F-1/A 1 h00839a1fv1za.htm ATA INC. ATA INC.
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As filed with the Securities and Exchange Commission on January 16, 2008
Registration No. 333-148512
 
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Amendment No. 1
to
Form F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
ATA Inc.
(Exact name of Registrant as Specified in its Charter)
         
Cayman Islands   8200   Not Applicable
(State or Other Jurisdiction of
Incorporation or Organization)		   (Primary Standard Industrial
Classification Code Number)		   (I.R.S. Employer
Identification Number)
 
8th Floor, Tower E
6 Gongyuan West Street,
Jian Guo Men Nei
Beijing 100005, China
Telephone: 86-10-6518-1122
(Address and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
 
CT Corporation System
111 Eighth Avenue, 13th Floor
New York, New York 10011
(212) 894-8940
 
Copies to:
         
Howard Zhang, Esq.
O’Melveny & Myers LLP
37th Floor, Yin Tai Centre, Office Tower
No. 2 Jianguomenwai Avenue
Beijing 100022, China
86-10-6563-4200		   David Johnson, Esq.
O’Melveny & Myers LLP
1999 Avenue of the Stars, 7th Floor
Los Angeles
CA 90067-6035
(310) 553-6700		   Chris K.H. Lin, Esq.
Simpson Thacher & Bartlett LLP
35th Floor, ICBC Tower
3 Garden Road
Central, Hong Kong SAR, China
852-2514-7600
          Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
          If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o
          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o
          If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o
          If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o
CALCULATION OF REGISTRATION FEE
                         
                         
                         
            Proposed Maximum     Proposed Maximum     Amount of
Title of Each Class of     Amount to be     Offering Price per     Aggregate     Registration
Securities to be Registered(1)(2)     Registered(2)(3)     Unit(3)     Offering Price(3)     Fee
                         
Common shares, par value $0.01 per share
     11,210,226     $5.75     $64,458,800     $2,533(4)
                         
                         
(1)  American depositary shares, or ADSs, evidenced by American depositary receipts issuable upon deposit of the common shares registered hereby will be registered under a separate registration statement on Form F-6. Each ADS represents two common shares.
 
(2)  Includes (a) common shares represented by ADSs that may be purchased by the underwriters pursuant to their overallotment option and (b) all common shares represented by ADSs initially offered and sold outside the United States that may be resold from time to time in the United States either as part of the distribution or within 40 days after the later of the effective date of this registration statement and the date the securities are first bona fide offered to the public.
 
(3)  Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended.
(4)  Previously paid.
          The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
 
 

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The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion,
Preliminary Prospectus dated January 16, 2008
PROSPECTUS
4,874,012 American Depositary Shares
ATA LOGO
ATA Inc.
Representing 9,748,024 Common Shares
 
          This is ATA Inc.’s initial public offering. ATA Inc., or ATA, is offering 4,874,012 American depositary shares, or ADSs. Each ADS represents two common shares.
          We expect the public offering price to be between $9.50 and $11.50 per ADS. Currently, no public market exists for the ADSs or the common shares. We have applied to have our ADSs listed on the Nasdaq Global Market under the symbol “ATAI.”
          Investing in the ADSs involves risks that are described in the “Risk Factors” section beginning on page 9 of this prospectus.
 
                 
    Per ADS   Total
         
Public offering price
     $       $  
Underwriting discount
     $       $  
Proceeds, before expenses, to ATA
     $       $  
          The underwriters may also purchase up to an additional 731,101 ADSs from us at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover overallotments.
          Neither the Securities and Exchange Commission nor any state securities regulator has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
          The ADSs are expected to be delivered against payment on or about                     , 2008.
 
Merrill Lynch & Co.
 
