June 24, 2015 - 20-F: Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

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

OR

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2015

OR

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

OR

o	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: 001-33910

ATA Inc.

(Exact name of Registrant as specified in its charter)

Not applicable

(Translation of Registrants name into English)

Cayman Islands

(Jurisdiction of incorporation or organization)

1/F East Gate, Building No. 2, Jian Wai Soho,

No. 39 Dong San Huan Zhong Road,

Chao Yang District, Beijing 100022, China

(Address of principal executive offices)

Benson Tsang

Chief Financial Officer

ATA Inc.

1/F East Gate, Building No. 2, Jian Wai Soho,

No. 39 Dong San Huan Zhong Road,

Chao Yang District, Beijing 100022, China

Telephone: 8610-6518-1122

Facsimile: 8610-5869-8106

(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		Name of each exchange on which registered
American Depositary Shares, each representing two common shares, par value $0.01 per share		NASDAQ Global market

Securities registered or to be registered pursuant to Section 12(g) of the Act. None

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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None

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


	45,905,582 common shares.

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

o Yes x No

If this report is an annual or transaction 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.

o Yes x 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.

x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer. See the definitions of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer o

Non-accelerated filer x

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

U.S. GAAP x

International Financial Reporting Standards as issued
by the International Accounting Standards Board o

Other o

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:

o Item 17 o 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.

o Yes x No

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TABLE OF CONTENTS

	Page
Introduction	1
Forward-looking statements	1
Part I.	2
Item 1. Identity of Directors, Senior Management and Advisors	2
Item 2. Offer Statistics and Expected Timetable	2
Item 3. Key Information	2
Item 4. Information on the Company	20
Item 4A. Unresolved Staff Comments	36
Item 5. Operating and Financial Review and Prospects	36
Item 6. Directors, Senior Management and Employees	52
Item 7. Major Shareholders and Related Party Transactions	59
Item 8. Financial Information	61
Item 9. The Offer and Listing	61
Item 10. Additional Information	62
Item 11. Quantitative and Qualitative Disclosures About Market Risk	68
Item 12. Description of Securities Other Than Equity Securities	68
Part II.	71
Item 13. Defaults, Dividend Arrearages and Delinquencies	71
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds	71
Item 15. Controls and Procedures	71
Item 16. Reserved	73
Item 16A. Audit Committee Financial Expert	73
Item 16B. Code of Ethics	73
Item 16C. Principal Accountant Fees and Services	73
Item 16D. Exemptions From the Listing Standards for Audit Committees	73
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers	74
Item 16F. Change in Registrants Certifying Accountant	74
Item 16G. Corporate Governance	74
Item 16H. Mine Safety Disclosure	75
Part III.	76
Item 17. Financial Statements	76
Item 18. Financial Statements	76
Item 19. Exhibits	76
Signatures	S-1

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INTRODUCTION

Except where the context otherwise requires and for purposes of this annual report only:

· all references to years are to the calendar year from January 1 to December 31 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 as the context requires;

· China, Chinese and PRC refers to the Peoples Republic of China, excluding, for purposes of this annual report only, Taiwan and the Special Administrative Regions of Hong Kong and Macau;

· all references to Renminbi or RMB are to the legal currency of China, and all references to U.S. dollars, dollars, $ or US$ are to the legal currency of the United States;

· U.S. GAAP refers to generally accepted accounting principles in the United States; and

· PRC GAAP refers to generally accepted accounting principles in the Peoples Republic of China.

This annual report on Form 20-F includes our audited consolidated statements of comprehensive income for the fiscal years ended March 31, 2013, 2014 and 2015 and audited consolidated balance sheets as of March 31, 2014 and 2015. Each of our ADSs represents two common shares. Our ADSs are listed on the Nasdaq Global Market under the symbol ATAI.

FORWARD-LOOKING STATEMENTS

This annual report on Form 20-F contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about us and our industry. All statements other than statements of historical fact in this annual report are forward-looking statements. In some cases, these forward-looking statements can be identified by words and phrases such as may, should, intend, predict, potential, continue, will, expect, anticipate, estimate, plan, believe, is /are likely to or the negative form of these words and phrases or other comparable expressions. The forward-looking statements included in this annual report relate to, among others:

· our goals and strategies;

· our future prospects and market acceptance of our technologies, products and services;

· our future business development and results of operations;

· projected revenues, profits, earnings and other estimated financial information;

· our plans to expand and enhance our products and services;

· the proposed listing of our testing services business on Chinas New Third Board;

· competition in the computer-based testing, educational services and test preparation and training markets; and

· Chinese laws, regulations and policies, including those applicable to the education industry, Internet content providers, Internet content and foreign exchange.

These forward-looking statements involve various risks, assumptions and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may turn out 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.D. of this annual report, Key information Risk Factors and elsewhere in this annual report.

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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. All forward-looking statements included herein attributable to us or other parties or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

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

Selected Consolidated Financial Data

The following selected consolidated statement of comprehensive income data for the fiscal years ended March 31, 2013, 2014 and 2015 (other than ADS data) and the selected consolidated balance sheet data as of March 31, 2014 and 2015 are derived from our audited consolidated financial statements included elsewhere in this annual report and should be read in conjunction with such consolidated financial statements and related notes. Our selected consolidated statement of comprehensive income data for the fiscal years ended March 31, 2011 and 2012 (other than ADS data) and the selected consolidated balance sheet data as of March 31, 2011, 2012 and 2013 are derived from our audited consolidated financial statements not included in this annual report. The following information should also be read in conjunction with Item 5. Operating and Financial Review and Prospects. Our audited consolidated financial statements are prepared in accordance with U.S. GAAP.

