash related to the frozen cash in the bank accounts by court order is disclosed in Note 6, the restricted cash related to deposits held in designated bank accounts as pledge of long-term or short-term loans are disclosed in Note 19.

(j) Short-term investments

The Group accounts for all investments in accordance with ASC topic 320 (“ASC 320”), Investments - Debt and Equity Securities. The Group classifies the investments in debt and equity securities as “held-to-maturity”, “trading” or “available-for-sale”, whose classification determines the respective accounting methods stipulated by ASC 320. All investments with original maturities of greater than three months not exceeding twelve months are classified as short-term investments, while those of more than twelve months are classified as long-term investments (Note 11). Investments that are expected to be realized in cash during the next twelve months are also included in short-term investments. Dividend and interest income, including amortization of the premium and discount arising at acquisition, for all categories of investments in securities, are included in earnings. Any realized gains or losses on the sale of the short-term investments, are determined on a specific identification method, and such gains and losses are reflected in earnings during the period in which gains or losses are realized.

The securities that the Group has the positive intent and the ability to hold to maturity are classified as held-to-maturity securities and stated at amortized cost.

The securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities. Unrealized holding gains and losses for trading securities are included in earnings.

Investments not classified as trading or as held-to-maturity are classified as available-for-sale securities. Available-for-sale investments are reported at fair value, with unrealized gains and losses recorded in accumulated other comprehensive income. Realized gains or losses are included in earnings during the period in which the gain or loss is realized. An impairment loss on the available-for-sale securities is recognized in the consolidated statements of income when the decline in value is determined to be other-than-temporary. As of August 31, 2021, all investments classified as available-for-sale securities have been recognized fully impairment loss because of the termination of the tutoring service business by the Company, which is in compliance with the changes in the regulatory environment on the private education industry in China.

(k) Property and equipment, net

Property and equipment are stated at cost less accumulated depreciation and impairment. Depreciation is calculated on a straight-line basis over the following estimated useful lives:

Category	Estimated Useful Lives
Furniture	3-5 years
Electronic equipment	3 years
Vehicles	4-5 years
Buildings	20 years
Leasehold improvement	Over the shorter of the lease term or the estimated useful lives

Repair and maintenance costs are charged to expense as incurred, whereas the cost of renewals and betterments that extend the useful lives of property and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the cost and accumulated depreciation from the asset and accumulated depreciation accounts with any resulting gain or loss reflected in the consolidated statements of income.

Direct costs that are related to the construction of property and equipment and incurred in connection with bringing the assets to their intended use are capitalized as construction in progress. Construction in progress is transferred to specific property and equipment, and the depreciation of these assets commences when the assets are ready for their intended use.

(l) Impairment of long-lived assets other than goodwill

The Group evaluates its long-lived assets, including fixed assets and intangible assets with finite lives, for impairment whenever events or changes in circumstances, such as a significant adverse change to market conditions that will impact the future use of the assets, indicate that the carrying amount of an asset may not be fully recoverable. When these events occur, the Group evaluates the recoverability of long-lived assets by comparing the carrying amount of the assets to the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Group recognizes an impairment loss based on the excess of the carrying amount of the assets over their fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the assets, when the market prices are not readily available. During the fiscal year ended August 31, 2019 and 2020, there was no impairment of any of our long-lived assets. However, the Opinion and a related series of notice, administrative measures or circular and the compliance measures taken by the Company have material adverse impact on our after-school tutoring services related to academic subjects in China’s compulsory education system, which in turn have adversely affected the Company’s results of operations and prospect. We have gradually terminated our after-school tutoring services related to academic subjects business since August 2021, and officially ceased our business in October 2021. As a result, the Company recognized an impairment loss with amount of RMB849,246 (US$131,454) for long-lived assets other than goodwill.

(m) Business combination

The Group accounts for its business combinations using the purchase method of accounting in accordance with ASC 805 (“ASC 805”), Business Combinations. The purchase method of accounting requires that the consideration transferred to be allocated to the assets, including separately identifiable assets and liabilities the Group acquired, based on their estimated fair values. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and all contractual contingencies as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of cost of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the businesses acquired, the difference is recognized directly in earnings.

In a business combination achieved in stages, the Group remeasures the previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the remeasurement gain or loss, if any, is recognized in the consolidated statements of income.

The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and non-controlling interests is based on various assumptions and valuation methodologies requiring considerable judgment from management. The most significant variables in these valuations are discount rates, terminal values, the number of years on which the cash flow projections are based, as well as the assumptions and estimates used to determine the cash inflows and outflows. The Group determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons. Terminal values are based on the expected life of assets, forecasted life cycle and forecasted cash flows over that period. There is no additional business combination by the Company in fiscal year of 2021.

(n) Goodwill

The Group assesses goodwill for impairment in accordance with ASC 350-20, Intangibles-Goodwill and Other: Goodwill (“ASC 350-20”), which requires that goodwill be tested for impairment at the reporting unit level at least annually and more frequently upon the occurrence of certain events, as defined by ASC 350-20.

The Group has determined it has five reporting units. Goodwill was allocated to five reporting units as of August 31, 2019 and 2020. The Group has the option to assess qualitative factors first to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. In the qualitative assessment, the Group considers primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. Based on the qualitative assessment, if it is more likely than not that the fair value of each reporting unit is less than the carrying amount, the quantitative impairment test is performed.

Specifically, the quantitative impairment test is determined using a two-step process. The first step compares the fair value of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of the affected reporting unit’s goodwill to the carrying value of that goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. An impairment loss is recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill. Estimating fair value is performed by utilizing various valuation techniques, with the primary technique being a discounted cash flow.

Affected by the changes in the regulatory environment on the private education industry in China., all subsidiaries acquired by the Company also terminated their education programs and learning centers from August 2021 gradually. As of August 31, 2021, the Company recognized impairment loss with amount of RMB1,076,560 (US$166,640) for goodwill.

(o) Intangible assets

Intangible assets with finite lives are carried at cost less accumulated amortization. Amortization of finite-lived intangible assets is computed using the straight-line method over the estimated useful lives. The estimated useful lives of intangible assets from the date of purchase are as follows:

Category	Estimated Useful Lives
Student base	5 years
Customer relationship	1-9 years
Trademark	10-20 years
License	30 years
Franchise agreements	6 years
Technology and system	5 years

As of August 31, 2021, affected by the changes in the regulatory environment on the private education industry in China., the Company recognized impairment loss with amount of RMB197,328 (US$30,544) for intangible assets.

(p) Long-term investments

The Group’s long-term investments consist of equity securities without readily determinable fair value, investment in debt securities accounted for at fair value and equity method investments.

The Group adopted ASC Topic 321, Investments-Equity Securities (“ASC 321”) from September 1, 2018. Pursuant to ASC 321, for equity securities measured at fair value with changes in fair value record in earnings, the Group does not assess whether those investments are impaired. For those equity securities that the Group selects to use the measurement alternative, the Group uses the measurement alternative to measure those investments at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The Group makes a qualitative assessment of whether the investment is impaired at each reporting date. If a qualitative assessment indicates that the investment is impaired, the Group has to estimate the investment’s fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, (“ASC 820”). If the fair value is less than the investment’s carrying value, the Group recognizes an impairment loss in net income equal to the difference between the carrying value and fair value.

Investments in equity investees represent investments in entities in which the Group can exercise significant influence but does not own a majority equity interest or control are accounted for using the equity method of accounting in accordance with ASC 323-10 (“ASC 323-10”), Investments-Equity Method and Joint Ventures: Overall. Under the equity method, the Group initially records its investment at cost and prospectively recognizes its proportionate share of each equity investee’s net profit or loss into its consolidated statements of income. The difference between the cost of the equity investee and the amount of the underlying equity in the net assets of the equity investee is recognized as equity method goodwill included in equity method investments on the consolidated balance sheets. The Group evaluates its equity method investment for impairment under ASC 323-10. An impairment loss on the equity method investment is recognized in the consolidated statements of income when the decline in value is determined to be other-than-temporary.

Investment in debt securities accounted for at fair value with original maturities of greater than twelve months are classified as long-term investments. As investment in debt securities classified as available for sale in accordance with ASC 320 are reported at fair value. Any unrealized gains and losses on available-for-sale investments are included in other comprehensive income. Interest income are recognized in earnings. When a decline in value is determined to be other-than-temporary, the impairment loss on the long-term available-for-sale investments would be recognized in the consolidated statements of comprehensive income.

In 2019, 2020 and 2021, we evaluated our investments, taking into consideration, including, but not limited to, the duration, degree and causes of the decline in financial results, its intent and ability to hold the investment and the invested companies’ financial performance and near-term prospects. Based on the evaluation, the Company recognized impairment loss of RMB10,000, RMB161,600 and RMB1,652,308 (US$255,759) for the years ended August 31, 2019, 2020 and 2021, respectively.

(q) Fair value of financial instruments

Financial instruments include cash and cash equivalents, restricted cash, short-term and long-term investments, due from third party payment platforms, due from third parties, amount due from a related party, redeemable convertible preferred shares, short-term and long-term loans, and convertible senior notes.

The carrying amounts of these financial instruments, except for the short-term and long-term investments, redeemable convertible preferred shares (Note 23), long-term loans and convertible senior notes, approximate their fair values because of their short-term maturities. Available-for-sale investments are adjusted to fair value at each reporting date. The redeemable convertible preferred shares were initially recognized at fair value upon issuance and immediately accreted to their full redemption value as of redemption occurred at the end of the reporting periods. If a beneficial conversion feature exists as of the commitment date, its intrinsic value is bifurcated from the carrying value of the redeemable convertible preferred shares as a contribution to additional paid in capital. The discount resulting from the beneficial conversion feature is amortized from the date of issuance to the earliest conversion date. The carrying amount of the long-term loan and convertible senior notes approximate their fair value due to the fact that the related interest rates approximate the interest rates currently offered by financial institutions for similar debt instruments with comparable maturities.

(r) Revenue recognition

On September 1, 2018, the Group adopted ASC Topic 606 Revenue from Contracts with Customers (“Topic 606”), applying the modified retrospective method to all contracts that were not completed as of September 1, 2018. Results for the year ended August 31, 2019,2020 and 2021 are presented under Topic 606, while revenues for the years ended August 31, 2018 are not adjusted and continue to be reported under ASC Topic 605, Revenue Recognition (“Topic 605”).

Revenue is recognized when control of promised services are transferred to the Group’s customers in amounts of consideration to which the Group expects to be entitled to in exchange for those services. The Group follows the five steps approach for revenue recognition under Topic 606: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue as the Group satisfies a performance obligation.

The Group generates revenues primarily through tuition fees from personalized and small class premium tutoring services with individual students in the PRC. In addition, the Group generates revenues from other services such as franchise, licensing, and study tours. The following table presents the Group’s revenues disaggregated by revenue sources for the years ended August 31, 2020 and 2021.

Disaggregation of net revenues	Personalized and small class premium tutoring services RMB		Others RMB		For the year ended August 31, 2021 RMB
OneSmart VIP		2,767,502		12,604		2,780,106
HappyMath		363,143		-		363,143
FasTrack		183,344		-		183,344
Other		96,817		-		96,817
		3,410,806		12,604		3,423,410

(r) Revenue recognition (continued)

Disaggregation of net revenues	Personalized and small class premium tutoring services RMB		Others RMB		For the year ended August 31, 2020 RMB
OneSmart VIP		2,616,057		9,122		2,625,179
HappyMath		422,944		-		422,944
FasTrack		170,707		5,763		176,470
OneSmart Online		103,848		-		103,848
Other		110,440		-		110,440
		3,423,996		14,885		3,438,881

Primary sources of the Group’s revenues are as follows:

1) Personalized premium tutoring services is referring to OneSmart VIP one-on-one and one-on-three tutoring services. Small class premium tutoring services primarily consist of HappyMath, FasTrack, and other after-school small classes tutoring. The Group launched OneSmart Online in February 2020 as a complement to its offline business providing online courses to the existing student base from OneSmart VIP, HappyMath and FasTrack English programs through an online platform. OneSmart Online also integrated the online tutoring business from Shanghai Yimi after the acquisition (Note 4). Each contract of personalized premium service and small class tutoring service is accounted for as a single performance obligation which is satisfied proportionately over the stated service period. Tuition fees are generally collected in advance and are initially recorded as prepayments from customers. Tuition revenues are recognized proportionately as the tutoring sessions are delivered.

Refunds are provided to students who decide to withdraw from contracts for remaining undelivered tutoring sessions. A refund is equal to and limited to the amount related to the undelivered classes. The Group estimates and records a refund liability for the potion of tuition fees collected in advance that it does not expect to be entitled to.

2) Other revenues included franchise revenues derived from franchise agreements where the franchisees operating under the OneSmart or FasTrack brand are required to pay an initial one-time non-refundable franchise fee and recurring franchise fees, which mainly consist of on-going management and service fees based on a certain percentage of the franchisees’ monthly tuition received. Each franchise contract is accounted for as a single performance obligation to provide the franchisee the license to its OneSmart or FasTrack intellectual property. The one-time franchise fees are fixed consideration payable upon submission of a franchise application or renewal and are recognized on a straight-line basis over the initial or renewal term of the franchise contracts. The continuing fees represent variable consideration that are recognized on a monthly basis.

The Group’s contract assets consisted of accounts receivable for other services. The balance of contract assets amounted to nil as of August 31, 2020 and August 31, 2021. The Group’s contract liabilities mainly consisted of prepayments from customers, with a balance of RMB2,547,493 and RMB2,787,686 (US$431,504) as of August 31, 2020 and August 31, 2021, respectively. A majority of contract liabilities at the beginning of the year ended August 31, 2021 were recognized as revenues during the year ended August 31, 2021 and a majority of contract liabilities as of August 31, 2021 might be refunded to our customers in the following year affected by the Opinion and a related series of notice, administrative measures or circular. The difference between the opening and closing balances of the Group’s contract liabilities primarily results from the timing difference between the Group’s satisfaction of performance obligation and the customers’ payments.

Refund liabilities mainly related to the estimated refunds that are expected to be provided to students if they decide they no longer want to attend tutoring. The refund liability estimation is based on historical refund ratio on a portfolio basis using the most likely amount method. As of August 31, 2020 and August 31, 2021, refund liability amounted to RMB333,045 and RMB364,447 (US$56,412), respectively, is recorded in prepayments from customers.

(s) Cost of revenues

Cost of revenues consist primarily of salaries and other personnel expenses, rental expenses, depreciation expenses, utilities and other expenses directly attributable to the Group’s revenues.

(t) Advertising expenditures

Advertising expenditures are expensed when incurred and are included in selling and marketing expenses, which amounted to RMB383,306, RMB378,198 and RMB463,324 (US$71,718) for the years ended August 31, 2019 , 2020 and 2021, respectively.

(u) Government grants

The Group receives government subsidies at the discretion of the local government. Government grants are recognized when it is probable that the Group will comply with the conditions attached to them, and the grants are received. Government grants without attached conditions are recognized when received. When the grant relates to an expense item, it is recognized in the consolidated statement of income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate, as a reduction of the related operating expense. When the grant relates to an asset, it is recognized as a deferred government grant and released to the consolidated statement of income in equal amounts over the expected useful life of the related asset, when operational, as a reduction of the related depreciation expense.

For the years ended August 31, 2019, 2020 and 2021, government grants in the amounts of RMB31,937, RMB24,238 and RMB86,206 (US$13,344) were recognized as other income in the consolidated statements of income, respectively.

(v) Leases

The Group adopted ASU No. 2016-02, Leases (Topic 842) (“ASC 842”) from September 1, 2019 by using the modified retrospective method and did not restate the comparable periods. The Group has elected the package of practical expedients, which allows the Group not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any expired or existing leases as of the adoption date. The Group also elected the short-term lease exemption for all contracts with lease terms of 12 months or less. The Group have lease agreements with lease and non-lease components, which are generally accounted for separately.

The Group determines if an arrangement is a lease or contains a lease at lease inception. For operating leases, the Group recognizes a right-of-use (“ROU”) asset and a lease liability based on the present value of the lease payments over the lease term on the consolidated balance sheets at commencement date. As most of the Group’s leases do not provide an implicit rate, the Group estimates its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The ROU assets also include any lease payments made, net of lease incentives. Lease expense is recorded on a straight-line basis over the lease term. The Company’s leases often include options to extend and lease terms include such extended terms when the Company is reasonably certain to exercise those options. Lease terms also include periods covered by options to terminate the leases when the Company is reasonably certain not to exercise those options.

Upon adoption, the Group recognized ROU assets of RMB1,632,236 and total lease liabilities (including current and non-current) RMB1,550,882 for operating leases, based on the present value of the remaining minimum rental payments under existing operating leases. The difference between the lease liabilities and ROU assets represented the prepaid rent balances of RMB81,354. The impact of adopting ASC 842 on the Group’s opening accumulated deficit, current year net income and current year cash flow was insignificant. As of August 31, 2020, the Group recognized operating lease ROU assets of RMB1,481,196 (US$229,273) and total lease liabilities RMB1,412,191 (US$218,592), including current portion of RMB483,056 (US$74,772) for operating leases.

However, the Opinion and a related series of notice, administrative measures or circular and the compliance measures taken by the Company have material adverse impact on our after-school tutoring services related to academic subjects in China’s compulsory education system, which in turn have adversely affected the Company’s results of operations and prospect. We have gradually terminated our after-school tutoring services related to academic subjects business since August 2021, and officially ceased our all business in October 2021. All of the Company’s operating leases mainly related to offices and classroom facilities were gradually terminated since August 2021. The Company removed the right-of-use asset and the lease liability, with loss recognized of RMB45,368 (US$7,022) for the difference in accordance with ASC842-20-40-1. By the end of August 31, 2021, all rental deposits related to those early terminated lease contracts have been expensed as the early termination penalty by the Company.

(w) Income taxes

The Group follows the liability method of accounting for income taxes in accordance with ASC 740 (“ASC 740”), Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Group records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in tax expense in the period that includes the enactment date of the change in tax rate.

The Group accounted for uncertainties in income taxes in accordance with ASC 740. Interest and penalties related to unrecognized tax benefit recognized in accordance with ASC 740 are classified in the consolidated statements of income as income tax expense.

(x) Share-based compensation

The Group applies ASC 718 (“ASC 718”), Compensation - Stock Compensation, to account for its employee share-based payments. In accordance with ASC 718, the Group determines whether an award should be classified and accounted for as a liability award or an equity award. All the Group’s share-based awards to employees were classified as equity awards.

In accordance with ASC 718, the Group recognizes share-based compensation cost for equity awards to employees with a performance condition based on the probable outcome of that performance condition. Compensation cost is recognized if it is probable that the performance condition will be achieved.

A change in any of the terms or conditions of the awards is accounted for as a modification of the awards. Incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified, measured based on the fair value of the awards and other pertinent factors at the modification date. For vested awards, the Group recognizes incremental compensation cost in the period the modification occurs. For unvested awards, the Group recognizes over the remaining requisite service period, the sum of the incremental compensation cost and the remaining unrecognized compensation cost for the original award on the modification date. If the fair value of the modified award is lower than the fair value of the original award immediately before modification, the minimum compensation cost the Group recognizes is the cost of the original award. When the vesting conditions (or other terms) of the equity awards granted to employees are modified, the Group first determines on the modification date whether the original vesting conditions were expected to be satisfied, regardless of the entity’s policy election for accounting for forfeitures. If the original vesting conditions were not expected to be satisfied, the grant date fair value of the original equity awards are ignored and the fair value of the equity awards measured at the modification date are recognized if the modified awards ultimately vest.

The Group uses the accelerated method to recognize compensation expense for all awards granted. The Group, with the assistance of an independent third-party valuation firm, determined the fair value of the awards granted to employees. The Group adopted ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, (“ASU 2016-09”) and elected to account for forfeitures as they occur.

(y) Employee benefit expenses

All eligible employees of the Group are entitled to staff welfare benefits including medical care, welfare subsidies, unemployment insurance and pension benefits through a PRC government-mandated multi-employer defined contribution plan. The Group is required to make contributions to the plan and accrues for these benefits based on certain percentages of the qualified employees’ salaries. The Group recorded employee benefit expenses of RMB336,067, RMB305,649 and RMB228,255 (US$35,331) for the years ended August 31, 2019, 2020 and 2021, respectively.

(z) Comprehensive income/(loss)

Comprehensive income/(loss) is defined as the changes in equity of the Group during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. Among other disclosures, ASC 220, Comprehensive Income, requires that all items that are required to be recognized under current accounting standards as components of comprehensive income/(loss) be reported in a financial statement that is displayed with the same prominence as other financial statements. For each of the periods presented, the Group’s comprehensive income/(loss) includes net income and unrealized gain on available-for-sale investments, net of tax and is presented in the consolidated statements of comprehensive income/(loss).

(aa) Earnings/(Loss) per share

Basic earnings/(loss) per share is computed by dividing net income/(loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period using the two-class method. Under the two-class method, net income/(loss) is allocated between ordinary shares and other participating securities based on their participating rights. Diluted earnings/(loss) per share is calculated by dividing net income/(loss) attributable to ordinary shareholders by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinary equivalent shares consist of the ordinary shares issuable upon the conversion of the Group’s redeemable convertible preferred shares and convertible senior notes using the if-converted method and ordinary shares issuable upon the exercise of share options and restricted Class A ordinary shares (“Restricted Shares”) using the treasury stock method. Ordinary equivalent shares are not included in the denominator of the diluted loss per share calculation when inclusion of such shares would be anti-dilutive.

Basic and diluted earnings/(loss) per share are not reported separately for Class A or Class B ordinary shares (the “Ordinary Shares”) as each class of shares has the same rights to undistributed and distributed earnings.

(ab) Segment reporting

In accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision making group, in deciding how to allocate resources and in assessing performance. The Group has only one reportable segment since the Group does not distinguish revenues, costs and expenses by operating segments in its internal reporting, and reports costs and expenses by nature as a whole. The Group’s CODM, who has been identified as the CEO, reviews the consolidated results when making decisions about allocating resources and assessing performance of the Group as a whole. As the Group generates all of its revenue in the PRC, no geographical segments are presented.

(ac) Comparative information

Certain of the prior year comparative figures have been reclassified to conform to the current year’s presentation.

(ad) Non-controlling interests

For certain subsidiaries, a non-controlling interest is recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Group. Consolidated net loss or income on the consolidated statements of income includes the net loss or income attributable to non-controlling interests. The cumulative results of operations attributable to non-controlling interests are recorded as non-controlling interests in the Group’s consolidated balance sheets.

In January 2020, the FASB issued ASU No. 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendments also clarify that for the purpose of applying paragraph 815-10-15-141(a) an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option in accordance with the financial instruments guidance in Topic 825. An entity also would evaluate the remaining characteristics in paragraph 815-10-15-141 to determine the accounting for those forward contracts and purchased options. The amendments are effective for fiscal years beginning September 1, 2021, and interim periods within those fiscal years. The Group does not expect to early adopt this guidance and is in the process of evaluating the impact of adoption of this guidance on the Group’s consolidated financial statements.

(ae) Recent accounting pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The amendments are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, with early adoption permitted. The Group is currently evaluating the impact of the new guidance on our consolidated financial statements.

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Group is currently evaluating the impact of the new guidance on our consolidated financial statements.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606, Revenue from Contracts with Customers The new amendments are effective for us are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption permitted. The Group is currently evaluating the impact of the new guidance on our consolidated financial statements.

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Concentration of Risks

12 Months Ended

Aug. 31, 2021

Risks and Uncertainties [Abstract]

Concentration of Risks

3. Concentration of Risks

(a) Concentration of credit risk

Financial instruments that potentially subject the Group to significant concentration of credit risk consist primarily of cash and cash equivalents, restricted cash, due from third party payment platform, due from third parties, amount due from a related party, and short-term and long-term investments. As of August 31, 2021, all of the Group’s cash and cash equivalents, restricted cash, certain short-term investments were deposited with financial institutions with high-credit ratings and quality. There has been no recent history of default in relation to these financial institutions.

The Group manages credit risk of due from third party payment platform, due from third parties, amount due from a related party and certain short-term and long-term available-for-sale investments by performing credit assessments on its borrowers and its ongoing monitoring of the outstanding balances.

(b) Business, customer, political, social and economic risks

The Group believes that changes in any of the following areas could have a material adverse effect on the Group’s future financial position, results of operations or cash flows: changes in the overall demand for services; competitive pressures due to new entrants; advances and new trends in new industry standards; changes in certain strategic relationships or customer relationships; regulatory considerations; and risks associated with the Group’s ability to attract and retain employees necessary to support its growth. The Group’s operations could be also adversely affected by significant political, economic and social uncertainties in the PRC. From July 2021 and September 2021, the General Office of Ministry of Education issued a series of rules, regulations, notices and circulars on further alleviating the burden of homework and after-school tutoring for students in compulsory education. The Company complies with all applicable rules and regulations in providing educational services. On October 12, 2021, the Company ceased all the domestic education programs and learning centers in China. The Company plans to sell its original tutoring service business and restructure to smart education business.

No single customer or supplier accounted for more than 10% of revenues or costs of revenues for the years ended August 31, 2019, 2020 and 2021.

(c) Foreign currency exchange rate risk

From July 21, 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. For RMB against US$, there was appreciation of approximately 4.7%, depreciation of approximately 4.3% and depreciation of approximately 5.7% during the years ended August 31, 2019, 2020 and 2021. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the US$ in the future.

(d) Currency convertibility risk

The Group transacts all of its business in RMB, which is not freely convertible into foreign currencies. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the People’s Bank of China (the “PBOC”). However, the unification of the exchange rates does not imply that the RMB may be readily convertible into US$ or other foreign currencies. All foreign exchange transactions continue to take place either through the PBOC or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC. Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts.

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Business Combinations

12 Months Ended

Aug. 31, 2021

Business Combinations [Abstract]

Business Combinations

4. Business Combinations

During the years ended August 31, 2019, 2020 and 2021, the Group completed twenty-six, six and nil acquisitions, respectively. These acquisitions are expected to strengthen the Group’s current market and to generate synergy with the Group’s organic business. The results of the acquired entities’ operations have been included in the Company’s consolidated financial statements since their respective dates of acquisition. The Group completed the valuation necessary to assess the fair value of the acquired assets and liabilities and the non-controlling interests, resulting from which the amounts of goodwill were determined and recognized as of the respective acquisition dates.

Goodwill arising from the business combinations, which are not tax deductible, are mainly attributable to synergies expected to be achieved from the acquisitions. Pro forma financial information of the acquirees are not presented as the effects of the acquisitions on the Group’s consolidated financial statements were not material.

(a) Acquisition of Yuhan (Shanghai) Information Technology Co., Ltd. (“Yuhan”)

Yuhan provides offline English tutoring services under the brand, “FasTrack English”. FasTrack English offers English tutoring to students from three to twelve years old in one-to-two to one-to-fourteen teacher-to-student based classroom settings which aim to improve the comprehensive English capacities of young children.

In July 2017, the Group acquired 20% equity interest in Yuhan and the investment was accounted for under the equity method given the Group’s ability to exercise significant influence over the operations of Yuhan. In January 2018, the Group entered into a share purchase agreement to purchase an additional 55.6% equity interest in Yuhan for cash consideration of RMB140,000 (US$21,670). The acquisition closed on January 2, 2018 when the Company obtained control of Yuhan holding in aggregate 75.6% of its equity interest.

The allocation of the purchase price as of the date of acquisition is summarized as follows:

	For the year ended August 31,
	2018			2018
	RMB			US$
Intangible assets (i) (Note 10)		97,870			15,149
Net tangible assets (ii)		(24,331	)		(3,766	)
Goodwill (Note 12)		161,001			24,921
Total fair value of purchase price allocation		234,540			36,304
Cash consideration		140,000			21,670
Fair value of ownership interests previously held in the acquiree		42,595			6,593
Fair value of non-controlling interest		51,945			8,041

(i) The acquired intangible assets consisted of trademark, license use right, customer relationship, student base as well as franchise agreements. These intangible assets have estimated amortization periods of five to thirty years.

(ii) Net tangible assets acquired primarily included cash and cash equivalent of RMB6,381 (US$988), short-term investment of RMB46,000 (US$7,120), prepayment and other current assets of RMB20,175 (US$3,123), property and equipment of RMB7,662 (US$1,186), accrued expenses and other current liabilities of RMB18,979 (US$2,938), deferred tax liabilities of RMB24,268 (US$3,756) and prepayments from customers of RMB62,668 (US$9,700) as of the date of acquisition.

A gain of RMB1,481 in relation to the revaluation of the previously held equity interest was recorded in other income, net in the consolidated statement of income for the year ended August 31, 2018. The fair value of the previously held equity interest was determined using an income approach. As Yuhan was a private company, the fair value measurements for the non-controlling interest and previously held equity interest were estimated based on certain factors including discount rate, terminal growth rate, revenue growth rate, EBIT margin and adjustments for the lack of control or lack of marketability, as relevant, that market participants would consider when estimating the fair value of the noncontrolling interest and the previously held equity interest in Yuhan.

(b) Acquisition of Tianjin Huaying

In September 2018, the Group entered into share purchase agreements to purchase an 100% equity interest in Tianjin Huaying Education Consulting Co., Ltd. and its subsidiaries and related party Tianjin Hedong Hua Ying Training School (“collectively referred to as “Tianjin Huaying”), under the common control of the same selling shareholder, having operated K-12 after-school education services in Tianjin, China for cash consideration of RMB144,000 (US$22,290) and contingent consideration of RMB86,316 (US$13,361), in total of RMB230,316 (US$35,650). The acquisition closed on September 5, 2018 when the Company obtained control of 100% of Tianjin Huaying equity interest.

The allocation of the purchase price as of the date of acquisition is summarized as follows:

	For the year ended August 31,
	2019			2019
	RMB			US$
Intangible assets (i) (Note 10)		59,800			9,256
Net tangible assets (ii)		6,582			1,019
Deferred tax liabilities, net		(14,179	)		(2,195	)
Goodwill (Note 12)		178,113			27,570
Total fair value of purchase price allocation		230,316			35,650
Consideration		230,316			35,650

(i) The acquired intangible assets consisted of trademark, customer relationship and franchise agreements. These intangible assets have estimated amortization periods of five to ten years.

(ii) Net tangible assets acquired primarily included cash and cash equivalent of RMB16,917 (US$2,619), short-term investments of RMB16,350 (US$2,531), prepayment and other current assets of RMB10,366 (US$1,605), property and equipment of RMB1,621 (US$251), accrued expenses and other current liabilities of RMB9,940 (US$1,539) and prepayments from customers of RMB28,732 (US$4,447) as of the date of acquisition.

The consideration comprised of RMB144,000 in cash and RMB86,316 of contingent consideration payable in cash. The contingent consideration is driven by the Tianjin Huaying’s net profit targets for the fiscal year ended August 31, 2019 , 2020 and the fiscal year ended August 31, 2021. The Group determined the fair value of the contingent cash consideration as of the acquisition date and as of August 31, 2021, Tianjin Huaying has met the aforementioned targets. The outstanding contingent consideration was recorded in the “Other non-current liabilities”, and has been paid in subsequent period.

The purchase price allocation for the acquisitions was based on a valuation determined by the Group with the assistance of an independent third-party valuation firm. The significant inputs used in the purchase price allocations were revenue growth rates, gross margin rates, weighted-average cost of capital, discount rate, and terminal values.

(c) Acquisition of Yimi Online Tutoring

From 2018 to 2020, the Group provided loans with total principal and related interests amounting to RMB51,374 (US$7,952) to Shanghai Yimi. Shanghai Yimi has fully repaid the loans to the Company in the fiscal year of 2021.

In 2019, the Group completed investments in preferred shares issued by Yimi Cayman for total amount of RMB196,693 (US$ 30,446). The investment was accounted for available-for-sale investments (Note 11).

In 2020, the Group invested in convertible loans issued by Yimi Cayman for total amount of RMB51,995 (US$8,048). The investment was accounted for available-for-sale investments (Note 11).

On February 1, 2020, OneSmart Online Edu Inc. (“OneSmart Online”) entered into a share swap agreement and an asset and business transfer agreement with Yimi Education Technology Inc. (” Yimi Cayman”), its affiliated companies and VIE, Shanghai Yimi Education Technology Co., Ltd. (“Shanghai Yimi”) to acquire certain technologies and business (the “Yimi’s Target Business”) for a total consideration of RMB311,149 (US$48,162) that is comprised of the acquisition-date fair value of previous held investments in preferred shares and convertible loans amounting to RMB248,688 (US$38,494) and loans and related interests provided to Shanghai Yimi amounting to RMB51,374 (US$7,952), as well as RMB11,088 (US$1,716) in cash, as part of the Company’s continuing efforts to enhance the quality and customer experience on OneSmart Online, the online platform of the Company. The foregoing transactions are collectively referred to as the “Yimi transactions”.

The acquisition was completed on February 1, 2020 when the Company obtained control of the business.

In connection with the acquisition, OneSmart Online granted restricted shares to the founding shareholders of Shanghai Yimi. The restricted shares are vested over agreed requisite service periods subsequent to the acquisition and dependent on the achievement of certain performance target of Yimi’s Target Business, which is accounted for as share-based compensation in accordance with ASC 718 (Note 14).

The allocation of the purchase price as of the date of acquisition is summarized as follows:

	For the year ended August 31,
	2020			2020
	RMB			US$
Intangible assets (i) (Note 10)		50,800			7,863
Net tangible assets (ii)		(56,523	)		(8,749	)
Deferred tax liabilities, net		(3,211	)		(497	)
Goodwill (Note 12)		348,579			53,956
Total fair value of purchase price allocation		339,645			52,573
Consideration		311,149			48,162
Fair value of non-controlling interests		28,496			4,411

(i) The acquired intangible assets consisted of technology and system. These intangible assets have estimated amortization periods of five years.

(ii) Net tangible assets acquired primarily included cash and cash equivalent of RMB832 (US$129), prepayment and other current assets of RMB6,429 (US$995), property and equipment of RMB4,805 (US$744), accrued expenses and other current liabilities of RMB2,669 (US$413) and prepayments from customers of RMB65,920 (US$10,204) as of the date of acquisition.

The purchase price allocation for the acquisitions was based on a valuation determined by the Group with the assistance of an independent third-party valuation firm. The significant inputs used in the purchase price allocations were revenue growth rates, gross margin rates, weighted-average cost of capital, discount rate, and terminal values.

The acquisition-date fair value of previous held investments in preferred shares and convertible loans was determined using an income approach, and a gain of RMB46,343 (US$7,173) in relation to the revaluation was recorded in other income, net in the consolidated statement of loss for the year ended August 31, 2020. As the acquiree is a private company, the fair value measurements for the non-controlling interests were estimated based on certain factors including discount rate, terminal growth rate, revenue growth rate, EBIT margin and adjustments for the lack of control and lack of marketability, as relevant, that market participants would consider when estimating the fair value of the noncontrolling interest.

(d) Acquisition of Yousheng

Shanghai Yousheng Education and Technology Co., Ltd. (“Yousheng”) provides online English tutoring services to young children from four to twelve years old in one-on-one or one-on-four teacher-to-student based classroom settings which aim to improve the comprehensive English capacities of young children.

In September 2019, the Group acquired 15% equity interest in Yousheng and the investment was accounted for as equity investment without readily determinable fair value, using measurement alternative (Note 11). In June 2020, the Group step-acquired 85% equity interest in Yousheng for a total consideration of RMB145,352 (US$22,499). The consideration comprised of the acquisition-date fair value of previously held convertible loans and loans that were previously provided to Yousheng amounting to RMB109,225 (US$16,907) and RMB14,527 (US$2,249), respectively, as well as prepayments for long-term investments amounting to RMB21,600 (US$3,343). The acquisition was completed on June 4, 2020 when the Company obtained control of Yousheng holding in aggregate 100% of its equity interest.

The allocation of the purchase price as of the date of acquisition is summarized as follows:

	For the year ended August 31,
	2020			2020
	RMB			US$
Intangible assets (i) (Note 10)		72,000			11,145
Net tangible assets (ii)		(22,862	)		(3,539	)
Deferred tax liabilities, net		(264	)		(41	)
Goodwill (Note 12)		116,919			18,098
Total fair value of purchase price allocation		165,793			25,663
Consideration		145,352			22,499
Fair value of ownership interests previously held in the acquiree		20,441			3,164

(i) The acquired intangible assets consisted of technology and system. These intangible assets have estimated amortization periods of five years.

(ii) Net tangible assets acquired primarily included cash and cash equivalent of RMB2,604 (US$403), prepayment and other current assets of RMB2,767 (US$428), property and equipment of RMB2,893 (US$448), accrued expenses and other current liabilities of RMB15,655 (US$2,423), and prepayments from customers of RMB15,471 (US$2,395) as of the date of acquisition.