Piper Jaffray
 
Susquehanna Financial Group, LLLP
 
The date of this prospectus is                     , 2008

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 EX-5.1 OPINION OF CONYERS, DILL & PEARMAN
 EX-8.1 OPINION OF O'MELVENY & MYERS LLP
 EX-8.2 OPINION OF CONYERS, DILL & PEARMAN
 EX-10.4 MASTER SERVICE AGREEMENT
 EX-23.1 CONSENT OF KPMG
 EX-23.4 CONSENT OF IDC
 EX-23.5 CONSENT OF SALLMANNS (FAR EAST) LIMITED
 EX-23.6 CONSENT OF HOPE NI
 EX-23.7 CONSENT OF ALEC TSUI
 
          You should rely only on the information contained in this prospectus. Neither we nor the underwriters have authorized anyone to provide you with information that is different from that contained in this prospectus. This prospectus may only be used where it is legal to offer and sell these securities. The information in this prospectus is only accurate as of the date of this prospectus.
 
          Through and including                     , 2008 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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Conventions That Apply to This Prospectus
          Unless we indicate otherwise, information is presented in this prospectus assuming that:
  •  the underwriters will not exercise their option to purchase additional ADSs to cover overallotments; and
 
  • all of our outstanding preferred shares will be converted into common shares immediately prior to the completion of this offering.
          In this prospectus,
  • all references to years are to the calendar year from January 1 to December 31 unless specifically stated otherwise, and references to our fiscal year or years are to the fiscal year or years ended March 31;
 
  • “we,” “us,” “our company,” “our” and “ATA” refer to ATA Inc., and its subsidiaries and affiliated PRC entity as the context requires;
 
  • “China,” “Chinese” and “PRC” refer to the People’s Republic of China, excluding for purposes of this prospectus Taiwan, Hong Kong and Macau;
 
  • “RMB” and “Renminbi” refer to the legal currency of China, and “U.S. dollars,” “dollars,” and “$” refer to the legal currency of the United States; and
 
  • “U.S. GAAP” refers to generally accepted accounting principles in the United States.
          This prospectus contains translations of Renminbi amounts into U.S. dollars at specified rates. Unless otherwise noted, all translations from Renminbi to U.S. dollar amounts were made at the noon buying rate in the City of New York for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve Bank of New York, as of September 28, 2007, which was RMB7.4928 to $1.00. We make no representation that the Renminbi or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. The Chinese government restricts or prohibits the conversion of Renminbi into foreign currency and foreign currency into Renminbi for certain types of transactions. On January 15, 2008, the noon buying rate was RMB7.2345 to $1.00.
          This prospectus contains information and statistics relating to China’s economy and the industries in which we operate derived from various publications issued by Chinese governmental entities and other third parties which have not been independently verified by us, the underwriters or any of their respective affiliates or advisers. The information in such third-party sources may not be consistent with other information compiled in or outside China.
          We commissioned International Data Corporation, or IDC, a leading provider of global IT research and advice, to prepare a report for the purpose of providing various industry and other information and illustrating our position in the computer-based testing services market in China. Information from this report appears in Industry, Business and other sections of this prospectus. We have taken such care as we consider reasonable in the reproduction and extraction of information from the IDC report and other third-party sources.