	For the fiscal year ended March 31,
	2011		2012		2013		2014		2015
	RMB		RMB		RMB		RMB		RMB		US$
	(In thousands, except for share and ADS data)
Selected Consolidated Statement of Comprehensive Income Data:
Net Revenues
Testing services	243,103		290,881		335,791		358,837		319,055		51,469
Test preparation and training solutions	15,427		26,996		11,343		5,949		5,711		921
Other (1)	45,374		34,208		19,541		19,882		25,392		4,096
Total net revenues	303,904		352,085		366,675		384,668		350,158		56,486
Gross profit	154,688		193,267		177,844		196,188		177,619		28,653
Total operating expenses	133,796		128,781		150,830		154,809		147,938		23,865
Income from operations	20,892		64,486		27,013		41,379		31,758		5,123
Income tax expense	(3,312	)	(14,339	)	(7,005	)	(19,895	)	(9,575	)	(1,545	)
Net income	19,754		55,841		23,208		27,276		23,056		3,719

(1) Includes net revenues from test-based educational services of RMB25,727,038, RMB12,614,294, RMB6,778,429, RMB3,309,944 and RMB273,187 ($44,070) in the fiscal years ended March 31, 2011, 2012, 2013, 2014 and 2015, respectively.

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	For the fiscal year ended March 31,
	2011	2012	2013	2014	2015
	RMB	RMB	RMB	RMB	RMB	US$
Basic earnings per common share	0.44	1.22	0.50	0.59	0.49	0.08
Diluted earnings per common share	0.44	1.19	0.50	0.59	0.49	0.08
Basic earnings per ADS (1)	0.88	2.44	1.00	1.18	0.98	0.16
Diluted earnings per ADS (1)	0.88	2.38	1.00	1.18	0.98	0.16
Dividends declared per common share		1.393	0.554		1.260	0.205
Weighted average common shares outstanding
Basic	44,469,182	44,713,418	44,967,823	45,227,159	45,597,580
Diluted	44,469,182	45,664,887	45,115,617	45,231,555	45,597,580

(1) Each ADS represents two common shares.

	As of March 31,
	2011		2012		2013		2014		2015
	RMB		RMB		RMB		RMB		RMB	US$
	(In thousands)
Selected Consolidated Balance Sheet Data:
Cash	268,058		257,168		290,030		311,947		240,295	38,764
Restricted cash							2,700
Accounts receivable, net	47,052		81,845		51,115		68,353		48,150	7,767
Total current assets	325,491		355,069		354,770		398,093		312,951	50,484
Total assets	435,447		460,720		457,818		491,237		455,244	73,438
Deferred revenues, current	19,101		27,333		7,377		8,383		21,743	3,507
Total current liabilities	67,448		91,066		79,568		77,149		76,158	12,286
Total liabilities	71,384		94,305		82,271		79,345		77,922	12,570
Retained earnings (accumulated deficit)	(107,698	)	(51,857	)	(28,649	)	(1,372	)	21,684	3,498
Common shares	3,429		3,443		3,461		3,475		3,514	567
Total shareholders equity	364,063		366,415		375,548		411,892		377,322	60,868

	For the fiscal year ended March 31,
	2011	2012	2013	2014	2015
Key Operating Data:
Number of tests delivered (1)	7,162,462	8,529,095	9,266,581	9,688,210	8,821,781

(1) Includes Microsoft royalty tests overseas, tests delivered through our test delivery platform and tests using our Dynamic Simulation Technology. Also includes free tests delivered for business development purpose. The number of tests delivered excluding free tests in the fiscal years ended March 31, 2011, 2012, 2013, 2014 and 2015 was 6,907,158, 8,026,639, 8,744,859, 9,411,226 and 8,767,389, respectively.

Exchange Rate Information

We conduct our business primarily in China and a substantial majority of our revenues and expenses are denominated in Renminbi. The conversion of Renminbi into U.S. dollars in this annual report is based on the noon buying rate in The City of New York for cable transfers of Renminbi per U.S. dollar certified for customs purposes by the Federal Reserve Bank of New York, as set forth in the H.10 weekly statistical release of Federal Reserve Board. Unless otherwise noted, all translations from Renminbi to U.S. dollars in this annual report were made at a rate of RMB6.1990 to US$1.00, which was the noon buying rate in effect as of March 31, 2015. The noon buying rate on June 15, 2015 was RMB6.2081 to US$1.00. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, the rates stated below, 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.

The following table sets forth information concerning exchange rates between the Renminbi and the U.S. dollar for the periods indicated. These rates are provided solely for your convenience and are not necessarily the exchange rates that we used in this annual report.