The purchase price allocation for the acquisitions was based on a valuation determined by the Group with the assistance of an independent third-party valuation firm. The significant inputs used in the purchase price allocations were revenue growth rates, gross margin rates, weighted-average cost of capital, discount rate, and terminal values.

A loss of RMB2,782 (US$431) in relation to the revaluation of the previously held equity interest and convertible loans were recorded in other income, net in the consolidated statement of loss for the year ended August 31, 2020. The acquisition-date fair value of previously held convertible loans was determined using an income approach, and the fair value of the previously held equity interest were also determined using an income approach. As Yousheng is a private company, the fair value measurements for previously held equity interest was estimated based on certain factors including discount rate, terminal growth rate, revenue growth rate, EBIT margin and adjustments for the lack of control and lack of marketability, as relevant, that market participants would consider when estimating the fair value of previously held equity interest.

The business combination did not have a material impact on the Company’s consolidated statements of operations and therefore pro forma disclosures have not been presented.

(e) Acquisition of Ruiyipeiyou

Beijing Ruiyipeiyou Education and Technology Co., Ltd. (“Ruiyipeiyou”) provides online math tutoring services to young children in small class, which aim to improve the comprehensive math capacities of young children.

In August 2020, the Group acquired the business from Ruiyipeiyou to enhance the quality and customer experience on OneSmart Online, the online platform of the Group for a total consideration of RMB131,290 (US$20,322). The consideration comprised of the acquisition-date fair value of convertible loans that previously invested in Ruiyipeiyou amounting to RMB97,077 (US$15,026), prepayments for long-term investments amounting to RMB14,400 (US$ 2,229), as well as cash consideration amounting to RMB19,813 (US$3,067). The acquisition was completed on August 31, 2020 when the Company obtained control of the business.

The allocation of the purchase price as of the date of acquisition is summarized as follows:

	For the year ended August 31,
	2020			2020
	RMB			US$
Intangible assets (i) (Note 10)		17,000			2,631
Net tangible assets (ii)		(5,526	)		(855	)
Deferred tax liabilities, net		(4,250	)		(658	)
Goodwill (Note 12)		124,066			19,204
Total fair value of purchase price allocation		131,290			20,322
Consideration		131,290			20,322

(i) The acquired intangible assets consisted of technology and system. These intangible assets have estimated amortization periods of five years.

(ii) Net tangible assets acquired primarily included prepayments from customers of RMB5,526 (US$855) as of the date of acquisition.

The purchase price allocation for the acquisitions was based on a valuation determined by the Group with the assistance of an independent third-party valuation firm. The significant inputs used in the purchase price allocations were revenue growth rates, gross margin rates, weighted-average cost of capital, discount rate, and terminal values.

The business combination did not have a material impact on the Company’s consolidated statements of operations and therefore pro forma disclosures have not been presented.

(f) Other acquisitions that constitute business combinations are summarized as follows:

	For the years ended August 31,
	2019			2020			2021		2021
	RMB			RMB			RMB		US$
Intangible assets (i) (Note 10)		20,700			11,000			-		-
Net tangible liabilities (ii)		(174,405	)		(77,919	)		-		-
Goodwill (Note 12)		311,817			113,032			-		-
Total fair value of purchase price allocation		158,112			46,113			-		-
Cash consideration		143,740			28,000			-		-
Fair value of equity interests previously held in the acquirees		3,305			7,410			-		-
Fair value of non-controlling interests		11,067			10,703			-		-

(i) The acquired intangible assets consisted of customer relationship, with estimated amortization periods of two years.

(ii) In the 2019 business acquisitions, net tangible assets acquired primarily included cash and cash equivalent of RMB17,898 (US$2,770), prepayment and other current assets of RMB14,561 (US$2,254), property and equipment of RMB7,225 (US$1,118), accrued expenses and other current liabilities of RMB23,038 (US$3,566) and prepayments from customers of RMB187,103 (US$28,962) and deferred tax liabilities, net of RMB3,948 (US$611) as of the date of acquisition. In the 2020 business acquisitions, net tangible assets acquired primarily included cash and cash equivalent of RMB24,450 (US$3,785), short-term investment of RMB20,013 (US$3,098), prepayment and other current assets of RMB116,645 (US$18,055), property and equipment of RMB24,777 (US$3,835), accrued expenses and other current liabilities of RMB208,012 (US$32,198), prepayments from customers of RMB55,340 (US$8,566) and deferred tax liabilities, net of RMB452 (US$70) as of the date of acquisition.

In relation to the revaluation of previously held equity interests, the Group recognized gain of RMB1,897, RMB594 and nil in the consolidated statement of income/(loss) for the years ended August 31, 2019, 2020 and 2021, respectively. The fair value of the previously held equity interest and non-controlling interests was determined using an income approach. As the acquirees are private companies, the fair value measurements for the non-controlling interests and previously held equity interests were estimated based on certain factors including discount rate, terminal growth rate, revenue growth rate, EBIT margin and adjustments for the lack of control and lack of marketability, as relevant, that market participants would consider when estimating the fair value of the noncontrolling interest and the previously held equity interest in acquirees.

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Net Revenues

12 Months Ended

Aug. 31, 2021

Revenue from Contract with Customer [Abstract]

Net revenues

5. Net revenues

	For the years ended August 31,
	2019		2020		2021		2021
	RMB		RMB		RMB		US$
Personalized and small class premium tutoring revenues		3,879,364		3,423,996		3,410,806		527,956
Other revenues		114,509		14,885		12,604		1,951
		3,993,873		3,438,881		3,423,410		529,907

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Cash, cash equivalents and restricted cash

12 Months Ended

Aug. 31, 2021

Cash and Cash Equivalents [Abstract]

Cash, cash equivalents and restricted cash

6. Cash, cash equivalents and restricted cash

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Cash in bank		1,158,044		29,626		4,586
Restricted cash in bank <i>		187,241		355,017		54,953
		1,345,285		384,643		59,539

<i> This related to cash deposits in the bank accounts that are frozen by court order as the Company was subject to multiple legal proceedings, administrative proceedings, claims and other litigation as a result of overdue payments to service providers and loans payable to the lenders.

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Short-term Investments

12 Months Ended

Aug. 31, 2021

Short-Term Investments [Abstract]

Short-term Investments

7. Short-term Investments

The Company’s short-term investments included cash deposits at floating rates in commercial banks and available-for-sale securities with maturities of one year or less. The following is a summary of the Company’s short-term investments:

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Commercial banks deposits		243,013		13,000		2,012
Available-for-sale securities		243,743		68,575		10,615
		486,756		81,575		12,627

For the years ended August 31, 2019, 2020 and 2021, the Group recognized interest income related to its commercial bank deposits of RMB11,679, RMB1,994 and RMB2,820 (US$437), respectively, in the consolidated statements of income/(loss).

For the years ended August 31, 2019, 2020 and 2021, the Group recognized realized gain on disposal of available-for-sale securities of RMB11,451, RMB7,110 and RMB100 (US$15), respectively, as other income in the consolidated statements of income/(loss). As of August 31, 2019, 2020 and 2021, there were unrealized gains/(loss) of RMB(1,802), RMB4,451 and RMB4,009 (US$621), respectively, and accrued interest of RMB 4,088, nil and nil, respectively.

As of August 31, 2021, all investments classified as available-for-sale securities have been recognized fully impairment loss RMB185,723 (US$28,748) because of the tutoring service business termination by the Company, which is compliance with the changes in the regulatory environment on the private education industry in China. 

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Prepayments and other current assets

12 Months Ended

Aug. 31, 2021

Prepayments And Other Current Assets [Abstract]

Prepayments and other current assets

8. Prepayments and other current assets

Prepayments and other current assets, net consisted of the following:  

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Prepaid rental expense		54,505		-		-
Loans to third parties		112,435		-		-
Receivable from a third-party payment platform		78,197		-		-
Prepayments to suppliers		42,482		-		-
Prepaid income tax, business tax, VAT and other surcharges		10,571		-		-
Deposits		18,408		-		-
Other receivables		-		-		-
Staff advances		7,610		-		-
Loans to employees		12,030		-		-
Others		8,632		-		-
Prepayments and other current assets, net		344,870		-		-

As of August 31, 2021, all prepayments and other current assets have been recognized fully impairment loss RMB605,423 (US$93,713) because of the tutoring service business termination by the Company, which is compliance with the changes in the regulatory environment on the private education industry in China.

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Property and Equipment, Net

12 Months Ended

Aug. 31, 2021

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

9. Property and Equipment, Net

Property and equipment, net consisted of the following:

	As of August 31,
	2020			2021			2021
	RMB			RMB			US$
Furniture		57,051			-			-
Electronic equipment		225,749			-			-
Vehicles		3,889			1,902			294
Leasehold improvements		976,106			-			-
Buildings		44,776			47,776			7,395
		1,307,571			49,678			7,689
Less: accumulated depreciation		(741,074	)		(12,723	)		(1,969	)
Construction in progress		14,751			-			-
Property and equipment, net		581,248			36,955			5,720

For the years ended August 31, 2019, 2020 and 2021, the Group recorded depreciation expenses of RMB152,801, RMB209,663 and RMB196,168 (US$30,365), respectively.

No impairment charges were recognized on the property and equipment for the years ended August 31, 2019 and 2020.

However, the Opinion and a related series of notice, administrative measures or circular and the compliance measures taken by the Company have material adverse impact on our after-school tutoring services related to academic subjects in China’s compulsory education system, which in turn have adversely affected the Company’s results of operations and prospect. The Company have gradually terminated our after-school tutoring services related to academic subjects business since August 2021, and officially ceased our business in October 2021. As a result, the Company recognized impairment loss with net amount of RMB493,375(US$76,369) on the property and equipment for the year ended August 31, 2021.

Subsequent to the date, the Company sold two apartments, both transactions were completed in September 2021. Both transactions are disclosed in Note 28 Subsequent events.

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Intangible assets, Net

12 Months Ended

Aug. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets, Net

10. Intangible assets, Net

Intangible assets, net consisted of the following:

	As of August 31,
	2020			2021		2021
	RMB			RMB		US$
Customer relationship		71,180			-		-
Trademark		111,450			-		-
Student base		2,390			-		-
License		23,600			-		-
Franchise agreements		9,420			-		-
Technology and system		127,600			-		-
		345,640			-		-
Less: accumulated amortization		(67,687	)		-		-
Intangible assets, net		277,953			-		-

For the years ended August 31, 2019, 2020 and 2021, the Group recorded amortization expenses of RMB23,081, RMB38,302 and RMB11,549 (US$1,788), respectively.

No impairment charges were recognized on intangible assets for years ended August 31, 2019 and 2020. The Company recognized impairment loss with amount of RMB197,328(US$30,544) on the intangible assets for the year ended August 31, 2021 because of the tutoring service business termination by the Company.

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Long-term Investments

12 Months Ended

Aug. 31, 2021

Long-Term Investments [Abstract]

Long-term Investments

11. Long-term Investments

The Company’s long-term investments comprised of the following:

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Equity securities without readily determinable fair value		349,765		-		-
Equity method investments		84,272		-		-
Available-for-sale investments		614,141		-		-
		1,048,178		-		-

There were no impairment indicators for the investments and there were no impairment losses recognized for the year ended August 31, 2020. For the year ended August 31, 2021, the Company assessed all long-term investments for the impairment consideration. All the investments by the Company were related to the same industry which have been impacted materially by the policy directives of the Opinion. Juren Education Group and its affiliated companies, the biggest investment project with amount of RMB903,891 (US$139,913) by the Company, have announced its bankruptcy in August 2021. As a result, the Company recognized impairment loss with amount of RMB1,652,308 (US$255,759) on the long-term investments.

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Goodwill

12 Months Ended

Aug. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

12. Goodwill

Goodwill balances as of August 31, 2020 and 2021 were as follows:

	RMB
Balance as of August 31, 2019		815,052
Goodwill acquired (Note 4)		702,596
Disposal of subsidiaries		(36,247	)
Balance as of August 31, 2020		1,481,401
Goodwill acquired (Note 4)		-
Disposal of subsidiaries		(404,841	)
Impairment charges		(1,076,560	)
Balance as of August 31, 2021		-
Balance as of August 31, 2021, in US$		-

No impairment charges were recorded during the years ended August 31, 2020. For the year ended August 31, 2021, the Company assessed all goodwill for the impairment consideration. The Company’s goodwill as of August 31, 2020 and 2021 relates to its acquisition of certain schools and companies in the same industry. which have been impacted materially by the policy directives of the Opinion. As a result, the Company recognized impairment loss with amount of RMB1,076,560 (US$166,640) on the goodwill.

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Accrued Expenses and Other Current Liabilities

12 Months Ended

Aug. 31, 2021

Disclosure Text Block Supplement [Abstract]

Accrued Expenses and Other Current Liabilities

13. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Salary and welfare payable		612,570		533,691		82,610
Other taxes payable		12,230		-		-
Accrued expenses		150,671		279,448		43,256
Deposits from franchisees		16,249		7,201		1,115
Payables for leasehold improvement		36,363		-		-
Payables for long-term investments		4,412		-		-
Interest payable		20,631		12,731		1,971
Others		35,929		35,393		5,477
		889,055		868,464		134,429

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Share-Based Compensation

12 Months Ended

Aug. 31, 2021

Share-Based Payment Arrangement [Abstract]

Share-Based Compensation

14. Share-Based Compensation

Amended and Restated 2015 Plan (the “Amended 2015 Plan”)

In connection with the Reorganization on September 17, 2017, the Company adopted the Amended and Restated 2015 Plan (the “Amended 2015 Plan”) to replace the 2015 Plan which was cancelled concurrently. Under the Amended 2015 Plan, the Board of Directors of the Company authorized to grant share options or other equity incentives to employees, directors or consultants to purchase up to an aggregate of 336,642,439 Class A ordinary shares. The employees generally received 102.10 options for each fully vested share that was outstanding as of September 17, 2017, totaling 63,880,024 fully vested options. The employees also received 16,442,655 and 49,634,837 share options at the same exchange ratio to replace the restricted shares that were vested or vesting on December 1, 2017 and 2018, respectively, as issued under the 2015 Plan. All of the share options contain a performance condition whereby no share options are exercisable until the consummation of a Qualified IPO. The share options expire 10 years from the date of grant. The Group accounted for the termination of the shares under the 2015 Plan and the concurrent issuance of options as replacement awards as a Type II modification in accordance with ASC 718, under which, the Group deferred the recognition of the incremental share-based compensation expense until the Qualified IPO occurred. Upon the IPO completion date, the Group recognized incremental share-based compensation amounting to RMB39,881 (US$6,173).

From November 2017 to immediately before IPO, the Group granted 164,865,010 share options under the Amended 2015 Plan. Whereas some of the share options carry requisite service periods of four years with: i) 50%, 25% and 25% of the share options vesting on the second, third and fourth anniversary of the vesting commencement date, respectively, or ii) 50% and 50% of the share options vesting on the second and fourth anniversary of the vesting commencement date, respectively, all of the share options contain the same IPO performance condition described in the paragraph above.

In February 2018, the Board of Directors approved an evergreen term of the Amended 2015 Plan which permits an annual 2.0% increase of the total number of ordinary shares outstanding on August 31 of the preceding calendar year of the Company on the first day of each the following nine fiscal years commencing on September 1, 2018.

Amended and Restated 2015 Plan (the “Amended 2015 Plan”) (continued)

During the year ended August 31, 2018, subsequent to the completion of the IPO, the Group granted 9,172,674 share options under the Amended 2015 Plan. Vesting terms included i) immediate vesting of 100% of the share options on date of grant, ii) vesting periods of 2 years, with immediate vesting of 1/3 of the share options on date of grant, first and second anniversary of the vesting commencement date, respectively; iii) a vesting period of 4 years, with 50% and 50% of the share options vesting on the second and fourth anniversary of the vesting commencement date, respectively, or iv) vesting periods of 4 years, with 25% of the share options vesting on each anniversary of the vesting commencement date.

During the year ended August 31, 2019, the Group granted 141,997,178 share options under the Amended 2015 Plan. Vesting terms included i) immediate vesting of 100% of the share options on date of grant, ii) vesting periods of 3 years, with immediate vesting of 25% of the share options on date of grant, 1/48 of the share options in the each month 1 year after the vesting commencement date, respectively; iii) vesting periods of 3 years, with 1/3 of the share options vesting on each anniversary of the vesting commencement date; iv) vesting periods of 4 years, with 50% and 50% of the share options vesting on the second and fourth anniversary of the vesting commencement date, respectively, or v) vesting periods of 4 years, with 25% of the share options vesting on each anniversary of the vesting commencement date. During the year, the Group also granted to an executive 39,669,960 options under the Amended 2015 Plan with market conditions tied to the Group’s market capitalization for specified periods while he remains employed by the Group. In addition, certain share options were modified to become fully invested immediately prior to an employee’s termination.

During the year ended August 31, 2019, the Group granted 14,556,320 restricted Class A ordinary shares (“Restricted Shares”) under the Amended 2015 Plan. Vesting terms included i) immediate vesting of 100% of the Restricted Shares after one year of the vesting commencement date, ii) vesting periods of 4 years, with 25% of the Restricted Shares vesting on each anniversary of the vesting commencement date.

During the year ended August 31, 2020, the Group granted 93,574,240 share options under the Amended 2015 Plan. Vesting terms included i) immediate vesting of 100% of the share options on date of grant, ii) vesting periods of 4 years, with 50% and 50% of the share options vesting on the second and fourth anniversary of the vesting commencement date, or iii) vesting periods of 4 years, with 25% of the share options vesting on each anniversary of the vesting commencement date, respectively.

During the year ended August 31, 2020, the Group granted 39,821,200 restricted Class A ordinary shares (“Restricted Shares”) under the Amended 2015 Plan. Vesting terms included vesting periods of 4 years, with 25% of the Restricted Shares vesting on each anniversary of the vesting commencement date.

During the fiscal year ended August 31, 2021, we granted 120,744,240 share options under the Amended and Restated 2015 Plan. Vesting terms included i) immediate vesting of 100% of the share options on date of grant, ii) vesting periods of 4 years, with 50% and 50% of the share options vesting on the second and fourth anniversary of the vesting commencement date, or iii) vesting periods of 4 years, with 25% of the share options vesting on each anniversary of the vesting commencement date, respectively.

During the year ended August 31, 2021, we granted 5,502,840 restricted Class A ordinary shares under the Amended and Restated 2015 Plan. Vesting terms included vesting periods of 4 years, with 25% of the Restricted Shares vesting on each anniversary of the vesting commencement date.

Amended and Restated 2015 Plan (the “Amended 2015 Plan”) (continued)

The fair value of the share options under the Amended 2015 Plan were determined on the grant dates using the binomial option pricing model with assistance from an independent valuation firm. Pre IPO, the Group determined the fair value of its ordinary shares using the income approach based on key assumptions including WACC and DLOM. The income approach involved applying appropriate discount rates to estimated cash flows that were based on earnings forecasts. The growth rates of the Group’s revenues, as well as major milestones that it achieved, contributed to the fair value of the ordinary shares. Subsequently to the IPO, fair value of the ordinary shares is the price of the Company’s publicly traded shares. The assumptions adopted to estimate the fair value of share options granted were as follows:

	Year ended	Year ended
	August 31, 2020	August 31, 2021
Risk-free interest rate	0.65%-1.92%	0.65%-1.92%
Expected volatility	51.8%-52.7%	33.27%
Suboptimal exercise factor	2.20-2.80	2.20-2.80
Fair value per ordinary share	US$0.05-US$0.12	US$0.05-US$0.12

Domestic Plan

In March 2017, the Board of Directors of Shanghai OneSmart approved an employee share incentive scheme under which, incentives are provided by certain of Shanghai OneSmart’s subsidiaries to their regional management and staff (the “Domestic Plan”). According to the scheme, the subsidiaries may grant to their employees options with independent annual performance conditions specified for each tranche of options, in four tranches, as well as an additional performance condition at the end of the fourth year based on the cumulative result of the business over the term of the four years. When vested, the options are exercisable into the subsidiaries’ equity interests. The share options expire 4 years from the date of grant.

On May 2, 2017, 120,000 options were granted to employees, accounting for 8% of the total equity interests in the subsidiaries. The exercise price ranged from RMB40 to RMB160 per option. The options are equity awards measured at their fair values on May 2, 2017, the grant date. Given only the achievement of the performance conditions of the first two tranches of the options were determined to be probable, each of the first two tranches of the options was accounted for as a separate award with its own service inception date and requisite service period. On March 31, 2019, the Group modified the annual performance condition for the fourth tranche of the options granted on May 2, 2017, however, the achievement of the third and fourth traches as well as the final cumulative result of the business over the term of four years continued to improbable. Thus, no incremental costs were incurred as a result of the modification. As of August 31, 2019 and 2020, 60,000 and nil options did not meet the performance conditions and were forfeited. The remaining 70,000 options were vested and exercised as of August 31, 2020.

On March 31, 2019, 10,000 options were granted to a certain employee, accounting for 1% of the total equity interests in a certain subsidiary. The exercise price is RMB80 per option. The options are equity awards measured at their fair values on March 31, 2019, the grant date, immediate vesting of 100% of the share options on date of grant.

Domestic Plan (continued)

The Group calculated the estimated fair value of the share options under the Domestic Plan on the grant date using the binomial option pricing model with assistance from an independent valuation firm. Assumptions used to determine the fair value of the share options granted under the Domestic Plan is summarized in the following table:

	For the year ended
	August 31, 2019
Risk-free interest rate	2.4%
Expected volatility	47.0%
Suboptimal exercise factor	2.80
Fair value per ordinary share	RMB351.24

Restricted shares issued to the founding shareholders of Shanghai Yimi (Note 4)

On February 1, 2020, OneSmart Online granted 9,677,288 restricted shares to the founding shareholders in connection with the acquisition of Yimi’s Target Business. The vesting of the restricted shares is subject to the achievement of certain performance target of Yimi’s Target Business. If performance target is achieved, 50% of the restricted shares shall vest on January 1, 2021 and remaining 50% shall vest on January 1, 2022. The restricted shares are measured at their fair values on February 1, 2020, the grant date. Given the achievement of the performance conditions were determined to be probable, each of the two tranches was accounted for as a separate award with its own service inception date and requisite service period.

The Group calculated the estimated fair value of the restricted shares on the grant date using the binomial option pricing model with assistance from an independent valuation firm. Assumptions used to determine the fair value of the restricted shares is summarized in the following table:

	For the year ended
	August 31, 2020
Risk-free interest rate	1.51%
Expected volatility	50.15%
Suboptimal exercise factor	2.80
Fair value per ordinary share	RMB1.41

Restricted shares issued to the founding shareholders of Shanghai Yimi (Note 4) (continued)

A summary of the share option activities under the Amended 2015 Plan is as follows:

										Weighted
				Weighted		Weighted				average
	Number of			average		average		Aggregate		remaining
	share			exercise		grant date		intrinsic		contractual
	options			price		fair value		value		term
				US$		US$		US$
Outstanding as of September 1, 2017		-			-		-		-		-
Granted		303,995,200			0.03		0.16
Forfeited		(2,804,550	)		0.08		0.09
Outstanding as of August 31, 2018		301,190,650			0.03		0.16		54,133		8.59
Granted		181,667,138			0.10		0.05
Forfeited		(33,355,010	)		0.17		0.08
Exercised		(55,658,760	)		0.02		0.02
Outstanding as of August 31, 2019		393,844,018			0.05		0.13		53,966		7.80
Granted		93,574,240			0.05		0.10
Forfeited		(29,876,751	)		0.11		0.11
Exercised		(65,654,200	)		0.01		0.13
Outstanding as of August 31, 2020		391,887,307			0.05		0.04		31,356		7.57
Granted		115,241,400			0.04		0.05
Forfeited		(82,902,302	)		0.03		0.14
Exercised		(81,138,360	)		0.02		0.17
Outstanding as of August 31, 2021		343,088,045			0.06		0.00		1,375		5.58
Vested and expected to vest as of August 31, 2021		343,088,045			0.06		0.00		1,375		5.58

A summary of the Restricted Shares activities under the Amended 2015 Plan is as follows:

								Weighted
				Weighted				average
	Number of			average		Aggregate		remaining
	Restricted			grant date		intrinsic		contractual
	Shares			fair value		value		term
				US$		US$
Outstanding as of September 1, 2018		-			-		-		-
Granted		14,556,320			0.21
Forfeited		(218,440	)		0.21
Outstanding as of August 31, 2019		14,337,880			0.21		2,737		2.80
Granted		39,821,200			0.20
Forfeited		(2,409,120	)		0.54
Exercised		(4,341,329	)		1.42
Outstanding as of August 31, 2020		47,408,631			0.07		5,025		0.01
Granted		5,502,840			0.11
Forfeited		(7,949,681	)		0.19
Exercised		(2,185,400	)		0.22
Outstanding as of August 31, 2021		42,776,390			0.04		596		1.61
Vested and expected to vest as of August 31, 2021		42,776,390			0.04		596		1.61

Restricted shares issued to the founding shareholders of Shanghai Yimi (Note 4) (continued)

A summary of the activities under the Domestic Plan is as follows:

				Weighted		Weighted
	Number of			average		average		Aggregate
	share			purchase		grant date		intrinsic
	options			price		fair value		value
				RMB		RMB		RMB
Outstanding as of September 1, 2017		120,000			93.33		151.19		7,023
Granted		-			-		-
Forfeited		-			-		-
Outstanding as of August 31, 2018		120,000			93.33		151.19		79,990
Granted		10,000			80.00		148.47
Forfeited		(60,000	)		93.33		151.19
Outstanding as of August 31, 2019		70,000			91.43		150.80		39,687
Granted		-			-		-
Forfeited		-			-		-
Exercised		(70,000	)		91.43		150.80
Outstanding as of August 31, 2020		-			-		-		-
Vested and expected to vest as of August 31, 2020		-			-		-		-

The aggregate intrinsic value is calculated as the difference between the exercise price of the awards and the fair value of the underlying ordinary shares at each reporting date, for those awards that had exercise price below the estimated fair value of the relevant ordinary shares.

Under the Amended 2015 Plan, the outstanding unvested awards including share options and Restricted Shares resulted in an aggregate intrinsic value of RMB12,734 (US$1,971) and total unrecognized share-based compensation expense related to the unvested awards was RMB44,532 (US$6,893) as of August 31, 2021. The expense is expected to be recognized over a weighted-average period of 1.25 years.

The Company recognized share-based compensation expense for the years ended August 31, 2019, 2020 and 2021 as follows:

	For the years ended August 31,
	2019		2020		2021		2021
	RMB		RMB		RMB		US$
Sales and marketing		906		674		110		17
General and administrative		70,626		137,312		42,752		6,618
Total share-based compensation expense		71,532		137,986		42,862		6,635

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Income Taxes

12 Months Ended

Aug. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

15. Income Taxes

Cayman Islands

Under the current laws of the Cayman Islands, the Company, OneSmart Online and Yimi Cayman are not subject to tax on income or capital gain arising in Cayman Islands. Additionally, upon payments of dividends by the Company, OneSmart Online and Yimi Cayman to its shareholders, no Cayman Islands withholding tax will be imposed.

British Virgin Islands

Under the current laws of the British Virgin Islands, OneSmart BVI is not subject to tax on income or capital gains. In addition, upon payments of dividends by the company to its shareholders, no British Virgin Islands withholding tax will be imposed.

Hong Kong

OneSmart HK, Great EDU and Yimi HK are incorporated in Hong Kong and are subject to Hong Kong profits tax of 16.5% on the activities conducted in Hong Kong. No provision for Hong Kong profits tax was made in the consolidated financial statements as it had no assessable income for the years ended August 31, 2019, 2020 and 2021.

PRC

The Company’s subsidiaries and VIEs in the PRC are subject to the statutory rate of 25%, in accordance with the Enterprise Income Tax law (the “EIT Law”), which was effective since January 1, 2008. Shanghai Jing Xue Rui meets the requirements of “high and new technology enterprise” (“HNTE”) and could enjoy the preferential tax rate of 15%. Shanghai Jing Xue Rui has renewed the HNTE certificate in 2020 and is subject to an enterprise income tax (“EIT”) rate of 15% from calendar years 2020 through 2022.

Dividends, interests, rent or royalties payable by the Group’s PRC subsidiaries, to non-PRC resident enterprises, and proceeds from any such non-resident enterprise investor’s disposition of assets (after deducting the net value of such assets) shall be subject to 10% withholding tax, unless the respective non-PRC resident enterprise’s jurisdiction of incorporation has a tax treaty or arrangements with China that provides for a reduced withholding tax rate or an exemption from withholding tax.

The current and deferred portions of income tax expense included in the consolidated statements of income were as follows:

	For the years ended
	August 31,
	2019			2020			2021		2021
	RMB			RMB			RMB		US$
Current		138,552			36,458			30,870		4,778
Deferred		(17,011	)		(74,243	)		-		-
Income tax expense/(benefit)		121,541			(37,785	)		30,870		4,778

The reconciliations of the income tax expense for the years ended August 31, 2019, 2020 and 2021 were as follows:

	For the years ended August 31,
	2019			2020			2021			2021
	RMB			RMB			RMB			US$
Income/(loss) before income tax expense and share of net (loss)/income from equity investees		316,069			(788,450	)		(4,983,919	)		(771,458	)
PRC statutory tax rate		25	%		25	%		25	%		25	%
Income tax/(benefit) at statutory tax rate		79,017			(197,112	)		(1,245,980	)		(192,865	)
Non-deductible expenses		30,961			3,028			1,148,509			177,777
International tax rate difference		6,000			39,619			23,335			3,612
Preferential tax rate		(8,357	)		(14,306	)		(1,579	)		(244	)
Effect of income tax exemptions		(1,232	)		(538	)		-			-
Equity pick-up		(2,698	)		-			-			-
Additional tax deduction for qualified research and development expenses		(5,525	)		(4,278	)		(4,176	)		(646	)
Change in valuation allowance		11,006			134,720			110,761			17,144
Expired loss		11,905			-			-			-
Interest and penalty		1,605			1,096			-			-
Outside basis difference		(1,583	)		-			-			-
Effect of changes in tax rates on deferred taxes		442			(14	)		-			-
Income tax expense/(benefit)		121,541			(37,785	)		30,870			4,778

The significant components of the Group’s deferred tax assets were as follows:

	For the years ended August 31,
	2020			2021		2021
	RMB			RMB		US$
Non-current deferred tax assets:
Tax loss carry forward		297,887			-		-
Accrued expenses and other payables		113,981			-		-
Unrecognized financing expenses of long-term payable		2,192			-		-
Fair value changes on financial assets		38,265			-		-
Leasing liability		353,048			-
Impairment of other receivables and investments		52,944			-		-
Excessive advertising expense		36,230			-		-
Others		2,050			-		-
Less: valuation allowance		(325,604	)		-		-
Non-current deferred tax assets, net		570,993			-		-
Non-current deferred tax liabilities:					-		-
Intangible assets		(67,037	)		-		-
Unrealized gain on investments		(186	)		-		-
Capitalization of bonus		(15,873	)		-		-
Fair value changes on private equity investments		(3,081	)		-		-
Accelerated depreciation of fixed assets		(9,468	)		-		-
Right-of-use Asset		(353,048	)		-		-
Equity in gain of unconsolidated investees		(1,371	)		-		-
Others		(233	)		-		-
Non-current deferred tax liabilities, net		(450,297	)		-		-
Deferred tax assets, net		120,696			-		-

The Group operates through subsidiaries, VIEs and subsidiaries of VIEs and valuation allowance is considered for each of the entities on an individual basis. The Group recorded valuation allowance against deferred tax assets of those entities that were in a 3-year cumulative loss and are not forecasting profits in the near future as of August 31, 2020 and 2021. In making such determination, the Group also evaluated a variety of factors including the Group’s operating history, accumulated deficit, existence of taxable temporary differences and reversal periods.

As of August 31, 2021, the Group had taxable losses of RMB1,303,410 (US$201,754) derived from entities in the PRC, which can be carried forward per tax regulation to offset future net profit for income tax purposes. The PRC taxable loss will expire from December 31, 2021 to 2026 if not utilized.

As of August 31, 2021, the total amount of net loss from its PRC subsidiaries as well as VIEs was RMB 2,455,436 (US$ 380,075). The amount of unrecognized deferred tax assets for temporary differences related to investments in foreign subsidiaries is not determined because such a determination is not practicable.

Unrecognized Tax Benefit

As of August 31,2020 and 2021, the Group had unrecognized tax benefit of RMB25,871 and nil, of which RMB23,300 and nil, respectively, are presented on a net basis against the deferred tax assets related to tax loss carry forwards on the consolidated balance sheets. This primarily represents the estimated income tax expense the Group would pay should its income tax returns have been prepared in accordance with the current PRC tax laws and regulations. It is possible that the amount of unrecognized benefit will further change in the next 12 months; however, an estimate of the range of the possible change cannot be made at this moment. As of August 31,2020 and 2021, unrecognized tax benefits of RMB2,571 and nil, respectively, if ultimately recognized, will impact the effective tax rate. A reconciliation of the beginning and ending amount of unrecognized tax benefit was as follows:

	For the years ended August 31,
	2020			2021		2021
	RMB			RMB		US$
Balance at September 1		25,183			-		-
Increase		5,542			-		-
Decrease		(4,854	)		-		-
Balance at August 31		25,871			-		-

As of August 31, 2021, the tax years ended December 31, 2015 through period ended as of the reporting date for the WFOE, the VIEs and VIEs’ subsidiaries remain open to examination by the PRC tax authorities.

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Shareholders' Equity

12 Months Ended

Aug. 31, 2021

Stockholders' Equity Note [Abstract]

Shareholders’ Equity

16. Shareholders’ Equity

On March 28, 2018, the Company completed its IPO on the New York Stock Exchange. The Company offered 16,300,000 ADSs representing 652,000,000 Class A ordinary shares at US$11.00 per ADS. Net proceeds from the IPO deducting underwriting discount and other expenses were RMB1,048,660 (US$162,321). IPO costs of RMB26,752 (US$4,141) were recorded as reduction of the proceeds from the IPO in shareholders’ equity.

Pursuant to the Company’s memorandum and articles of association, upon the completion of the IPO, all of the then outstanding redeemable convertible preferred shares automatically converted into 3,568,365,545 Class A ordinary shares and the related aggregate carrying value of RMB4,272,293 was reclassified from mezzanine equity to shareholders’ equity. The participating rights (liquidation and dividend rights) of the Class A and Class B ordinary shares are identical, except with respect to voting and conversion rights. Holders of Class A and Class B ordinary shares shall all time vote together as one class on all resolutions submitted to a vote by the shareholders. Each share of Class A and Class B ordinary shares entitle the holder thereof to one vote per share and twenty votes per share on all matters subject to vote at general meetings of the Company respectively. Each share of Class B ordinary share is convertible into one Class A ordinary share at any time at the option of the holder thereof. The right to convert shall be exercisable by the holder of Class B ordinary share delivering a written notice to the Company that such holders elect to convert a specified number of Class B ordinary shares into Class A ordinary shares. In no event shall Class A ordinary shares be convertible into Class B ordinary shares.

As of August 31, 2020, the Company had ordinary shares outstanding comprising of 4,146,103,947 Class A ordinary shares and 2,296,842,016 Class B ordinary shares, respectively. No Class B ordinary shares were converted into Class A ordinary shares as of August 31, 2020.

As of August 31, 2021, the Company had ordinary shares outstanding comprising of 4,321,229,545 Class A ordinary shares and 2,290,430,016 Class B ordinary shares, respectively. No Class B ordinary shares were converted into Class A ordinary shares as of August 31, 2021.

During the year ended August 31, 2020, 76,586,600 treasury stock in total were repurchased by the Company from the open market at US$0.1300 per share for RMB70,889. 198,011,720 and 24,691,358 treasury stock were held by the depositary bank and the Company, respectively, as of August 31, 2020. There was no repurchase occurred on treasury stock during the year ended August 31, 2021. 9,976 and 10,089 treasury stock were held by the depositary bank and the Company, respectively, as of August 31, 2021.

On July 1, 2020, the Group acquired additional 49% noncontrolling interest of our subsidiary, Beijing Ruihuisi Education and Consulting Co., Ltd. with a total consideration of RMB61,250 (US$9,481). 