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SUMMARY
          This summary highlights selected information contained in greater detail elsewhere in this prospectus. This summary may not contain all of the information that you should consider before investing in our ADSs. You should carefully read the entire prospectus, including the “Risk Factors” section and our consolidated financial statements and the accompanying notes, before making an investment decision.
ATA Inc.
Our Business
          We are the leading provider of computer-based testing services in China, with the largest market share, 30.9%, in terms of revenue in 2006, according to IDC. We also provide career-oriented, test-based educational programs and test preparation solutions in China. To comply with PRC law, we operate the online portion of our test preparation solutions business through a series of contractual arrangements with ATA Online (Beijing) Education Technology Limited, or ATA Online, a PRC entity owned by two of our founders and over which we do not have direct control or direct oversight. Our clients include professional associations, such as the China Banking Association and the Securities Association of China, which accounted for 19.5% and 4.2%, respectively, of our net revenues for the six months ended September 30, 2007, Chinese governmental agencies, including the PRC Ministry of Labor, which accounted for 8.5% of our net revenues for the same period, well-known IT vendors, Chinese educational institutions, distributors of our test preparation software products, and individual test preparation services consumers. During the six months ended September 30, 2007, approximately two million tests were delivered using our computer-based testing technologies and services.
          We began providing computer-based testing services in 1999. We offer comprehensive services for the creation and delivery of computer-based tests based on our proprietary testing technologies and test delivery platform. Our computer-based testing services are used for professional licensure and certification tests in various industries, including information technology, or IT, services, banking, teaching, securities, insurance and accounting. Our test center network comprised 1,810 authorized test centers located throughout China as of September 30, 2007, which we believe is the largest test center network of any commercial testing service provider in China based on client feedback and our market experience. Combined with our test delivery technologies, this network allows our clients to administer large-scale nationwide tests in a consistent, secure and cost-effective manner. We have delivered over 23 million tests since 1999, and in July 2007 delivered tests to more than 200,000 test takers in a single day for the China Banking Association, through our test delivery platform.
          Leveraging our testing expertise, we have expanded into providing career-oriented educational services and test preparation solutions. In 2002, we began offering career-oriented course programs, which we market to Chinese educational institutions. We develop our course programs by integrating our testing technologies and services with IT learning content authorized by major IT vendors such as Microsoft China, Borland and Adobe. In March 2006, we began offering pre-occupational training programs, which allow students to obtain practical skills for specific job requirements. By integrating our testing technologies with test preparation content, we began offering targeted test preparation solutions for certain professional licensure and certification tests in the securities, insurance and teaching industries in 2006. ATA Online has launched online test preparation Internet web sites in coordination with the Securities Association of China and the China Banking Association to help candidates across China prepare for these organizations’ professional licensure and certification tests, which are delivered through our test delivery platform. We also offer our NTET Tutorial Platform software for training teachers for certification under the National Teachers’ Skill Test of Applied Educational Technology in Secondary and Elementary School, or NTET test, which is delivered nationwide through our test delivery platform.
          Our proprietary technologies and know-how for the creation and delivery of computer-based tests are important to our service capabilities. Our E-testing platform is composed of a set of self-developed tools and applications for facilitating the computer-based testing process, and is capable of handling

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large-scale tests and quickly and securely transmitting, processing and storing large amounts of data. We have also developed proprietary technologies for the creation and operation of advanced performance-based tests, such as our self-developed Dynamic Simulation Technology, which leading IT certification sponsors, such as Microsoft, have adopted for their computer-simulated tests given around the world. We have also developed content creation technologies for the conversion of paper-based tests into computer-based formats.
          Our total net revenues have increased from RMB69.0 million for the fiscal year ended March 31, 2006 to RMB84.9 million ($11.3 million) for the fiscal year ended March 31, 2007 and from RMB32.4 million for the six months ended September 30, 2006 to RMB76.2 million ($10.2 million) for the six months ended September 30, 2007. We had net losses of RMB24.8 million and RMB16.8 million for the fiscal years ended March 31, 2006 and 2007, respectively, and net income of RMB8.5 million ($1.1 million) for the six months ended September 30, 2007.
China’s Testing and Education Markets
          China has one of the fastest growing economies in the world. As China’s economy continues to develop, its service industries are playing an increasingly important role. We believe this will increase opportunities in the testing and education markets as people continue to seek advanced skills and professional licenses and certifications.
          China has one of the world’s largest testing markets in terms of test takers, with 122.7 million test candidates in 2006, according to IDC. Testing has played a prominent role in Chinese society for centuries, and this long tradition of testing extends to professional associations and businesses in China that rely on tests to issue professional licenses and certifications, assess ongoing professional skills and select job candidates. As China’s economy has modernized and become more dependent on technology, a growing number of test sponsors have adopted computer-based tests in place of traditional paper-based tests. Computer-based tests offer key advantages over traditional paper-based tests, including easier administration, reduced scoring errors, greater data security and quicker results analysis. Test sponsors are increasingly outsourcing the design and delivery of computer-based tests to third-party service providers.
          China’s education market is experiencing rapid growth in terms of both the number of schools and the number of students, especially at the post-secondary higher education level. However, a growing number of students who are unable to reach China’s universities are seeking alternative means to obtain the skills necessary to succeed in the job market. Moreover, as Internet usage becomes increasingly common, people are turning to online resources as a means of furthering their education and to prepare for various types of tests. Online education and test preparation provide students the flexibility to take interactive courses at times and in locations most convenient to them. Online education and test preparation are particularly attractive to working adults, and their employers, as they seek to combine work with the pursuit of higher level licenses and certifications.
Our Strengths, Strategies and Risks
          We believe the following competitive strengths have been instrumental in achieving our current market position and provide the basis for our continued growth:
  • our early mover advantage and leadership position in the computer-based testing services industry in China;
 