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	Renminbi per U.S. Dollar Noon Buying Rate
	Average (1)	High	Low	Period-end
Fiscal year ended March 31, 2011	6.6972	6.5483	6.8323	6.5483
Fiscal year ended March 31, 2012	6.3790	6.2935	6.5477	6.2975
Fiscal year ended March 31, 2013	6.2783	6.2105	6.3879	6.2108
Fiscal year ended March 31, 2014	6.1220	6.0402	6.2273	6.2164
Fiscal year ended March 31, 2015	6.1952	6.1107	6.2741	6.1990
Most recent six months:
December 2014	6.1886	6.1490	6.2256	6.2046
January 2015	6.2181	6.1870	6.2535	6.2495
February 2015	6.2518	6.2399	6.2695	6.2695
March 2015	6.2386	6.1955	6.2741	6.1990
April 2015	6.2010	6.1927	6.2185	6.2018
May 2015	6.2035	6.1958	6.2086	6.1980
June 2015 (period through June 15, 2015)	6.2027	6.1976	6.2081	6.2081

Source: H.10 weekly statistical release of the Federal Reserve Board

(1) Annual averages are calculated using the exchange rates for the last day of each month during the relevant year. Monthly averages are calculated using daily exchange rates during the relevant month.

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

Risks Relating to Our Business

A limited number of our clients have accounted for and are expected to continue to account for a high percentage of our revenues. The loss of or significant reduction in orders from any of these clients could significantly reduce our revenues and have a material adverse effect on our results of operations.

Our three largest clients in the fiscal year ended March 31, 2015, the Securities Association of China, or SAC, the Chinese Institute of Certified Public Accountants, or CICPA, and the China Banking Association, or CBA, accounted for 19.1%, 18.5% and 18.3%, respectively, of our net revenues in that period. We provide both computer-based testing and test administration services to our three largest clients. We generated RMB196.0 million ($31.6 million) from provision of our services to SAC, CICPA and CBA in the fiscal year ended March 31, 2015.

As of March 31, 2015, our gross accounts receivable from SAC, CICPA and CBA were RMB21.6 million ($3.5 million), RMB0.2 million ($24,197) and RMB2.1 million ($0.3 million), respectively.

Due to our dependence on a limited number of clients, any one of the following events, among others, could cause material fluctuations or declines in our revenues and have a material adverse effect on our financial condition or results of operations:

· a reduction, delay or cancellation of contracts or product or service orders from one or more of our major clients;

· a delay in paying or failure to pay outstanding accounts receivable;

· a decision by one or more of our major clients to award contracts or orders to one of our competitors; and

· a decision by one or more of our major clients to significantly reduce the price they are willing to pay for our services or products.

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Any of these events could occur due to causes outside of our control, such as macro-economic conditions, changes in a clients management or the personnel with whom we interact, changes in technology, the actions of our competitors, changes in governmental regulations and policies and changes in a clients budgeting or financial prospects.

Our financial results are subject to fluctuations and seasonality related to the revenue cycles for our products and services, our relatively long and unpredictable sales cycle and other factors beyond our control, any of which may decrease our revenues in a particular period. As a result, it is difficult for us to predict our results of operations and you should not rely on our historical operating results as an indication of our future financial performance.

Our results of operations have varied in the past from period to period, and are likely to vary in the future, due to the fact that a substantial portion of our sources of revenues are seasonal. We have experienced seasonality and expect in the future to continue to experience seasonality in net revenues and accounts receivable related to our test delivery services, with the quarters ending June 30 and December 31 typically having higher net revenues from testing services and the quarters ending September 30 and March 31 typically having lower net revenues from testing services. This is primarily because the tests from which we derive substantial revenues are mostly delivered in the quarters ending June 30 and December 31. Test timing can be a major contributing factor to quarterly fluctuations of financial results. For example, because the National Unified Certified Public Accountants (the CPA) exam took place in the second quarter of fiscal year 2015, a quarter earlier than in fiscal year 2014, the number of billable exams delivered and corresponding revenues in the second quarter of fiscal year 2015 increased significantly from those in the second quarter of fiscal year 2014.

In addition, our sales cycles are generally long and unpredictable. A clients decision to purchase our products and services often involves a lengthy evaluation process. Throughout the sales cycle, we often spend considerable time educating and providing information to prospective clients regarding the use and benefits of our products and services. Moreover, budget constraints and the need for multiple approvals within large enterprises, governmental agencies and educational institutions may also delay purchasing decisions. As a result, the sales cycle for our services may last a year or longer. Such a lengthy sales cycle, and any future increases in our sales cycle, could lead to higher sales and marketing expenses and adversely affect our cash flow from operations. In addition, the lengthy sales cycle has made, and may continue to make, our financial results prone to fluctuations or decrease our revenues in a particular period.

If our revenues for a particular quarter are lower than we expect, we may be unable to reduce our operating expenses for that quarter by a corresponding amount, which could negatively affect our operating results for that quarter. As a result, you should not rely on our quarter-to-quarter comparisons of our operating results as indicators of likely future performance. Our operating results may be below the expectations of public market analysts and investors in one or more future quarters. If that occurs, the market price of our ADSs could decline and you could lose part or all of your investment. Fluctuations of our quarterly financial results may also lead to increased volatility in the market price of our ADSs.

The market for our services in China is still emerging and evolving rapidly. If market acceptance of our services declines or fails to grow, our revenue growth may slow or we may experience a decrease in revenues.

As the market for our services in China is still emerging, our success will depend to a large extent on our ability to convince our clients that our technologies and services are valuable and that it is more cost-effective for them to utilize our services than for them to develop similar services in-house.