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Related Party Transactions

12 Months Ended

Aug. 31, 2021

Related Party Transactions [Abstract]

Related Party Transactions

17. Related Party Transactions

The Group had the following balances with related parties as of August 31, 2020 and 2021, respectively:

Names of the related parties	Relationship with the Group
Shanghai Ya Qiao Education Investment Co., Ltd. (“Ya Qiao Education”)	Equity investee
Shanghai Luo Bo Education Technology Co.,Ltd. (“Luo Bo”)	Equity investee
Fujian Hexi Equity Investment Partnership (Limited Partnership) (“He Xi”)	Equity investee
Beijing Tus-Juren Education Technology Co., Ltd. (“Tus-Juren”)	Former equity investee

(a) Amounts due from related parties

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Ya Qiao Education		20,400		-		-
Luo Bo		491		-		-

The amounts due from Ya Qiao Education is interest-free, unsecured and payable within 5 years from draw down. In April 2019, the Group had signed an agreement with Ya Qiao Education to convert RMB16,500 (US$2,554) receivables to 75% of equity investment in Ya Qiao Education. As of August 31, 2021, the equity acquisition transaction was not yet completed. The Company recognized impairment loss RMB10,849 (US$1,679) on amounts due from related parties by the year ended August 31, 2021.

(b) Amounts due to related parties

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
He Xi		13,644		-		-
Luo Bo		803		1,205		187

(c) Transactions with the related party

	For the years ended August 31,
	2019		2020		2021		2021
	RMB		RMB		RMB		US$
Other revenues
Tus-Juren		6,772		-		-		-

In October 2018, the Group acquired 30% of equity investment in Beijing Tus-Juren Education Technology Co., Ltd., or Tus-Juren, a leading K-12 after-school education company in China. As the Company had significant influence, Tus-Juren was accounted for as an equity method investment. In March 2019, the Group disposed 12% of equity investment in Tus-Juren and lost its significant influence over Tus-Juren. The Group recorded the balance as long-term investment using measurement alternative (Note 11) at RMB134,143 (US$20,764) as of August 31, 2020. The Group provided consulting services and charged licensing fees to Tus-Juren which were recorded as other revenues.

From November 2018 to February 2020, the Group lent five-year convertible loans in the aggregate principal amount of RMB721,210 (US$111,636) to Tus-Juren, which are recognized in available-for-sale investments (Note 11) to provide financial support for its operations. Such convertible loan bears an annual interest of 10% and the Group has the option to convert the principal and any unpaid interests into the equity interests of Tus-Juren at a pre-determined valuation at any time after either the third or fourth anniversary from the borrowing date. In February 2020, the Group signed a supplement agreement with Juren to waive the interests on the convertible loans beginning from December 1, 2019. The modifications are considered as extinguishments with RMB153,061 (US$23,692) losses recognized in 2020.

In addition, as of August 31, 2021, the Group provided RMB195,726 (US$30,296) loans to Tus-Juren and its subsidiaries. However, Tus-Juren and its subsidiaries, have announced its bankruptcy in August 2021, which is affected by the changes in the regulatory environment on the private education industry in China. As a result, as of August 31, 2021, the Company recognized fully impairment loss for the loans recorded in prepayment and other current assets to Tus-Juren and its subsidiaries.

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Other Non-Current Assets

12 Months Ended

Aug. 31, 2021

Disclosure Text Block Supplement [Abstract]

Other non-current assets

18. Other non-current assets

Other non-current assets consisted of the following:

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Rental deposits		122,968		-		-
Prepayment for long-term investments		17,383		-		-
Due from third parties(a)		444,200		-		-
Deferred assets		54,341		-		-
Others		-		-		-
		638,892		-		-

(a) Due from third parties primarily consisted of loans of RMB357,040 (US$55,266)  and nil provided to a third party during the year ended August 31, 2020 and 2021, respectively.

As of August 31, 2021, all other non-current assets have been recognized fully impairment loss RMB81,024 (US$12,542) because of the tutoring service business termination by the Company, which is compliance with the changes in the regulatory environment on the private education industry in China.

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Loans

12 Months Ended

Aug. 31, 2021

Debt Disclosure [Abstract]

Loans

19. Loans

The following table presents the Company’s outstanding loans as of August 31, 2020 and 2021:

		As of August 31,
		2020		2021		2021
		RMB		RMB		US$
Short-term loans	(a)		789,550		498,574		77,174
Long-term loans, current portion	(b)		295,433		513,432		79,474
Long-term loans	(b)		1,023,151		135,000		20,897

(a) Short-term loans

Short-term loans consisted of several bank loans mainly denominated in RMB. As of August 31, 2021, all short-term loans borrowed in 2020 were repaid in full.

In January 2020, Shanghai OneSmart entered into a banking facility agreement with China Merchants Bank, pursuant to which Shanghai OneSmart is entitled to borrow a loan of RMB95,000(US$14,705) with floating interest rate benchmarked to the one-year lending rate of PBOC. As of August 31, 2020, Shanghai OneSmart drew down the amount in full. The loan was intended for general working capital purposes and was guaranteed by Shanghai Jing Xue Rui, and the Founder, Xi Zhang. As of August 31, 2021, this loan was fully repaid.

In January, March and April 2020, Shanghai OneSmart entered into four loan agreements with Shanghai Pudong Development Bank, pursuant to which Shanghai OneSmart is entitled to borrow RMB400,000 (US$61,916) in aggregate with floating interest rate benchmarked to the one-year lending rate of PBOC. As of August 31, 2020, Shanghai OneSmart drew down the amount in full. The loans were intended for general working capital purposes and guaranteed by Shanghai Jing Xue Rui, and the Founder, Xi Zhang. One of these loans amounting to RMB200,000 (US$30,958) was secured by deposits of US$32,000, which was recorded in short-term investments as of August 31, 2020. As of August 31, 2021, this loan was fully repaid.

In February 2020, Shanghai OneSmart factored certain intercompany notes receivable to Bank of Ningbo Co., Ltd. for total proceeds of RMB26,300 (US$4,071). The loan was intended for general working capital purposes; and was guaranteed by Shanghai Jing Xue Rui, and the Founder, Xi Zhang. As of August 31, 2021, this loan was fully repaid.

In March 2020, Shanghai OneSmart entered into three loan agreements with China CITIC Bank, pursuant to which Shanghai OneSmart is entitled to borrow RMB140,000 (US$21,670) in aggregate with floating interest rate benchmarked to the one-year lending rate of PBOC. As of August 31, 2020, Shanghai OneSmart drew down the amount in full. The loans were intended for general working capital purposes and guaranteed by Shanghai Jing Xue Rui, and the Founder, Xi Zhang. The deposits in restricted cash pledged for these short-term loans was RMB40,212 (US$6,224) as of August 31, 2020. As of August 31, 2021, this loan was fully repaid.

In March 2020, Shanghai OneSmart entered into a banking facility agreement with China MinSheng Bank, pursuant to which Shanghai OneSmart is entitled to borrow loans of RMB100,000 (US$15,479) in total with an annual interest rate of 4.785%. As of August 31, 2020, Shanghai OneSmart drew down RMB50,000 (US$7,739). The loans were intended for general working capital purposes and guaranteed by the Founder, Xi Zhang. As of August 31, 2021, this loan was fully repaid.

In April 2020, Shanghai OneSmart entered into a banking facility agreement with China Everbright Bank Co. Ltd, Seoul Branch, pursuant to which Shanghai OneSmart is entitled to borrow a term loan facility of up to EUR10,000 with a floating interest rate of EURIBOR+1.7% to finance general working capital purpose. As of August 31, 2020, Shanghai OneSmart drew down EUR9,800. The deposit in restricted cash pledged for this short-term loan was RMB24,060 (US$3,724) as of August 31, 2020. As of August 31, 2021, this loan was fully repaid.

In March 2021, Shanghai OneSmart entered into a banking facility agreement with China Merchants Bank, pursuant to which Shanghai OneSmart is entitled to borrow a loan of RMB90,000(US$13,931) with floating interest rate benchmarked to the one-year lending rate of PBOC. As of August 31, 2020, Shanghai OneSmart drew down the amount RMB60,000(US$9,287). The loan was intended for general working capital purposes and was guaranteed by Shanghai Jing Xue Rui, and the Founder, Xi Zhang.

In March 2021, Shanghai OneSmart entered into three loan agreements with China CITIC Bank, pursuant to which Shanghai OneSmart is entitled to borrow RMB98,000 (US$15,169) in aggregate with floating interest rate benchmarked to the one-year lending rate of PBOC. As of August 31, 2021, Shanghai OneSmart drew down the amount in full. The loans were intended for general working capital purposes and guaranteed by Meta Data Limited, and the Founder, Xi Zhang.

(b) Long-term loans

In November 2017, Shanghai OneSmart entered into a banking facility agreement with Shanghai Pudong Development Bank, pursuant to which Shanghai OneSmart is entitled to borrow a RMB denominated loan of RMB450,000 (US$69,655) for five years with a floating interest rate benchmarked to the five-year lending rate of PBOC and adjusted every January during the five-year period. Under the terms of the agreement, the Company shall repay in fixed installments every December over 5 years. Shanghai OneSmart drew down the RMB450,000 (US$69,655) facility in full in December 2017, repaid RMB45,000 (US$6,966) in December 2018, and repaid RMB67,500 (US$10,448) in December 2019. The loan was intended for general working capital purposes; and is guaranteed by the Company, Shanghai Jing Xue Rui, and the Founder, Xi Zhang.

In March 2019, The Company entered into a banking facility agreement with UBS AG Singapore Branch, pursuant to which Shanghai OneSmart is entitled to borrow a USD denominated loan of US$139,000 term facility and US$61,000 greenshoe facility with a floating interest rate of LIBOR+2.7 %. The term facility has a three-year term from the initial drawdown date and should be repaid in installments. The Company drew down the US$139,000 term facility in full in March 2019. The proceeds from this term facility were used for the Group’s share repurchase program, working capital, capital expenditure, and other general corporate purposes; and is guaranteed by OneSmart HK and subject to certain financial covenants as defined in the facility agreement. As of August 31, 2020, the Company breached financial covenants due to the results of operations have been materially and adversely affected by the outbreak of COVID-19. The Company signed a waiver request letter and an amendment agreement with UBS AG Singapore Branch in June, 2020.

In April 2019, Shanghai OneSmart Education Investment entered into a banking facility agreement with Shanghai Pudong Development Bank, pursuant to which Shanghai OneSmart is entitled to borrow a RMB denominated loan of RMB43,200(US$6,687) for five years with a floating interest rate benchmarked to the five-year lending rate of PBOC. Under the terms of the agreement, the Group will repay in fixed installments every April over 5 years. Shanghai OneSmart Education Investment drew down the RMB43,200 (US$6,687) facility in full in April 2019 and repaid RMB4,320 (US$669) in April 2020. The loan was intended for acquisition of Tianjin Huaying, and is guaranteed by Shanghai OneSmart and the Founder, Xi Zhang. The loan was repaid fully in September 2020.

In January 2020, OneSmart Education Investment entered into a bank loan agreement with Shanghai Pudong Development Bank, pursuant to which Shanghai OneSmart is entitled to borrow a RMB denominated loan of RMB14,400 (US$2,229) for four years with a floating interest rate benchmarked to the one-year lending rate of PBOC. The loan was intended for acquisition of Tianjin Huaying, and is guaranteed by Shanghai OneSmart and the Founder, Xi Zhang. The loan was pledge by 100% equity of Tianjin Huaying. The loan was repaid fully in September 2020.

As of August 31, 2021, the maturities of the loan principals will be due according to the following schedule:

	RMB		US$
2022		1,012,007		156,648
2023		135,000		20,897
2024		-		-
2025		-		-
2026		-		-
		1,147,007		177,545

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Convertible Senior Notes

12 Months Ended

Aug. 31, 2021

Convertible Senior Notes [Abstract]

Convertible senior notes

20. Convertible senior notes

On February 28, 2020 and March 16, 2020, the Company issued US$25 million and US$10 million convertible senior notes (the “Notes”) to Yiheng Capital Partners, L.P., (“Yiheng Capital”) and Keenan Capital Fund, LP, (“Keenan Capital”), respectively. Both Yiheng Capital and Keenan Capital are existing minority shareholders of the Company. Interest shall be payable semi-annually in arrears at a rate of 4.75% per annum on each August 1 and February 1, commencing on August 1, 2020 . The Notes will mature on February 28, 2025 and March 16, 2025, respectively unless repurchased or converted in accordance with their terms prior to such date.

The Notes holders have the right, at their option, to convert the outstanding principal amount of the Notes, to convert all or any portion (if the portion to be converted is US$1,000 principal amount or an integral multiple thereof) of the Notes at any time after the execution of proof of initial conversion price in form and substance prior to the close of business on the second business day immediately preceding the maturity date into fully paid Class A Shares at the applicable conversion rate. (the “Conversion Option”).

The initial conversion price is US$148.08 and US$162.52 of the Company’s ADS per US$1,000 principal amount of the Notes (which is equivalent to an initial conversion price of approximately US$6.75 and US$6.15 per ADS). The conversion rate will be subject to adjustment in some events.

The holders may require the Company to repurchase all or a portion of the Notes for cash on February 28, 2023 and March 16, 2023 at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.

If certain events of default, changes in tax laws of the relevant taxing jurisdiction or fundamental change as defined in the indenture for the Notes were to occur, the outstanding obligations under the Notes could be immediately due and payable (the “Contingent Redemption Options”). The Company will pay additional interest, at its election, as the sole remedy relating to the failure to comply with certain reporting obligations as defined in the indenture of the Notes. In addition, the Notes provide its holders with additional interest equal to the fair value of any dividends received by the holders of the Company’s ordinary shares (the “Contingent Interest Features”).

The Company evaluated the embedded conversion features contained in the Notes and determined that the Conversion Option was not required to be bifurcated because it met the scope exception provided for under ASC 815-10-15-74(a).

The Company also evaluated the embedded Contingent Redemption Options and Contingent Interest Features contained in the Notes in accordance with ASC 815 to determine if these features require bifurcation. The Contingent Redemption Options were not required to be bifurcated because they are considered to be clearly and closely related to the debt host, as the Notes were not issued at a substantial discount and are redeemable at par.

The Contingent Interest Features are not considered to be clearly and closely related to the debt host and met the definition of a derivative. However, the fair value of the Contingent Interest Features on the issuance date and at December 31, 2020 was not significant. In addition, the Company assessed whether the additional interest payments need to be accrued as a liability in accordance with ASC 450. Since the likelihood of the occurrence of such default events is determined to be remote, the Company did not accrue additional interest expense for the year ended August 31, 2021. The Company will continue to assess the accrual for these additional interest payment liabilities at each reporting date.

Furthermore, no beneficial conversion feature was recognized for the Notes as the fair value per ADS at the commitment date was US$5.44 and US$5.02, which was less than the most favorable conversion price.

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Earnings/(Loss) Per Share

12 Months Ended

Aug. 31, 2021

Earnings Per Share [Abstract]

Earnings/(Loss) Per Share

21. Earnings/(Loss) Per Share

The following table sets forth the computation of basic and diluted net income per share for the following periods:

	As of August 31,
	2019		2020			2021			2021
	RMB		RMB			RMB			US$
Numerator:
Net income/(loss) attribute to Meta Data Limited’s shareholders		245,368		(729,829	)		(4,987,567	)		(772,022	)
Accretion to redemption value of Preferred Shares		-		-			-			-
Deemed dividend-repurchase of Preferred Shares		-		-			-			-
Net income/(loss) attributable to ordinary shareholders for computing net income per ordinary share - basic and diluted		245,368		(729,829	)		(4,987,567	)		(772,022	)
Denominator:
Weighted average number of shares used in calculating net income/(loss) per ordinary share - basic (in millions of shares)		6,460		6,451			6,612			6,612
Incremental weighted-average ordinary shares from assumed exercise of share options and vesting of restricted shares using the treasury stock method (in millions of shares)		249		-			-			-
Weighted average number of shares used in calculating net income/(loss) per ordinary share - diluted (in millions of shares)		6,709		6,451			6,612			6,612
Earnings/(loss) per share - basic		0.0380		(0.1131	)		(0.7543	)		(0.1168	)
Earnings/(loss) per share - diluted		0.0366		(0.1131	)		(0.7543	)		(0.1168	)

The redeemable convertible preferred shares that were issued as part of the Reorganization and presented on a retroactive basis did not share the losses of the Company. The redeemable convertible preferred shares did not have an impact on diluted EPS for the years ended August 31, 2021 on an if-converted or two-class method, as the redeemable convertible preferred shares did not carry any preferred dividend rights and only participated in all dividends on a one-to-one per-share basis with the holders of ordinary shares.

No adjustments were made to the basic earnings/(loss) per share amounts presented for the year ended August 31, 2020 and August 31, 2021 as the impact of the outstanding share options and restricted shares and convertible senior notes in the relevant periods were anti-dilutive.

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Accumulated Other Comprehensive Income

12 Months Ended

Aug. 31, 2021

Stockholders' Equity Note [Abstract]

Accumulated Other Comprehensive Income

22. Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income were as follows:

				Foreign
	Unrealized			currency
	gains/(loss) on			translation
	investment			adjustment			Total
	RMB						RMB
Balance as of September 1, 2017		19,123			-			19,123
Other comprehensive income before reclassification, net of tax		37,157			-			37,157
Amounts reclassified from accumulated other comprehensive income, net of tax		(13,838	)		-			(13,838	)
Foreign currency translation adjustment		-			86,458			86,458
Balance as of August 31, 2018		42,442			86,458			128,900
Other comprehensive income before reclassification, net of tax		(35,150	)		-			(35,150	)
Amounts reclassified from accumulated other comprehensive income, net of tax		(11	)		-			(11	)
Foreign currency translation adjustment		-			(6,591	)		(6,591	)
Balance as of August 31, 2019		7,281			79,867			87,148
Other comprehensive income before reclassification, net of tax		(8,885	)		-			(8,885	)
Amounts reclassified from accumulated other comprehensive income, net of tax		10,561			-			10,561
Foreign currency translation adjustment		-			10,343			10,343
Balance as of August 31, 2020		8,957			90,210			99,167
Other comprehensive income before reclassification, net of tax		(15,905	)		-			(15,905	)
Amounts reclassified from accumulated other comprehensive income, net of tax		4,210			5,221			9,431
Balance as of August 31, 2021		(2,738	)		95,431			92,693
Balance as of August 31, 2021, in US$		(424	)		14,770			14,346

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Redeemable Convertible Preferred Shares

12 Months Ended

Aug. 31, 2021

Disclosure Text Block Supplement [Abstract]

Redeemable Convertible Preferred Shares

23. Redeemable Convertible Preferred Shares

The Company issued 1,890,686,563 and 35,757,200 of Series A and Series A-1 redeemable convertible preferred shares (the “Preferred Shares”) to shareholders of the VIEs in connection with the Reorganization. The Preferred Shares are recorded at fair value on the issuance date and is presented on a retroactive basis.

In September 2017, immediately following the Reorganization, the Company issued 1,840,535,677 Series A-1 redeemable convertible preferred shares to new investors for total cash consideration of RMB1,840,536 (US$284,895). Accretion charge of RMB758,898 (US$117,469), related to the Series A-1 redeemable convertible preferred shares was recorded as an increase to the net loss attributable to ordinary shareholders. The Group subsequently repurchased an aggregate of 341,256,445 Series A redeemable convertible preferred shares for cash consideration of US$46,850 from Then Shareholders.

In December 2017, the Founder transferred 142,642,550 of his Class B ordinary shares to a new investor for cash consideration of RMB163,023 (US$25,234) and each of such transferred ordinary share was re-designated as a Series A-1 redeemable convertible preferred share. Accretion charge of RMB204,007 (US$31,578), related to the Series A-1 redeemable convertible preferred shares was recorded as an increase to the net loss attributable to ordinary shareholders.

The following is a summary of the significant terms of the Preferred Shares:

Conversion rights

The holders of the Preferred Shares were entitled to convert, at the option of the holder thereof, at any time following the date of the first issuance of the respective Preferred Shares applicable of such Preferred Share, into such number of Class A ordinary shares as was determined by dividing the deemed issue price (“Adjusted Issue Price”) applicable to such series of Preferred Shares by the conversion price applicable to such series of Preferred Shares (the “Conversion Price”), in effect on the date of conversion. The initial Conversion Price shall initially equal the Adjusted Issue Price applicable to such Preferred Share, and shall be adjusted from time to time. The initial conversion ratio for Preferred Shares to Class A ordinary shares shall be 1:1.

Automatic Conversion

Each Preferred Share, shall automatically be converted into one Class A ordinary share at the then-effective conversion ratio applicable to such Preferred Share upon the closing of a firm commitment underwritten public offering in the United States on the New York Stock Exchange or the NASDAQ Global Market pursuant to an effective registration statement under the Securities Act, or on the Main Board of Hong Kong Stock Exchange or another internationally recognized stock exchange approved by the Board, including certain directors appointed by the Series A-1 redeemable convertible preferred shareholders, covering the offer and sale of Class A ordinary shares of the Company to the public, at a public offering price per share that implies a market capitalization of the Company immediately prior to such offering of not less than (i) RMB6,500,000 or its US$ equivalent if the IPO occurs within 18 months following the closing date of the Preferred Shares issuance (the “Closing Date”), (ii) RMB7,000,000 or its US$ equivalent if the IPO occurs within 18 to 27 months following the Closing Date, or (iii) RMB7,500,000 or its US$ equivalent if the IPO occurs after 27 months following the Closing Date but before the third anniversary of the Closing Date, (the “Qualified IPO”).

Dividends

The holders of the Preferred Shares shall be entitled to receive dividends when and if declared by the Board of Directors, pro rata on an as-converted basis, without preference on the ordinary shares or any other classes of shares of the Company.

No dividends were declared for the periods presented.

Voting rights

The holders of each Preferred Shares were entitled to the number of votes equal to the number of Class A ordinary shares into which such Preferred Share could be converted at the voting date.

Redemption

The Preferred Shares were redeemable by the holders at any time after the earlier of the occurrence of the following event: (i) the Company fails to complete a Qualified IPO within 36 months after the closing of the Preferred Shares issuance (ii) relevant transactions have not been completed in accordance with the documents governing the Reorganization within 12 months following the closing of the Reorganization, and (iii) material breach of certain governing documents of the Reorganization where the breach remains un-remedied within 30 days after a written notice is delivered by certain holders of Series A-1 redeemable convertible preferred shares. Redemption were at amounts equal to the sum of the Adjusted Issue Price plus accrued daily interest at 10% per annum and all declared but unpaid dividends.

Liquidation Preference

In the event of liquidation, dissolution or winding up of the Company, the assets of the Company available for distribution shall be made as follows:

- First, the holders of Series A-1 redeemable convertible preferred shares were entitled to receive an amount equal to issue price, reduced by any and all dividends received on or before the date of such distribution and any net proceeds from any sale, transfer or other disposition of Series A-1 redeemable convertible preferred shares received by such holders of preferred shares, in preference to any distribution to the holder of the Series A redeemable convertible preferred shares and the Ordinary Shares of the Company; and

- After payment was made to the holders of the Series A-1 redeemable convertible preferred shares holders in accordance with the above, the remaining assets of the Company available for distribution to shareholders shall be distributed ratably among all shareholders according to the number of Ordinary Shares and Preferred Shares as if they had been converted into Class A ordinary shares immediately prior to such liquidation, dissolution or winding up of the Company.

Initial Measurement and Subsequent Accounting for the Preferred Shares

The Preferred Shares did not meet the criteria of mandatorily redeemable financial instruments specified in ASC 480-10-S99, and were classified as mezzanine equity in the consolidated balance sheets. The Preferred Shares were initially measured at fair value. Beneficial conversion features exist when the conversion price of the Preferred Shares is lower than the fair value of the Class A ordinary shares at the commitment date, which was the issuance date in the Company’s case. When a beneficial conversion feature exists as of the commitment date, its intrinsic value is bifurcated from the carrying value of the redeemable convertible preferred shares as a contribution to additional paid-in capital. On the commitment date, the most favorable conversion price used to measure the beneficial conversion feature of the Preferred Shares was higher than the fair value per Class A ordinary share and therefore no bifurcation of beneficial conversion feature was recognized. The Company determined the fair value of the Class A ordinary shares with the assistance of an independent third party valuation firm.

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Restricted Net Assets

12 Months Ended

Aug. 31, 2021

Restricted Net Assets [Abstract]

Restricted Net Assets

24. Restricted Net Assets

Prior to payment of dividends, pursuant to the laws applicable to the PRC’s foreign investment enterprises, the VIEs and the VIEs’ subsidiaries must make appropriations from after-tax profit to non-distributable reserve funds as determined by the board of directors of each company. These reserves include (i) general reserve and (ii) the development fund.

Subject to certain cumulative limits, in the event the Company’s board of directors declares dividends, the general reserve requires annual appropriations of 10% of after-tax income as determined under PRC laws and regulations at each year-end until the balance reaches 50% of the PRC entity’s registered capital; the other reserve appropriations are at the Company’s discretion. The general reserve can only be used for specific purposes of enterprise expansion and are not distributable as cash dividends. During the years ended August 31, 2019, 2020 and 2021, the Group’s appropriations to the general reserve were RMB886, RMB1,226 and RMB1,643 (US$254).

PRC laws and regulations also require private schools to make annual appropriations of no less than 25% of after-tax income plus an annual increase according to the net assets of the schools to its development fund, which is to be used for the construction or maintenance of the schools or procurement or upgrading of educational equipment. As of August 31, 2019, 2020 and 2021, total appropriation of RMB6,194, RMB11,044 and RMB14,784 (US$2,288) was made, respectively.

The general reserve and development fund cannot be transferred to the Company in the form of loans or advances and are not distributable as cash dividends except in the event of liquidation.

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Leases

12 Months Ended

Aug. 31, 2021

Disclosure Text Block [Abstract]

Leases

25. Leases

The Group’s operating leases mainly related to offices and classroom facilities. The Group has no finance leases. The Company do not assume renewals in our determination of the lease term unless the renewals are reasonably certain to be exercised at lease commencement. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Opinion and a related series of notice, administrative measures or circular and the compliance measures taken by the Company have material adverse impact on our after-school tutoring services related to academic subjects in China’s compulsory education system, which in turn have adversely affected the Company’s results of operations and prospect. We have gradually terminated our after-school tutoring services related to academic subjects business since August 2021, and officially ceased our all business in October 2021. All of the Company’s operating leases mainly related to offices and classroom facilities were gradually terminated since August 2021. The Company removed the right-of-use asset and the lease liability, with loss recognized of RMB45,368 (US$7,022) for the difference in accordance with ASC842-20-40-1. By the end of August 31, 2021, all rental deposits related to those early terminated lease contracts have been expensed as the early termination penalty by the Company.

The operating lease costs were as follows:

	For the year ended August 31, 2021
	RMB		US$
Operating Lease Costs:
Fixed		645,180		99,867
Short-term		8,365		1,295
Total		653,545		101,162

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Commitments and Contingencies

12 Months Ended

Aug. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

26. Commitments and Contingencies

(a) Capital expenditure commitments

The Group has no capital expenditure commitment as of August 31, 2021, which are expected to be paid within one year.

(b) Contingencies

The Group has been named as a defendant in a number of lawsuits arising in its ordinary course of business. As of the date of this annual report, the Company continues to use all commercially reasonable efforts to defend itself in these proceedings and is undergoing on-going discussion with regulatory authorities. The total number of the lawsuits by category, amount involved and scope of each category are presented in Note 28 – Subsequent Event.

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Fair Value Measurement

12 Months Ended

Aug. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurement

27. Fair Value Measurement

The Group applies ASC 820 (“ASC 820”), Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 requires disclosures to be provided on fair value measurement.

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs which are supported by little or no market activity.

ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.

Assets and Liabilities Measured or Disclosed at Fair Value on a recurring basis

In accordance with ASC 820, the Group measures available-for-sale investments and contingent consideration for business acquisitions at fair value on a recurring basis. The fair value of the Group’s available-for-sale investments were measured using the income approach, based on the value indicated by current market expectations about those future amounts with the exception of one debt security, which was measured using the market approach, based on market value of comparable companies operating in similar businesses and other significant inputs derived from or corroborated by observable market data. The Company measured the fair value of contingent consideration for business combination using management’s estimates of the acquiree’s adjusted net operating profits for the years ended August 31, 2019 and 2020, as well as a discount factor which considered the time value of money and credit risk. Significant increases (decreases) in the inputs used in the fair value measurement of Level 3 available-for-sale securities and contingent consideration in isolation would result in a significant lower (higher) fair value measurement.

Assets and liabilities measured or disclosed at fair value on a recurring basis are summarized below (continued):

			Fair value measurement or disclosure
			at August 31, 2020 using
	Total fair value at August 31, 2020		Quoted prices in active market for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	RMB		RMB		RMB		RMB
Fair value measurement
Short-term investments:
Available-for-sale		243,743		-		-		243,743
Long-term investments:
Available-for-sale		614,141		-		-		614,141
Total assets measured at fair value		857,884		-		-		857,884
Total assets measured at fair value in US$		125,286		-		-		125,286
Fair value measurement
Contingent consideration		47,084		-		-		47,084
Total liability measured at fair value		47,084		-		-		47,084
Total liability measured at fair value in US$		7,288		-		-		7,288

			Fair value measurement or disclosure
			at August 31, 2021 using
	Total fair value at August 31, 2021		Quoted prices in active market for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	RMB		RMB		RMB		RMB
Fair value measurement
Short-term investments:
Available-for-sale		68,575		-		-		68,575
Long-term investments:
Available-for-sale		-		-		-		-
Total assets measured at fair value		68,575		-		-		68,575
Total assets measured at fair value in US$		10,615		-		-		10,615
Fair value measurement
Contingent consideration		-		-		-		-
Total liability measured at fair value		-		-		-		-
Total liability measured at fair value in US$		-		-		-		-

Reconciliations of assets categorized within Level 3 under the fair value hierarchy are as follow:

Available-for-sale investments:

	RMB
Balance as of August 31, 2018		485,307
Additions		1,040,581
Disposals		(262,651	)
Changes in fair value		(43,454	)
Accrued interest		52,395
Balance as of August 31, 2019		1,272,178
Additions		358,256
Disposals		(547,131	)
Changes in fair value		(12,422	)
Accrued interest		23,628
Impairment loss		(236,625	)
Balance as of August 31, 2020		857,884
Additions		64,604
Disposals		(247,617	)
Changes in fair value		3,874
Accrued interest		3,971
Impairment loss		(614,141	)
Balance as of August 31, 2021		68,575
Balance as of August 31, 2021, in US$		10,615

Assets and Liabilities Measured or Disclosed at Fair Value on a nonrecurring basis

The Group measures certain financial assets, including equity method investments and equity securities without readily determinable fair value, at fair value on a nonrecurring basis only if impairment charges were to be recognized. The Group’s non-financial assets, such as goodwill, intangible assets and property and equipment, would be measured at fair value only if they were determined to be impaired on an other-than-temporary basis.

During the years ended August 31,2021, RMB 1,372,582 (US$212,461) impairment charge was recorded for equity securities without readily determinable fair value. The valuations are classified within Level 3, using income approach based on the Group’s best estimate of the future cash flow forecast and the discount rate.

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Subsequent Event

12 Months Ended

Aug. 31, 2021

Subsequent Events [Abstract]

Subsequent Event

28. Subsequent Event

Subsequent to this reporting date, the Company breached events of default covenants due to cessation of business in October 2021 which was caused by a series of rules, regulations and administrative measures for after-school tutoring for primary and secondary school students issued by the General Office of Ministry of Education of PRC from July 2021 to September 2021. As a result, the banking facility of US$62,060 became immediately due and payable.

Subsequent to this reporting date, the Company breached event of default covenants due to the Company’s default in the payment of the banking facility which indebtedness has an aggregate outstanding principal in excess of US$10 million   and such indebtedness was due and payable prior to its stated maturity of April 2022. As a result, convertible senior notes of US$35,000 and a long-term loan of RMB135,000 (US$20,897) became due and payable.

Subsequent to this reporting date, the Company sold two properties at RMB12,750 (US$1,974) and RMB15,500 (US$2,399), both transactions were completed in September 2021 and the Company recorded gains of disposal at RMB1,601(US$248) and RMB4,997(US$773), respectively.

Subsequent to this reporting date, all the cash in the domestic bank accounts in China of the Company have been frozen by court order as the Company was subject to multiple legal proceedings, administrative proceedings, claims and other litigation as a result of overdue payments to service providers and loans payable to the lenders.

The Company entered into certain securities purchase agreement on January 24, 2022 (the “SPA”) with certain non-affiliated and accredited “non-U.S. Persons”, (the “Purchasers”) as defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to which the Company agreed to sell 8,000,000,000 Class A ordinary shares, (the “Shares”) par value $0.000001 per share, at a per share purchase price $0.0035625 (the “Offering”), which is 90% of the average NYSE official closing price of the ADS divided by 1,000, the current conversion ratio of ADS, for the three trading days immediately preceding the execution of the SPA. On February 11, 2022, the Offering closed as all the conditions of the SPA have been satisfied and the Company issued the Shares to the Purchasers. The gross proceeds to the Company from the Offering was $28.5 million.

Subsequent to this reporting date, the Group has been named in a number of lawsuits arising in its ordinary course of business. The following table presents the total number of the lawsuits by category, amount involved and scope of each category:

	Numbers		Total amount involved		Amount involved scope per case
				RMB	RMB
Amounts in thousands of Renminbi (“RMB”) except for number of cases
Lease		5		2,167	From 371 to 797
Advertisement		1		3,968	3,968
Technology Service		2		503	From 237 to 266
Education Service		310		13,653	From 1 to 386
Purchase		4		2,424	From 49 to 1,298
Property Preservation		2		2,440	From 62 to 2,377
Decoration		3		4,020	From 680 to 2,540
Other		85		933	From 40 to 80
Total		412		30,108

As of the date of this annual report, the Company is using all commercially reasonable efforts to defend itself in these proceedings and is still undergoing on-going discussion with regulatory authorities.

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Condensed Financial Information of the Company

12 Months Ended

Aug. 31, 2021

Condensed Financial Information Disclosure [Abstract]

Condensed Financial Information of the Company

29. Condensed Financial Information of the Company

The following is the condensed financial information of the Company on a parent company only basis.

Condensed balance sheets

	As of August 31,
	2020			2021			2021
	RMB			RMB			US$
ASSETS
Current assets:
Cash and cash equivalents		162,391			27,150			4,203
Restricted cash		122,969			12,046			1,865
Short-term investments		287,585			68,575			10,615
Amounts due from subsidiaries					2,081,389			322,176
Total current assets		572,945			2,189,160			338,859
Non-current assets:
Long-term investment		872,756			-			-
Investments in subsidiaries, VIEs and VIEs’ subsidiaries		1,176,422			-			-
Total non-current assets		2,049,178			-			-
TOTAL ASSETS		2,622,123			2,189,160			338,859
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accrued expenses and other current liabilities		-			13,019			2,015
Long-term loan, current portion		-			400,932			62,060
Total current liabilities		-			413,951			64,075
Non-current liabilities:
Loss in excess of Investments in subsidiaries, VIEs and VIEs’ subsidiaries		-			5,934,617			918,614
Convertible Loan		-			226,114			35,000
Amounts due to subsidiaries		2,221,486			246,127			38,098
Total non-current liabilities		2,221,486			6,406,858			991,712
TOTAL LIABILITIES		2,221,486			6,820,809			1,055,787
Shareholder’ equity:
Class A ordinary shares (US$0.000001 par value; 37,703,157,984 shares authorized; 4,130,261,827 issued and outstanding as of August 31, 2019 and 4,146,103,947 issued and outstanding as of August 31, 2020, respectively)		26			26			4
Class B ordinary shares (US$0.000001 par value; 2,296,842,016 issued and outstanding as of August 31, 2019 and August 31, 2020, respectively)		16			16			2
Additional paid-in capital		5,598,978			5,337,962			826,259
Treasury stock		(274,648	)		(344	)		(53	)
Statutory reserves		12,270			16,427			2,543
Accumulated deficit		(5,035,172	)		(10,078,429	)		(1,560,033	)
Accumulated other comprehensive income		99,167			92,693			14,350
Total shareholders’ equity		400,637			(4,631,649	)		(716,928	)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		2,622,123			2,189,160			338,859

Condensed statements of income/(loss)

	For the years ended August 31,
	2019			2020			2021			2021
	RMB			RMB			RMB			US$
Operating expenses:
Selling and marketing		(906	)		(674	)		(110	)		(17	)
General and administrative		(70,258	)		(140,821	)		(62,492	)		(9,673	)
Interest income		3,905			2,083			5,678			879
Interest expense		(27,960	)		(58,857	)		(51,335	)		(7,946	)
Foreign exchange gain/(loss)		(1,526	)		4,336			(1,655	)		(256	)
Share of income/(loss) in subsidiaries, VIEs and VIEs’ subsidiaries		342,113			(535,896	)		(4,877,653	)		(755,009	)
Income/(loss) before income tax provision		245,368			(729,829	)		(4,987,567	)		(772,022	)
Provision for income tax		-			-			-			-
Net income/(loss)		245,368			(729,829	)		(4,987,567	)		(772,022	)
Accretion to redemption value of redeemable convertible preferred shares		-			-			-			-
Deemed dividend-repurchase of redeemable convertible preferred shares		-			-			-			-
Net income/(loss) attributable to ordinary shareholders of Meta Data Limited		245,368			(729,829	)		(4,987,567	)		(772,022	)

Condensed statements of comprehensive income/(loss)

	For the years ended August 31,
	2019			2020			2021			2021
	RMB			RMB			RMB			US$
Net income/(loss)		245,368			(729,829	)		(4,987,567	)		(772,022	)
Unrealized gain on available-for-sale investments, net of tax		(35,161	)		1,676			4,009			621
Foreign currency translation adjustment		(6,591	)		10,343			5,221			808
Comprehensive income/(loss)		203,616			(717,810	)		(4,978,337	)		(770,593	)

Condensed statements of cash flows

	For the years ended August 31,
	2019			2020			2021			2021
	RMB			RMB			RMB			US$
Net cash used in by operating activities		(8,668	)		(319,227	)		-			-
Net cash used in investing activities		(1,042,665	)		(117,034	)		-			-
Net cash provided by financing activities		732,306			176,546			(230,316	)		(35,650	)
Effect of exchange rate changes		33,033			(23,063	)		(15,848	)		(2,453	)
Net increase/(decrease) in cash and cash equivalents and restricted cash		(285,994	)		(282,778	)		(246,164	)		(38,103	)
Cash and cash equivalents and restricted cash, at beginning of year		854,132			568,138			285,360			44,171
Cash and cash equivalents and restricted cash, at end of year		568,138			285,360			39,196			6,068

Basis of presentation

Condensed financial information is used for the presentation of the Company, or the parent company. The condensed financial information of the parent company has been prepared using the same accounting policies as set out in the Company’s consolidated financial statements except that the parent company used the equity method to account for investment in its subsidiaries and VIEs and the VIEs’ subsidiaries.