  • our experience in delivering sophisticated and large-scale computer-based tests;
 
  • our large test center network and scalable test delivery platform;
 
  • the flexibility and customizability of our testing services;
 
  • our performance-based testing and test security technologies;

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  • our established relationships with key test sponsors and leading IT vendors; and
 
  • our experienced management team.
          Our mission is to extend our position as the leading provider of computer-based testing services in China, and expand our career-oriented, test-based educational programs and test preparation solutions businesses in China, by pursuing the following strategies:
  • continue to seek opportunities in licensure and certification testing services;
 
  • further enhance our technology and expand our test center network reach;
 
  • leverage our testing service strengths to expand our test preparation and educational program offerings;
 
  • increase recognition of our “ATA” brand; and
 
  • pursue selective strategic acquisitions and alliances, if and when attractive opportunities arise.
          The successful execution of our strategies is subject to risks and uncertainties, including:
  •  our ability to maintain profitability, as we only achieved profitability recently and had previously been loss-making since our inception, in addition to having an accumulated deficit of RMB135.1 million and RMB126.6 million ($16.9 million) as of March 31, 2007 and September 30, 2007, respectively;
 
  • our ability to meet challenges associated with our rapid expansion, including our expansion into the test preparation market;
 
  • market acceptance of our technologies, products and services;
 
  • our ability to maintain relationships with key governmental agencies, test sponsors, educational institutions and IT vendors; and
 
  • governmental policies, including policies regarding funding for governmental agencies that sponsor tests, policies promoting vocational education, tuition policies and policies relating to foreign investment in Internet content distribution.
          See “Risk Factors” for a discussion of these and other risks and uncertainties associated with our business and investing in our ADSs.
Corporate Structure
          Our predecessor company, American Testing Authority, Inc., a New York company, began operations in 1999, and in that same year established ATA Testing Authority (Beijing) Limited, or ATA Testing, as a wholly owned subsidiary in China. In November 2001, our founders established ATA Testing Authority (Holdings) Limited, or ATA BVI, in the British Virgin Islands. The following year American Testing Authority, Inc. merged into ATA BVI and ATA BVI became our holding company. In June 2003, we established a Chinese joint venture company, ATA Learning (Beijing) Inc., or ATA Learning, with Yinchuan Economic and Technological Development Zone Investment Holding Co. Ltd., or Yinchuan Holding. In May 2005, we exercised our call option to acquire the remaining interest from Yinchuan Holding and converted ATA Learning into a wholly owned subsidiary of ATA BVI.
          We incorporated ATA Inc. in the Cayman Islands in September 2006 as our listing vehicle. ATA Inc. became our ultimate holding company in November 2006 when it issued shares to the existing shareholders of ATA BVI in exchange for all of the outstanding shares of ATA BVI.
          Due to PRC regulatory restrictions on foreign ownership of Internet content businesses in China, we operate the online portion of our test preparation solutions business through a series of contractual arrangements entered into among us, ATA Learning and ATA Online, a PRC entity owned by two of our