We must address the following concerns, among others, with our clients as they decide to implement our computer-based testing and career-oriented educational services and to use our technologies and services:

· concern over the commitment of time, personnel and funding necessary to implement our computer-based testing services and career-oriented educational services;

· ability of clients to develop their own computer-based testing services or career-oriented educational services;

· possible perceived security and academic integrity risks associated with computer-based testing services and third-party curriculum providers; and

· reluctance of the academic community to adopt computer-based learning materials and computer-based tests.

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A decline in the demand for computer-based testing services by test sponsors could negatively affect demand for our computer-based testing services and technologies. Even if demand for computer-based testing services continues to grow, this demand may not grow as quickly as we anticipate. If market acceptance of our services declines or fails to grow, our revenue growth may slow or we may experience a decrease in revenues.

The markets for our new service offerings are still new and unpredictable. If we cannot succeed in adapting to client needs in the new markets or effectively addressing risks associated with this expansion, our revenue growth may slow and our reputation may be negatively affected.

We have allocated, and intend to continue to allocate, time, effort and capital to expand our service offerings, and test-delivery systems, such as our patented mobile test administration platform called the Mobile Testing Service, or MTS, which we launched in 2013. In November 2013, we completed our acquisition of Xing Wei Institute (HK) Limited, or Xing Wei, a private education technology company that provides training solutions as well as online and mobile training platforms for corporations in China, to expand our service offering with respect to training and consulting for corporations. In July 2014, we and the New Oriental Education & Technology Group formed a joint venture to provide online and mobile education solutions to growing base of professionals in China. In December 2014, we made a strategic investment in Master Mind Education, which marks our expansion into Chinas K-12 education market. In January 2015, we made another strategic investment in Satech, which marks our expansion into SAT exam-related training market. As the markets for these offerings are relatively new for us, we cannot assure you that we will succeed in adapting to client needs in these markets or effectively addressing risks associated with this expansion. It may be difficult for us to accurately predict demand for these and other new service offerings we develop. Furthermore, the PRC government may enact unforeseen regulations and policies that could limit our ability to provide or expand certain services, such as prohibitions on foreign-invested entities engaging in certain businesses. Additional risks that we face expanding in this market include the following:

· we may underestimate the amount of capital, personnel and other resources required to carry out our expansion plans, which may affect the success of our expansion and/or negatively impact the quality of our other product and service offerings;

· if we are unsuccessful in the relevant new market, it may negatively affect our reputation and the status of our brand in our other markets; and

· we may fail to develop sufficient payment collection, technical support and other administrative capabilities necessary to successfully develop and manage our new service offerings on an increasingly large scale.

If we fail to maintain our relationship with major test sponsors, our revenue growth may slow or we may experience a decrease in revenues.

The success of our service offerings going forward depends on our ability to gain and maintain relevant business relationships, such as our relationship with major test sponsors for computer-based tests in China, our relationship with the licensor of certain test titles, and our relationship with Saville Consulting in relation to psychometric tests for our HR Select employee assessment solution. Factors that are beyond our control may cause our relationship with relevant parties to change. For example, our exclusive TOEIC distributor contract ended on February 28, 2014 due to ETS decision to change its distribution model. Although we are still a distributor and administrator of TOEIC exams in China and signed a non-exclusive distributor contract with ETS on June 23, 2014 to continue delivery of certain TOEIC exams to our existing institutional clients from April 1, 2014 through December 31, 2016, we lost a majority of the revenues generated from administering TOEIC exams in the fiscal year ended March 31, 2015 due to contractual limitations on our scope of TOEIC exam services to selected market segments in China. If we fail to maintain our relationship with major test sponsors, our revenue growth may slow or we may experience a decrease in revenues.

Breaches or perceived breaches of our security measures relating to test collection, scoring and storage or unauthorized disclosure or misuse of personal data through breach of our computer systems or otherwise could result in negative publicity and clients loss and expose us to protracted and costly litigation.

As part of our service offerings, we collect, process, transmit and store highly confidential information, including personal information and test questions, answers and scores. Maintaining the security and confidentiality of the information we handle as part of our testing services is essential to protecting the integrity and accuracy of the test taking process and retaining our client base. In addition, any breach or perceived breach in our security measures pertaining to the collection, processing, transmission or storage of such information as a result of third-party action, employee error, and malfeasance or otherwise, or any instances or claims of cheating on tests that we administer could result in liability claims and have a negative impact on our reputation. Additionally, we could be subject to liability claims or regulatory penalties for misuses of information collected from clients or students or for the unauthorized disclosure or unauthorized or inappropriate use of such information. Any such negative publicity or liability claims could have a material adverse impact on our future business, cause us to lose clients and expose us to costly litigation.

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Reductions in public funding available to our clients that are governmental agencies could adversely impact demand by these agencies and institutions for our products and services.

We derive a significant portion of our total net revenues from licensing and service fees from Chinese governmental agencies. Demand and ability to pay for our products and services by these agencies are affected by government budgetary cycles, funding availability and government policies. Funding reductions, reallocations or delays could adversely impact demand for our products and services by our clients or reduce the fees these clients are willing to pay for our products and services.

A significant portion of our revenues are dependent on market acceptance of our E-testing platform and other computer-based testing technologies, and if we are unable to anticipate and meet our clients technological needs and challenges from new technologies and industry standards, our products and services may lose market acceptance or become obsolete, and our margins and results of operations may be adversely affected.