The parent company records its investment in its subsidiaries and VIEs and the VIEs’ subsidiaries under the equity method of accounting as prescribed in ASC 323, Investments-Equity Method and Joint Ventures. Such investments are presented on the condensed balance sheets as “Investment in subsidiaries, VIEs and VIEs’ subsidiaries” and their respective profit or loss as “Share of income/(loss) in subsidiaries, VIEs and VIEs’ subsidiaries” on the condensed statements of income. Equity method accounting ceases when the carrying amount of the investment, including any additional financial support, in a subsidiary and VIE is reduced to zero unless the parent company has guaranteed obligations of the subsidiary and VIE or is otherwise committed to provide further financial support. If the subsidiary and VIE subsequently reports net income, the parent company shall resume applying the equity method only after its share of that net income equals the share of net losses not recognized during the period the equity method was suspended.

The parent company’s condensed financial statements should be read in conjunction with the Company’s consolidated financial statements.

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Accounting Policies, by Policy (Policies)

12 Months Ended

Aug. 31, 2021

Organization and Principal Activities [Abstract]

Basis of presentation

(a) Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”).

Liquidity

(b) Liquidity

In assessing the Company’s liquidity and substantial doubt about its ability to continue as a going concern, the Company monitors and analyzes cash on-hand and operating expenditure commitments. The Company’s liquidity needs are to meet working capital requirements and operating expense obligations. To date, the Company financed its operations primarily through cash generated by operating activities, IPO proceeds, equity or convertible securities financing activities and commercial bank loan.

The accompanying financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern. The accompanying financial statements have been prepared on a basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has suffered recurring losses from operations, is in default of its debt obligations and as of August 31, 2021 was net liability and shareholders’ deficit position. Between July 2021 and September 2021, the General Office of Ministry of Education issued a series of rules, regulations, notices and circulars on further alleviating the burden of homework and after-school tutoring for students in compulsory education. To comply with all applicable rules and regulations in providing educational services, the Company ceased all the domestic education programs and learning centers operations in China on October 12, 2021. The above matters raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. As shown in the accompanying financial statements as of August 31, 2021, the Company had net cash decreased of RMB960,642 (US$148,697), RMB41,127 and RMB24,335 for the years ended August 31, 2021, 2020 and 2019, respectively. As of August 2021, the Company had cash balance of RMB29,626 (US$4,586) and restricted cash of RMB355,017 (US$54,953).

The Company has historically met its cash needs through a combination of cash flows from operating activities, proceeds from bank loans and proceeds from disposal of short-term investments. The cash requirements of the Company are generally for operating activities, repayments of bank loans, purchase of property and equipment and excess cash was used in the purchase of short-term and long-term investments. Between July 2021 and September 2021, the General Office of Ministry of Education issued a series of rules, regulations, notices and circulars on further alleviating the burden of homework and after-school tutoring for students in compulsory education (“the Opinion”). In order to comply with all applicable rules and regulations in providing educational services, the Company ceased all the domestic education programs and learning centers operations in China on October 12, 2021. As a result, this raises substantial doubt about its ability to continue as a going concern.

In evaluating if there is substantial doubt about the ability to continue as a going concern, the Group is trying to alleviate the going concern risk through (1) equity or debt financing, (2) increasing cash generated from new business model operations, and (3) debt divestiture, to meet our anticipated working capital requirements for at least the next 12 months. The Group may, however, need additional capital in the future to fund our further expansion. If the Group determines that its cash requirements exceed the amount of cash and cash equivalents it has on hand at the time, the Group may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result in further dilution to shareholders of the Group.

The Company entered into certain securities purchase agreement on January 24, 2022 (the “SPA”) with certain non-affiliated and accredited “non-U.S. Persons”, (the “Purchasers”) as defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to which the Company agreed to sell 8,000,000,000 Class A ordinary shares, (the “Shares”) par value $0.000001 per share, at a per share purchase price $0.0035625 (the “Offering”), which is 90% of the average NYSE official closing price of the ADS divided by 1,000, the current conversion ratio of ADS, for the three trading days immediately preceding the execution of the SPA. On February 11, 2022, the Offering closed as all the conditions of the SPA have been satisfied and the Company issued the Shares to the Purchasers. The gross proceeds to the Company from the Offering was US$28.5 million.

The Company plans to restructure its business by selling tutoring services and then focus on smart education services. The sale of the tutoring services has not been determined as of the date of the issuance of these financial statements. The Company have carried out product iterations on our original business: shifting from education and training to education and technology, using the original channels to carry out quality education and technology output, including 5G technology, smart campus system, virtual training system based on Metaverse, etc. The new business is using the six core technologies of Metaverse and artificial intelligence, blockchain, network computing, interaction, game technology, and the Internet of Things as the company’s core technologies, building a new type of blockchain smart student card and global smart employment quality Educational virtual world (new type of artificial intelligence employment training), combination of virtual and real prediction world (digital education, risk prediction, computing power output), VR shopping world (new e-commerce) and other products provide global customers with a new digital world experience. As of May 2022, the Company has signed a series of strategic cooperation agreements with six non-affiliated companies to pre-launch smart education training business.

The Company have recruited a global management team and technology research and development team to develop new products and new business directions that combine education and technology. In order to diversify the negative impact from local regulation, the Company has also decided to expend its business outside China.

As a result, the Company prepared the consolidated financial statements assuming the Company will continue as a going concern. However, there is no assurance that the measures above can be achieved as planned. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Principles of consolidation

(c) Principles of consolidation

The consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIEs and the subsidiaries of the VIEs. All significant inter-company transactions and balances between the Company, its subsidiaries and the VIEs have been eliminated upon consolidation. Results of subsidiaries, businesses acquired from third parties and the VIEs are consolidated from the date on which control is transferred to the Company.

Consolidation of variable interest entities

(d) Consolidation of variable interest entities

In accordance with accounting standards regarding consolidation of variable interest entities (“VIEs”), VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision-making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

The Company determined that Shanghai Onesmart, Shanghai Rui Si and Shanghai Xiangyuan are VIEs because the Company is the primary beneficiary of risks and rewards of those VIEs.

The condensed consolidating table below disaggregated the Consolidated Balance Sheets of the Company into Onesmart, the VIE and its subsidiaries, the WFOE that is the primary beneficiary of the VIEs and an aggregation of other entities that are consolidated as of August 31, 2021 and 2020.

	As of August 31, 2021
	Other entities that are			WFOE that is the primary beneficiary		VIE and its						Consolidated
	consolidated			of the VIE		subsidiaries			Onesmart			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	)

	As of August 31, 2020
	Other entities		WFOE that is the primary
	that are		beneficiary		VIE and its					Consolidated
	consolidated		of the VIE		subsidiaries		Onesmart			total
	RMB		RMB		RMB		RMB			RMB
Intercompany receivables		100,400		-		11,107,310		2,287,588			-
Current assets excluding intercompany receivables		13,751		31,297		1,559,409		572,945			2,177,402
Current assets		114,151		31,297		12,666,719		2,860,533			2,177,402
Investment in subsidiaries		2,046,413		289		992,652		872,756			-
Non-current assets excluding investment in subsidiaries		1,052,138		23,771		4,644,477		603			5,720,989
Non-current assets		1,052,138		23,771		4,644,477		603			5,720,989
Total assets		1,065,889		55,068		6,203,886		573,548			7,898,391
Intercompany payables		1,819,347		1,634,862		9,990,619		50,470			-
Current liabilities excluding intercompany payables		175,896		-		4,668,607		272,251			5,116,754
Current liabilities		1,995,243		1,634,862		14,659,226		322,721			5,116,754
Non-current liabilities		-		-		1,344,630		995,034			2,339,664
Total liabilities		175,896		-		6,013,237		1,267,285			7,456,418
Total shareholders’ equity (net assets)		889,993		55,068		190,649		(693,737	)		441,973

The condensed consolidating table below disaggregated the Consolidated Statements of Operations and Comprehensive Income (Loss) of the Company into Onesmart, the VIE and its 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 31, 2020 and 2021.

	For the years ended August 31, 2021
				WFOE
	Other entities			that is the primary
	that are			beneficiary			VIE and its						Consolidated
	consolidated			of the VIE			subsidiaries			Onesmart			total
	RMB			RMB			RMB			RMB			RMB
Net revenues		1,125			1,016			3,421,269			-			3,423,410
Cost of revenues		-			-			(2,093,743	)		-			(2,093,743	)
Gross profit		1,125			1,016			1,327,526			-			1,329,667
Operating expenses		(3,323	)		(134,500	)		(5,991,693	)		(62,602	)		(6,192,118	)
Income (loss) from operations		(2,198	)		(133,484	)		(4,664,167	)		(62,602	)		(4,862,451	)
Other expenses		(244	)		(30,494	)		(63,503	)		(27,227	)		(121,468	)
Income (loss) before income taxes		(2,442	)		(163,978	)		(4,727,670	)		(89,829	)		(4,983,919	)
Provision for income taxes		-			(1,405	)		(29,465	)		-			(30,870	)
Net income (loss)		(2,442	)		(165,383	)		(4,757,135	)		(89,829	)		(5,014,789	)

	For the years ended August 31, 2020
				WFOE
	Other entities			that is the primary
	that are			beneficiary			VIE and its						Consolidated
	consolidated			of the VIE			subsidiaries			Onesmart			total
	RMB			RMB			RMB			RMB			RMB
Net revenues		1,955			-			3,436,926			-			3,438,881
Cost of revenues		(2,862	)		-			(2,166,877	)		-			(2,169,739	)
Gross profit		(907	)		-			1,270,049			-			1,269,142
Operating expenses		(4,028	)		(6,978	)		(1,619,319	)		(1,495	)		(1,631,819	)
Income (loss) from operations		(4,935	)		(6,978	)		(349,270	)		(1,495	)		(362,677	)
Other expenses		(1	)		(1,078	)		(372,255	)		(52,439	)		(425,773	)
Income (loss) before income taxes		(4,937	)		(8,055	)		(721,525	)		(53,933	)		(788,450	)
Provision for income taxes		-			-			37,785			-			37,785
Net income (loss)		(4,937	)		(8,055	)		(683,740	)		(53,933	)		(750,665	)

The condensed consolidating table below disaggregated the Consolidated Statements of Cash Flows of the Company into Onesmart, the VIE and its 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, 2020 and 2021.

	For the years ended August 31, 2021
				WFOE
	Other			that is the
	entities			primary
	that are			beneficiary		VIE and its						Consolidated
	consolidated			of the VIE		subsidiaries			Onesmart			total
	RMB			RMB		RMB			RMB			RMB
Net cash provided by (used in) operating activities		(1,167	)		29,266		110,244			-			138,343
Net cash used in investing activities		-			15		(147,962	)		-			(147,947	)
Net cash provided by (used in) financing activities		-			-		(704,874	)		(230,316	)		(935,190	)
Effect of exchange rate changes on cash and restricted cash		-			-		-			(15,848	)		(15,848	)
Net increase (decrease) in cash and restricted cash		(1,167	)		29,281		(742,592	)		(246,164	)		(960,642	)
Cash and restricted cash from continuing operations, beginning of year		11,677			28,645		1,019,603			285,360			1,345,285
Cash and restricted cash from continuing operations, end of year		10,510			57,926		277,011			39,196			384,643

	For the years ended August 31, 2020
				WFOE
	Other			that is the
	entities			primary
	that are			beneficiary			VIE and its						Consolidated
	consolidated			of the VIE			subsidiaries			Onesmart			total
	RMB			RMB			RMB			RMB			RMB
Net cash provided by (used in) operating activities		23,974			(71,511	)		607,495			(319,266	)		240,692
Net cash used in investing activities		(33,581	)		45,593			(801,909	)		(117,034	)		(906,931	)
Net cash provided by (used in) financing activities		-			-			472,213			176,546			648,759
Effect of exchange rate changes on cash and restricted cash		-			-			-			(23,647	)		(23,647	)
Net increase (decrease) in cash and restricted cash		(9,607	)		(25,918	)		277,799			(283,401	)		(41,127	)
Cash and restricted cash from continuing operations, beginning of year		21,284			54,564			741,803			568,761			1,386,412
Cash and restricted cash from continuing operations, end of year		11,677			28,645			1,019,603			285,360			1,345,285

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 VIE’s earnings after eliminating VIE’s accumulated losses and making appropriation of VIE’s 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 VIE’s earnings will be through payment of service fees to Onesmart, 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 VIE, amount owed by VIE to the Company should be first settled. Cash transfers were mainly for the purpose of providing working capital between Onesmart and its subsidiaries, VIE and its subsidiaries and WFOE that is the primary beneficiary of the VIE.

Use of estimates

(e) Use of estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and revenue and expenses during the reporting periods. Significant accounting estimates reflected in the Group’s consolidated financial statements include, but not limited to valuation allowance for deferred tax assets, uncertain tax position, the initial valuation of the assets acquired and liabilities assumed in a business combination, economic lives and impairment of long-lived assets, impairment of goodwill, the valuation of short-term and long-term investments and share-based compensation. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements.

Foreign currency

(f) Foreign currency

The functional currency of the Company, OneSmart BVI, and OneSmart HK is the United States Dollars (“US$”). The Company’s PRC subsidiaries and the VIEs determined their functional currency to be Renminbi (the “RMB”). The Group uses the RMB as its reporting currency.

Transactions denominated in foreign currencies are re-measured into the functional currency at the exchange rates prevailing on the transaction dates. Monetary assets and liabilities denominated in foreign currencies are re-measured at the exchange rates prevailing at the balance sheet date. Non-monetary items that are measured in terms of historical cost in foreign currency are re-measured using the exchange rates at the dates of the initial transactions. Exchange gains and losses are included in the consolidated statements of income.

The Company uses the average exchange rate for the year and the exchange rate at the balance sheet date to translate the operating results and financial position, respectively. Translation differences are recorded in accumulated other comprehensive income, a component of shareholders’ equity.

Convenience translation

(g) Convenience translation

Amounts in US$ are presented for the convenience of the reader and are translated at the noon buying rate of US$1.00 to RMB6.4604 on August 31, 2021 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate.

Cash and cash equivalents

(h) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments which are unrestricted as to withdrawal or use.

Restricted cash

(i) Restricted cash

Restricted cash primarily represents deposits held in a designated bank account as pledged security for the principle, interest payments on the Group’s long-term or short-term loans and restricted cash with banks. The restricted cash related to the frozen cash in the bank accounts by court order is disclosed in Note 6, the restricted cash related to deposits held in designated bank accounts as pledge of long-term or short-term loans are disclosed in Note 19.

Short-term investments

(j) Short-term investments

The Group accounts for all investments in accordance with ASC topic 320 (“ASC 320”), Investments - Debt and Equity Securities. The Group classifies the investments in debt and equity securities as “held-to-maturity”, “trading” or “available-for-sale”, whose classification determines the respective accounting methods stipulated by ASC 320. All investments with original maturities of greater than three months not exceeding twelve months are classified as short-term investments, while those of more than twelve months are classified as long-term investments (Note 11). Investments that are expected to be realized in cash during the next twelve months are also included in short-term investments. Dividend and interest income, including amortization of the premium and discount arising at acquisition, for all categories of investments in securities, are included in earnings. Any realized gains or losses on the sale of the short-term investments, are determined on a specific identification method, and such gains and losses are reflected in earnings during the period in which gains or losses are realized.

The securities that the Group has the positive intent and the ability to hold to maturity are classified as held-to-maturity securities and stated at amortized cost.

The securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities. Unrealized holding gains and losses for trading securities are included in earnings.

Investments not classified as trading or as held-to-maturity are classified as available-for-sale securities. Available-for-sale investments are reported at fair value, with unrealized gains and losses recorded in accumulated other comprehensive income. Realized gains or losses are included in earnings during the period in which the gain or loss is realized. An impairment loss on the available-for-sale securities is recognized in the consolidated statements of income when the decline in value is determined to be other-than-temporary. As of August 31, 2021, all investments classified as available-for-sale securities have been recognized fully impairment loss because of the termination of the tutoring service business by the Company, which is in compliance with the changes in the regulatory environment on the private education industry in China.

Property and equipment, net

(k) Property and equipment, net

Property and equipment are stated at cost less accumulated depreciation and impairment. Depreciation is calculated on a straight-line basis over the following estimated useful lives:

Category	Estimated Useful Lives
Furniture	3-5 years
Electronic equipment	3 years
Vehicles	4-5 years
Buildings	20 years
Leasehold improvement	Over the shorter of the lease term or the estimated useful lives

Repair and maintenance costs are charged to expense as incurred, whereas the cost of renewals and betterments that extend the useful lives of property and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the cost and accumulated depreciation from the asset and accumulated depreciation accounts with any resulting gain or loss reflected in the consolidated statements of income.

Direct costs that are related to the construction of property and equipment and incurred in connection with bringing the assets to their intended use are capitalized as construction in progress. Construction in progress is transferred to specific property and equipment, and the depreciation of these assets commences when the assets are ready for their intended use.

Impairment of long-lived assets other than goodwill

(l) Impairment of long-lived assets other than goodwill

The Group evaluates its long-lived assets, including fixed assets and intangible assets with finite lives, for impairment whenever events or changes in circumstances, such as a significant adverse change to market conditions that will impact the future use of the assets, indicate that the carrying amount of an asset may not be fully recoverable. When these events occur, the Group evaluates the recoverability of long-lived assets by comparing the carrying amount of the assets to the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Group recognizes an impairment loss based on the excess of the carrying amount of the assets over their fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the assets, when the market prices are not readily available. During the fiscal year ended August 31, 2019 and 2020, there was no impairment of any of our long-lived assets. However, the Opinion and a related series of notice, administrative measures or circular and the compliance measures taken by the Company have material adverse impact on our after-school tutoring services related to academic subjects in China’s compulsory education system, which in turn have adversely affected the Company’s results of operations and prospect. We have gradually terminated our after-school tutoring services related to academic subjects business since August 2021, and officially ceased our business in October 2021. As a result, the Company recognized an impairment loss with amount of RMB849,246 (US$131,454) for long-lived assets other than goodwill.

Business combination

(m) Business combination

The Group accounts for its business combinations using the purchase method of accounting in accordance with ASC 805 (“ASC 805”), Business Combinations. The purchase method of accounting requires that the consideration transferred to be allocated to the assets, including separately identifiable assets and liabilities the Group acquired, based on their estimated fair values. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and all contractual contingencies as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of cost of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the businesses acquired, the difference is recognized directly in earnings.

In a business combination achieved in stages, the Group remeasures the previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the remeasurement gain or loss, if any, is recognized in the consolidated statements of income.

The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and non-controlling interests is based on various assumptions and valuation methodologies requiring considerable judgment from management. The most significant variables in these valuations are discount rates, terminal values, the number of years on which the cash flow projections are based, as well as the assumptions and estimates used to determine the cash inflows and outflows. The Group determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons. Terminal values are based on the expected life of assets, forecasted life cycle and forecasted cash flows over that period. There is no additional business combination by the Company in fiscal year of 2021.

Goodwill

(n) Goodwill

The Group assesses goodwill for impairment in accordance with ASC 350-20, Intangibles-Goodwill and Other: Goodwill (“ASC 350-20”), which requires that goodwill be tested for impairment at the reporting unit level at least annually and more frequently upon the occurrence of certain events, as defined by ASC 350-20.

The Group has determined it has five reporting units. Goodwill was allocated to five reporting units as of August 31, 2019 and 2020. The Group has the option to assess qualitative factors first to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. In the qualitative assessment, the Group considers primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. Based on the qualitative assessment, if it is more likely than not that the fair value of each reporting unit is less than the carrying amount, the quantitative impairment test is performed.

Specifically, the quantitative impairment test is determined using a two-step process. The first step compares the fair value of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of the affected reporting unit’s goodwill to the carrying value of that goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. An impairment loss is recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill. Estimating fair value is performed by utilizing various valuation techniques, with the primary technique being a discounted cash flow.

Affected by the changes in the regulatory environment on the private education industry in China., all subsidiaries acquired by the Company also terminated their education programs and learning centers from August 2021 gradually. As of August 31, 2021, the Company recognized impairment loss with amount of RMB1,076,560 (US$166,640) for goodwill.

Intangible assets

(o) Intangible assets

Intangible assets with finite lives are carried at cost less accumulated amortization. Amortization of finite-lived intangible assets is computed using the straight-line method over the estimated useful lives. The estimated useful lives of intangible assets from the date of purchase are as follows:

Category	Estimated Useful Lives
Student base	5 years
Customer relationship	1-9 years
Trademark	10-20 years
License	30 years
Franchise agreements	6 years
Technology and system	5 years

As of August 31, 2021, affected by the changes in the regulatory environment on the private education industry in China., the Company recognized impairment loss with amount of RMB197,328 (US$30,544) for intangible assets.

Long-term investments

(p) Long-term investments

The Group’s long-term investments consist of equity securities without readily determinable fair value, investment in debt securities accounted for at fair value and equity method investments.

The Group adopted ASC Topic 321, Investments-Equity Securities (“ASC 321”) from September 1, 2018. Pursuant to ASC 321, for equity securities measured at fair value with changes in fair value record in earnings, the Group does not assess whether those investments are impaired. For those equity securities that the Group selects to use the measurement alternative, the Group uses the measurement alternative to measure those investments at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The Group makes a qualitative assessment of whether the investment is impaired at each reporting date. If a qualitative assessment indicates that the investment is impaired, the Group has to estimate the investment’s fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, (“ASC 820”). If the fair value is less than the investment’s carrying value, the Group recognizes an impairment loss in net income equal to the difference between the carrying value and fair value.

Investments in equity investees represent investments in entities in which the Group can exercise significant influence but does not own a majority equity interest or control are accounted for using the equity method of accounting in accordance with ASC 323-10 (“ASC 323-10”), Investments-Equity Method and Joint Ventures: Overall. Under the equity method, the Group initially records its investment at cost and prospectively recognizes its proportionate share of each equity investee’s net profit or loss into its consolidated statements of income. The difference between the cost of the equity investee and the amount of the underlying equity in the net assets of the equity investee is recognized as equity method goodwill included in equity method investments on the consolidated balance sheets. The Group evaluates its equity method investment for impairment under ASC 323-10. An impairment loss on the equity method investment is recognized in the consolidated statements of income when the decline in value is determined to be other-than-temporary.

Investment in debt securities accounted for at fair value with original maturities of greater than twelve months are classified as long-term investments. As investment in debt securities classified as available for sale in accordance with ASC 320 are reported at fair value. Any unrealized gains and losses on available-for-sale investments are included in other comprehensive income. Interest income are recognized in earnings. When a decline in value is determined to be other-than-temporary, the impairment loss on the long-term available-for-sale investments would be recognized in the consolidated statements of comprehensive income.

In 2019, 2020 and 2021, we evaluated our investments, taking into consideration, including, but not limited to, the duration, degree and causes of the decline in financial results, its intent and ability to hold the investment and the invested companies’ financial performance and near-term prospects. Based on the evaluation, the Company recognized impairment loss of RMB10,000, RMB161,600 and RMB1,652,308 (US$255,759) for the years ended August 31, 2019, 2020 and 2021, respectively.

Fair value of financial instruments

(q) Fair value of financial instruments

Financial instruments include cash and cash equivalents, restricted cash, short-term and long-term investments, due from third party payment platforms, due from third parties, amount due from a related party, redeemable convertible preferred shares, short-term and long-term loans, and convertible senior notes.

The carrying amounts of these financial instruments, except for the short-term and long-term investments, redeemable convertible preferred shares (Note 23), long-term loans and convertible senior notes, approximate their fair values because of their short-term maturities. Available-for-sale investments are adjusted to fair value at each reporting date. The redeemable convertible preferred shares were initially recognized at fair value upon issuance and immediately accreted to their full redemption value as of redemption occurred at the end of the reporting periods. If a beneficial conversion feature exists as of the commitment date, its intrinsic value is bifurcated from the carrying value of the redeemable convertible preferred shares as a contribution to additional paid in capital. The discount resulting from the beneficial conversion feature is amortized from the date of issuance to the earliest conversion date. The carrying amount of the long-term loan and convertible senior notes approximate their fair value due to the fact that the related interest rates approximate the interest rates currently offered by financial institutions for similar debt instruments with comparable maturities.

Revenue recognition

(r) Revenue recognition

On September 1, 2018, the Group adopted ASC Topic 606 Revenue from Contracts with Customers (“Topic 606”), applying the modified retrospective method to all contracts that were not completed as of September 1, 2018. Results for the year ended August 31, 2019,2020 and 2021 are presented under Topic 606, while revenues for the years ended August 31, 2018 are not adjusted and continue to be reported under ASC Topic 605, Revenue Recognition (“Topic 605”).

Revenue is recognized when control of promised services are transferred to the Group’s customers in amounts of consideration to which the Group expects to be entitled to in exchange for those services. The Group follows the five steps approach for revenue recognition under Topic 606: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue as the Group satisfies a performance obligation.

The Group generates revenues primarily through tuition fees from personalized and small class premium tutoring services with individual students in the PRC. In addition, the Group generates revenues from other services such as franchise, licensing, and study tours. The following table presents the Group’s revenues disaggregated by revenue sources for the years ended August 31, 2020 and 2021.

Disaggregation of net revenues	Personalized and small class premium tutoring services RMB		Others RMB		For the year ended August 31, 2021 RMB
OneSmart VIP		2,767,502		12,604		2,780,106
HappyMath		363,143		-		363,143
FasTrack		183,344		-		183,344
Other		96,817		-		96,817
		3,410,806		12,604		3,423,410

(r) Revenue recognition (continued)

Disaggregation of net revenues	Personalized and small class premium tutoring services RMB		Others RMB		For the year ended August 31, 2020 RMB
OneSmart VIP		2,616,057		9,122		2,625,179
HappyMath		422,944		-		422,944
FasTrack		170,707		5,763		176,470
OneSmart Online		103,848		-		103,848
Other		110,440		-		110,440
		3,423,996		14,885		3,438,881

Primary sources of the Group’s revenues are as follows:

1) Personalized premium tutoring services is referring to OneSmart VIP one-on-one and one-on-three tutoring services. Small class premium tutoring services primarily consist of HappyMath, FasTrack, and other after-school small classes tutoring. The Group launched OneSmart Online in February 2020 as a complement to its offline business providing online courses to the existing student base from OneSmart VIP, HappyMath and FasTrack English programs through an online platform. OneSmart Online also integrated the online tutoring business from Shanghai Yimi after the acquisition (Note 4). Each contract of personalized premium service and small class tutoring service is accounted for as a single performance obligation which is satisfied proportionately over the stated service period. Tuition fees are generally collected in advance and are initially recorded as prepayments from customers. Tuition revenues are recognized proportionately as the tutoring sessions are delivered.

Refunds are provided to students who decide to withdraw from contracts for remaining undelivered tutoring sessions. A refund is equal to and limited to the amount related to the undelivered classes. The Group estimates and records a refund liability for the potion of tuition fees collected in advance that it does not expect to be entitled to.

2) Other revenues included franchise revenues derived from franchise agreements where the franchisees operating under the OneSmart or FasTrack brand are required to pay an initial one-time non-refundable franchise fee and recurring franchise fees, which mainly consist of on-going management and service fees based on a certain percentage of the franchisees’ monthly tuition received. Each franchise contract is accounted for as a single performance obligation to provide the franchisee the license to its OneSmart or FasTrack intellectual property. The one-time franchise fees are fixed consideration payable upon submission of a franchise application or renewal and are recognized on a straight-line basis over the initial or renewal term of the franchise contracts. The continuing fees represent variable consideration that are recognized on a monthly basis.

The Group’s contract assets consisted of accounts receivable for other services. The balance of contract assets amounted to nil as of August 31, 2020 and August 31, 2021. The Group’s contract liabilities mainly consisted of prepayments from customers, with a balance of RMB2,547,493 and RMB2,787,686 (US$431,504) as of August 31, 2020 and August 31, 2021, respectively. A majority of contract liabilities at the beginning of the year ended August 31, 2021 were recognized as revenues during the year ended August 31, 2021 and a majority of contract liabilities as of August 31, 2021 might be refunded to our customers in the following year affected by the Opinion and a related series of notice, administrative measures or circular. The difference between the opening and closing balances of the Group’s contract liabilities primarily results from the timing difference between the Group’s satisfaction of performance obligation and the customers’ payments.

Refund liabilities mainly related to the estimated refunds that are expected to be provided to students if they decide they no longer want to attend tutoring. The refund liability estimation is based on historical refund ratio on a portfolio basis using the most likely amount method. As of August 31, 2020 and August 31, 2021, refund liability amounted to RMB333,045 and RMB364,447 (US$56,412), respectively, is recorded in prepayments from customers.

Cost of revenues

(s) Cost of revenues

Cost of revenues consist primarily of salaries and other personnel expenses, rental expenses, depreciation expenses, utilities and other expenses directly attributable to the Group’s revenues.

Advertising expenditures

(t) Advertising expenditures

Advertising expenditures are expensed when incurred and are included in selling and marketing expenses, which amounted to RMB383,306, RMB378,198 and RMB463,324 (US$71,718) for the years ended August 31, 2019 , 2020 and 2021, respectively.

Government grants

(u) Government grants

The Group receives government subsidies at the discretion of the local government. Government grants are recognized when it is probable that the Group will comply with the conditions attached to them, and the grants are received. Government grants without attached conditions are recognized when received. When the grant relates to an expense item, it is recognized in the consolidated statement of income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate, as a reduction of the related operating expense. When the grant relates to an asset, it is recognized as a deferred government grant and released to the consolidated statement of income in equal amounts over the expected useful life of the related asset, when operational, as a reduction of the related depreciation expense.

For the years ended August 31, 2019, 2020 and 2021, government grants in the amounts of RMB31,937, RMB24,238 and RMB86,206 (US$13,344) were recognized as other income in the consolidated statements of income, respectively.

Leases

(v) Leases

The Group adopted ASU No. 2016-02, Leases (Topic 842) (“ASC 842”) from September 1, 2019 by using the modified retrospective method and did not restate the comparable periods. The Group has elected the package of practical expedients, which allows the Group not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any expired or existing leases as of the adoption date. The Group also elected the short-term lease exemption for all contracts with lease terms of 12 months or less. The Group have lease agreements with lease and non-lease components, which are generally accounted for separately.

The Group determines if an arrangement is a lease or contains a lease at lease inception. For operating leases, the Group recognizes a right-of-use (“ROU”) asset and a lease liability based on the present value of the lease payments over the lease term on the consolidated balance sheets at commencement date. As most of the Group’s leases do not provide an implicit rate, the Group estimates its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The ROU assets also include any lease payments made, net of lease incentives. Lease expense is recorded on a straight-line basis over the lease term. The Company’s leases often include options to extend and lease terms include such extended terms when the Company is reasonably certain to exercise those options. Lease terms also include periods covered by options to terminate the leases when the Company is reasonably certain not to exercise those options.

Upon adoption, the Group recognized ROU assets of RMB1,632,236 and total lease liabilities (including current and non-current) RMB1,550,882 for operating leases, based on the present value of the remaining minimum rental payments under existing operating leases. The difference between the lease liabilities and ROU assets represented the prepaid rent balances of RMB81,354. The impact of adopting ASC 842 on the Group’s opening accumulated deficit, current year net income and current year cash flow was insignificant. As of August 31, 2020, the Group recognized operating lease ROU assets of RMB1,481,196 (US$229,273) and total lease liabilities RMB1,412,191 (US$218,592), including current portion of RMB483,056 (US$74,772) for operating leases.

However, the Opinion and a related series of notice, administrative measures or circular and the compliance measures taken by the Company have material adverse impact on our after-school tutoring services related to academic subjects in China’s compulsory education system, which in turn have adversely affected the Company’s results of operations and prospect. We have gradually terminated our after-school tutoring services related to academic subjects business since August 2021, and officially ceased our all business in October 2021. All of the Company’s operating leases mainly related to offices and classroom facilities were gradually terminated since August 2021. The Company removed the right-of-use asset and the lease liability, with loss recognized of RMB45,368 (US$7,022) for the difference in accordance with ASC842-20-40-1. By the end of August 31, 2021, all rental deposits related to those early terminated lease contracts have been expensed as the early termination penalty by the Company.

Income taxes

(w) Income taxes

The Group follows the liability method of accounting for income taxes in accordance with ASC 740 (“ASC 740”), Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Group records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in tax expense in the period that includes the enactment date of the change in tax rate.

The Group accounted for uncertainties in income taxes in accordance with ASC 740. Interest and penalties related to unrecognized tax benefit recognized in accordance with ASC 740 are classified in the consolidated statements of income as income tax expense.

Share-based compensation

(x) Share-based compensation

The Group applies ASC 718 (“ASC 718”), Compensation - Stock Compensation, to account for its employee share-based payments. In accordance with ASC 718, the Group determines whether an award should be classified and accounted for as a liability award or an equity award. All the Group’s share-based awards to employees were classified as equity awards.

In accordance with ASC 718, the Group recognizes share-based compensation cost for equity awards to employees with a performance condition based on the probable outcome of that performance condition. Compensation cost is recognized if it is probable that the performance condition will be achieved.

A change in any of the terms or conditions of the awards is accounted for as a modification of the awards. Incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified, measured based on the fair value of the awards and other pertinent factors at the modification date. For vested awards, the Group recognizes incremental compensation cost in the period the modification occurs. For unvested awards, the Group recognizes over the remaining requisite service period, the sum of the incremental compensation cost and the remaining unrecognized compensation cost for the original award on the modification date. If the fair value of the modified award is lower than the fair value of the original award immediately before modification, the minimum compensation cost the Group recognizes is the cost of the original award. When the vesting conditions (or other terms) of the equity awards granted to employees are modified, the Group first determines on the modification date whether the original vesting conditions were expected to be satisfied, regardless of the entity’s policy election for accounting for forfeitures. If the original vesting conditions were not expected to be satisfied, the grant date fair value of the original equity awards are ignored and the fair value of the equity awards measured at the modification date are recognized if the modified awards ultimately vest.

The Group uses the accelerated method to recognize compensation expense for all awards granted. The Group, with the assistance of an independent third-party valuation firm, determined the fair value of the awards granted to employees. The Group adopted ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, (“ASU 2016-09”) and elected to account for forfeitures as they occur.

Employee benefit expenses

(y) Employee benefit expenses

All eligible employees of the Group are entitled to staff welfare benefits including medical care, welfare subsidies, unemployment insurance and pension benefits through a PRC government-mandated multi-employer defined contribution plan. The Group is required to make contributions to the plan and accrues for these benefits based on certain percentages of the qualified employees’ salaries. The Group recorded employee benefit expenses of RMB336,067, RMB305,649 and RMB228,255 (US$35,331) for the years ended August 31, 2019, 2020 and 2021, respectively.