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founders. We do not have any direct ownership interest or direct shareholding rights in ATA Online and as a result do not have direct control or direct oversight over ATA Online. For a description of these contractual arrangements, see “Our Corporate Structure” and “Related Party Transactions.” If the Chinese government determines that the contractual arrangement structure through which we operate our online test preparation business does not comply with Chinese laws and regulations, we could be subject to penalties and may not be able to continue that business. Moreover, any conflicts between us and the shareholders of ATA Online, or any failure by ATA Online or its shareholders to perform their obligations under our contractual arrangements with them, may materially and adversely affect our online test preparation business and financial condition. For a detailed discussion of the various risks and uncertainties related to these contractual arrangements and the structure we use to operate our online test preparation business, see “Risk Factors — Risks Relating to Regulation of Our Business.”
Recent Developments
          The following is an estimate of certain unaudited selected consolidated financial data for the three months ended December 31, 2007. Because our financial statements for the three months ended December 31, 2007 have not been finalized and are subject to completion of our normal quarter-end closing procedures, the unaudited selected consolidated financial data for the three months ended December 31, 2007 set forth below may be subject to change.
          We estimate:
  • total net revenues were between RMB63.0 million ($8.4 million) and RMB67.5 million ($9.0 million), compared to RMB36.3 million for the three months ended December 31, 2006;
 
  • gross profit was between RMB42.8 million ($5.7 million) and RMB46.0 million ($6.1 million), compared to RMB25.9 million for the three months ended December 31, 2006;
 
  • income from operations was between RMB14.8 million ($2.0 million) and RMB16.0 million ($2.1 million), compared to RMB6.6 million for the three months ended December 31, 2006; and
 
  • net income was between RMB10.6 million ($1.4 million) and RMB12.0 million ($1.6 million), compared to RMB6.9 million for the three months ended December 31, 2006.
          Our preliminary consolidated financial data for the quarter ended December 31, 2007 are subject to adjustment based upon, among other things, completion of our reporting processes. Actual results could differ materially from the estimates provided above. For additional information regarding the various risks and uncertainties inherent in such estimates, see “Special Note Regarding Forward-Looking Statements.” Financial results for the three months ended December 31, 2007 may not be indicative of our full year results for the fiscal year ending March 31, 2008 or future quarterly periods. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for information regarding trends and other factors that may influence our financial results.
          Our quarterly results of operations are subject to seasonal fluctuations. In particular, net revenues from testing services and test preparation solutions are typically lowest in the quarter ending March 31. As a result, we expect our total net revenues, gross profit, income from operations and net income to be significantly lower during the three months ending March 31, 2008 than they were for the three months ended December 31, 2007, which we estimate will result in a net loss from operations and a net loss for the three months ending March 31, 2008. In addition, we may also incur a net loss from operations and a net loss for the three months ending June 30, 2008 depending on whether certain large-scale tests, such as the banking licensure test, are scheduled in the quarter ending September 30, 2008 instead of the prior quarter. For more information, see the section entitled “Recent Developments.”

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Our Offices
          Our principal executive offices are located at 8th Floor, Tower E, 6 Gongyuan West Street, Jian Guo Men Nei, Beijing 100005, the People’s Republic of China. Our telephone number at this address is 86-10-6518-1122, and our fax number is 86-10-6517-9517. Our web site is www.ata.net.cn. The information contained on our web site is not part of this prospectus.
          Investor inquiries should be directed to us at the address and telephone number of our principal executive offices set forth above. Our agent for service of process in the United States is CT Corporation System, located at 111 Eighth Avenue, 13th Floor, New York, New York 10011.
The Offering
ADSs offered by us: 4,874,012 ADSs.
 
The ADSs Each ADS represents two common shares, par value $0.01 per share. The ADSs will be evidenced by American depositary receipts, or ADRs.
 