Our advanced technologies for the creation and delivery of computer-based tests, including our E-testing platform and our performance-based testing technologies, are a key factor in growing and maintaining our relationships with test sponsors, educational institution clients and educational program content providers. Our future success depends on our ability to upgrade our systems, develop new technologies and anticipate and meet the technical needs of our clients on a regular basis. The emergence in the market of new test creation and delivery technologies or substitute products and services could reduce our competitiveness or render our current technologies and services obsolete. Moreover, if other companies develop similar technologies offering functionality comparable to that of our technologies, pricing pressure may increase and our margins and results of operations may be adversely affected. Additionally, industry standards such as standard interfaces and data exchange protocols may be developed for testing technologies, and if these industry standards are incompatible with our technologies, demand for our technologies, products and services may decline significantly. To the extent we are unable to maintain our market leadership position in key testing technologies or anticipate and respond to technological developments and changes in industry standards in a timely and cost-effective manner, our products and services may lose market acceptance or become obsolete.

Technical errors or failures in relation to computer-based tests delivered through our test delivery platform could result in negative publicity, loss of clients, liability claims and costly and disruptive litigation.

Due to the complexity of the technologies we use to create and deliver computer-based tests for our clients, technical errors or failures may occur in relation to these services. These may include errors, failures or bugs in our software applications and test security technologies, breakdowns or failures of our servers and computer networks, and connectivity failures between our networks. While we have not experienced major problems to date due to errors, breakdowns, failures, bugs or defects, we cannot assure you that we will not experience such problems in the future. If such a problem were to occur, it could disrupt or compromise the integrity of the test taking process or of test content and results, which could lead to negative publicity and loss of clients and may subject us to liability claims. Although we have established a formal crisis management system to respond to technical problems, it has never been tested in a real crisis situation. Any litigation or negative publicity resulting from an error or failure, with or without merit, could result in substantial costs and divert managements attention and resources from our business and operations.

If we fail to maintain a strong brand, our business may not grow and our financial results may be adversely impacted.

We believe that maintaining and enhancing the value of the ATA brand is important to attracting clients. Our success in maintaining brand awareness will depend on our ability to consistently provide high quality, value-adding, user-friendly and secure products and services. As we expand our product and service offerings, we are increasing our efforts to establish a wider recognition of the ATA brand. To establish a wider recognition of our ATA brand among test takers, test sponsors and companies, we may need to spend significant resources on advertising. As we have limited experience with advertising and other activities required to establish a widely recognized brand, we cannot assure you that we will effectively allocate our resources for these activities or succeed in maintaining and broadening our brand recognition and appeal. If we fail to maintain a strong brand, our business may not grow and our financial results may be adversely impacted.

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Actions by our authorized test centers could lead to damage to our brand and reputation, which could cause us to incur substantial costs and strain our relationships with our clients.

As of March 31, 2015, we had contractual relationships with 2,989 authorized test centers. We do not own these centers and their employees are not our employees. Under our contracts with these test centers, we require them to provide sufficient facilities to properly administer computer-based tests and to follow prescribed guidelines for facility maintenance and test administration. We also conduct regular reviews of their facilities and operations and provide consulting services on test administration. However, our contractual arrangements with the test centers provide us with only limited ability to oversee their activities, and most test centers engage in other activities, such as serving as classrooms, when not administering tests. If a test center were to engage in unauthorized or unlawful conduct, whether related to administering computer-based tests or otherwise, our clients, prospective clients and the general public may associate this conduct with our brand, and negative publicity associated with this conduct could harm our reputation and lessen overall demand for computer-based testing services. Furthermore, our business may also be adversely affected if our authorized test centers do not maintain their premises, administer our computer-based tests, or hire qualified personnel and train them properly in a manner consistent with our standards and requirements. In addition, a liability claim against an ATA authorized test center or any center personnel may result in unfavorable publicity for us, our products and services and our other test centers, and could damage our brand and reputation, whether or not the claim is successful. While we may terminate our contracts and relationships with our authorized test centers if any of these events were to occur, we may not be able to identify problems or take action quickly enough to prevent harm to our reputation.

We depend on our key personnel and our business may be severely disrupted if we lose their services and are unable to replace them.

Our future success is dependent upon the continued services of our key executives, as we rely on their industry experience and expertise in our business operations. In particular, we rely heavily on Kevin Xiaofeng Ma, our chairman and chief executive officer for his business vision, management skills, technical expertise, experience in the testing, IT and education industries and working relationships with many of our clients, shareholders and other participants in the testing, IT and education industries. If Mr. Ma is unable or unwilling to continue in his present positions, or if he joined a competitor or formed a competing company in violation of his employment agreement, we may not be able to replace him easily and our business may be severely disrupted.

We may face increasing competition from international and domestic competitors. If we fail to successfully compete, our revenues and market share may decrease, and our results of operations may be adversely affected.

As our business and markets continue to expand, we will face increasing competition, including competition from new entrants, both domestic and international, who will try to gain market share from us. Competitors may introduce new technologies, products and services that have better performance, offer lower prices and gain broader acceptance than our technologies, products and services. Such new products may reduce the overall market for our products and services.