Comprehensive income/(loss)

(z) Comprehensive income/(loss)

Comprehensive income/(loss) is defined as the changes in equity of the Group during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. Among other disclosures, ASC 220, Comprehensive Income, requires that all items that are required to be recognized under current accounting standards as components of comprehensive income/(loss) be reported in a financial statement that is displayed with the same prominence as other financial statements. For each of the periods presented, the Group’s comprehensive income/(loss) includes net income and unrealized gain on available-for-sale investments, net of tax and is presented in the consolidated statements of comprehensive income/(loss).

Earnings/(Loss) per share

(aa) Earnings/(Loss) per share

Basic earnings/(loss) per share is computed by dividing net income/(loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period using the two-class method. Under the two-class method, net income/(loss) is allocated between ordinary shares and other participating securities based on their participating rights. Diluted earnings/(loss) per share is calculated by dividing net income/(loss) attributable to ordinary shareholders by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinary equivalent shares consist of the ordinary shares issuable upon the conversion of the Group’s redeemable convertible preferred shares and convertible senior notes using the if-converted method and ordinary shares issuable upon the exercise of share options and restricted Class A ordinary shares (“Restricted Shares”) using the treasury stock method. Ordinary equivalent shares are not included in the denominator of the diluted loss per share calculation when inclusion of such shares would be anti-dilutive.

Basic and diluted earnings/(loss) per share are not reported separately for Class A or Class B ordinary shares (the “Ordinary Shares”) as each class of shares has the same rights to undistributed and distributed earnings.

Segment reporting

(ab) Segment reporting

In accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision making group, in deciding how to allocate resources and in assessing performance. The Group has only one reportable segment since the Group does not distinguish revenues, costs and expenses by operating segments in its internal reporting, and reports costs and expenses by nature as a whole. The Group’s CODM, who has been identified as the CEO, reviews the consolidated results when making decisions about allocating resources and assessing performance of the Group as a whole. As the Group generates all of its revenue in the PRC, no geographical segments are presented

Comparative information

(ac) Comparative information

Certain of the prior year comparative figures have been reclassified to conform to the current year’s presentation.

Non-controlling interests

(ad) Non-controlling interests

For certain subsidiaries, a non-controlling interest is recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Group. Consolidated net loss or income on the consolidated statements of income includes the net loss or income attributable to non-controlling interests. The cumulative results of operations attributable to non-controlling interests are recorded as non-controlling interests in the Group’s consolidated balance sheets.

In January 2020, the FASB issued ASU No. 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendments also clarify that for the purpose of applying paragraph 815-10-15-141(a) an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option in accordance with the financial instruments guidance in Topic 825. An entity also would evaluate the remaining characteristics in paragraph 815-10-15-141 to determine the accounting for those forward contracts and purchased options. The amendments are effective for fiscal years beginning September 1, 2021, and interim periods within those fiscal years. The Group does not expect to early adopt this guidance and is in the process of evaluating the impact of adoption of this guidance on the Group’s consolidated financial statements.

Recent accounting pronouncements

(ae) Recent accounting pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The amendments are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, with early adoption permitted. The Group is currently evaluating the impact of the new guidance on our consolidated financial statements.

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Group is currently evaluating the impact of the new guidance on our consolidated financial statements.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606, Revenue from Contracts with Customers The new amendments are effective for us are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption permitted. The Group is currently evaluating the impact of the new guidance on our consolidated financial statements.

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Organization and Principal Activities (Tables)

12 Months Ended

Aug. 31, 2021

Organization and Principal Activities [Abstract]

Schedule of VIEs and the major subsidiaries of the VIEs

			Percentage
			of direct or
			indirect
	Date of		ownership
	incorporation/	Place of	by the
Entity	acquisition	incorporation	Company	Principal activities
			Direct
Subsidiaries:
OneSmart Edu Inc. (“OneSmart BVI”)	June 16, 2016	BVI	100%	Holding company
OneSmart Edu (HK) Limited (“OneSmart HK”)	July 11, 2017	Hong Kong	100%	Holding company
OneSmart Great Edu (HK) Limited (“Great EDU”)	Sept 11, 2018	Hong Kong	100%	Holding company
OneSmart Online Edu Inc. (“OneSmart Online”)	December 4, 2019	Cayman	90%	Holding company
Yimi Education Technology Inc. (“Yimi Cayman”)	February 1, 2020	Cayman	90%	Holding company
Yimi Education Technology (HK) Limited (“Yimi HK”)	February 1, 2020	Hong Kong	90%	Holding company
Shanghai Jing Xue Rui Information and Technology Co., Ltd. (“Shanghai Jing Xue Rui” or “WFOE”)	September 28, 2011	PRC	100%	Educational technology research and development
Yimi Education Technology (Shanghai) Co., Ltd (“Yimi Shanghai” or “WFOE”)	February 1, 2020	PRC	90%	Educational technology research and development
			Indirect
VIEs:
Shanghai OneSmart Education and Training Co., Ltd. (“Shanghai OneSmart”)	September 11, 2007	PRC	100%	K12 post-class education program services
Shanghai Rui Si Technology Information Consulting Co., Ltd. (“Shanghai Rui Si”)	June 8, 2009	PRC	100%	Early childhood education services
Xiangyuan (Shanghai) Education Technology Co., Ltd. (“Shanghai Xiangyuan”)	December 6, 2019	PRC	100%	K12 post-class online education program services
Subsidiaries of VIEs:
Beijing Jingrui Peiyou Education Consulting Co., Ltd. (“Beijing Jingrui Peiyou”)	July 5, 2010	PRC	100%	K12 post-class education program services
Nanjing Jingrui Education Information Consulting Co., Ltd. (“Nanjing Jingrui”)	March 31, 2011	PRC	100%	K12 post-class education program services
Hangzhou OneSmart Education Information Consulting Co., Ltd. (“Hangzhou OneSmart”)	April 2, 2011	PRC	100%	K12 post-class education program services
Guangzhou Jingxuerui Education Information Consulting Co., Ltd. (“Guangzhou OneSmart”)	June 27, 2012	PRC	100%	K12 post-class education program services
Shenzhen Jingrui Education Training Centers (“Shenzhen Jingrui”)	September 7, 2012	PRC	100%	K12 post-class education program services
Changzhou Jingrui Education Information Consulting Co., Ltd. (“Changzhou Jingrui”)	May 27, 2014	PRC	100%	K12 post-class education program services
Shanghai Jing Yu Investment Co., Ltd. (“Shanghai Jing Yu”)	October 23, 2015	PRC	100%	Investment holding
Wuxi Jingzhirui Education Training Centers (“Wuxi Jingzhirui”)	November 9, 2018	PRC	100%	K12 post-class education program services
Shanghai Jingsirui Education Training Centers (“Shanghai Jingsirui”)	December 7, 2015	PRC	100%	K12 post-class education program services
Shanghai FasTrack English Education Training Co., Ltd. (“FasTrack English”)	January 1, 2018	PRC	75.61%	Early childhood education services
Shanghai OneSmart Education Investment Co., Ltd. (“Shanghai OneSmart Education Investment”)	November 25, 2014	PRC	100%	Investment holding

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Aug. 31, 2021

Organization and Principal Activities [Abstract]

Schedule of consolidated balance sheets

	As of August 31, 2021
	Other entities that are			WFOE that is the primary beneficiary		VIE and its						Consolidated
	consolidated			of the VIE		subsidiaries			Onesmart			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	)

	As of August 31, 2020
	Other entities		WFOE that is the primary
	that are		beneficiary		VIE and its					Consolidated
	consolidated		of the VIE		subsidiaries		Onesmart			total
	RMB		RMB		RMB		RMB			RMB
Intercompany receivables		100,400		-		11,107,310		2,287,588			-
Current assets excluding intercompany receivables		13,751		31,297		1,559,409		572,945			2,177,402
Current assets		114,151		31,297		12,666,719		2,860,533			2,177,402
Investment in subsidiaries		2,046,413		289		992,652		872,756			-
Non-current assets excluding investment in subsidiaries		1,052,138		23,771		4,644,477		603			5,720,989
Non-current assets		1,052,138		23,771		4,644,477		603			5,720,989
Total assets		1,065,889		55,068		6,203,886		573,548			7,898,391
Intercompany payables		1,819,347		1,634,862		9,990,619		50,470			-
Current liabilities excluding intercompany payables		175,896		-		4,668,607		272,251			5,116,754
Current liabilities		1,995,243		1,634,862		14,659,226		322,721			5,116,754
Non-current liabilities		-		-		1,344,630		995,034			2,339,664
Total liabilities		175,896		-		6,013,237		1,267,285			7,456,418
Total shareholders’ equity (net assets)		889,993		55,068		190,649		(693,737	)		441,973

Schedule of consolidated statements of operations and comprehensive income (loss)

	For the years ended August 31, 2021
				WFOE
	Other entities			that is the primary
	that are			beneficiary			VIE and its						Consolidated
	consolidated			of the VIE			subsidiaries			Onesmart			total
	RMB			RMB			RMB			RMB			RMB
Net revenues		1,125			1,016			3,421,269			-			3,423,410
Cost of revenues		-			-			(2,093,743	)		-			(2,093,743	)
Gross profit		1,125			1,016			1,327,526			-			1,329,667
Operating expenses		(3,323	)		(134,500	)		(5,991,693	)		(62,602	)		(6,192,118	)
Income (loss) from operations		(2,198	)		(133,484	)		(4,664,167	)		(62,602	)		(4,862,451	)
Other expenses		(244	)		(30,494	)		(63,503	)		(27,227	)		(121,468	)
Income (loss) before income taxes		(2,442	)		(163,978	)		(4,727,670	)		(89,829	)		(4,983,919	)
Provision for income taxes		-			(1,405	)		(29,465	)		-			(30,870	)
Net income (loss)		(2,442	)		(165,383	)		(4,757,135	)		(89,829	)		(5,014,789	)

	For the years ended August 31, 2020
				WFOE
	Other entities			that is the primary
	that are			beneficiary			VIE and its						Consolidated
	consolidated			of the VIE			subsidiaries			Onesmart			total
	RMB			RMB			RMB			RMB			RMB
Net revenues		1,955			-			3,436,926			-			3,438,881
Cost of revenues		(2,862	)		-			(2,166,877	)		-			(2,169,739	)
Gross profit		(907	)		-			1,270,049			-			1,269,142
Operating expenses		(4,028	)		(6,978	)		(1,619,319	)		(1,495	)		(1,631,819	)
Income (loss) from operations		(4,935	)		(6,978	)		(349,270	)		(1,495	)		(362,677	)
Other expenses		(1	)		(1,078	)		(372,255	)		(52,439	)		(425,773	)
Income (loss) before income taxes		(4,937	)		(8,055	)		(721,525	)		(53,933	)		(788,450	)
Provision for income taxes		-			-			37,785			-			37,785
Net income (loss)		(4,937	)		(8,055	)		(683,740	)		(53,933	)		(750,665	)

Schedule of consolidated statements of cash flows

	For the years ended August 31, 2021
				WFOE
	Other			that is the
	entities			primary
	that are			beneficiary		VIE and its						Consolidated
	consolidated			of the VIE		subsidiaries			Onesmart			total
	RMB			RMB		RMB			RMB			RMB
Net cash provided by (used in) operating activities		(1,167	)		29,266		110,244			-			138,343
Net cash used in investing activities		-			15		(147,962	)		-			(147,947	)
Net cash provided by (used in) financing activities		-			-		(704,874	)		(230,316	)		(935,190	)
Effect of exchange rate changes on cash and restricted cash		-			-		-			(15,848	)		(15,848	)
Net increase (decrease) in cash and restricted cash		(1,167	)		29,281		(742,592	)		(246,164	)		(960,642	)
Cash and restricted cash from continuing operations, beginning of year		11,677			28,645		1,019,603			285,360			1,345,285
Cash and restricted cash from continuing operations, end of year		10,510			57,926		277,011			39,196			384,643

	For the years ended August 31, 2020
				WFOE
	Other			that is the
	entities			primary
	that are			beneficiary			VIE and its						Consolidated
	consolidated			of the VIE			subsidiaries			Onesmart			total
	RMB			RMB			RMB			RMB			RMB
Net cash provided by (used in) operating activities		23,974			(71,511	)		607,495			(319,266	)		240,692
Net cash used in investing activities		(33,581	)		45,593			(801,909	)		(117,034	)		(906,931	)
Net cash provided by (used in) financing activities		-			-			472,213			176,546			648,759
Effect of exchange rate changes on cash and restricted cash		-			-			-			(23,647	)		(23,647	)
Net increase (decrease) in cash and restricted cash		(9,607	)		(25,918	)		277,799			(283,401	)		(41,127	)
Cash and restricted cash from continuing operations, beginning of year		21,284			54,564			741,803			568,761			1,386,412
Cash and restricted cash from continuing operations, end of year		11,677			28,645			1,019,603			285,360			1,345,285

Schedule of estimated useful lives of the property and equipment

Category	Estimated Useful Lives
Furniture	3-5 years
Electronic equipment	3 years
Vehicles	4-5 years
Buildings	20 years
Leasehold improvement	Over the shorter of the lease term or the estimated useful lives

Schedule of estimated useful lives of the intangible assets

Category	Estimated Useful Lives
Student base	5 years
Customer relationship	1-9 years
Trademark	10-20 years
License	30 years
Franchise agreements	6 years
Technology and system	5 years

Schedule of disaggregation of revenues

Disaggregation of net revenues	Personalized and small class premium tutoring services RMB		Others RMB		For the year ended August 31, 2021 RMB
OneSmart VIP		2,767,502		12,604		2,780,106
HappyMath		363,143		-		363,143
FasTrack		183,344		-		183,344
Other		96,817		-		96,817
		3,410,806		12,604		3,423,410

Disaggregation of net revenues	Personalized and small class premium tutoring services RMB		Others RMB		For the year ended August 31, 2020 RMB
OneSmart VIP		2,616,057		9,122		2,625,179
HappyMath		422,944		-		422,944
FasTrack		170,707		5,763		176,470
OneSmart Online		103,848		-		103,848
Other		110,440		-		110,440
		3,423,996		14,885		3,438,881

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Business Combinations (Tables)

12 Months Ended

Aug. 31, 2021

Yuhan [Member]

Business Combinations (Tables) [Line Items]

Schedule of purchase price as of the date of acquisition

	For the year ended August 31,
	2018			2018
	RMB			US$
Intangible assets (i) (Note 10)		97,870			15,149
Net tangible assets (ii)		(24,331	)		(3,766	)
Goodwill (Note 12)		161,001			24,921
Total fair value of purchase price allocation		234,540			36,304
Cash consideration		140,000			21,670
Fair value of ownership interests previously held in the acquiree		42,595			6,593
Fair value of non-controlling interest		51,945			8,041

Tianjin Huaying [Member]

Business Combinations (Tables) [Line Items]

Schedule of purchase price as of the date of acquisition

	For the year ended August 31,
	2019			2019
	RMB			US$
Intangible assets (i) (Note 10)		59,800			9,256
Net tangible assets (ii)		6,582			1,019
Deferred tax liabilities, net		(14,179	)		(2,195	)
Goodwill (Note 12)		178,113			27,570
Total fair value of purchase price allocation		230,316			35,650
Consideration		230,316			35,650

Yimi Online Tutoring [Member]

Business Combinations (Tables) [Line Items]

Schedule of purchase price as of the date of acquisition

	For the year ended August 31,
	2020			2020
	RMB			US$
Intangible assets (i) (Note 10)		50,800			7,863
Net tangible assets (ii)		(56,523	)		(8,749	)
Deferred tax liabilities, net		(3,211	)		(497	)
Goodwill (Note 12)		348,579			53,956
Total fair value of purchase price allocation		339,645			52,573
Consideration		311,149			48,162
Fair value of non-controlling interests		28,496			4,411

Yousheng [Member]

Business Combinations (Tables) [Line Items]

Schedule of purchase price as of the date of acquisition

	For the year ended August 31,
	2020			2020
	RMB			US$
Intangible assets (i) (Note 10)		72,000			11,145
Net tangible assets (ii)		(22,862	)		(3,539	)
Deferred tax liabilities, net		(264	)		(41	)
Goodwill (Note 12)		116,919			18,098
Total fair value of purchase price allocation		165,793			25,663
Consideration		145,352			22,499
Fair value of ownership interests previously held in the acquiree		20,441			3,164

Ruiyipeiyou [Member]

Business Combinations (Tables) [Line Items]

Schedule of purchase price as of the date of acquisition

	For the year ended August 31,
	2020			2020
	RMB			US$
Intangible assets (i) (Note 10)		17,000			2,631
Net tangible assets (ii)		(5,526	)		(855	)
Deferred tax liabilities, net		(4,250	)		(658	)
Goodwill (Note 12)		124,066			19,204
Total fair value of purchase price allocation		131,290			20,322
Consideration		131,290			20,322

Other Acquisitions [Member]

Business Combinations (Tables) [Line Items]

Schedule of purchase price as of the date of acquisition

	For the years ended August 31,
	2019			2020			2021		2021
	RMB			RMB			RMB		US$
Intangible assets (i) (Note 10)		20,700			11,000			-		-
Net tangible liabilities (ii)		(174,405	)		(77,919	)		-		-
Goodwill (Note 12)		311,817			113,032			-		-
Total fair value of purchase price allocation		158,112			46,113			-		-
Cash consideration		143,740			28,000			-		-
Fair value of equity interests previously held in the acquirees		3,305			7,410			-		-
Fair value of non-controlling interests		11,067			10,703			-		-

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Net Revenues (Tables)

12 Months Ended

Aug. 31, 2021

Revenue from Contract with Customer [Abstract]

Schedule of net revenues

5. Net revenues

	For the years ended August 31,
	2019		2020		2021		2021
	RMB		RMB		RMB		US$
Personalized and small class premium tutoring revenues		3,879,364		3,423,996		3,410,806		527,956
Other revenues		114,509		14,885		12,604		1,951
		3,993,873		3,438,881		3,423,410		529,907

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Cash, cash equivalents and restricted cash (Tables)

12 Months Ended

Aug. 31, 2021

Cash and Cash Equivalents [Abstract]

Schedule of cash, cash equivalents and restricted cash

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Cash in bank		1,158,044		29,626		4,586
Restricted cash in bank <i>		187,241		355,017		54,953
		1,345,285		384,643		59,539

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Short-term Investments (Tables)

12 Months Ended

Aug. 31, 2021

Short-Term Investments [Abstract]

Schedule of short-term investments

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Commercial banks deposits		243,013		13,000		2,012
Available-for-sale securities		243,743		68,575		10,615
		486,756		81,575		12,627

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Prepayments and other current assets (Tables)

12 Months Ended

Aug. 31, 2021

Prepayments And Other Current Assets [Abstract]

Schedule of prepayments and other current assets, net

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Prepaid rental expense		54,505		-		-
Loans to third parties		112,435		-		-
Receivable from a third-party payment platform		78,197		-		-
Prepayments to suppliers		42,482		-		-
Prepaid income tax, business tax, VAT and other surcharges		10,571		-		-
Deposits		18,408		-		-
Other receivables		-		-		-
Staff advances		7,610		-		-
Loans to employees		12,030		-		-
Others		8,632		-		-
Prepayments and other current assets, net		344,870		-		-

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Property and Equipment, Net (Tables)

12 Months Ended

Aug. 31, 2021

Property, Plant and Equipment [Abstract]

Schedule of property and equipment, net

	As of August 31,
	2020			2021			2021
	RMB			RMB			US$
Furniture		57,051			-			-
Electronic equipment		225,749			-			-
Vehicles		3,889			1,902			294
Leasehold improvements		976,106			-			-
Buildings		44,776			47,776			7,395
		1,307,571			49,678			7,689
Less: accumulated depreciation		(741,074	)		(12,723	)		(1,969	)
Construction in progress		14,751			-			-
Property and equipment, net		581,248			36,955			5,720

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Intangible assets, Net (Tables)

12 Months Ended

Aug. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of intangible assets net

	As of August 31,
	2020			2021		2021
	RMB			RMB		US$
Customer relationship		71,180			-		-
Trademark		111,450			-		-
Student base		2,390			-		-
License		23,600			-		-
Franchise agreements		9,420			-		-
Technology and system		127,600			-		-
		345,640			-		-
Less: accumulated amortization		(67,687	)		-		-
Intangible assets, net		277,953			-		-

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Long-term Investments (Tables)

12 Months Ended

Aug. 31, 2021

Long-Term Investments [Abstract]

Schedule of long term Investments

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Equity securities without readily determinable fair value		349,765		-		-
Equity method investments		84,272		-		-
Available-for-sale investments		614,141		-		-
		1,048,178		-		-

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Goodwill (Tables)

12 Months Ended

Aug. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of goodwill

	RMB
Balance as of August 31, 2019		815,052
Goodwill acquired (Note 4)		702,596
Disposal of subsidiaries		(36,247	)
Balance as of August 31, 2020		1,481,401
Goodwill acquired (Note 4)		-
Disposal of subsidiaries		(404,841	)
Impairment charges		(1,076,560	)
Balance as of August 31, 2021		-
Balance as of August 31, 2021, in US$		-

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Accrued Expenses and Other Current Liabilities (Tables)

12 Months Ended

Aug. 31, 2021

Disclosure Text Block Supplement [Abstract]

Schedule of Components of accrued expenses and other current liabilities

13. Accrued Expenses and Other Current Liabilities

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Salary and welfare payable		612,570		533,691		82,610
Other taxes payable		12,230		-		-
Accrued expenses		150,671		279,448		43,256
Deposits from franchisees		16,249		7,201		1,115
Payables for leasehold improvement		36,363		-		-
Payables for long-term investments		4,412		-		-
Interest payable		20,631		12,731		1,971
Others		35,929		35,393		5,477
		889,055		868,464		134,429

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Share-Based Compensation (Tables)

12 Months Ended

Aug. 31, 2021

Share-Based Compensation (Tables) [Line Items]

Schedule of share-based compensation expense

	For the years ended August 31,
	2019		2020		2021		2021
	RMB		RMB		RMB		US$
Sales and marketing		906		674		110		17
General and administrative		70,626		137,312		42,752		6,618
Total share-based compensation expense		71,532		137,986		42,862		6,635

Amended 2015 Plan [Member]

Share-Based Compensation (Tables) [Line Items]

Schedule assumptions estimate the fair value of share options granted

	Year ended	Year ended
	August 31, 2020	August 31, 2021
Risk-free interest rate	0.65%-1.92%	0.65%-1.92%
Expected volatility	51.8%-52.7%	33.27%
Suboptimal exercise factor	2.20-2.80	2.20-2.80
Fair value per ordinary share	US$0.05-US$0.12	US$0.05-US$0.12

Schedule of summary of share options activities

										Weighted
				Weighted		Weighted				average
	Number of			average		average		Aggregate		remaining
	share			exercise		grant date		intrinsic		contractual
	options			price		fair value		value		term
				US$		US$		US$
Outstanding as of September 1, 2017		-			-		-		-		-
Granted		303,995,200			0.03		0.16
Forfeited		(2,804,550	)		0.08		0.09
Outstanding as of August 31, 2018		301,190,650			0.03		0.16		54,133		8.59
Granted		181,667,138			0.10		0.05
Forfeited		(33,355,010	)		0.17		0.08
Exercised		(55,658,760	)		0.02		0.02
Outstanding as of August 31, 2019		393,844,018			0.05		0.13		53,966		7.80
Granted		93,574,240			0.05		0.10
Forfeited		(29,876,751	)		0.11		0.11
Exercised		(65,654,200	)		0.01		0.13
Outstanding as of August 31, 2020		391,887,307			0.05		0.04		31,356		7.57
Granted		115,241,400			0.04		0.05
Forfeited		(82,902,302	)		0.03		0.14
Exercised		(81,138,360	)		0.02		0.17
Outstanding as of August 31, 2021		343,088,045			0.06		0.00		1,375		5.58
Vested and expected to vest as of August 31, 2021		343,088,045			0.06		0.00		1,375		5.58

Schedule of summary of Restricted Shares activities

								Weighted
				Weighted				average
	Number of			average		Aggregate		remaining
	Restricted			grant date		intrinsic		contractual
	Shares			fair value		value		term
				US$		US$
Outstanding as of September 1, 2018		-			-		-		-
Granted		14,556,320			0.21
Forfeited		(218,440	)		0.21
Outstanding as of August 31, 2019		14,337,880			0.21		2,737		2.80
Granted		39,821,200			0.20
Forfeited		(2,409,120	)		0.54
Exercised		(4,341,329	)		1.42
Outstanding as of August 31, 2020		47,408,631			0.07		5,025		0.01
Granted		5,502,840			0.11
Forfeited		(7,949,681	)		0.19
Exercised		(2,185,400	)		0.22
Outstanding as of August 31, 2021		42,776,390			0.04		596		1.61
Vested and expected to vest as of August 31, 2021		42,776,390			0.04		596		1.61

Domestic Plan [Member]

Share-Based Compensation (Tables) [Line Items]

Schedule assumptions estimate the fair value of share options granted

	For the year ended
	August 31, 2019
Risk-free interest rate	2.4%
Expected volatility	47.0%
Suboptimal exercise factor	2.80
Fair value per ordinary share	RMB351.24

Schedule of summary of share options activities

				Weighted		Weighted
	Number of			average		average		Aggregate
	share			purchase		grant date		intrinsic
	options			price		fair value		value
				RMB		RMB		RMB
Outstanding as of September 1, 2017		120,000			93.33		151.19		7,023
Granted		-			-		-
Forfeited		-			-		-
Outstanding as of August 31, 2018		120,000			93.33		151.19		79,990
Granted		10,000			80.00		148.47
Forfeited		(60,000	)		93.33		151.19
Outstanding as of August 31, 2019		70,000			91.43		150.80		39,687
Granted		-			-		-
Forfeited		-			-		-
Exercised		(70,000	)		91.43		150.80
Outstanding as of August 31, 2020		-			-		-		-
Vested and expected to vest as of August 31, 2020		-			-		-		-

Shanghai Yimi [Member]

Share-Based Compensation (Tables) [Line Items]

Schedule assumptions estimate the fair value of restricted shares

	For the year ended
	August 31, 2020
Risk-free interest rate	1.51%
Expected volatility	50.15%
Suboptimal exercise factor	2.80
Fair value per ordinary share	RMB1.41

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Income Taxes (Tables)

12 Months Ended

Aug. 31, 2021

Income Tax Disclosure [Abstract]

Schedule of current and deferred portions of income tax expense included in the consolidated statements of income

15. Income Taxes

	For the years ended August 31,
	2019			2020			2021			2021
	RMB			RMB			RMB			US$
Income/(loss) before income tax expense and share of net (loss)/income from equity investees		316,069			(788,450	)		(4,983,919	)		(771,458	)
PRC statutory tax rate		25	%		25	%		25	%		25	%
Income tax/(benefit) at statutory tax rate		79,017			(197,112	)		(1,245,980	)		(192,865	)
Non-deductible expenses		30,961			3,028			1,148,509			177,777
International tax rate difference		6,000			39,619			23,335			3,612
Preferential tax rate		(8,357	)		(14,306	)		(1,579	)		(244	)
Effect of income tax exemptions		(1,232	)		(538	)		-			-
Equity pick-up		(2,698	)		-			-			-
Additional tax deduction for qualified research and development expenses		(5,525	)		(4,278	)		(4,176	)		(646	)
Change in valuation allowance		11,006			134,720			110,761			17,144
Expired loss		11,905			-			-			-
Interest and penalty		1,605			1,096			-			-
Outside basis difference		(1,583	)		-			-			-
Effect of changes in tax rates on deferred taxes		442			(14	)		-			-
Income tax expense/(benefit)		121,541			(37,785	)		30,870			4,778

Schedule of components of income tax expense

	For the years ended
	August 31,
	2019			2020			2021		2021
	RMB			RMB			RMB		US$
Current		138,552			36,458			30,870		4,778
Deferred		(17,011	)		(74,243	)		-		-
Income tax expense/(benefit)		121,541			(37,785	)		30,870		4,778

Schedule of components of deferred tax assets

	For the years ended August 31,
	2020			2021		2021
	RMB			RMB		US$
Non-current deferred tax assets:
Tax loss carry forward		297,887			-		-
Accrued expenses and other payables		113,981			-		-
Unrecognized financing expenses of long-term payable		2,192			-		-
Fair value changes on financial assets		38,265			-		-
Leasing liability		353,048			-
Impairment of other receivables and investments		52,944			-		-
Excessive advertising expense		36,230			-		-
Others		2,050			-		-
Less: valuation allowance		(325,604	)		-		-
Non-current deferred tax assets, net		570,993			-		-
Non-current deferred tax liabilities:					-		-
Intangible assets		(67,037	)		-		-
Unrealized gain on investments		(186	)		-		-
Capitalization of bonus		(15,873	)		-		-
Fair value changes on private equity investments		(3,081	)		-		-
Accelerated depreciation of fixed assets		(9,468	)		-		-
Right-of-use Asset		(353,048	)		-		-
Equity in gain of unconsolidated investees		(1,371	)		-		-
Others		(233	)		-		-
Non-current deferred tax liabilities, net		(450,297	)		-		-
Deferred tax assets, net		120,696			-		-

Schedule of unrecognized tax benefit

	For the years ended August 31,
	2020			2021		2021
	RMB			RMB		US$
Balance at September 1		25,183			-		-
Increase		5,542			-		-
Decrease		(4,854	)		-		-
Balance at August 31		25,871			-		-

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Related Party Transactions (Tables)

12 Months Ended

Aug. 31, 2021

Related Party Transactions (Tables) [Line Items]

Schedule of related parties

Names of the related parties	Relationship with the Group
Shanghai Ya Qiao Education Investment Co., Ltd. (“Ya Qiao Education”)	Equity investee
Shanghai Luo Bo Education Technology Co.,Ltd. (“Luo Bo”)	Equity investee
Fujian Hexi Equity Investment Partnership (Limited Partnership) (“He Xi”)	Equity investee
Beijing Tus-Juren Education Technology Co., Ltd. (“Tus-Juren”)	Former equity investee

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Ya Qiao Education		20,400		-		-
Luo Bo		491		-		-

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
He Xi		13,644		-		-
Luo Bo		803		1,205		187

	For the years ended August 31,
	2019		2020		2021		2021
	RMB		RMB		RMB		US$
Other revenues
Tus-Juren		6,772		-		-		-

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Other Non-Current Assets (Tables)

12 Months Ended

Aug. 31, 2021

Disclosure Text Block Supplement [Abstract]

Schedule of other non-current assets

	As of August 31,
	2020		2021		2021
	RMB		RMB		US$
Rental deposits		122,968		-		-
Prepayment for long-term investments		17,383		-		-
Due from third parties(a)		444,200		-		-
Deferred assets		54,341		-		-
Others		-		-		-
		638,892		-		-

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Loans (Tables)

12 Months Ended

Aug. 31, 2021

Debt Disclosure [Abstract]

Schedule of Company’s outstanding loans

		As of August 31,
		2020		2021		2021
		RMB		RMB		US$
Short-term loans	(a)		789,550		498,574		77,174
Long-term loans, current portion	(b)		295,433		513,432		79,474
Long-term loans	(b)		1,023,151		135,000		20,897

Schedule of maturities of the loan principals

	RMB		US$
2022		1,012,007		156,648
2023		135,000		20,897
2024		-		-
2025		-		-
2026		-		-
		1,147,007		177,545

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Earnings/(Loss) Per Share (Tables)

12 Months Ended

Aug. 31, 2021

Earnings Per Share [Abstract]

Schedule of computation of basic and diluted net income per share

	As of August 31,
	2019		2020			2021			2021
	RMB		RMB			RMB			US$
Numerator:
Net income/(loss) attribute to Meta Data Limited’s shareholders		245,368		(729,829	)		(4,987,567	)		(772,022	)
Accretion to redemption value of Preferred Shares		-		-			-			-
Deemed dividend-repurchase of Preferred Shares		-		-			-			-
Net income/(loss) attributable to ordinary shareholders for computing net income per ordinary share - basic and diluted		245,368		(729,829	)		(4,987,567	)		(772,022	)
Denominator:
Weighted average number of shares used in calculating net income/(loss) per ordinary share - basic (in millions of shares)		6,460		6,451			6,612			6,612
Incremental weighted-average ordinary shares from assumed exercise of share options and vesting of restricted shares using the treasury stock method (in millions of shares)		249		-			-			-
Weighted average number of shares used in calculating net income/(loss) per ordinary share - diluted (in millions of shares)		6,709		6,451			6,612			6,612
Earnings/(loss) per share - basic		0.0380		(0.1131	)		(0.7543	)		(0.1168	)
Earnings/(loss) per share - diluted		0.0366		(0.1131	)		(0.7543	)		(0.1168	)

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Accumulated Other Comprehensive Income (Tables)

12 Months Ended

Aug. 31, 2021

Stockholders' Equity Note [Abstract]

Schedule of components of accumulated other comprehensive income

22. Accumulated Other Comprehensive Income

				Foreign
	Unrealized			currency
	gains/(loss) on			translation
	investment			adjustment			Total
	RMB						RMB
Balance as of September 1, 2017		19,123			-			19,123
Other comprehensive income before reclassification, net of tax		37,157			-			37,157
Amounts reclassified from accumulated other comprehensive income, net of tax		(13,838	)		-			(13,838	)
Foreign currency translation adjustment		-			86,458			86,458
Balance as of August 31, 2018		42,442			86,458			128,900
Other comprehensive income before reclassification, net of tax		(35,150	)		-			(35,150	)
Amounts reclassified from accumulated other comprehensive income, net of tax		(11	)		-			(11	)
Foreign currency translation adjustment		-			(6,591	)		(6,591	)
Balance as of August 31, 2019		7,281			79,867			87,148
Other comprehensive income before reclassification, net of tax		(8,885	)		-			(8,885	)
Amounts reclassified from accumulated other comprehensive income, net of tax		10,561			-			10,561
Foreign currency translation adjustment		-			10,343			10,343
Balance as of August 31, 2020		8,957			90,210			99,167
Other comprehensive income before reclassification, net of tax		(15,905	)		-			(15,905	)
Amounts reclassified from accumulated other comprehensive income, net of tax		4,210			5,221			9,431
Balance as of August 31, 2021		(2,738	)		95,431			92,693
Balance as of August 31, 2021, in US$		(424	)		14,770			14,346

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Leases (Tables)

12 Months Ended

Aug. 31, 2021

Disclosure Text Block [Abstract]

Schedule of operating lease costs

	For the year ended August 31, 2021
	RMB		US$
Operating Lease Costs:
Fixed		645,180		99,867
Short-term		8,365		1,295
Total		653,545		101,162

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Fair Value Measurement (Tables)

12 Months Ended

Aug. 31, 2021

Fair Value Disclosures [Abstract]

Schedule of assets and liabilities measured or disclosed at fair value

			Fair value measurement or disclosure
			at August 31, 2020 using
	Total fair value at August 31, 2020		Quoted prices in active market for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	RMB		RMB		RMB		RMB
Fair value measurement
Short-term investments:
Available-for-sale		243,743		-		-		243,743
Long-term investments:
Available-for-sale		614,141		-		-		614,141
Total assets measured at fair value		857,884		-		-		857,884
Total assets measured at fair value in US$		125,286		-		-		125,286
Fair value measurement
Contingent consideration		47,084		-		-		47,084
Total liability measured at fair value		47,084		-		-		47,084
Total liability measured at fair value in US$		7,288		-		-		7,288

			Fair value measurement or disclosure
			at August 31, 2021 using
	Total fair value at August 31, 2021		Quoted prices in active market for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	RMB		RMB		RMB		RMB
Fair value measurement
Short-term investments:
Available-for-sale		68,575		-		-		68,575
Long-term investments:
Available-for-sale		-		-		-		-
Total assets measured at fair value		68,575		-		-		68,575
Total assets measured at fair value in US$		10,615		-		-		10,615
Fair value measurement
Contingent consideration		-		-		-		-
Total liability measured at fair value		-		-		-		-
Total liability measured at fair value in US$		-		-		-		-

Schedule of reconciliations of assets fair value hierarchy for Available-for-sale investments

	RMB
Balance as of August 31, 2018		485,307
Additions		1,040,581
Disposals		(262,651	)
Changes in fair value		(43,454	)
Accrued interest		52,395
Balance as of August 31, 2019		1,272,178
Additions		358,256
Disposals		(547,131	)
Changes in fair value		(12,422	)
Accrued interest		23,628
Impairment loss		(236,625	)
Balance as of August 31, 2020		857,884
Additions		64,604
Disposals		(247,617	)
Changes in fair value		3,874
Accrued interest		3,971
Impairment loss		(614,141	)
Balance as of August 31, 2021		68,575
Balance as of August 31, 2021, in US$		10,615