• A nominee of the depositary will be the registered holder of the common shares underlying your ADSs, and you will have rights of an ADR holder as provided in the deposit agreement among us, the depositary and the holders and beneficial owners of ADSs from time to time.
 
• Although we do not expect to pay cash dividends in the foreseeable future, in the event we declare dividends on our common shares, the depositary will pay you the cash dividends and other distributions it receives on our common shares, after deducting its fees and expenses, and subject to any tax withholding requirements and whether the depositary can convert the currency on a reasonable basis into U.S. dollars and transfer the U.S. dollars to the United States.
 
• You may surrender your ADSs to the depositary for cancellation in exchange for common shares underlying your ADSs. The depositary will charge you fees for such cancellations.
 
• Under certain circumstances, we may amend or terminate the deposit agreement for any reason without your consent, and if you continue to hold our ADSs, you agree to be bound by the deposit agreement as amended.
 
You should carefully read the section in this prospectus entitled “Description of American Depositary Shares” to better understand the terms of the ADSs. You should also read the deposit agreement, which is an exhibit to the registration statement that includes this prospectus.
 
ADSs outstanding immediately after the offering 4,874,012 ADSs.
 
Common shares outstanding immediately after this offering 43,378,710 common shares.
 
Option to purchase additional ADSs We have granted to the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up

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to an aggregate of 731,101 additional ADSs at the initial public offering price, less underwriting discounts, solely to cover overallotments of ADSs, if any.
 
Depositary Citibank, N.A.
 
Timing and settlement for ADSs The ADSs are expected to be delivered against payment on or around                     , 2008. The ADRs evidencing the ADSs purchased in this offering will be deposited with a custodian for, and registered in the name of a nominee of, The Depository Trust Company, or DTC, in New York, New York. In general, beneficial interests in the ADSs will be shown on, and transfers of these beneficial interests will be effected only through, records maintained by DTC and its direct and indirect participants.
 
Use of proceeds Our net proceeds from this offering are expected to be approximately $43.8 million (assuming an initial public offering price of $10.50 per ADS, the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus, and after deducting estimated underwriting discounts and estimated offering expenses payable by us). If the underwriters exercise their overallotment option in full, we estimate that our net proceeds will be approximately $50.9 million. We anticipate using a portion of these net proceeds to develop and expand our test preparation solutions business, to license course content from IT vendors to expand our degree major and single course program offerings, for marketing costs related to enhancing our “ATA” brand, to fund working capital and for other general corporate purposes, including incremental costs associated with being a public company, and for acquisitions of complementary assets, technologies and businesses. See “Use of Proceeds.”
 
Lock-up agreements We and our executive officers, directors and shareholders have agreed, with exceptions, not to sell or transfer any of our common shares or ADSs for 180 days after the date of this prospectus. See “Shares Eligible for Future Sale” and “Underwriting.”
 
Risk factors See “Risk Factors” and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our ADSs.
 
Listing We have applied to have our ADSs listed on the Nasdaq Global Market. Our common shares will not be listed on any exchange or quoted for trading on any over-the-counter trading system.
 
Nasdaq Global Market symbol We have applied to have our ADSs listed on the Nasdaq Global Market under the symbol “ATAI.”

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SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
          You should read the following information with our consolidated financial statements and related notes, “Selected Consolidated Financial and Operating Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. Our consolidated financial statements are prepared in accordance with U.S. GAAP.
          The following summary consolidated statements of operations data for the fiscal years ended March 31, 2006 and 2007 (other than pro forma (loss) earnings per common share and ADS data), and the summary consolidated balance sheets data as of March 31, 2006 and 2007, are derived from our audited consolidated financial statements included elsewhere in this prospectus and should be read in conjunction with, and are qualified in their entirety by reference to, these consolidated financial statements and related notes.
          The summary consolidated statements of operations data for the six months ended September 30, 2006 and 2007 and the summary consolidated balance sheets data as of September 30, 2007 are derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. We have prepared our unaudited condensed consolidated financial statements on the same basis as our audited consolidated financial statements. The unaudited financial information includes all adjustments, consisting only of normal and recurring adjustments, that we consider necessary for a fair presentation of our financial position and operating results for the periods presented. The unaudited results for the six months ended September 30, 2007 may not be indicative of our results for the full year ending March 31, 2008.
                                         