In the computer-based testing services market, we compete primarily on the basis of technology, price, management experience and established infrastructure. In the future, as more companies enter this market, we believe pricing may become increasingly competitive as well. For our HR Select employee assessment solution, while there are other companies providing services to corporate human resources departments, we are differentiated by our focus on offering more professional testing services with proprietary testing technologies. Traditional Chinese test preparation material providers, such as publishing companies, indirectly compete with our test preparation and training solutions. Increased competition could cause us to lose clients or make it necessary for us to reduce our prices in order to retain our clients, which may negatively affect our revenues and results of operations.

We may not be able to attract and retain the highly skilled employees we need to support our planned growth.

Due to intense market competition for highly skilled workers, we have faced difficulties locating experienced and skilled personnel in certain areas, such as administration, marketing, product development, sales, finance and accounting. In particular, we have had difficulty finding personnel with experience in the computer-based testing services market. We cannot assure you that we will be able to attract or retain the key personnel that we will need to achieve our business objectives. Even if we can identify qualified candidates, they may be subject to non-competition agreements with their prior employers that prevent us from hiring them. In addition, we cannot assure you that we will be able to retain our current skilled personnel. According to our contracts with our employees, all of our employees are prohibited from engaging in any activities that compete with our business during the period of their employment and for two years after termination of their employment with us. Furthermore, all employees are prohibited, for a period of two years following termination, from soliciting other employees to leave us and, for a period of five years following termination, from soliciting our existing clients. However, we may have difficulty enforcing these non-competition and non-solicitation provisions in China because the Chinese legal system, especially with respect to the enforcement of such provisions, is still developing.

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Many of our contracts with governmental agencies and public educational institutions take the form of framework agreements and offer little contractual or legal protections, and it may be impractical for us to pursue or obtain legal remedies against these clients.

Many governmental agencies and other public sector entities in China require the use of simple framework agreements for the procurement of products and services from us that lack many of the detailed aspects of our business arrangement. For example, the terms of service may lack the clarity we would normally have in our contracts with commercial enterprises, or contract terms protecting our intellectual property may not be as clear and detailed as we would normally have in our contracts with commercial enterprises. Moreover, it may not be feasible or practicable for us to take legal action against our government and public sector clients to enforce our contractual rights. As a result, we may lack the same contractual or legal protections, or ability to enforce such protections, that we would normally have under the contracts we typically enter into with our other clients.

Unauthorized use of our intellectual property by third parties, including infringement of our ATA brand, and the expenses incurred in protecting our intellectual property rights, may adversely affect our business.

Our copyrights, trademarks, trade secrets, patents and other intellectual property are important to our success. In particular, we believe that our ATA brand name represents a valuable asset as we have sought to gain a reputation for high quality and secure testing services and advanced testing technologies within our markets. Unauthorized use of any of our intellectual property may adversely affect our business and reputation. We rely on trademark, patent, and copyright law, trade secret protection and confidentiality agreements with our employees, clients, business partners and others to protect our intellectual property rights. Nevertheless, it may be possible for third parties to obtain and use our intellectual property without authorization. The unauthorized use of intellectual property is common and widespread in China and enforcement of intellectual property rights by Chinese regulatory agencies is inconsistent. Moreover, litigation may be necessary in the future to enforce our intellectual property rights. Future litigation could result in substantial costs and diversion of our managements attention and resources, and could disrupt our business, as well as have a material adverse effect on our financial condition and results of operations. Given the relative unpredictability of Chinas legal system and potential difficulties enforcing a court judgment in China, there is no guarantee that we would be able to halt the unauthorized use of our intellectual property through litigation.

We may be subject to intellectual property infringement claims, which may force us to incur substantial legal expenses and, if determined adversely against us, may materially disrupt our business.

We cannot assure you that our business operations, in particular, our software, trademarks, know-how and other technologies do not or will not infringe upon patents, valid copyrights or other intellectual property rights held by third parties. We may become subject to legal proceedings and claims from time to time relating to the intellectual property of others in the ordinary course of our business. For example, we have been unable to register our ATA trademark with the China Trademark Office due to similarity with other marks. Although we have not received notice of trademark infringement claims since we began using the mark in 1999 and believe that the risk of litigation is remote, we may be subject to such claims in the future. If we are found to have violated the intellectual property rights of others, we may be enjoined from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives. In addition, we may incur substantial expenses, and may be forced to divert management and other resources from our business operations, to defend against these third-party infringement claims, regardless of their merit. Successful infringement or licensing claims against us may result in substantial monetary liabilities or may materially disrupt the conduct of our business by restricting or prohibiting our use of the intellectual property in question.

Because there is limited business insurance coverage in China, any business disruption or litigation we experience might result in our incurring substantial costs and diverting significant resources to handle such disruption or litigation.

The insurance industry in China is not fully developed. Insurance companies in China offer limited business insurance products. While business disruption insurance may be available to a limited extent in China, we have determined that the risks of disruption and the difficulties and costs associated with acquiring such insurance render it commercially impractical for us to have such insurance. As a result, we do not have any business liability, disruption or litigation insurance coverage for our operations in China. Any business disruption or litigation might result in our incurring substantial costs and the diversion of resources.

We may face challenges and risks in connection with possible acquisitions as well as forming joint ventures, including identifying suitable opportunities and integrating acquired or new businesses and assets with our existing operations, which could interrupt our business operations or adversely affect our results of operations.