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Subsequent Event (Tables)

12 Months Ended

Aug. 31, 2021

Subsequent Events [Abstract]

Schedule of total number of the lawsuits by category, amount involved and scope of each category

	Numbers		Total amount involved		Amount involved scope per case
				RMB	RMB
Amounts in thousands of Renminbi (“RMB”) except for number of cases
Lease		5		2,167	From 371 to 797
Advertisement		1		3,968	3,968
Technology Service		2		503	From 237 to 266
Education Service		310		13,653	From 1 to 386
Purchase		4		2,424	From 49 to 1,298
Property Preservation		2		2,440	From 62 to 2,377
Decoration		3		4,020	From 680 to 2,540
Other		85		933	From 40 to 80
Total		412		30,108

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Condensed Financial Information of the Company (Tables)

12 Months Ended

Aug. 31, 2021

Condensed Financial Information Disclosure [Abstract]

Schedule of condensed balance sheets

	As of August 31,
	2020			2021			2021
	RMB			RMB			US$
ASSETS
Current assets:
Cash and cash equivalents		162,391			27,150			4,203
Restricted cash		122,969			12,046			1,865
Short-term investments		287,585			68,575			10,615
Amounts due from subsidiaries					2,081,389			322,176
Total current assets		572,945			2,189,160			338,859
Non-current assets:
Long-term investment		872,756			-			-
Investments in subsidiaries, VIEs and VIEs’ subsidiaries		1,176,422			-			-
Total non-current assets		2,049,178			-			-
TOTAL ASSETS		2,622,123			2,189,160			338,859
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accrued expenses and other current liabilities		-			13,019			2,015
Long-term loan, current portion		-			400,932			62,060
Total current liabilities		-			413,951			64,075
Non-current liabilities:
Loss in excess of Investments in subsidiaries, VIEs and VIEs’ subsidiaries		-			5,934,617			918,614
Convertible Loan		-			226,114			35,000
Amounts due to subsidiaries		2,221,486			246,127			38,098
Total non-current liabilities		2,221,486			6,406,858			991,712
TOTAL LIABILITIES		2,221,486			6,820,809			1,055,787
Shareholder’ equity:
Class A ordinary shares (US$0.000001 par value; 37,703,157,984 shares authorized; 4,130,261,827 issued and outstanding as of August 31, 2019 and 4,146,103,947 issued and outstanding as of August 31, 2020, respectively)		26			26			4
Class B ordinary shares (US$0.000001 par value; 2,296,842,016 issued and outstanding as of August 31, 2019 and August 31, 2020, respectively)		16			16			2
Additional paid-in capital		5,598,978			5,337,962			826,259
Treasury stock		(274,648	)		(344	)		(53	)
Statutory reserves		12,270			16,427			2,543
Accumulated deficit		(5,035,172	)		(10,078,429	)		(1,560,033	)
Accumulated other comprehensive income		99,167			92,693			14,350
Total shareholders’ equity		400,637			(4,631,649	)		(716,928	)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		2,622,123			2,189,160			338,859

Schedule of condensed statements of income/(loss) ​

	For the years ended August 31,
	2019			2020			2021			2021
	RMB			RMB			RMB			US$
Operating expenses:
Selling and marketing		(906	)		(674	)		(110	)		(17	)
General and administrative		(70,258	)		(140,821	)		(62,492	)		(9,673	)
Interest income		3,905			2,083			5,678			879
Interest expense		(27,960	)		(58,857	)		(51,335	)		(7,946	)
Foreign exchange gain/(loss)		(1,526	)		4,336			(1,655	)		(256	)
Share of income/(loss) in subsidiaries, VIEs and VIEs’ subsidiaries		342,113			(535,896	)		(4,877,653	)		(755,009	)
Income/(loss) before income tax provision		245,368			(729,829	)		(4,987,567	)		(772,022	)
Provision for income tax		-			-			-			-
Net income/(loss)		245,368			(729,829	)		(4,987,567	)		(772,022	)
Accretion to redemption value of redeemable convertible preferred shares		-			-			-			-
Deemed dividend-repurchase of redeemable convertible preferred shares		-			-			-			-
Net income/(loss) attributable to ordinary shareholders of Meta Data Limited		245,368			(729,829	)		(4,987,567	)		(772,022	)

Schedule of condensed statements of comprehensive income/(loss)

	For the years ended August 31,
	2019			2020			2021			2021
	RMB			RMB			RMB			US$
Net income/(loss)		245,368			(729,829	)		(4,987,567	)		(772,022	)
Unrealized gain on available-for-sale investments, net of tax		(35,161	)		1,676			4,009			621
Foreign currency translation adjustment		(6,591	)		10,343			5,221			808
Comprehensive income/(loss)		203,616			(717,810	)		(4,978,337	)		(770,593	)

Schedule of condensed statements of cash flows

	For the years ended August 31,
	2019			2020			2021			2021
	RMB			RMB			RMB			US$
Net cash used in by operating activities		(8,668	)		(319,227	)		-			-
Net cash used in investing activities		(1,042,665	)		(117,034	)		-			-
Net cash provided by financing activities		732,306			176,546			(230,316	)		(35,650	)
Effect of exchange rate changes		33,033			(23,063	)		(15,848	)		(2,453	)
Net increase/(decrease) in cash and cash equivalents and restricted cash		(285,994	)		(282,778	)		(246,164	)		(38,103	)
Cash and cash equivalents and restricted cash, at beginning of year		854,132			568,138			285,360			44,171
Cash and cash equivalents and restricted cash, at end of year		568,138			285,360			39,196			6,068

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Organization and Principal Activities (Details) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands			1 Months Ended				12 Months Ended
	Mar. 28, 2018 CNY (¥) shares	Mar. 28, 2018 USD ($) $ / shares shares	Dec. 31, 2017 CNY (¥) shares	Dec. 31, 2017 USD ($) shares	Sep. 30, 2017 CNY (¥) shares	Sep. 30, 2017 USD ($) shares	Aug. 31, 2021 CNY (¥) shares	Aug. 31, 2021 USD ($) shares	Aug. 31, 2020 CNY (¥) ¥ / shares	Aug. 31, 2019 CNY (¥)	Aug. 31, 2018 CNY (¥)	Aug. 31, 2018 USD ($)	Dec. 31, 2017 shares	Aug. 31, 2021 USD ($)	Sep. 30, 2017 USD ($)
Organization and Principal Activities (Details) [Line Items]
Aggregate repurchased							76,586,600	76,586,600
Cash consideration (in Dollars)									¥ 70,889	¥ 203,760
Cash consideration shareholders					3	3
Other expenses	¥ 1,048,660	$ 162,321
Voting rights									1
Shareholders of the VIEs [Member]
Organization and Principal Activities (Details) [Line Items]
Company paid to shareholders											¥ 2,242,914	$ 347,179
Variable Interest Entity, Primary Beneficiary [Member]
Organization and Principal Activities (Details) [Line Items]
Statutory reserves							¥ 10,000							$ 1,548
Variable Interest Entity, Primary Beneficiary [Member] | Revenue from Contract with Customer, Product and Service Benchmark [Member]
Organization and Principal Activities (Details) [Line Items]
Consolidated revenues							100.00%	100.00%	100.00%	99.00%
Variable Interest Entity, Primary Beneficiary [Member] | Assets, Total [Member]
Organization and Principal Activities (Details) [Line Items]
Consolidated revenues							91.00%	91.00%		63.00%
Variable Interest Entity, Primary Beneficiary [Member] | Liabilities, Total [Member]
Organization and Principal Activities (Details) [Line Items]
Consolidated revenues									81.00%	87.00%
IPO [Member]
Organization and Principal Activities (Details) [Line Items]
Other expenses	1,048,660	162,321
IPO cost	¥ 26,752	$ 4,141
Class B Ordinary Shares [Member] | Happy Edu Inc [Member]
Organization and Principal Activities (Details) [Line Items]
Ordinary shares issued													2,439,484,566
Class A Ordinary Shares [Member]
Organization and Principal Activities (Details) [Line Items]
Aggregate repurchased					94,897,359	94,897,359
Cash consideration (in Dollars) | $						$ 13,028
Class A Ordinary Shares [Member] | Shareholders of the VIEs [Member]
Organization and Principal Activities (Details) [Line Items]
Ordinary shares issued													94,897,359
Class A Ordinary Shares [Member] | IPO [Member]
Organization and Principal Activities (Details) [Line Items]
Ordinary shares issued	652,000,000	652,000,000
Series A redeemable convertible preferred share [Member]
Organization and Principal Activities (Details) [Line Items]
Aggregate repurchased					341,256,445	341,256,445
Cash consideration (in Dollars) | $						$ 46,850
Series A redeemable convertible preferred share [Member] | Shareholders of the VIEs [Member]
Organization and Principal Activities (Details) [Line Items]
Ordinary shares issued													1,890,686,563
Series A-1 redeemable convertible preferred share [Member]
Organization and Principal Activities (Details) [Line Items]
Ordinary shares issued					1,840,535,677	1,840,535,677
Gross cash consideration					¥ 1,840,536	$ 284,895
Fair value less issuance costs					¥ 241										$ 37
Series A-1 redeemable convertible preferred share [Member] | Shareholders of the VIEs [Member]
Organization and Principal Activities (Details) [Line Items]
Ordinary shares issued													35,757,200
American Depositary Shares [Member] | IPO [Member]
Organization and Principal Activities (Details) [Line Items]
Ordinary shares issued	16,300,000	16,300,000
Ordinary per share | $ / shares		$ 11
IPO cost	¥ 26,752	$ 4,141
Xi Zhang Founder [Member]
Organization and Principal Activities (Details) [Line Items]
Cash consideration | $				$ 25,234
Xi Zhang Founder [Member] | Class B Ordinary Shares [Member]
Organization and Principal Activities (Details) [Line Items]
Founder shares			142,642,550	142,642,550
Cash consideration | ¥			¥ 163,023
Loan Agreements [Member]
Organization and Principal Activities (Details) [Line Items]
Terms loans									10 years
Exclusive Purchase Right Agreements [Member] | Minimum [Member]
Organization and Principal Activities (Details) [Line Items]
Ordinary per share | ¥ / shares									¥ 1

XML

Organization and Principal Activities (Details) - Schedule of VIEs and the major subsidiaries of the VIEs	12 Months Ended
	Aug. 31, 2021
OneSmart BVI [Member]
Subsidiaries:
Date of incorporation acquisition	Jun. 16, 2016
Place of incorporation	BVI
Percentage of direct or indirect ownership by the Company	100.00%
Principal activities	Holding company
OneSmart Edu (HK) Limited (“OneSmart HK”) [Member]
Subsidiaries:
Date of incorporation acquisition	Jul. 11, 2017
Place of incorporation	Hong Kong
Percentage of direct or indirect ownership by the Company	100.00%
Principal activities	Holding company
OneSmart Great Edu (HK) Limited (“Great EDU”) [Member]
Subsidiaries:
Date of incorporation acquisition	Sep. 11, 2018
Place of incorporation	Hong Kong
Percentage of direct or indirect ownership by the Company	100.00%
Principal activities	Holding company
OneSmart Online Edu Inc. (“OneSmart Online”) [Member]
Subsidiaries:
Date of incorporation acquisition	Dec. 04, 2019
Place of incorporation	Cayman
Percentage of direct or indirect ownership by the Company	90.00%
Principal activities	Holding company
Yimi Education Technology Inc. (“Yimi Cayman”) [Member]
Subsidiaries:
Date of incorporation acquisition	Feb. 01, 2020
Place of incorporation	Cayman
Percentage of direct or indirect ownership by the Company	90.00%
Principal activities	Holding company
Yimi Education Technology (HK) Limited (“Yimi HK”) [Member]
Subsidiaries:
Date of incorporation acquisition	Feb. 01, 2020
Place of incorporation	Hong Kong
Percentage of direct or indirect ownership by the Company	90.00%
Principal activities	Holding company
Shanghai Jing Xue Rui Information and Technology Co., Ltd. (“Shanghai Jing Xue Rui” or “WFOE”) [Member]
Subsidiaries:
Date of incorporation acquisition	Sep. 28, 2011
Place of incorporation	PRC
Percentage of direct or indirect ownership by the Company	100.00%
Principal activities	Educational technology research and development
Yimi Education Technology (Shanghai) Co., Ltd (“Yimi Shanghai” or “WFOE”) [Member]
Subsidiaries:
Date of incorporation acquisition	Feb. 01, 2020
Place of incorporation	PRC
Percentage of direct or indirect ownership by the Company	90.00%
Principal activities	Educational technology research and development
Shanghai OneSmart Education and Training Co., Ltd. (“Shanghai OneSmart”) [Member]
Subsidiaries:
Date of incorporation acquisition	Sep. 11, 2007
Place of incorporation	PRC
Percentage of direct or indirect ownership by the Company	100.00%
Principal activities	K12 post-class education program services
Shanghai Rui Si Technology Information Consulting Co., Ltd. (“Shanghai Rui Si”) [Member]
Subsidiaries:
Date of incorporation acquisition	Jun. 08, 2009
Place of incorporation	PRC
Percentage of direct or indirect ownership by the Company	100.00%
Principal activities	Early childhood education services
Xiangyuan (Shanghai) Education Technology Co., Ltd. (“Shanghai Xiangyuan”) [Member]
Subsidiaries:
Date of incorporation acquisition	Dec. 06, 2019
Place of incorporation	PRC
Percentage of direct or indirect ownership by the Company	100.00%
Principal activities	K12 post-class online education program services
Beijing Jingrui Peiyou Education Consulting Co., Ltd. (“Beijing Jingrui Peiyou”) [Member]
Subsidiaries:
Date of incorporation acquisition	Jul. 05, 2010
Place of incorporation	PRC
Percentage of direct or indirect ownership by the Company	100.00%
Principal activities	K12 post-class education program services
Nanjing Jingrui Education Information Consulting Co., Ltd. (“Nanjing Jingrui”) [Member]
Subsidiaries:
Date of incorporation acquisition	Mar. 31, 2011
Place of incorporation	PRC
Percentage of direct or indirect ownership by the Company	100.00%
Principal activities	K12 post-class education program services
Hangzhou OneSmart Education Information Consulting Co., Ltd. (“Hangzhou OneSmart”) [Member]
Subsidiaries:
Date of incorporation acquisition	Apr. 02, 2011
Place of incorporation	PRC
Percentage of direct or indirect ownership by the Company	100.00%
Principal activities	K12 post-class education program services
Guangzhou Jingxuerui Education Information Consulting Co., Ltd. (“Guangzhou OneSmart”) [Member]
Subsidiaries:
Date of incorporation acquisition	Jun. 27, 2012
Place of incorporation	PRC
Percentage of direct or indirect ownership by the Company	100.00%
Principal activities	K12 post-class education program services
Shenzhen Jingrui Education Training Centers (“Shenzhen Jingrui”) [Member]
Subsidiaries:
Date of incorporation acquisition	Sep. 07, 2012
Place of incorporation	PRC
Percentage of direct or indirect ownership by the Company	100.00%
Principal activities	K12 post-class education program services
Changzhou Jingrui Education Information Consulting Co., Ltd. (“Changzhou Jingrui”) [Member]
Subsidiaries:
Date of incorporation acquisition	May 27, 2014
Place of incorporation	PRC
Percentage of direct or indirect ownership by the Company	100.00%
Principal activities	K12 post-class education program services
Shanghai Jing Yu Investment Co., Ltd. (“Shanghai Jing Yu”) [Member]
Subsidiaries:
Date of incorporation acquisition	Oct. 23, 2015
Place of incorporation	PRC
Percentage of direct or indirect ownership by the Company	100.00%
Principal activities	Investment holding
Wuxi Jingzhirui Education Training Centers (“Wuxi Jingzhirui”) [Member]
Subsidiaries:
Date of incorporation acquisition	Nov. 09, 2018
Place of incorporation	PRC
Percentage of direct or indirect ownership by the Company	100.00%
Principal activities	K12 post-class education program services
Shanghai Jingsirui Education Training Centers (“Shanghai Jingsirui”) [Member]
Subsidiaries:
Date of incorporation acquisition	Dec. 07, 2015
Place of incorporation	PRC
Percentage of direct or indirect ownership by the Company	100.00%
Principal activities	K12 post-class education program services
Shanghai FasTrack English Education Training Co., Ltd. (“FasTrack English”) [Member]
Subsidiaries:
Date of incorporation acquisition	Jan. 01, 2018
Place of incorporation	PRC
Percentage of direct or indirect ownership by the Company	75.61%
Principal activities	Early childhood education services
Shanghai OneSmart Education Investment Co., Ltd. (“Shanghai OneSmart Education Investment”) [Member]
Subsidiaries:
Date of incorporation acquisition	Nov. 25, 2014
Place of incorporation	PRC
Percentage of direct or indirect ownership by the Company	100.00%
Principal activities	Investment holding

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Summary of Significant Accounting Policies (Details) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands		12 Months Ended
		Aug. 31, 2021 CNY (¥) ¥ / shares	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2020 USD ($)	Aug. 31, 2019 CNY (¥)	Aug. 31, 2019 USD ($)	Aug. 31, 2021 USD ($) $ / shares	Aug. 31, 2020 USD ($)
Summary of Significant Accounting Policies (Details) [Line Items]
Net cash decreased		¥ 960,642	$ 148,697	¥ 41,127		¥ 24,335
Cash balance		29,626		1,158,044				$ 4,586
Restricted cash	[1]	¥ 355,017		¥ 187,241				$ 54,953
Proceeds from issuance of offering (in Dollars) | $			$ 28,500
After tax net income percentage		10.00%	10.00%
Value-added sales tax percentage		6.00%	6.00%
Other taxes percentage		12.00%	12.00%
Value-added taxes percentage		6.00%	6.00%
Convenience translation per share | (per share)		¥ 6.4604						$ 1
Impairment loss		¥ 849,246	$ 131,454		$ 0		$ 0
Number of reporting units		5	5	5	5	5	5
Impairment loss for goodwill		¥ 1,076,560	$ 166,640
Impairment loss for intangible assets		197,328	30,544
Impairment loss		3,821,885	591,586	¥ 161,605		¥ 10,000
Contract assets
Contract with customer from prepayment				2,787,686		2,547,493			$ 431,504
Refund liability		364,447		333,045				$ 56,412
Government grants			13,344	24,238		31,937
Operating lease right of use assets				1,481,196					229,273
Operating lease liability current				483,056					74,772
Operating lease liability non-current				929,135
Operating lease right of use assets prepaid rent		81,354
Total lease liabilities				1,412,191					$ 218,592
Loss recognized on operating lease liability		45,368	7,022
Employee benefit expenses		¥ 228,255	$ 35,331	305,649		336,067
Number of reportable segments		1	1
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-02 [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Operating lease right of use assets		¥ 1,632,236
Operating lease liability current		1,550,882
Operating lease liability non-current		1,550,882
Selling and Marketing Expense [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Advertising expenditure		463,324	$ 71,718	378,198		383,306
Other Nonoperating Income [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Government grants		86,206
Long Term Investments [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Impairment loss		¥ 1,652,308	$ 255,759	¥ 161,600		¥ 10,000

[1] This related to cash deposits in the bank accounts that are frozen by court order as the Company was subject to multiple legal proceedings, administrative proceedings, claims and other litigation as a result of overdue payments to service providers and loans payable to the lenders.

XML

Summary of Significant Accounting Policies (Details) - Schedule of consolidated balance sheets - CNY (¥) ¥ in Thousands	Aug. 31, 2021	Aug. 31, 2020
Other Entities that are Consolidated [Member]
Condensed Financial Statements, Captions [Line Items]
Intercompany receivables	¥ 3,670,240	¥ 100,400
Current assets excluding intercompany receivables	6,239	13,751
Current assets	3,676,479	114,151
Investment in subsidiaries		2,046,413
Non-current assets excluding investment in subsidiaries	191	1,052,138
Non-current assets	191	1,052,138
Total assets	6,430	1,065,889
Intercompany payables	5,301,895	1,819,347
Current liabilities excluding intercompany payables	3,613	175,896
Current liabilities	5,305,508	1,995,243
Non-current liabilities	22,643
Total liabilities	26,256	175,896
Total shareholders’ equity (net assets)	(19,826)	889,993
WFOE that is the Primary Beneficiary of the VIE [Member]
Condensed Financial Statements, Captions [Line Items]
Intercompany receivables	3,608,176
Current assets excluding intercompany receivables	59,187	31,297
Current assets	3,667,363	31,297
Investment in subsidiaries		289
Non-current assets excluding investment in subsidiaries	15,038	23,771
Non-current assets	15,038	23,771
Total assets	74,225	55,068
Intercompany payables	3,208,560	1,634,862
Current liabilities excluding intercompany payables	4,370
Current liabilities	3,212,930	1,634,862
Non-current liabilities
Total liabilities	4,370
Total shareholders’ equity (net assets)	69,855	55,068
VIE and its Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Intercompany receivables	6,275,233	11,107,310
Current assets excluding intercompany receivables	293,021	1,559,409
Current assets	6,568,254	12,666,719
Investment in subsidiaries		992,652
Non-current assets excluding investment in subsidiaries	21,726	4,644,477
Non-current assets	21,726	4,644,477
Total assets	314,747	6,203,886
Intercompany payables	6,878,456	9,990,619
Current liabilities excluding intercompany payables	4,295,643	4,668,607
Current liabilities	11,174,099	14,659,226
Non-current liabilities	158,084	1,344,630
Total liabilities	4,453,727	6,013,237
Total shareholders’ equity (net assets)	(4,138,980)	190,649
Onesmart [Member]
Condensed Financial Statements, Captions [Line Items]
Intercompany receivables	2,081,389	2,287,588
Current assets excluding intercompany receivables	107,771	572,945
Current assets	2,189,160	2,860,533
Investment in subsidiaries		872,756
Non-current assets excluding investment in subsidiaries		603
Non-current assets		603
Total assets	107,771	573,548
Intercompany payables	246,127	50,470
Current liabilities excluding intercompany payables	413,951	272,251
Current liabilities	660,078	322,721
Non-current liabilities	226,114	995,034
Total liabilities	640,065	1,267,285
Total shareholders’ equity (net assets)	(532,294)	(693,737)
Consolidated Total [Member]
Condensed Financial Statements, Captions [Line Items]
Intercompany receivables
Current assets excluding intercompany receivables	466,218	2,177,402
Current assets	466,218	2,177,402
Investment in subsidiaries
Non-current assets excluding investment in subsidiaries	36,955	5,720,989
Non-current assets	36,955	5,720,989
Total assets	503,173	7,898,391
Intercompany payables
Current liabilities excluding intercompany payables	4,717,577	5,116,754
Current liabilities	4,717,577	5,116,754
Non-current liabilities	406,841	2,339,664
Total liabilities	5,124,418	7,456,418
Total shareholders’ equity (net assets)	¥ (4,621,245)	¥ 441,973

XML

Summary of Significant Accounting Policies (Details) - Schedule of consolidated statements of operations and comprehensive income (loss) - CNY (¥) ¥ in Thousands	12 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
Other Entities that are Consolidated [Member]
Summary of Significant Accounting Policies (Details) - Schedule of consolidated statements of operations and comprehensive income (loss) [Line Items]
Net revenues	¥ 1,125	¥ 1,955
Cost of revenues		(2,862)
Gross profit	1,125	(907)
Operating expenses	(3,323)	(4,028)
Income (loss) from operations	(2,198)	(4,935)
Other expenses	(244)	(1)
Income (loss) before income taxes	(2,442)	(4,937)
Provision for income taxes
Net income (loss)	(2,442)	(4,937)
WFOE that is the Primary Beneficiary of the VIE [Member]
Summary of Significant Accounting Policies (Details) - Schedule of consolidated statements of operations and comprehensive income (loss) [Line Items]
Net revenues	1,016
Cost of revenues
Gross profit	1,016
Operating expenses	(134,500)	(6,978)
Income (loss) from operations	(133,484)	(6,978)
Other expenses	(30,494)	(1,078)
Income (loss) before income taxes	(163,978)	(8,055)
Provision for income taxes	(1,405)
Net income (loss)	(165,383)	(8,055)
VIE and its Subsidiaries [Member]
Summary of Significant Accounting Policies (Details) - Schedule of consolidated statements of operations and comprehensive income (loss) [Line Items]
Net revenues	3,421,269	3,436,926
Cost of revenues	(2,093,743)	(2,166,877)
Gross profit	1,327,526	1,270,049
Operating expenses	(5,991,693)	(1,619,319)
Income (loss) from operations	(4,664,167)	(349,270)
Other expenses	(63,503)	(372,255)
Income (loss) before income taxes	(4,727,670)	(721,525)
Provision for income taxes	(29,465)	37,785
Net income (loss)	(4,757,135)	(683,740)
Onesmart [Member]
Summary of Significant Accounting Policies (Details) - Schedule of consolidated statements of operations and comprehensive income (loss) [Line Items]
Net revenues
Cost of revenues
Gross profit
Operating expenses	(62,602)	(1,495)
Income (loss) from operations	(62,602)	(1,495)
Other expenses	(27,227)	(52,439)
Income (loss) before income taxes	(89,829)	(53,933)
Provision for income taxes
Net income (loss)	(89,829)	(53,933)
Consolidated Total [Member]
Summary of Significant Accounting Policies (Details) - Schedule of consolidated statements of operations and comprehensive income (loss) [Line Items]
Net revenues	3,423,410	3,438,881
Cost of revenues	(2,093,743)	(2,169,739)
Gross profit	1,329,667	1,269,142
Operating expenses	(6,192,118)	(1,631,819)
Income (loss) from operations	(4,862,451)	(362,677)
Other expenses	(121,468)	(425,773)
Income (loss) before income taxes	(4,983,919)	(788,450)
Provision for income taxes	(30,870)	37,785
Net income (loss)	¥ (5,014,789)	¥ (750,665)

XML

Summary of Significant Accounting Policies (Details) - Schedule of consolidated statements of cash flows - CNY (¥) ¥ in Thousands	12 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
Other Entities that are Consolidated [Member]
Summary of Significant Accounting Policies (Details) - Schedule of consolidated statements of cash flows [Line Items]
Net cash provided by (used in) operating activities	¥ (1,167)	¥ 23,974
Net cash used in investing activities		(33,581)
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and restricted cash
Net increase (decrease) in cash and restricted cash	(1,167)	(9,607)
Cash and restricted cash from continuing operations, beginning of year	11,677	21,284
Cash and restricted cash from continuing operations, end of year	10,510	11,677
WFOE that is the Primary Beneficiary of the VIE [Member]
Summary of Significant Accounting Policies (Details) - Schedule of consolidated statements of cash flows [Line Items]
Net cash provided by (used in) operating activities	29,266	(71,511)
Net cash used in investing activities	15	45,593
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and restricted cash
Net increase (decrease) in cash and restricted cash	29,281	(25,918)
Cash and restricted cash from continuing operations, beginning of year	28,645	54,564
Cash and restricted cash from continuing operations, end of year	57,926	28,645
VIE and its Subsidiaries [Member]
Summary of Significant Accounting Policies (Details) - Schedule of consolidated statements of cash flows [Line Items]
Net cash provided by (used in) operating activities	110,244	607,495
Net cash used in investing activities	(147,962)	(801,909)
Net cash provided by (used in) financing activities	(704,874)	472,213
Effect of exchange rate changes on cash and restricted cash
Net increase (decrease) in cash and restricted cash	(742,592)	277,799
Cash and restricted cash from continuing operations, beginning of year	1,019,603	741,803
Cash and restricted cash from continuing operations, end of year	277,011	1,019,603
Onesmart [Member]
Summary of Significant Accounting Policies (Details) - Schedule of consolidated statements of cash flows [Line Items]
Net cash provided by (used in) operating activities		(319,266)
Net cash used in investing activities		(117,034)
Net cash provided by (used in) financing activities	(230,316)	176,546
Effect of exchange rate changes on cash and restricted cash	(15,848)	(23,647)
Net increase (decrease) in cash and restricted cash	(246,164)	(283,401)
Cash and restricted cash from continuing operations, beginning of year	285,360	568,761
Cash and restricted cash from continuing operations, end of year	39,196	285,360
Consolidated Total [Member]
Summary of Significant Accounting Policies (Details) - Schedule of consolidated statements of cash flows [Line Items]
Net cash provided by (used in) operating activities	138,343	240,692
Net cash used in investing activities	(147,947)	(906,931)
Net cash provided by (used in) financing activities	(935,190)	648,759
Effect of exchange rate changes on cash and restricted cash	(15,848)	(23,647)
Net increase (decrease) in cash and restricted cash	(960,642)	(41,127)
Cash and restricted cash from continuing operations, beginning of year	1,345,285	1,386,412
Cash and restricted cash from continuing operations, end of year	¥ 384,643	¥ 1,345,285

XML

Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the property and equipment	12 Months Ended
	Aug. 31, 2021
Furniture [Member] | Minimum [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the property and equipment [Line Items]
Estimated useful lives of the property, plant & equipment	3 years
Furniture [Member] | Maximum [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the property and equipment [Line Items]
Estimated useful lives of the property, plant & equipment	5 years
Electronic equipment [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the property and equipment [Line Items]
Estimated useful lives of the property, plant & equipment	3 years
Vehicles [Member] | Minimum [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the property and equipment [Line Items]
Estimated useful lives of the property, plant & equipment	4 years
Vehicles [Member] | Maximum [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the property and equipment [Line Items]
Estimated useful lives of the property, plant & equipment	5 years
Buildings [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the property and equipment [Line Items]
Estimated useful lives of the property, plant & equipment	20 years
Leasehold improvement [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the property and equipment [Line Items]
Estimated useful lives of the property , plant & equipment	Over the shorter of the lease term or the estimated useful lives

XML

Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the intangible assets	12 Months Ended
	Aug. 31, 2021
Student base [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the intangible assets [Line Items]
Estimated useful lives of intangible assets	5 years
Customer relationship [Member] | Minimum [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the intangible assets [Line Items]
Estimated useful lives of intangible assets	1 year
Customer relationship [Member] | Maximum [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the intangible assets [Line Items]
Estimated useful lives of intangible assets	9 years
Trademark [Member] | Minimum [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the intangible assets [Line Items]
Estimated useful lives of intangible assets	10 years
Trademark [Member] | Maximum [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the intangible assets [Line Items]
Estimated useful lives of intangible assets	20 years
License [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the intangible assets [Line Items]
Estimated useful lives of intangible assets	30 years
Franchise agreements [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the intangible assets [Line Items]
Estimated useful lives of intangible assets	6 years
Technology and system [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the intangible assets [Line Items]
Estimated useful lives of intangible assets	5 years

XML

Summary of Significant Accounting Policies (Details) - Schedule of disaggregation of revenues ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)
Disaggregation of Revenue [Line Items]
Net revenues	¥ 3,423,410	$ 529,907	¥ 3,438,881	¥ 3,993,873
OneSmart VIP [Member]
Disaggregation of Revenue [Line Items]
Net revenues	2,780,106		2,625,179
HappyMath [Member]
Disaggregation of Revenue [Line Items]
Net revenues	363,143		422,944
FasTrack [Member]
Disaggregation of Revenue [Line Items]
Net revenues	183,344		176,470
Other [Member]
Disaggregation of Revenue [Line Items]
Net revenues	96,817		110,440
OneSmart Online [Member]
Disaggregation of Revenue [Line Items]
Net revenues			103,848
Personalized and small class premium tutoring services [Member]
Disaggregation of Revenue [Line Items]
Net revenues	3,410,806		3,423,996
Personalized and small class premium tutoring services [Member] | OneSmart VIP [Member]
Disaggregation of Revenue [Line Items]
Net revenues	2,767,502		2,616,057
Personalized and small class premium tutoring services [Member] | HappyMath [Member]
Disaggregation of Revenue [Line Items]
Net revenues	363,143		422,944
Personalized and small class premium tutoring services [Member] | FasTrack [Member]
Disaggregation of Revenue [Line Items]
Net revenues	183,344		170,707
Personalized and small class premium tutoring services [Member] | Other [Member]
Disaggregation of Revenue [Line Items]
Net revenues	96,817		110,440
Personalized and small class premium tutoring services [Member] | OneSmart Online [Member]
Disaggregation of Revenue [Line Items]
Net revenues			103,848
Others [Member]
Disaggregation of Revenue [Line Items]
Net revenues	12,604		14,885
Others [Member] | OneSmart VIP [Member]
Disaggregation of Revenue [Line Items]
Net revenues	12,604		9,122
Others [Member] | HappyMath [Member]
Disaggregation of Revenue [Line Items]
Net revenues
Others [Member] | FasTrack [Member]
Disaggregation of Revenue [Line Items]
Net revenues			5,763
Others [Member] | Other [Member]
Disaggregation of Revenue [Line Items]
Net revenues
Others [Member] | OneSmart Online [Member]
Disaggregation of Revenue [Line Items]
Net revenues

XML

Concentration of Risks (Details)	12 Months Ended
	Aug. 31, 2021	Aug. 31, 2020	Aug. 31, 2019
Concentration of Risks (Details) [Line Items]
Percentage of revenues	10.00%	10.00%	10.00%
Foreign Currency Exchange Rate Risk [Member]
Concentration of Risks (Details) [Line Items]
Appreciation of RMB against US dollar			4.70%
Depreciation of RMB against US dollar	5.70%	4.30%

XML

Business Combinations (Details) ¥ in Thousands			1 Months Ended						12 Months Ended
	Feb. 01, 2020 CNY (¥)	Feb. 01, 2020 USD ($)	Jun. 30, 2020 CNY (¥)	Jun. 30, 2020 USD ($)	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Jan. 31, 2018 CNY (¥)	Jan. 31, 2018 USD ($)	Aug. 31, 2021 CNY (¥)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2020 USD ($)	Aug. 31, 2019 CNY (¥)	Aug. 31, 2019 USD ($)	Aug. 31, 2018 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 USD ($)	Jun. 04, 2020	Feb. 01, 2020 USD ($)	Sep. 30, 2019	Aug. 31, 2019 USD ($)	Sep. 05, 2018	Aug. 31, 2018 USD ($)	Jan. 02, 2018	Jul. 31, 2017
Business Combinations (Details) [Line Items]
Number of business acquisitions completed										6	6	26	26
Prepayments from customers									¥ 5,526						$ 855,000
Contingent consideration										¥ 47,084		¥ 91,440
Yuhan [Member]
Business Combinations (Details) [Line Items]
Percentage of equity interest																								20.00%
Percentage of equity interest							55.60%	55.60%
Cash consideration							¥ 140,000	$ 21,670,000
Percentage of aggregate of equity interest																							75.60%
Cash and cash equivalent														¥ 6,381								$ 988,000
Short-term investments														46,000								7,120,000
Prepayment and other current assets														20,175								3,123,000
Property and equipment														7,662								1,186,000
Accrued expenses and other current liabilities														18,979								2,938,000
Deferred tax liabilities														24,268								3,756,000
Prepayments from customers														62,668								$ 9,700,000
Gains of evaluation of the previously held equity interests														¥ 1,481
Yuhan [Member] | Minimum [Member]
Business Combinations (Details) [Line Items]
Estimated amortization periods														5 years
Yuhan [Member] | Maximum [Member]
Business Combinations (Details) [Line Items]
Estimated amortization periods														30 years
Tianjin Huaying [Member]
Business Combinations (Details) [Line Items]
Percentage of equity interest					100.00%	100.00%															100.00%
Cash consideration					¥ 144,000	$ 22,290,000			144,000
Cash and cash equivalent												16,917								$ 2,619,000
Short-term investments												16,350								2,531,000
Prepayment and other current assets												10,366								1,605,000
Property and equipment												1,621								251,000
Accrued expenses and other current liabilities												9,940								1,539,000
Prepayments from customers												¥ 28,732								$ 4,447,000
Contingent consideration					86,316	13,361,000
Total					¥ 230,316	$ 35,650,000
Contingent consideration									86,316
Tianjin Huaying [Member] | Minimum [Member]
Business Combinations (Details) [Line Items]
Estimated amortization periods												5 years	5 years
Tianjin Huaying [Member] | Maximum [Member]
Business Combinations (Details) [Line Items]
Estimated amortization periods												10 years	10 years
Shanghai Yimi [Member]
Business Combinations (Details) [Line Items]
Lloans with total principal and related interests									¥ 51,374						7,952,000
Yimi Cayman [Member]
Business Combinations (Details) [Line Items]
Investments in preferred shares issued total amount												¥ 196,693	$ 30,446,000
Yimi Online Tutoring [Member]
Business Combinations (Details) [Line Items]
Cash and cash equivalent										832
Consideration in the form of loans and related interests										51,995
Yimi Online Tutoring [Member]
Business Combinations (Details) [Line Items]
Cash and cash equivalent | $																$ 129,000
Prepayment and other current assets										6,429						995,000
Property and equipment										4,805						744,000
Accrued expenses and other current liabilities										2,669						413,000
Prepayments from customers										65,920						10,204,000
Consideration in the form of loans and related interests | $											$ 8,048,000
Yimi's Target Business [Member] | OneSmart Online [Member]
Business Combinations (Details) [Line Items]
Cash consideration	¥ 311,149	$ 48,162,000
Previous held investments in preferred shares and convertible loans	248,688																	$ 38,494,000
Loans and related interests	51,374																	$ 7,952,000
Cash	¥ 11,088	$ 1,716,000
Other Acquisition [Member]
Business Combinations (Details) [Line Items]
Estimated amortization periods									5 years
Yousheng [Member]
Business Combinations (Details) [Line Items]
Percentage of equity interest																			15.00%
Percentage of equity interest			85.00%	85.00%													100.00%
Cash and cash equivalent									¥ 2,604						403,000
Prepayment and other current assets									2,767						428,000
Property and equipment									2,893						448,000
Accrued expenses and other current liabilities									15,655						2,423,000
Prepayments from customers									¥ 15,471						$ 2,395,000
Total			¥ 145,352	$ 22,499,000
Consideration in the form of loans and related interests			14,527	2,249,000
Consideration in the form of convertible loans			109,225	16,907,000
Prepayments for long-term investments			¥ 21,600	$ 3,343,000
Ruiyipeiyou [Member]
Business Combinations (Details) [Line Items]
Total										131,290	20,322,000
Consideration in the form of convertible loans										97,077	15,026,000
Prepayments for long-term investments										14,400	2,229,000
Business Combination, Contingent Consideration, Asset, Current										19,813						$ 3,067,000
Other Acquisition [Member]
Business Combinations (Details) [Line Items]
Estimated amortization periods									5 years
Other Acquisition [Member]
Business Combinations (Details) [Line Items]
Estimated amortization periods									2 years
Gains of evaluation of the previously held equity interests										594		¥ 1,897
Description of business combination												business acquisitions, net tangible assets acquired primarily included cash and cash equivalent of RMB17,898 (US$2,770), prepayment and other current assets of RMB14,561 (US$2,254), property and equipment of RMB7,225 (US$1,118), accrued expenses and other current liabilities of RMB23,038 (US$3,566) and prepayments from customers of RMB187,103 (US$28,962) and deferred tax liabilities, net of RMB3,948 (US$611) as of the date of acquisition. In the 2020 business acquisitions, net tangible assets acquired primarily included cash and cash equivalent of RMB24,450 (US$3,785), short-term investment of RMB20,013 (US$3,098), prepayment and other current assets of RMB116,645 (US$18,055), property and equipment of RMB24,777 (US$3,835), accrued expenses and other current liabilities of RMB208,012 (US$32,198), prepayments from customers of RMB55,340 (US$8,566) and deferred tax liabilities, net of RMB452 (US$70) as of the date of acquisition.	business acquisitions, net tangible assets acquired primarily included cash and cash equivalent of RMB17,898 (US$2,770), prepayment and other current assets of RMB14,561 (US$2,254), property and equipment of RMB7,225 (US$1,118), accrued expenses and other current liabilities of RMB23,038 (US$3,566) and prepayments from customers of RMB187,103 (US$28,962) and deferred tax liabilities, net of RMB3,948 (US$611) as of the date of acquisition. In the 2020 business acquisitions, net tangible assets acquired primarily included cash and cash equivalent of RMB24,450 (US$3,785), short-term investment of RMB20,013 (US$3,098), prepayment and other current assets of RMB116,645 (US$18,055), property and equipment of RMB24,777 (US$3,835), accrued expenses and other current liabilities of RMB208,012 (US$32,198), prepayments from customers of RMB55,340 (US$8,566) and deferred tax liabilities, net of RMB452 (US$70) as of the date of acquisition.
Other Income, Net [Member] | Yimi Cayman [Member]
Business Combinations (Details) [Line Items]
Gain of relation to the revaluation was recorded										46,343	7,173
Other Income, Net [Member] | Yousheng [Member]
Business Combinations (Details) [Line Items]
Loss from revaluation of the previously held equity interests										¥ 2,782	$ 431
Other Acquisition [Member]
Business Combinations (Details) [Line Items]
Estimated amortization periods									5 years

XML

Business Combinations (Details) - Schedule of purchase price as of the date of acquisition - Aug. 31, 2018 - Yuhan [Member] ¥ in Thousands, $ in Thousands		CNY (¥)	USD ($)
Business Acquisition [Line Items]
Intangible assets (Note 10)	[1]	¥ 97,870	$ 15,149
Net tangible assets	[2]	(24,331)	(3,766)
Goodwill (Note 12)		161,001	24,921
Total fair value of purchase price allocation		234,540	36,304
Cash consideration		140,000	21,670
Fair value of ownership interests previously held in the acquiree		42,595	6,593
Fair value of non-controlling interest		¥ 51,945	$ 8,041

[1] The acquired intangible assets consisted of trademark, license use right, customer relationship, student base as well as franchise agreements. These intangible assets have estimated amortization periods of five to thirty years.