    For the Year Ended    
    March 31,   For the Six Months Ended September 30,
         
    2006   2007   2006   2007   2007
                     
    RMB   RMB   RMB   RMB   $
    (In thousands, except for per share and per ADS data)
Consolidated Statements of Operations Data:
                                        
Total net revenues
     69,037       84,881       32,368       76,248       10,176  
Gross profit
     35,049       43,779       13,618       43,471       5,802  
(Loss) income from operations(1)
     (1,091 )     (19,596 )     (13,559 )     8,736       1,166  
Interest expense
     (22,713 )     —       —       —       —  
Net (loss)income(2)
     (24,809 )     (16,790 )     (11,857 )     8,530       1,138  
Accretion of Series A redeemable convertible preferred shares to redemption value
     (13,889 )     —       —       —       —  
Foreign currency exchange translation adjustment on Series A redeemable convertible preferred shares
     3,269       —       —       —       —  
Net (loss) income (applicable) available to common shareholders
     (35,429 )     (16,790 )     (11,857 )     8,530       1,138  
Basic (loss) earnings per common share
     (2.16 )     (0.82 )     (0.61 )     0.39       0.05  
Diluted (loss) earnings per common share
     (2.16 )     (0.82 )     (0.61 )     0.23       0.03  
Pro forma basic (loss) earnings per common share(3)
             (0.52 )             0.25       0.03  
Pro forma diluted (loss) earnings per common share(3)
             (0.52 )             0.23       0.03  
Basic (loss) earnings per ADS(4)
     (4.32 )     (1.64 )     (1.22 )     0.78       0.10  
Diluted (loss) earnings per ADS(4)
     (4.32 )     (1.64 )     (1.22 )     0.46       0.06  
Pro forma basic (loss) earnings per ADS (3)(4)
             (1.04 )             0.50       0.06  
Pro forma diluted (loss) earnings per ADS (3)(4)
             (1.04 )             0.46       0.06  
 
(1)  Includes non-cash share-based compensation expenses of RMB4.2 million, RMB2.5 million, RMB1.2 million and RMB1.1 million ($0.1 million) for the fiscal years ended March 31, 2006 and 2007 and the six months ended September 30, 2006 and 2007, respectively.
 
(2)  Our PRC subsidiaries, ATA Testing and ATA Learning, enjoy tax holidays provided by local and national PRC tax authorities. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Taxation.” If our PRC

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subsidiaries had not enjoyed these tax holidays, they would have had a preferential enterprise income tax rate of 15%. The following table shows the effects of the tax holidays for the periods indicated:
                                         
    For the Year Ended   For the Six Months Ended
    March 31,   September 30,
         
    2006   2007   2006   2007   2007
                     
    RMB   RMB   RMB   RMB   $
    (In thousands, except for per share data)
Effect on net (loss) income (applicable) available to common shareholders
     (544 )     155       183       231       31  
Effect on basic (loss) earnings per common share
     (0.033 )     0.008       0.009       0.011       0.001  
Effect on diluted (loss) earnings per common share
     (0.033 )     0.008       0.009       0.006       0.001  
(3)  Gives effect to the full conversion of preferred shares into 11,730,554 of our common shares, as if the conversion had taken place on April 1, 2006.
 
(4)  Each ADS represents two common shares.
                                 
    As of March 31,   As of September 30,
         
    2006   2007   2007   2007
                 
    RMB   RMB   RMB   $
    (In thousands)
Consolidated Balance Sheets Data:
                                
Cash
     44,624       45,019       52,567       7,016  
Total current assets