As part of our business strategy, we may seek to broaden our service offerings, obtain additional clients and strengthen our service quality by acquiring other companies or businesses. However, our ability to implement our acquisition strategy will depend on a number of factors, including the availability of suitable acquisition candidates at an acceptable cost or at all, our ability to compete effectively to attract and reach agreement with acquisition candidates or joint venture partners on commercially reasonable terms, and the availability of financing to complete acquisitions or joint ventures as well as our ability to obtain any required government approvals or licenses. In addition, we cannot assure you that any particular acquisition or joint venture transaction will produce the intended benefits or synergies. For example, we may not be successful in integrating acquisitions with our existing operations and personnel. Moreover, the acquisitions we pursue may require us to expend significant management and other resources, which may result in interruption to our business operations.

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There are other risks associated with acquisitions, including:

· unforeseen or hidden liabilities, including exposure to legal proceedings, associated with newly acquired companies;

· failure to generate sufficient revenues to offset the costs and expenses of acquisitions;

· integration of the management of the acquired business into our own;

· potential impairment losses or amortization expenses relating to goodwill and intangible assets arising from any of such acquisitions, which may materially reduce our net income or result in a net loss;

· potential conflicts with our existing employees as a result of our integration of newly acquired companies; and

· possible contravention of Chinese regulations applicable to such acquisitions.

Furthermore, raising capital to finance acquisitions could cause earnings or ownership dilution to your shareholding interests, which in turn could result in losses to you. Any one or a combination of the above risks could interrupt our business operations and adversely affect our results of operations.

The restructuring of our testing services business into our wholly owned subsidiary ATA Online (Beijing) Education Technology Limited, or ATA Online, and the listing of the shares of ATA Online, on stock exchanges in China may not provide the benefits we anticipate, and the listing could negatively impact holders of our ADSs.

To provide ATA Online with the ability and flexibility to raise funds from the PRC capital markets for business expansion, we restructured our testing services business into our wholly owned subsidiary ATA Online since May 2015. We are in the process of listing ATA Online on the National Equities Exchange and Quotations, an emerging over-the-counter market in China (the New Third Board) and expect to list ATA Online on the New Third Board by the end of 2015. Our ability to list ATA Online on the New Third Board is subject to various PRC exchange and regulatory approvals and filings, and as a result, there are significant timing, qualification and other uncertainties in connection with the proposed listing of the shares of ATA Online on the New Third Board.

We may incur costs in connection with ATA Onlines listing and possible share offerings. Even if we list ATA Online on the New Third Board, we may not realize the anticipated benefits of such listing, and ATA Onlines operation as a listed company may result in distraction of ATA management. Even if ATA Online remains our consolidated subsidiary after the listing, the ownership interest of our ADS holders in the earnings of ATA Onlines operations could be diluted, depending on the amount of funds raised, the returns on that funds and the manner in which that funds is raised (debt or equity). In addition, volatility in the trading price of our ADSs may increase due to events more specifically impacting ATA Onlines share trading price and operations. Our influence over the election of ATA Onlines board of directors will be decreased if ATA Onlines shareholders appoint directors who are independent of ATA.

We may need additional capital and any failure by us to raise additional capital on terms favorable to us, or at all, could limit our ability to grow our business and develop or enhance our product and service offerings to respond to market demand or competitive challenges.

Capital requirements are difficult to plan in our rapidly changing industry. We believe that our current cash and expected future cash flows from operations will be sufficient to meet our anticipated working capital and capital expenditures for the next 12 months and the foreseeable future beyond that point. We may, however, require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If our sources of liquidity are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity securities could result in dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financing covenants that would restrict our operations. Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including:

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· investors perception of, and demand for, securities of computer-based testing and education companies;

· conditions of the U.S., PRC and other capital markets in which we may seek to raise funds;

· our future results of operations and financial condition;

· Chinese government regulation of foreign investment in China;

· economic, political and other conditions in China; and

· Chinese government policies relating to the borrowing and remittance of foreign currency outside China.

We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to grow our business and develop or enhance our product and service offerings to respond to market demand or competitive challenges.

We may be unable to maintain an effective system of internal control over financial reporting, and as a result we may be unable to accurately report our financial results or prevent fraud.

We are subject to provisions of the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act requires that we include a report from management on the effectiveness of our internal control over financial reporting in our annual reports on Form 20-F. Our management concluded that our internal control over financial reporting is effective as of March 31, 2015, and our independent registered public accounting firm reported on our internal controls over financial reporting. However, if we fail to maintain effective internal control over financial reporting in the future, our management and our independent registered public accounting firm may not be able to conclude that we have effective internal control over financial reporting at a reasonable assurance level. Our failure to maintain effective internal control over financial reporting could result in a loss of investor confidence in the reliability of our reporting processes, which could materially and adversely affect the trading price of our ADSs.

Our reporting obligations as a public company will continue to place a significant strain on our management, operational and financial resources and systems for the foreseeable future. Our failure to maintain effective internal control over financial reporting could result in the loss of investor confidence in the reliability of our financial reporting processes, which in turn could harm our business and negatively impact the trading price of our ADSs.

Our independent registered public accounting firms audit documentation related to their audit reports included in this annual report may include audit documentation located in China. The Public Company Accounting Oversight Board currently cannot inspect audit documentation located in China and, as such, you may be deprived of the benefits of such inspection.