[2] Net tangible assets acquired primarily included cash and cash equivalent of RMB6,381 (US$988), short-term investment of RMB46,000 (US$7,120), prepayment and other current assets of RMB20,175 (US$3,123), property and equipment of RMB7,662 (US$1,186), accrued expenses and other current liabilities of RMB18,979 (US$2,938), deferred tax liabilities of RMB24,268 (US$3,756) and prepayments from customers of RMB62,668 (US$9,700) as of the date of acquisition.

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Business Combinations (Details) - Schedule of purchase price as of the date of acquisition - Aug. 31, 2019 - Tianjin Huaying [Member] ¥ in Thousands, $ in Thousands		CNY (¥)	USD ($)
Business Acquisition [Line Items]
Intangible assets (Note 10)	[1]	¥ 59,800	$ 9,256
Net tangible assets	[2]	6,582	1,019
Deferred tax liabilities, net		(14,179)	(2,195)
Goodwill (Note 12)		178,113	27,570
Total fair value of purchase price allocation		230,316	35,650
Consideration		¥ 230,316	$ 35,650

[1] The acquired intangible assets consisted of trademark, customer relationship and franchise agreements. These intangible assets have estimated amortization periods of five to ten years.

[2] Net tangible assets acquired primarily included cash and cash equivalent of RMB16,917 (US$2,619), short-term investments of RMB16,350 (US$2,531), prepayment and other current assets of RMB10,366 (US$1,605), property and equipment of RMB1,621 (US$251), accrued expenses and other current liabilities of RMB9,940 (US$1,539) and prepayments from customers of RMB28,732 (US$4,447) as of the date of acquisition.

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Business Combinations (Details) - Schedule of purchase price as of the date of acquisition - Aug. 31, 2020 - Yimi Online Tutoring [Member] ¥ in Thousands, $ in Thousands		CNY (¥)	USD ($)
Business Acquisition [Line Items]
Intangible assets	[1]	¥ 50,800	$ 7,863
Net tangible assets	[2]	(56,523)	(8,749)
Deferred tax liabilities, net		(3,211)	(497)
Goodwill		348,579	53,956
Total fair value of purchase price allocation		339,645	52,573
Consideration		311,149	48,162
Fair value of non-controlling interests		¥ 28,496	$ 4,411

[1] The acquired intangible assets consisted of technology and system. These intangible assets have estimated amortization periods of five years.

[2] Net tangible assets acquired primarily included cash and cash equivalent of RMB832 (US$129), prepayment and other current assets of RMB6,429 (US$995), property and equipment of RMB4,805 (US$744), accrued expenses and other current liabilities of RMB2,669 (US$413) and prepayments from customers of RMB65,920 (US$10,204) as of the date of acquisition.

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Business Combinations (Details) - Schedule of purchase price as of the date of acquisition - Aug. 31, 2020 - Yousheng [Member] ¥ in Thousands, $ in Thousands		CNY (¥)	USD ($)
Business Acquisition [Line Items]
Intangible assets	[1]	¥ 72,000	$ 11,145
Net tangible assets	[2]	(22,862)	(3,539)
Deferred tax liabilities, net		(264)	(41)
Goodwill		116,919	18,098
Total fair value of purchase price allocation		165,793	25,663
Consideration		145,352	22,499
Fair value of ownership interests previously held in the acquiree		¥ 20,441	$ 3,164

[1] The acquired intangible assets consisted of technology and system. These intangible assets have estimated amortization periods of five years.

[2] Net tangible assets acquired primarily included cash and cash equivalent of RMB2,604 (US$403), prepayment and other current assets of RMB2,767 (US$428), property and equipment of RMB2,893 (US$448), accrued expenses and other current liabilities of RMB15,655 (US$2,423), and prepayments from customers of RMB15,471 (US$2,395) as of the date of acquisition.

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Business Combinations (Details) - Schedule of purchase price as of the date of acquisition - Aug. 31, 2020 - Ruiyipeiyou [Member] ¥ in Thousands, $ in Thousands		CNY (¥)	USD ($)
Business Acquisition [Line Items]
Intangible assets	[1]	¥ 17,000	$ 2,631
Net tangible assets	[2]	(5,526)	(855)
Deferred tax liabilities, net		(4,250)	(658)
Goodwill		124,066	19,204
Total fair value of purchase price allocation		131,290	20,322
Consideration		¥ 131,290	$ 20,322

[1] The acquired intangible assets consisted of technology and system. These intangible assets have estimated amortization periods of five years.

[2] Net tangible assets acquired primarily included prepayments from customers of RMB5,526 (US$855) as of the date of acquisition.

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Business Combinations (Details) - Schedule of purchase price as of the date of acquisition - Other Acquisitions [Member] ¥ in Thousands		Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)
Business Acquisition [Line Items]
Intangible assets	[1]			¥ 11,000	¥ 20,700
Net tangible liabilities	[2]			(77,919)	(174,405)
Goodwill				113,032	311,817
Total fair value of purchase price allocation				46,113	158,112
Cash consideration				28,000	143,740
Fair value of equity interests previously held in the acquirees				7,410	3,305
Fair value of non-controlling interests				¥ 10,703	¥ 11,067

[1] The acquired intangible assets consisted of customer relationship, with estimated amortization periods of two years.

[2] In the 2019 business acquisitions, net tangible assets acquired primarily included cash and cash equivalent of RMB17,898 (US$2,770), prepayment and other current assets of RMB14,561 (US$2,254), property and equipment of RMB7,225 (US$1,118), accrued expenses and other current liabilities of RMB23,038 (US$3,566) and prepayments from customers of RMB187,103 (US$28,962) and deferred tax liabilities, net of RMB3,948 (US$611) as of the date of acquisition. In the 2020 business acquisitions, net tangible assets acquired primarily included cash and cash equivalent of RMB24,450 (US$3,785), short-term investment of RMB20,013 (US$3,098), prepayment and other current assets of RMB116,645 (US$18,055), property and equipment of RMB24,777 (US$3,835), accrued expenses and other current liabilities of RMB208,012 (US$32,198), prepayments from customers of RMB55,340 (US$8,566) and deferred tax liabilities, net of RMB452 (US$70) as of the date of acquisition.

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Net Revenues (Details) - Schedule of net revenues ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)
Revenue from External Customer [Line Items]
Net revenues	¥ 3,423,410	$ 529,907	¥ 3,438,881	¥ 3,993,873
Personalized and small class premium tutoring revenues [Member]
Revenue from External Customer [Line Items]
Net revenues	3,410,806	527,956	3,423,996	3,879,364
Other revenues [Member]
Revenue from External Customer [Line Items]
Net revenues	¥ 12,604	$ 1,951	¥ 14,885	¥ 114,509

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Cash, cash equivalents and restricted cash (Details) - Schedule of cash, cash equivalents and restricted cash ¥ in Thousands, $ in Thousands		Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)
Schedule of cash, cash equivalents and restricted cash [Abstract]
Cash in bank		¥ 29,626	$ 4,586	¥ 1,158,044
Restricted cash in bank	[1]	355,017	54,953	187,241
Total		¥ 384,643	$ 59,539	¥ 1,345,285

[1] This related to cash deposits in the bank accounts that are frozen by court order as the Company was subject to multiple legal proceedings, administrative proceedings, claims and other litigation as a result of overdue payments to service providers and loans payable to the lenders.

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Short-term Investments (Details) ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)	Aug. 31, 2021 USD ($)
Short-term Investments (Details) [Line Items]
Realized gain on disposal of available-for-sale securities			¥ 24,831	¥ 50,746
Available-for-sale impairment loss	185,723				$ 28,748
Short-Term Investments [Member]
Short-term Investments (Details) [Line Items]
Realized gain on disposal of available-for-sale securities	100	15	7,110	11,451
Unrealized gains/(loss) on investments	4,009	621	4,451	(1,802)
Short-Term Investments [Member] | Commercial Banks Deposits [Member]
Short-term Investments (Details) [Line Items]
Interest income	2,820	$ 437	1,994	11,679
Short-Term Investments [Member] | Available-for-Sale Securities [Member]
Short-term Investments (Details) [Line Items]
Accrued interest				¥ 4,088

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Short-term Investments (Details) - Schedule of short-term investments - Short-Term Investments [Member] ¥ in Thousands, $ in Thousands	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)
Short-term Investments (Details) - Schedule of short-term investments [Line Items]
Short-term investments	¥ 81,575	$ 12,627	¥ 486,756
Commercial banks deposits [Member]
Short-term Investments (Details) - Schedule of short-term investments [Line Items]
Short-term investments	13,000	2,012	243,013
Available-for-sale securities [Member]
Short-term Investments (Details) - Schedule of short-term investments [Line Items]
Short-term investments	¥ 68,575	$ 10,615	¥ 243,743

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Prepayments and other current assets (Details) - 12 months ended Aug. 31, 2021 ¥ in Thousands, $ in Thousands	CNY (¥)	USD ($)
Prepayments And Other Current Assets [Abstract]
Impairment loss	¥ 605,423	$ 93,713

XML

Prepayments and other current assets (Details) - Schedule of prepayments and other current assets, net ¥ in Thousands	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)
Schedule of prepayments and other current assets, net [Abstract]
Prepaid rental expense			¥ 54,505
Loans to third parties			112,435
Receivable from a third-party payment platform			78,197
Prepayments to suppliers			42,482
Prepaid income tax, business tax, VAT and other surcharges			10,571
Deposits			18,408
Other receivables
Staff advances			7,610
Loans to employees			12,030
Others			8,632
Prepayments and other current assets, net			¥ 344,870

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Property and Equipment, Net (Details) ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2020 USD ($)	Aug. 31, 2019 CNY (¥)	Aug. 31, 2019 USD ($)
Property and Equipment, Net (Details) [Line Items]
Depreciation expenses	¥ 196,168	$ 30,365	¥ 209,663		¥ 152,801
Impairment of long-lived assets other than goodwill	849,246	131,454		$ 0		$ 0
Property, Plant and Equipment [Member]
Property and Equipment, Net (Details) [Line Items]
Impairment loss net amount	¥ 493,375	$ 76,369

XML

Property and Equipment, Net (Details) - Schedule of property and equipment, net ¥ in Thousands, $ in Thousands	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	¥ 49,678	$ 7,689	¥ 1,307,571
Less: accumulated depreciation	(12,723)	(1,969)	(741,074)
Construction in progress			14,751
Property and equipment, net	36,955	5,720	581,248
Furniture [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross			57,051
Electronic equipment [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross			225,749
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	1,902	294	3,889
Leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross			976,106
Buildings [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	¥ 47,776	$ 7,395	¥ 44,776

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Intangible assets, Net (Details) ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expenses	¥ 11,549	$ 1,788	¥ 38,302	¥ 23,081
Impairment loss	¥ 197,328	$ 30,544

XML

Intangible assets, Net (Details) - Schedule of intangible assets net ¥ in Thousands	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross			¥ 345,640
Less: accumulated amortization			(67,687)
Intangible assets, net			277,953
Customer Relationship [Member]
Finite-Lived Intangible Assets [Line Items]
Finite Lived Intangible assets			71,180
Trademark [Member]
Finite-Lived Intangible Assets [Line Items]
Finite Lived Intangible assets			111,450
Student base [Member]
Finite-Lived Intangible Assets [Line Items]
Finite Lived Intangible assets			2,390
License [Member]
Finite-Lived Intangible Assets [Line Items]
Finite Lived Intangible assets			23,600
Franchise Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Finite Lived Intangible assets			9,420
Technology and System [Member]
Finite-Lived Intangible Assets [Line Items]
Finite Lived Intangible assets			¥ 127,600

XML

Long-term Investments (Details) - 12 months ended Aug. 31, 2021 ¥ in Thousands, $ in Thousands	CNY (¥)	USD ($)
Long-Term Investments [Abstract]
Long-term investments	¥ 903,891	$ 139,913
Impairment losses on long-term investments	¥ 1,652,308	$ 255,759

XML

Long-term Investments (Details) - Schedule of long term Investments ¥ in Thousands	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)
Long-term Investments (Details) - Schedule of long term Investments [Line Items]
Long-term investments			¥ 1,048,178
Equity Securities without Readily Determinable Fair Value [Member]
Long-term Investments (Details) - Schedule of long term Investments [Line Items]
Long-term investments			349,765
Equity Method Investments [Member]
Long-term Investments (Details) - Schedule of long term Investments [Line Items]
Long-term investments			84,272
Available-For-Sale Investments [Member]
Long-term Investments (Details) - Schedule of long term Investments [Line Items]
Long-term investments			¥ 614,141

XML

Goodwill (Details) - 12 months ended Aug. 31, 2021 ¥ in Thousands, $ in Thousands	CNY (¥)	USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Impairment loss	¥ 1,076,560	$ 166,640

XML

Goodwill (Details) - Schedule of goodwill ¥ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)
Schedule of goodwill [Abstract]
Goodwill, Beginning Balance	¥ 1,481,401		¥ 815,052
Goodwill acquired			702,596
Disposal of subsidiaries	(404,841)		(36,247)
Impairment charges	(1,076,560)
Goodwill, Ending Balance			¥ 1,481,401

XML

Accrued Expenses and Other Current Liabilities (Details) - Schedule of Components of accrued expenses and other current liabilities ¥ in Thousands, $ in Thousands	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)
Schedule of Components of accrued expenses and other current liabilities [Abstract]
Salary and welfare payable	¥ 533,691	$ 82,610	¥ 612,570
Other taxes payable			12,230
Accrued expenses	279,448	43,256	150,671
Deposits from franchisees	7,201	1,115	16,249
Payables for leasehold improvement			36,363
Payables for long-term investments			4,412
Interest payable	12,731	1,971	20,631
Others	35,393	5,477	35,929
Accrued expenses and other current liabilities	¥ 868,464	$ 134,429	¥ 889,055

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Share-Based Compensation (Details) ¥ / shares in Units, ¥ in Thousands, $ in Thousands						1 Months Ended								12 Months Ended
	Jan. 01, 2022	Jan. 01, 2021	Feb. 01, 2020 shares	Mar. 31, 2019 CNY (¥)	May 02, 2017 ¥ / shares shares	Mar. 31, 2019 ¥ / shares shares	Dec. 31, 2018 shares	Feb. 28, 2018	Dec. 31, 2017 shares	Nov. 30, 2017 shares	Sep. 17, 2017 CNY (¥) shares	Sep. 17, 2017 USD ($) shares	Mar. 31, 2017	Aug. 31, 2021 CNY (¥) shares	Aug. 31, 2020 shares	Aug. 31, 2019 shares	Aug. 31, 2018 shares	Aug. 30, 2018 shares	Aug. 31, 2021 USD ($)
Share-Based Compensation (Details) [Line Items]
Four tranches													2
Amended 2015 Plan [Member]
Share-Based Compensation (Details) [Line Items]
Number of options granted (in Shares)																141,997,178
Compensation amount											¥ 39,881	$ 6,173
Vesting percentage										50.00%				25.00%		100.00%	25.00%
Shares outstanding percentage								2.00%
Fiscal years								9 years
Vesting period														4 years	4 years
ShareBased Compensation Arrange Descriptions																Vesting terms included i) immediate vesting of 100% of the share options on date of grant, ii) vesting periods of 3 years, with immediate vesting of 25% of the share options on date of grant, 1/48 of the share options in the each month 1 year after the vesting commencement date, respectively; iii) vesting periods of 3 years, with 1/3 of the share options vesting on each anniversary of the vesting commencement date; iv) vesting periods of 4 years, with 50% and 50% of the share options vesting on the second and fourth anniversary of the vesting commencement date, respectively, or v) vesting periods of 4 years, with 25% of the share options vesting on each anniversary of the vesting commencement date.
Aggregate intrinsic value														¥ 12,734					$ 1,971
Compensation expense														¥ 44,532					$ 6,893
Weighted-average period														1 year 3 months
Domestic Plan [Member]
Share-Based Compensation (Details) [Line Items]
Number of options granted (in Shares)					120,000
Vesting period													4 years
Four tranches													4
Equity interests percentage					8.00%
Minimum [Member] | Domestic Plan [Member]
Share-Based Compensation (Details) [Line Items]
Exercise price per option (in Yuan Renminbi per share) | ¥ / shares					¥ 40
Maximum [Member] | Domestic Plan [Member]
Share-Based Compensation (Details) [Line Items]
Exercise price per option (in Yuan Renminbi per share) | ¥ / shares					¥ 160
Shanghai Onesmart Education And Training Co. Ltd [Member] | Domestic Plan [Member]
Share-Based Compensation (Details) [Line Items]
Vested options (in Shares)															70,000
Compensation amount | ¥				¥ 0
Vesting percentage						100.00%
Exercise price per option (in Yuan Renminbi per share) | ¥ / shares						¥ 80
Options forfeited (in Shares)																60,000
Options forfeited (in Shares)
Vesting Period Four Years [Member] | Amended 2015 Plan [Member]
Share-Based Compensation (Details) [Line Items]
Vesting percentage																25.00%
Class A Ordinary Shares [Member] | Amended 2015 Plan [Member]
Share-Based Compensation (Details) [Line Items]
Ordinary shares (in Shares)											336,642,439	336,642,439
Number of options granted (in Shares)														5,502,840	39,821,200	14,556,320
Vesting percentage														25.00%	25.00%	100.00%
Vesting period														4 years	4 years	4 years
Second, Third and Fourth anniversary [Member] | Amended 2015 Plan [Member]
Share-Based Compensation (Details) [Line Items]
Vesting percentage										25.00%
Second and Fourth Anniversary [Member]
Share-Based Compensation (Details) [Line Items]
Vesting percentage										50.00%				50.00%	50.00%	50.00%	50.00%
Second and Fourth Anniversary [Member] | Amended 2015 Plan [Member]
Share-Based Compensation (Details) [Line Items]
Vesting percentage										50.00%				50.00%	50.00%	50.00%	50.00%
Vesting period																4 years
Immediate Vesting [Member]
Share-Based Compensation (Details) [Line Items]
Vesting percentage															100.00%	25.00%	100.00%
Immediate Vesting [Member] | Amended 2015 Plan [Member]
Share-Based Compensation (Details) [Line Items]
Vesting period																	2 years
Shanghai Yimi Education Technology Co. Ltd [Member]
Share-Based Compensation (Details) [Line Items]
Vesting percentage		50.00%
Share-Based Payment Arrangement, Option [Member] | Amended 2015 Plan [Member]
Share-Based Compensation (Details) [Line Items]
Vested share											102.1	102.1
Vested options (in Shares)											63,880,024	63,880,024
Number of options granted (in Shares)							49,634,837		16,442,655	164,865,010				120,744,240		39,669,960	9,172,674
Share options expire period											10 years	10 years
Vesting percentage										25.00%				100.00%	25.00%
Vesting period														4 years	4 years	3 years
Share-Based Payment Arrangement, Option [Member] | Domestic Plan [Member]
Share-Based Compensation (Details) [Line Items]
Share options expire period													4 years
Share-Based Payment Arrangement, Option [Member] | Shanghai Onesmart Education And Training Co. Ltd [Member] | Domestic Plan [Member]
Share-Based Compensation (Details) [Line Items]
Number of options granted (in Shares)						10,000
Equity interests percentage						1.00%
Share-Based Payment Arrangement, Option [Member] | Class A Ordinary Shares [Member] | Amended 2015 Plan [Member]
Share-Based Compensation (Details) [Line Items]
Vesting percentage																25.00%
Share-Based Payment Arrangement, Option [Member] | Not Executive [Member] | Amended 2015 Plan [Member]
Share-Based Compensation (Details) [Line Items]
Number of options granted (in Shares)															93,574,240
Restricted Stock [Member] | Amended 2015 Plan [Member]
Share-Based Compensation (Details) [Line Items]
Restricted shares (in Shares)														5,502,840	39,821,200	14,556,320
Restricted Stock [Member] | Domestic Plan [Member]
Share-Based Compensation (Details) [Line Items]
Number of options granted (in Shares)																10,000
Options forfeited (in Shares)																60,000
Restricted Stock [Member] | Forecast [Member]
Share-Based Compensation (Details) [Line Items]
Vesting percentage	50.00%
Restricted Stock [Member] | Shanghai Yimi Education Technology Co. Ltd [Member]
Share-Based Compensation (Details) [Line Items]
Four tranches			2
Restricted shares (in Shares)			9,677,288

XML

Share-Based Compensation (Details) - Schedule of assumptions adopted to estimate the fair value of share options granted - Amended 2015 Plan [Member] - $ / shares	12 Months Ended
	Aug. 31, 2021	Aug. 31, 2020
Share-Based Compensation (Details) - Schedule of assumptions adopted to estimate the fair value of share options granted [Line Items]
Expected volatility	33.27%
Minimum [Member]
Share-Based Compensation (Details) - Schedule of assumptions adopted to estimate the fair value of share options granted [Line Items]
Risk-free interest rate	0.65%	0.65%
Expected volatility		51.80%
Suboptimal exercise factor	2.2	2.2
Fair value per ordinary share (in Dollars per share)	$ 0.05	$ 0.05
Maximum [Member]
Share-Based Compensation (Details) - Schedule of assumptions adopted to estimate the fair value of share options granted [Line Items]
Risk-free interest rate	1.92%	1.92%
Expected volatility		52.70%
Suboptimal exercise factor	2.8	2.8
Fair value per ordinary share (in Dollars per share)	$ 0.12	$ 0.12

XML

Share-Based Compensation (Details) - Schedule assumptions estimate the fair value of share options granted - Domestic Plan Stock Option [Member]	12 Months Ended
	Aug. 31, 2019 $ / shares
Share-Based Compensation (Details) - Schedule assumptions estimate the fair value of share options granted [Line Items]
Risk-free interest rate	2.40%
Expected volatility	47.00%
Suboptimal exercise factor	2.8
Fair value per ordinary share (in Dollars per share)	$ 351.24

XML

Share-Based Compensation (Details) - Schedule assumptions estimate the fair value of restricted shares - Restricted Stock [Member]	12 Months Ended
	Aug. 31, 2020 $ / shares
Share-Based Compensation (Details) - Schedule assumptions estimate the fair value of restricted shares [Line Items]
Risk-free interest rate	1.51%
Expected volatility	50.15%
Suboptimal exercise factor	2.8
Fair value per ordinary share (in Dollars per share)	$ 1.41

XML

Share-Based Compensation (Details) - Schedule of summary of share options activities - Share-Based Payment Arrangement, Option [Member] - Amended 2015 Plan [Member] - USD ($)			12 Months Ended
	Aug. 31, 2018	Sep. 01, 2017	Aug. 31, 2021	Aug. 31, 2020	Aug. 31, 2019	Aug. 31, 2018
Share-Based Compensation (Details) - Schedule of summary of share options activities [Line Items]
Number of share options outstanding at beginning of period (in Shares)			391,887,307	393,844,018	301,190,650
Weighted average exercise price Outstanding at beginning of period			$ 0.05	$ 0.05	$ 0.03
Weighted average grant date fair value Outstanding at beginning of period			$ 0.04	$ 0.13	$ 0.16
Aggregate intrinsic value Outstanding at beginning of period (in Dollars)			$ 31,356,000	$ 53,966,000	$ 54,133,000
Weighted average remaining contractual term outstanding beginning of period
Number of share options granted (in Shares)			115,241,400	93,574,240	181,667,138	303,995,200
Weighted average exercise price granted			$ 0.04	$ 0.05	$ 0.1	$ 0.03
Weighted average grant date fair value granted			$ 0.05	$ 0.1	$ 0.05	$ 0.16
Number of share options forfeited (in Shares)			(82,902,302)	(29,876,751)	(33,355,010)	(2,804,550)
Weighted average exercise price forfeited			$ 0.03	$ 0.11	$ 0.17	$ 0.08
Weighted average grant date fair value forfeited			$ 0.14	$ 0.11	$ 0.08	$ 0.09
Number of share options exercised (in Shares)			(81,138,360)	(65,654,200)	(55,658,760)
Weighted average exercise price exercised			$ 0.02	$ 0.01	$ 0.02
Weighted average grant date fair value exercised			$ 0.17	$ 0.13	$ 0.02
Number of share options outstanding at end of period (in Shares)	301,190,650		343,088,045	391,887,307	393,844,018	301,190,650
Weighted average exercise price outstanding at end of period	$ 0.03		$ 0.06	$ 0.05	$ 0.05	$ 0.03
Weighted average grant date fair value outstanding at end of period	$ 0.16		$ 0	$ 0.04	$ 0.13	$ 0.16
Aggregate intrinsic value outstanding at end of period (in Dollars)	$ 54,133,000		$ 1,375,000	$ 31,356,000	$ 53,966,000	$ 54,133,000
Weighted average remaining contractual term outstanding at end of period	8 years 7 months 2 days		5 years 6 months 29 days	7 years 6 months 25 days	7 years 9 months 18 days
Number of share options vested and expected to vest at end of period (in Shares)			343,088,045
Weighted average exercise price vested and expected to vest at end of period			$ 0.06
Weighted average grant date fair value vested and expected to vest at end of period			$ 0
Aggregate intrinsic value vested and expected to vest at end of period (in Dollars)			$ 1,375
Weighted average remaining contractual term vested and expected to vest at end of period			5 years 6 months 29 days

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Share-Based Compensation (Details) - Schedule of summary of restricted shares activities - Restricted Shares [Member] - Amended 2015 Plan [Member] - USD ($)	12 Months Ended
	Aug. 31, 2021	Aug. 31, 2020	Aug. 31, 2019
Share-Based Compensation (Details) - Schedule of summary of restricted shares activities [Line Items]
Number of restricted shares outstanding at beginning of period	47,408,631	14,337,880
Weighted average grant date fair value outstanding at beginning of period	$ 0.07	$ 0.21
Aggregate intrinsic value outstanding at beginning of period	$ 5,025	$ 2,737
Number of restricted shares granted	5,502,840	39,821,200	14,556,320
Weighted average grant date fair value granted	$ 0.11	$ 0.2	$ 0.21
Number of restricted shares forfeited	(7,949,681)	(2,409,120)	(218,440)
Weighted average grant date fair value forfeited	$ 0.19	$ 0.54	$ 0.21
Number of restricted shares exercised	(2,185,400)	(4,341,329)
Weighted average grant date fair value exercised	$ 0.22	$ 1.42
Number of restricted shares outstanding end of the period	42,776,390	47,408,631	14,337,880
Weighted average grant date fair value outstanding end of the period	$ 0.04	$ 0.07	$ 0.21
Aggregate intrinsic value outstanding end of the period	$ 596	$ 5,025	$ 2,737
Weighted average remaining contractual term outstanding end of the period	1 year 7 months 9 days	3 days	2 years 9 months 18 days
Number of restricted shares vested and expected to vest end of the period	42,776,390
Weighted average grant date fair value vested and expected to vest end of the period	$ 0.04
Aggregate intrinsic value vested and expected to vest end of the period	$ 596
Weighted average remaining contractual term vested and expected to vest end of the period	1 year 7 months 9 days

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Share-Based Compensation (Details) - Schedule of summary of share options activities - Restricted Shares Issued to the Founding Shareholders of Shanghai Yimi [Member] - Domestic Plan [Member] - CNY (¥) ¥ / shares in Units, ¥ in Thousands	12 Months Ended
	Aug. 31, 2020	Aug. 31, 2019	Aug. 30, 2018
Share-Based Compensation (Details) - Schedule of summary of share options activities [Line Items]
Number of share options outstanding at beginning of period (in Shares)	70,000		120,000
Weighted average purchase price outstanding at beginning of period	¥ 91.43		¥ 93.33
Weighted average grant date fair value outstanding at beginning of period	¥ 150.8		¥ 151.19
Aggregate intrinsic value outstanding at beginning of period (in Yuan Renminbi)	¥ 39,687		¥ 7,023
Number of share options granted (in Shares)		10,000
Weighted average purchase price granted		¥ 80
Weighted average grant date fair value granted		¥ 148.47
Number of share options forfeited (in Shares)		(60,000)
Weighted average purchase price forfeited		¥ 93.33
Weighted average grant date fair value forfeited		¥ 151.19
Number of share options exercised (in Shares)	(70,000)
Weighted average purchase price exercised	¥ 91.43
Weighted average grant date fair value exercised	¥ 150.8
Number of share options outstanding at end of period (in Shares)		70,000	120,000
Weighted average purchase price outstanding at end of period		¥ 91.43	¥ 93.33
Weighted average grant date fair value outstanding at end of period		¥ 150.8	¥ 151.19
Aggregate intrinsic value outstanding at end of period (in Yuan Renminbi)		¥ 39,687	¥ 79,990
Number of share options vested and expected to vest at the end of the period (in Shares)
Weighted average purchase price vested and expected to vest at the end of the period
Weighted average grant date fair value vested and expected to vest at the end of the period

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Share-Based Compensation (Details) - Schedule of share-based compensation expense ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total share-based compensation expense	¥ 42,862	$ 6,635	¥ 137,986	¥ 71,532
Sales and marketing [Member]
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total share-based compensation expense	110	17	674	906
General and Administrative [Member]
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total share-based compensation expense	¥ 42,752	$ 6,618	¥ 137,312	¥ 70,626

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Income Taxes (Details) ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2020 USD ($)	Aug. 31, 2019	Aug. 31, 2021 USD ($)
Income Taxes (Details) [Line Items]
Statutory rate	25.00%	25.00%	25.00%	25.00%	25.00%
Taxable losses	¥ 1,303,410					$ 201,754
Total amount of net loss	2,455,436					380,075
Unrecognized tax benefit	¥ 23,300		¥ 25,871
Unrecognized tax benefits of effective tax rate			¥ 2,571
Hong Kong [Member]
Income Taxes (Details) [Line Items]
Profits tax	16.50%	16.50%
China [Member]
Income Taxes (Details) [Line Items]
Statutory rate	25.00%	25.00%
Withholding tax rate	10.00%	10.00%
China [Member] | High And New Technology Enterprises [Member]
Income Taxes (Details) [Line Items]
Preferential tax rate			15.00%	15.00%
Enterprise income tax rate	15.00%	15.00%

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Income Taxes (Details) - Schedule of current and deferred portions of income tax expense included in the consolidated statements of income ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)
Schedule of current and deferred portions of income tax expense included in the consolidated statements of income [Abstract]
Income/(loss) before income tax expense and share of net (loss)/income from equity investees	¥ (4,983,919)	$ (771,458)	¥ (788,450)	¥ 316,069
PRC statutory tax rate	25.00%	25.00%	25.00%	25.00%
Income tax/(benefit) at statutory tax rate	¥ (1,245,980)	$ (192,865)	¥ (197,112)	¥ 79,017
Non-deductible expenses	1,148,509	177,777	3,028	30,961
International tax rate difference	23,335	3,612	39,619	6,000
Preferential tax rate	(1,579)	(244)	(14,306)	(8,357)
Effect of income tax exemptions			(538)	(1,232)
Equity pick-up				(2,698)
Additional tax deduction for qualified research and development expenses	(4,176)	(646)	(4,278)	(5,525)
Change in valuation allowance	110,761	17,144	134,720	11,006
Expired loss				11,905
Interest and penalty			1,096	1,605
Outside basis difference				(1,583)
Effect of changes in tax rates on deferred taxes			(14)	442
Income tax expense/(benefit)	¥ 30,870	$ 4,778	¥ (37,785)	¥ 121,541

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Income Taxes (Details) - Schedule of components of income tax expense ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)
Schedule of components of income tax expense [Abstract]
Current	¥ 30,870	$ 4,778	¥ 36,458	¥ 138,552
Deferred			(74,243)	(17,011)
Income tax expense/(benefit)	¥ 30,870	$ 4,778	¥ (37,785)	¥ 121,541

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Income Taxes (Details) - Schedule of components of deferred tax assets ¥ in Thousands	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)
Non-current deferred tax assets:
Tax loss carry forward			¥ 297,887
Accrued expenses and other payables			113,981
Unrecognized financing expenses of long-term payable			2,192
Fair value changes on financial assets			38,265
Leasing liability			353,048
Impairment of other receivables and investments			52,944
Excessive advertising expense			36,230
Others			2,050
Less: valuation allowance			(325,604)
Non-current deferred tax assets, net			570,993
Non-current deferred tax liabilities, net			(450,297)
Deferred tax assets, net			120,696
Intangible assets			(67,037)
Unrealized gain on investments			(186)
Capitalization of bonus			(15,873)
Fair value changes on private equity investments			(3,081)
Accelerated depreciation of fixed assets			(9,468)
Right-of-use Asset			(353,048)
Equity in gain of unconsolidated investees			(1,371)
Others			¥ (233)

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Income Taxes (Details) - Schedule of unrecognized tax benefit ¥ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2021 USD ($)
Schedule of unrecognized tax benefit [Abstract]
Balance at September 1			¥ 25,183
Increase			5,542
Decrease			(4,854)
Balance at August 31			¥ 25,871

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Shareholders' Equity (Details) $ / shares in Units, ¥ in Thousands, $ in Thousands					1 Months Ended	12 Months Ended
	Jul. 01, 2020 CNY (¥)	Jul. 01, 2020 USD ($)	Mar. 28, 2018 CNY (¥) shares	Mar. 28, 2018 USD ($) $ / shares shares	Sep. 30, 2017 shares	Aug. 31, 2021 CNY (¥) shares	Aug. 31, 2021 $ / shares shares	Aug. 31, 2020 CNY (¥) shares	Aug. 31, 2019 CNY (¥) shares
Shareholders' Equity (Details) [Line Items]
Net proceeds from IPO			¥ 1,048,660	$ 162,321
Number of convertible shares						1
Treasury stock						76,586,600
Treasury stock value (in Yuan Renminbi) | ¥								¥ 70,890	¥ 203,759
Treasury stock held by depositary bank						9,976
Treasury stock held by company						10,089
Deutsche Bank Trust Company Americas [Member]
Shareholders' Equity (Details) [Line Items]
Treasury stock held by depositary bank						198,011,720
Open Market [Member]
Shareholders' Equity (Details) [Line Items]
Treasury stock per share (in Dollars per share) | $ / shares							$ 0.13
Treasury stock value (in Yuan Renminbi) | ¥						¥ 70,889
Parent Company [Member]
Shareholders' Equity (Details) [Line Items]
Treasury stock held by company						24,691,358
IPO [Member]
Shareholders' Equity (Details) [Line Items]
Net proceeds from IPO			1,048,660	162,321
IPO cost			¥ 26,752	$ 4,141
American Depositary Shares [Member] | IPO [Member]
Shareholders' Equity (Details) [Line Items]
Shares issued			16,300,000	16,300,000
Share price (in Dollars per share) | $ / shares				$ 11
IPO cost			¥ 26,752	$ 4,141
Class A Ordinary Shares [Member]
Shareholders' Equity (Details) [Line Items]
Number of vote per share						1
Ordinary shares outstanding						4,321,229,545	4,321,229,545	4,146,103,947
Treasury stock					94,897,359
Class A Ordinary Shares [Member] | Parent Company [Member]
Shareholders' Equity (Details) [Line Items]
Ordinary shares outstanding								4,146,103,947	4,130,261,827
Class A Ordinary Shares [Member] | IPO [Member]
Shareholders' Equity (Details) [Line Items]
Shares issued			652,000,000	652,000,000
Class A ordinary shares						3,568,365,545	3,568,365,545
Aggregate carrying value (in Yuan Renminbi) | ¥						¥ 4,272,293
Class B Ordinary Shares [Member]
Shareholders' Equity (Details) [Line Items]
Number of vote per share						20
Ordinary shares outstanding						2,290,430,016	2,290,430,016	2,296,842,016
Number of convertible shares						0		0
Class B Ordinary Shares [Member] | Parent Company [Member]
Shareholders' Equity (Details) [Line Items]
Ordinary shares outstanding								2,296,842,016	2,296,842,016
Beijing Ruihuisi Education Consulting Co. Ltd [Member]
Shareholders' Equity (Details) [Line Items]
Additional noncontrolling interest	49.00%	49.00%
Total consideration	¥ 61,250	$ 9,481

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Related Party Transactions (Details) ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2020 USD ($)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 USD ($)	Feb. 29, 2020 CNY (¥)	Feb. 29, 2020 USD ($)	Apr. 30, 2019 CNY (¥)	Apr. 30, 2019 USD ($)	Mar. 31, 2019	Oct. 31, 2018
Ya Qiao Education [Member]
Related Party Transactions (Details) [Line Items]
Unsecured and payable term	5 years	5 years
Education convert receivables									¥ 16,500	$ 2,554
Ya Qiao Education [Member] | Business combination [Member]
Related Party Transactions (Details) [Line Items]
Equity investment percentage									75.00%	75.00%
He Xi [Member]
Related Party Transactions (Details) [Line Items]
Amounts due from related parties	¥ 10,849	$ 1,679
Beijing Tus Juren Education Technology Co Ltd Equity Investee [Member]
Related Party Transactions (Details) [Line Items]
Group disposed equity investment percentage											12.00%
Long-term investment			¥ 134,143			$ 20,764
Aggregate principal amount							¥ 721,210	$ 111,636
Annual interest percentage							10.00%	10.00%
Losses recognized			¥ 153,061	$ 23,692
Loans amount	¥ 195,726				$ 30,296
Beijing Tus Juren Education Technology Co Ltd Equity Investee [Member] | Business combination [Member]
Related Party Transactions (Details) [Line Items]
Equity investment percentage												30.00%

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Related Party Transactions (Details) - ​Schedule of related parties ¥ in Thousands, $ in Thousands	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)
Related Party Transaction [Line Items]
Shanghai Ya Qiao Education Investment Co., Ltd. (“Ya Qiao Education”)	Equity investee	Equity investee
Shanghai Luo Bo Education Technology Co.,Ltd. (“Luo Bo”)	Equity investee	Equity investee
Fujian Hexi Equity Investment Partnership (Limited Partnership) (“He Xi”)	Equity investee	Equity investee
Beijing Tus-Juren Education Technology Co., Ltd. (“Tus-Juren”)	Former equity investee	Former equity investee
Ya Qiao Education [Member]
Related Party Transaction [Line Items]
Amounts due from related parties			¥ 20,400
Luo Bo [Member]
Related Party Transaction [Line Items]
Amounts due from related parties			491
He Xi [Member]
Related Party Transaction [Line Items]
Amounts due from related parties			13,644
Luo Bo [Member]
Related Party Transaction [Line Items]
Amounts due from related parties	1,205	187	803
Tus-Juren [Member]
Related Party Transaction [Line Items]
Amounts due from related parties				¥ 6,772

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Other Non-Current Assets (Details)	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2020 USD ($)
Disclosure Text Block Supplement [Abstract]
Due from third parties loans			¥ 357,040	$ 55,266
Impairment loss	¥ 81,024	$ 12,542

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Other Non-Current Assets (Details) - Schedule of other non-current assets ¥ in Thousands		Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)
Schedule of other non-current assets [Abstract]
Rental deposits				¥ 122,968
Prepayment for long-term investments				17,383
Due from third parties	[1]			444,200
Deferred assets				54,341
Others
Total non-current assets				¥ 638,892

[1] Due from third parties primarily consisted of loans of RMB357,040 (US$55,266) and nil provided to a third party during the year ended August 31, 2020 and 2021, respectively.

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Loans (Details) ¥ in Thousands, $ in Thousands	1 Months Ended															4 Months Ended
	Mar. 31, 2021 CNY (¥)	Apr. 30, 2020 CNY (¥)	Apr. 30, 2020 USD ($)	Mar. 31, 2020 CNY (¥)	Feb. 29, 2020 CNY (¥)	Jan. 31, 2020 CNY (¥)	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Apr. 30, 2019 CNY (¥)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 CNY (¥)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 CNY (¥)	Dec. 31, 2017 USD ($)	Nov. 30, 2017 CNY (¥)	Apr. 30, 2020 CNY (¥)	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Mar. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2020 USD ($)	Apr. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Feb. 29, 2020 USD ($)	Jan. 31, 2020 USD ($)	Apr. 30, 2019 USD ($)	Nov. 30, 2017 USD ($)
Loans (Details) [Line Items]
Short-term loans																	¥ 498,574	$ 77,174		¥ 789,550
Restricted cash																	355,017	54,953		187,241
Long-term loan principal																	¥ 1,147,007	$ 177,545
Banking Facility Agreement with U B S G Singapore Branch [Member] | London Interbank Offered Rate (LIBOR) [Member]
Loans (Details) [Line Items]
Annual interest rate										2.70%
Shanghai OneAmart Education and Training Co. Ltd [member]
Loans (Details) [Line Items]
Short-term loans																					$ 800
Shanghai OneAmart Education and Training Co. Ltd [member] | Banking Facility Agreement With Shanghai Pudong Development Bank [Member]
Loans (Details) [Line Items]
Short-term loan facility amount															¥ 450,000												$ 69,655
Loan term															5 years												5 years
Amount repaid							¥ 67,500	$ 10,448			¥ 45,000	$ 6,966	¥ 450,000	$ 69,655
Shanghai OneAmart Education and Training Co. Ltd [member] | Banking Facility Agreement With Shanghai Pudong Development Bank [Member] | Five Year Lending Rate Of Peoples Bank Of China [Member]
Loans (Details) [Line Items]
Debt instrument description															In November 2017, Shanghai OneSmart entered into a banking facility agreement with Shanghai Pudong Development Bank, pursuant to which Shanghai OneSmart is entitled to borrow a RMB denominated loan of RMB450,000 (US$69,655) for five years with a floating interest rate benchmarked to the five-year lending rate of PBOC and adjusted every January during the five-year period.
Shanghai Onesmart Education Investment Co., Ltd. [Member]
Loans (Details) [Line Items]
Loan term						4 years																			4 years
Percentage of equity investment						100.00%
Shanghai Onesmart Education Investment Co., Ltd. [Member] | Banking Facility Agreement With Shanghai Pudong Development Bank [Member]
Loans (Details) [Line Items]
Short-term loan facility amount						¥ 14,400			¥ 43,200																$ 2,229	$ 6,687
Loan term									5 years																	5 years
Amount repaid		¥ 4,320	$ 669
Long-term loan principal									¥ 43,200																	$ 6,687
Shanghai Onesmart Education Investment Co., Ltd. [Member] | Banking Facility Agreement With Shanghai Pudong Development Bank [Member] | One Year Lending Rate Of Peoples Bank Of China [Member]
Loans (Details) [Line Items]
Debt instrument description						In January 2020, OneSmart Education Investment entered into a bank loan agreement with Shanghai Pudong Development Bank, pursuant to which Shanghai OneSmart is entitled to borrow a RMB denominated loan of RMB14,400 (US$2,229) for four years with a floating interest rate benchmarked to the one-year lending rate of PBOC.
Shanghai Onesmart Education Investment Co., Ltd. [Member] | Banking Facility Agreement With Shanghai Pudong Development Bank [Member] | Five Year Lending Rate Of Peoples Bank Of China [Member]
Loans (Details) [Line Items]
Debt instrument description									In April 2019, Shanghai OneSmart Education Investment entered into a banking facility agreement with Shanghai Pudong Development Bank, pursuant to which Shanghai OneSmart is entitled to borrow a RMB denominated loan of RMB43,200(US$6,687) for five years with a floating interest rate benchmarked to the five-year lending rate of PBOC.
Banking Facility Agreement With China Merchants Bank [ Member ] | Shanghai OneAmart Education and Training Co. Ltd [member]
Loans (Details) [Line Items]
Short-term loan facility amount	¥ 90,000					¥ 95,000													$ 13,931						$ 14,705
Short-term loans																				60,000	9,287
Banking Facility Agreement With China Merchants Bank [ Member ] | Shanghai OneAmart Education and Training Co. Ltd [member] | One Year Lending Rate Of Peoples Bank Of China [Member]
Loans (Details) [Line Items]
Debt instrument description						In January 2020, Shanghai OneSmart entered into a banking facility agreement with China Merchants Bank, pursuant to which Shanghai OneSmart is entitled to borrow a loan of RMB95,000(US$14,705) with floating interest rate benchmarked to the one-year lending rate of PBOC.
Banking Facility Agreement With Shanghai Pudong Development Bank [Member] | One Year Lending Rate Of Peoples Bank Of China [Member]
Loans (Details) [Line Items]
Debt instrument description																In January, March and April 2020, Shanghai OneSmart entered into four loan agreements with Shanghai Pudong Development Bank, pursuant to which Shanghai OneSmart is entitled to borrow RMB400,000 (US$61,916) in aggregate with floating interest rate benchmarked to the one-year lending rate of PBOC.
Banking Facility Agreement With Shanghai Pudong Development Bank [Member] | Shanghai OneAmart Education and Training Co. Ltd [member]
Loans (Details) [Line Items]
Short-term loan facility amount		¥ 400,000														¥ 400,000						$ 61,916
Number of loan agreements																4
Short-term loans																				200,000	30,958
Deposits																					32,000
Banking Facility With Bank Of Ningbo Co. Ltd One [ Member ] | Shanghai OneAmart Education and Training Co. Ltd [member]
Loans (Details) [Line Items]
Proceeds from Short-Term Debt (in Yuan Renminbi) | ¥					¥ 26,300
Proceeds from Short-term Debt																								$ 4,071
Banking Facility Agreement With China Citic Bank [Member] | One Year Lending Rate Of Peoples Bank Of China [Member]
Loans (Details) [Line Items]
Debt instrument description				In March 2020, Shanghai OneSmart entered into three loan agreements with China CITIC Bank, pursuant to which Shanghai OneSmart is entitled to borrow RMB140,000 (US$21,670) in aggregate with floating interest rate benchmarked to the one-year lending rate of PBOC.
Banking Facility Agreement With China Citic Bank [Member] | Shanghai OneAmart Education and Training Co. Ltd [member]
Loans (Details) [Line Items]
Short-term loan facility amount	¥ 98,000			¥ 140,000															$ 15,169				$ 21,670
Number of loan agreements	3			3
Restricted cash																				40,212	6,224
Banking Facility With China MinSheng Bank Co. Ltd [Member] | Shanghai OneAmart Education and Training Co. Ltd [member] | Euro Interbank Offered Rate [Member]
Loans (Details) [Line Items]
Short-term loan facility amount				¥ 100,000																			$ 15,479
Banking Facility With China Minsheng Banking Corp. Ltd [Member] | Shanghai OneAmart Education and Training Co. Ltd [member]
Loans (Details) [Line Items]
Annual interest rate				4.785%
Banking Facility With China Everbright Bank Co. Ltd [Member] | Shanghai OneAmart Education and Training Co. Ltd [member]
Loans (Details) [Line Items]
Short-term loans																				50,000	7,739
Banking Facility With China Everbright Bank Co. Ltd [Member] | Shanghai OneAmart Education and Training Co. Ltd [member] | Euro Interbank Offered Rate [Member]
Loans (Details) [Line Items]
Debt instrument description		Shanghai OneSmart entered into a banking facility agreement with China Everbright Bank Co. Ltd, Seoul Branch, pursuant to which Shanghai OneSmart is entitled to borrow a term loan facility of up to EUR10,000 with a floating interest rate of EURIBOR+1.7% to finance general working capital purpose. As of August 31, 2020, Shanghai OneSmart drew down EUR9,800.	Shanghai OneSmart entered into a banking facility agreement with China Everbright Bank Co. Ltd, Seoul Branch, pursuant to which Shanghai OneSmart is entitled to borrow a term loan facility of up to EUR10,000 with a floating interest rate of EURIBOR+1.7% to finance general working capital purpose. As of August 31, 2020, Shanghai OneSmart drew down EUR9,800.
Banking Facility With Bank Of Ningbo Co. Ltd Two [Member] | Shanghai OneAmart Education and Training Co. Ltd [member]
Loans (Details) [Line Items]
Short-term loan facility amount																				¥ 24,060	$ 3,724
Term Facility [Member] | Banking Facility Agreement with U B S G Singapore Branch [Member]
Loans (Details) [Line Items]
Short-term loan facility amount										$ 139,000
Long-term loan principal										139,000
Green Shoe Facility [Member] | Banking Facility Agreement with U B S G Singapore Branch [Member]
Loans (Details) [Line Items]
Short-term loan facility amount										$ 61,000

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Loans (Details) - Schedule of company’s outstanding loans ¥ in Thousands, $ in Thousands	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)
Schedule of company’s outstanding loans [Abstract]
Short-term loans	¥ 498,574	$ 77,174	¥ 789,550
Long-term loans, current portion	513,432	79,474	295,433
Long-term loans	¥ 135,000	$ 20,897	¥ 1,023,151

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Loans (Details) - Schedule of maturities of the loan principals - Aug. 31, 2021 ¥ in Thousands, $ in Thousands	CNY (¥)	USD ($)
Schedule of maturities of the loan principals [Abstract]
2022	¥ 1,012,007	$ 156,648
2023	135,000	20,897
2024
2025
2026
Long-term loan principal	¥ 1,147,007	$ 177,545

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Convertible Senior Notes (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended
	Mar. 16, 2023	Feb. 28, 2023	Mar. 16, 2020	Feb. 28, 2020	Aug. 31, 2021
Convertible Senior Notes (Details) [Line Items]
Maturity date				Feb. 28, 2025
Principal amount (in Dollars)					$ 1,000
Convertible Senior Notes [Member]
Convertible Senior Notes (Details) [Line Items]
Issued amount (in Dollars)			$ 10,000	$ 25,000
Arrears rate percentage			4.75%	4.75%
Principal amount (in Dollars)					$ 1,000
Conversion price per share				$ 6.75
Convertible Senior Notes [Member] | American Depositary Shares [Member]
Convertible Senior Notes (Details) [Line Items]
Initial conversion price per share			$ 162.52	148.08
Conversion price per share			6.15
Favorable conversion price per share			$ 5.02	$ 5.44
Forecast [Member] | Convertible Senior Notes [Member]
Convertible Senior Notes (Details) [Line Items]
Repurchase price percentage	100.00%	100.00%

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Earnings/(Loss) Per Share (Details) - Schedule of computation of basic and diluted net income per share ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥) ¥ / shares shares	Aug. 31, 2021 USD ($) $ / shares shares	Aug. 31, 2020 CNY (¥) ¥ / shares shares	Aug. 31, 2019 CNY (¥) ¥ / shares shares
Numerator:
Net income/(loss) attribute to OneSmart International Education Group Limited’s shareholders	¥ (4,987,567)	$ (772,022)	¥ (729,829)	¥ 245,368
Accretion to redemption value of Preferred Shares
Deemed dividend-repurchase of Preferred Shares
Net income/(loss) attributable to ordinary shareholders for computing net income per ordinary share - basic and diluted	¥ (4,987,567)	$ (772,022)	¥ (729,829)	¥ 245,368
Denominator:
Weighted average number of shares used in calculating net income/(loss) per ordinary share - basic (in millions of shares)	6,612	6,612	6,451	6,460
Incremental weighted-average ordinary shares from assumed exercise of share options and vesting of restricted shares using the treasury stock method (in millions of shares)				249
Weighted average number of shares used in calculating net income/(loss) per ordinary share - diluted (in millions of shares)	6,612	6,612	6,451	6,709
Earnings/(loss) per share - basic | (per share)	¥ (0.7543)	$ (0.1168)	¥ (0.1131)	¥ 0.038
Earnings/(loss) per share - diluted | (per share)	¥ (0.7543)	$ (0.1168)	¥ (0.1131)	¥ 0.0366

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Accumulated Other Comprehensive Income (Details) - Schedule of components of accumulated other comprehensive income ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)	Aug. 30, 2018 CNY (¥)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	¥ 99,167		¥ 87,148	¥ 128,900	¥ 19,123
Other comprehensive income before reclassification, net of tax	(15,905)		(8,885)	(35,150)	37,157
Amounts reclassified from accumulated other comprehensive income, net of tax	9,431		10,561	(11)	(13,838)
Foreign currency translation adjustment	10,343			(6,591)	86,458
Ending balance	92,693		99,167	87,148
Ending balance (in Dollars)	92,693	$ 14,346	99,167	87,148
Unrealized Gains/(Loss) On Investment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	8,957		7,281	42,442	19,123
Other comprehensive income before reclassification, net of tax	(15,905)		(8,885)	(35,150)	37,157
Amounts reclassified from accumulated other comprehensive income, net of tax	4,210		10,561	(11)	(13,838)
Foreign currency translation adjustment
Ending balance	(2,738)		8,957	7,281
Ending balance (in Dollars)	(2,738)	(424)	8,957	7,281
Foreign Currency Translation Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	90,210		79,867	86,458
Other comprehensive income before reclassification, net of tax
Amounts reclassified from accumulated other comprehensive income, net of tax	5,221
Foreign currency translation adjustment	10,343			(6,591)	¥ 86,458
Ending balance	95,431		90,210	79,867
Ending balance (in Dollars)	¥ 95,431	$ 14,770	¥ 90,210	¥ 79,867

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Redeemable Convertible Preferred Shares (Details) ¥ in Thousands, $ in Thousands	1 Months Ended				12 Months Ended
	Dec. 31, 2017 CNY (¥) shares	Dec. 31, 2017 USD ($) shares	Sep. 30, 2017 CNY (¥) shares	Sep. 30, 2017 USD ($) shares	Aug. 31, 2021 CNY (¥) shares	Aug. 31, 2021 USD ($) shares	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)
Redeemable Convertible Preferred Shares (Details) [Line Items]
Accretion charge
Repurchased an aggregate shares (in Shares)					76,586,600	76,586,600
Complete a qualified months					36 months	36 months
Documents governing reorganization					12 months	12 months
Interest rate percentage					10.00%	10.00%
Series A Redeemable Convertible Preferred Shares [Member]
Redeemable Convertible Preferred Shares (Details) [Line Items]
Shares issued (in Shares)					1,890,686,563	1,890,686,563
Repurchased an aggregate shares (in Shares)			341,256,445	341,256,445
Cash consideration | $				$ 46,850
Series A-1 Redeemable Convertible Preferred Shares [Member]
Redeemable Convertible Preferred Shares (Details) [Line Items]
Shares issued (in Shares)			1,840,535,677	1,840,535,677	35,757,200	35,757,200
Total cash consideration			¥ 1,840,536	$ 284,895
Accretion charge	¥ 204,007	$ 31,578	¥ 758,898	$ 117,469
Class A Ordinary Share [Member]
Redeemable Convertible Preferred Shares (Details) [Line Items]
Repurchased an aggregate shares (in Shares)			94,897,359	94,897,359
Converted into ordinary share (in Shares)					1	1
Xi Zhang Founder [Member] | Class B Ordinary Shares [Member]
Redeemable Convertible Preferred Shares (Details) [Line Items]
Cash consideration	¥ 163,023	$ 25,234
Founder transferred shares (in Shares)	142,642,550	142,642,550
IPO occurs within 18 months [Member]
Redeemable Convertible Preferred Shares (Details) [Line Items]
Equivalent amount | ¥					¥ 6,500,000
Closing date of the preferred shares issuance					18 months	18 months
IPO Occurs Within 18 To 27 Months [Member]
Redeemable Convertible Preferred Shares (Details) [Line Items]
Equivalent amount | ¥					¥ 7,000,000
IPO Occurs Within 18 To 27 Months [Member] | Minimum [Member]
Redeemable Convertible Preferred Shares (Details) [Line Items]
Closing date of the preferred shares issuance					18 months	18 months
IPO Occurs Within 18 To 27 Months [Member] | Maximum [Member]
Redeemable Convertible Preferred Shares (Details) [Line Items]
Closing date of the preferred shares issuance					27 months	27 months
IPO Occurs After 27 Months but Before Third Anniversary of Closing Date [Member]
Redeemable Convertible Preferred Shares (Details) [Line Items]
Equivalent amount | ¥					¥ 7,500,000
Closing date of the preferred shares issuance					27 months	27 months

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Restricted Net Assets (Details) ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)	Aug. 31, 2021 USD ($)
Restricted Net Assets [Abstract]
Annual appropriations percentage of after-tax income	10.00%	10.00%
PRC entity’s registered capital	50.00%	50.00%
Appropriations to general reserve	¥ 1,643	$ 254	¥ 1,226	¥ 886
Annual appropriations	25.00%	25.00%
Total appropriation	¥ 14,784		¥ 11,044	¥ 6,194	$ 2,288

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Leases (Details) - 12 months ended Aug. 31, 2021 ¥ in Thousands, $ in Thousands	CNY (¥)	USD ($)
Disclosure Text Block [Abstract]
Right-of-use asset and the lease liability	¥ 45,368	$ 7,022

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Leases (Details) - Schedule of operating lease costs - 12 months ended Aug. 31, 2021 ¥ in Thousands, $ in Thousands	CNY (¥)	USD ($)
Operating Lease Costs:
Fixed	¥ 645,180	$ 99,867
Short-term	8,365	1,295
Total	¥ 653,545	$ 101,162

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Commitments and Contingencies (Details)	12 Months Ended
	Aug. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Capital expenditure commitments, period	1 year

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Fair Value Measurement (Details) - 12 months ended Aug. 31, 2021 ¥ in Thousands, $ in Thousands	CNY (¥)	USD ($)
Fair Value Disclosures [Abstract]
Impairment charge	¥ 1,372,582	$ 212,461

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Fair Value Measurement (Details) - Schedule of assets and liabilities measured or disclosed at fair value ¥ in Thousands, $ in Thousands	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2020 USD ($)
Short-term investments:
Available-for-sale	¥ 68,575		¥ 243,743
Long-term investments:
Available-for-sale			614,141
Total assets measured at fair value	68,575	$ 10,615	857,884	$ 125,286
Total assets measured at fair value in US$ (in Dollars)	68,575	10,615	857,884	125,286
Fair value measurement
Contingent consideration			47,084
Total liability measured at fair value			47,084	7,288
Total liability measured at fair value in US$ (in Dollars)			47,084	7,288
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
Short-term investments:
Available-for-sale
Long-term investments:
Available-for-sale
Total assets measured at fair value
Total assets measured at fair value in US$ (in Dollars)
Fair value measurement
Contingent consideration
Total liability measured at fair value
Total liability measured at fair value in US$ (in Dollars)
Significant Other Observable Inputs (Level 2) [Member]
Short-term investments:
Available-for-sale
Long-term investments:
Available-for-sale
Total assets measured at fair value
Total assets measured at fair value in US$ (in Dollars)
Fair value measurement
Contingent consideration
Total liability measured at fair value
Total liability measured at fair value in US$ (in Dollars)
Significant Unobservable Inputs (Level 3) [Member]
Short-term investments:
Available-for-sale	68,575		243,743
Long-term investments:
Available-for-sale			614,141
Total assets measured at fair value	68,575	10,615	857,884	125,286
Total assets measured at fair value in US$ (in Dollars)	68,575	10,615	857,884	125,286
Fair value measurement
Contingent consideration			47,084
Total liability measured at fair value			47,084	7,288
Total liability measured at fair value in US$ (in Dollars)			¥ 47,084	$ 7,288

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Fair Value Measurement (Details) - Schedule of reconciliations of assets fair value hierarchy for Available-for-sale investments - Fair Value, Inputs, Level 3 [Member] ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)	Aug. 30, 2018 CNY (¥)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance	¥ 857,884		¥ 1,272,178
Additions	64,604		358,256	¥ 1,040,581
Disposals	(247,617)		(547,131)	(262,651)
Changes in fair value	3,874		(12,422)	(43,454)
Accrued interest	3,971		23,628	52,395
Impairment loss	(614,141)		(236,625)
Ending balance	68,575		857,884	1,272,178	¥ 485,307
Ending balance (in Dollars)	¥ 68,575	$ 10,615	¥ 857,884	¥ 1,272,178

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Subsequent Event (Details)			12 Months Ended
	Feb. 11, 2022 USD ($)	Jan. 24, 2022 $ / shares shares	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)
Subsequent Event (Details) [Line Items]
Due and payable				$ 62,060,000
Maturity year			Subsequent to this reporting date, the Company breached event of default covenants due to the Company’s default in the payment of the banking facility which indebtedness has an aggregate outstanding principal in excess of US$10 million   and such indebtedness was due and payable prior to its stated maturity of April 2022.
Outstanding principal in excess amount				10,000,000
Convertible senior notes				35,000,000
Long-term loan			¥ 135,000,000	$ 20,897,000
Subsequent event description			Subsequent to this reporting date, the Company sold two properties at RMB12,750 (US$1,974) and RMB15,500 (US$2,399), both transactions were completed in September 2021 and the Company recorded gains of disposal at RMB1,601(US$248) and RMB4,997(US$773), respectively.
Forecast [Member]
Subsequent Event (Details) [Line Items]
Average percentage		90.00%
Current conversion shares (in Shares) | shares		1,000
Gross proceeds	$ 28,500
Class A Ordinary Shares [Member] | Forecast [Member]
Subsequent Event (Details) [Line Items]
Agreed shares issued (in Shares) | shares		8,000,000,000
Shares per value (in Dollars per share) | $ / shares		$ 0.000001
Purchase price per share (in Dollars per share) | $ / shares		$ 0.0035625

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Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category ¥ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Numbers	412
Total amount involved	¥ 30,108
Lease [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Numbers	5
Total amount involved	¥ 2,167
Lease [Member] | Minimum [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Amount involved scope per case	371
Lease [Member] | Maximum [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Amount involved scope per case	¥ 797
Advertising [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Numbers	1
Total amount involved	¥ 3,968
Amount involved scope per case	¥ 3,968
Technology Service [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Numbers	2
Total amount involved	¥ 503
Technology Service [Member] | Minimum [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Amount involved scope per case	237
Technology Service [Member] | Maximum [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Amount involved scope per case	¥ 266
Education Service [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Numbers	310
Total amount involved	¥ 13,653
Education Service [Member] | Minimum [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Amount involved scope per case	1
Education Service [Member] | Maximum [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Amount involved scope per case	¥ 386
Purchase [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Numbers	4
Total amount involved	¥ 2,424
Purchase [Member] | Minimum [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Amount involved scope per case	49
Purchase [Member] | Maximum [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Amount involved scope per case	¥ 1,298
Property Preservation [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Numbers	2
Total amount involved	¥ 2,440
Property Preservation [Member] | Minimum [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Amount involved scope per case	62
Property Preservation [Member] | Maximum [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Amount involved scope per case	¥ 2,377
Decoration [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Numbers	3
Total amount involved	¥ 4,020
Decoration [Member] | Minimum [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Amount involved scope per case	680
Decoration [Member] | Maximum [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Amount involved scope per case	¥ 2,540
Other [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Numbers	85
Total amount involved	¥ 933
Other [Member] | Minimum [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Amount involved scope per case	40
Other [Member] | Maximum [Member]
Subsequent Event (Details) - Schedule of total number of the lawsuits by category, amount involved and scope of each category [Line Items]
Amount involved scope per case	¥ 80

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Condensed Financial Information of the Company (Details) - Schedule of condensed balance sheets - Parent Company [Member] ¥ in Thousands, $ in Thousands	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)
Current assets:
Cash and cash equivalents	¥ 27,150	$ 4,203	¥ 162,391
Restricted cash	12,046	1,865	122,969
Short-term investments	68,575	10,615	287,585
Amounts due from subsidiaries	2,081,389	322,176
Total current assets	2,189,160	338,859	572,945
Non-current assets:
Long-term investment			872,756
Investments in subsidiaries, VIEs and VIEs’ subsidiaries			1,176,422
Total non-current assets			2,049,178
TOTAL ASSETS	2,189,160	338,859	2,622,123
Current liabilities:
Accrued expenses and other current liabilities	13,019	2,015
Long-term loan, current portion	400,932	62,060
Total current liabilities	413,951	64,075
Non-current liabilities:
Loss in excess of Investments in subsidiaries, VIEs and VIEs’ subsidiaries	5,934,617	918,614
Convertible Loan	226,114	35,000
Amounts due to subsidiaries	246,127	38,098	2,221,486
Total non-current liabilities	6,406,858	991,712	2,221,486
TOTAL LIABILITIES	6,820,809	1,055,787	2,221,486
Shareholder’ equity:
Additional paid-in capital	5,337,962	826,259	5,598,978
Treasury stock	(344)	(53)	(274,648)
Statutory reserves	16,427	2,543	12,270
Accumulated deficit	(10,078,429)	(1,560,033)	(5,035,172)
Accumulated other comprehensive income	92,693	14,350	99,167
Total shareholders’ equity	(4,631,649)	(716,928)	400,637
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	2,189,160	338,859	2,622,123
Class A Ordinary Shares
Shareholder’ equity:
Ordinary shares value	26	4	26
Class B Ordinary Shares
Shareholder’ equity:
Ordinary shares value	¥ 16	$ 2	¥ 16

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Condensed Financial Information of the Company (Details) - Schedule of condensed balance sheets (Parentheticals) - Parent Company [Member] - $ / shares	Aug. 31, 2020	Aug. 31, 2019
Class A Ordinary Shares
Condensed Balance Sheet Statements, Captions [Line Items]
Ordinary shares par value (in Dollars per share)	$ 0.000001	$ 0.000001
Ordinary shares, shares authorized	37,703,157,984	37,703,157,984
Ordinary shares, shares issued	4,146,103,947	4,130,261,827
Ordinary shares, shares outstanding	4,146,103,947	4,130,261,827
Class B Ordinary Shares
Condensed Balance Sheet Statements, Captions [Line Items]
Ordinary shares par value (in Dollars per share)	$ 0.000001	$ 0.000001
Ordinary shares, shares issued	2,296,842,016	2,296,842,016
Ordinary shares, shares outstanding	2,296,842,016	2,296,842,016

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Condensed Financial Information of the Company (Details) - Schedule of condensed statements of income/(loss) ​ - Parent Company [Member] ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)
Operating expenses:
Selling and marketing	¥ (110)	$ (17)	¥ (674)	¥ (906)
General and administrative	(62,492)	(9,673)	(140,821)	(70,258)
Interest income	5,678	879	2,083	3,905
Interest expense	(51,335)	(7,946)	(58,857)	(27,960)
Foreign exchange gain/(loss)	(1,655)	(256)	4,336	(1,526)
Share of income/(loss) in subsidiaries, VIEs and VIEs’ subsidiaries	(4,877,653)	(755,009)	(535,896)	342,113
Income/(loss) before income tax provision	(4,987,567)	(772,022)	(729,829)	245,368
Provision for income tax
Net income/(loss)	(4,987,567)	(772,022)	(729,829)	245,368
Accretion to redemption value of redeemable convertible preferred shares
Deemed dividend-repurchase of redeemable convertible preferred shares
Net income/(loss) attributable to ordinary shareholders of OneSmart International Education Group Limited	¥ (4,987,567)	$ (772,022)	¥ (729,829)	¥ 245,368

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Condensed Financial Information of the Company (Details) - Schedule of condensed statements of comprehensive income/(loss) - Parent Company [Member] ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)
Condensed Statement of Income Captions [Line Items]
Net income/(loss)	¥ (4,987,567)	$ (772,022)	¥ (729,829)	¥ 245,368
Unrealized gain on available-for-sale investments, net of tax	4,009	621	1,676	(35,161)
Foreign currency translation adjustment	5,221	808	10,343	(6,591)
Comprehensive income/(loss)	¥ (4,978,337)	$ (770,593)	¥ (717,810)	¥ 203,616

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Condensed Financial Information of the Company (Details) - Schedule of condensed statements of cash flows - Parent Company [Member] ¥ in Thousands, $ in Thousands	12 Months Ended
	Aug. 31, 2021 CNY (¥)	Aug. 31, 2021 USD ($)	Aug. 31, 2020 CNY (¥)	Aug. 31, 2019 CNY (¥)
Condensed Cash Flow Statements, Captions [Line Items]
Net cash used in by operating activities			¥ (319,227)	¥ (8,668)
Net cash used in investing activities			(117,034)	(1,042,665)
Net cash provided by financing activities	(230,316)	(35,650)	176,546	732,306
Effect of exchange rate changes	(15,848)	(2,453)	(23,063)	33,033
Net increase/(decrease) in cash and cash equivalents and restricted cash	(246,164)	(38,103)	(282,778)	(285,994)
Cash and cash equivalents and restricted cash, at beginning of year	285,360	44,171	568,138	854,132
Cash and cash equivalents and restricted cash, at end of year	¥ 39,196	$ 6,068	¥ 285,360	¥ 568,138