Our independent registered public accounting firm that issues the audit reports included in our annual reports filed with the U.S. Securities and Exchange Commission, or SEC, as auditors of companies that are traded publicly in the United States and a firm registered with the U.S. Public Company Accounting Oversight Board (United States) , or the PCAOB, is required by the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. Our operations are conducted in China, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of the PRC authorities. Accordingly, any audit documentation located in China related to our independent registered public accounting firms reports included in our filings with the U.S. Securities and Exchange Commission is not currently inspected by the PCAOB. On May 24, 2013, the PCAOB announced that it had entered into a memorandum of understanding on enforcement and cooperation with the China Securities Regulatory Commission, or CSRC, and the PRC Ministry of Finance, or MOF, which establishes a cooperative framework between the parties for the production and exchange of audit documents relevant to investigations in the United States and China. However, direct PCAOB inspections of independent registered accounting firms in China are still not permitted by Chinese authorities.

Inspections conducted by the PCAOB outside of China have identified deficiencies in those firms audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The lack of PCAOB inspections in China prevents the PCAOB from regularly evaluating audit documentation located in China and its related quality control procedures. As a result, investors may be deprived of the benefits of PCAOB inspections.

The inability of the PCAOB to conduct inspections in China makes it more difficult to evaluate the effectiveness of our auditors audit procedures or quality control procedures as compared to audits outside of China that are subject to PCAOB inspections. Investors may lose confidence in our reported financial information and procedures and the quality of our financial statements.

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Proceedings instituted by the SEC against five PRC-based accounting firms, including the mainland China affiliate of our independent registered public accounting firm, could result in financial statements being determined to not be in compliance with the requirements of the Securities Exchange Act of 1934.

In December 2012, the SEC instituted proceedings under Rule 102(e)(1)(iii) of the SECs Rules of Practice against five PRC-based accounting firms, including the mainland China affiliate of our independent registered public accounting firm, alleging that these firms had violated U.S. securities laws and the SECs rules and regulations by failing to provide to the SEC the firms work papers related to their audits of certain PRC-based companies that are publicly traded in the United States. Rule 102(e)(1)(iii) grants to the SEC the authority to deny to any person, temporarily or permanently, the ability to practice before the SEC who is found by the SEC, after notice and opportunity for a hearing, to have willfully violated any such laws or rules and regulations. On January 22, 2014, an initial administrative law decision was issued, censuring these accounting firms and suspending four of the five firms from practicing before the SEC for a period of six months. On February 12, 2014, these PRC-based accounting firms appealed to the SEC against this sanction. On February 6, 2015, before a review by the commissioner of the SEC had taken place, the firms reached a settlement with the SEC. Under the settlement, the SEC accepts that future requests by the SEC for the production of documents will normally be made to the CSRC. The firms will receive matching Section 106 requests, and are required to abide by a detailed set of procedures with respect to such requests, which in substance require them to facilitate production via the CSRC. If they fail to meet the specified criteria, the SEC retains authority to impose a variety of additional remedial measures on the firms, depending on the nature of the failure. Remedies for any future noncompliance could include, as appropriate, an automatic six-month bar on a single firms performance of certain audit work, commencement of a new proceeding against a firm, or in extreme cases, the resumption of the current proceeding against all these accounting firms.

In the event that the SEC restarts the administrative proceedings, depending upon the final outcome, listed companies in the United States with major PRC operations may find it difficult or impossible to retain auditors in respect of their operations in the PRC. Moreover, any negative news about the proceedings against these audit firms may cause investor uncertainty regarding China-based, United States-listed companies and the market price of our ADSs may be adversely affected. If the mainland China affiliate of our independent registered public accounting firm were denied, temporarily or permanently, the ability to practice before the SEC, and we are unable to find timely another China-based registered public accounting firm which can audit and issue a report on our financial statements, our financial statements could be determined to not be in compliance with the requirements for financial statements of public companies with a class of securities registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Such a determination could ultimately lead to the delisting of our ADSs from the NASDAQ Global Market, which event would effectively terminate the trading market for our ADSs in the United States, and/or to the SECs revoking the registration of our ADSs under the Exchange Act pursuant to Section 12(j) thereof, in which event broker-dealers thereafter would be prohibited from effecting transactions in, or inducing the purchase or sale of, our ADSs in the United States.

We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. holders of our ADSs or common shares.

We believe that we were not a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for our taxable year ended March 31, 2015, and we do not expect to be a PFIC in any future taxable year. However, PFIC status is tested each year and depends on the composition of our assets and income and the value of our assets from time to time. Since we currently hold, and expect to continue to hold, a substantial amount of cash and other passive assets and, since the value of our assets is to be determined in large part by reference to the market prices of our ADSs and common shares, which is likely to fluctuate over time, there can be no assurance that we will not be a PFIC for any future taxable year. If we are a PFIC for any taxable year during which a U.S. investor held our ADSs or common shares, certain adverse U.S. federal income tax consequences would apply to the U.S. investor. See Item 10. Additional Information E. Taxation United States Federal Income Taxation Passive Foreign Investment Company.

Risks Relating to Regulation of Our Business

If the China Securities Regulatory Commission, or CSRC, or another PRC regulatory agency determines that CSRC approval was required in connection with our initial public offering, we may become subject to penalties.

On August 8, 2006, six PRC regulatory agencies, including the CSRC, promulgated the Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rule, which became effective on September 8, 2006. The M&A Rule, among other things, requires that an offshore company controlled by PRC companies or individuals that has acquired a PRC domestic company for the purpose of listing the PRC domestic companys equity interest on an overseas stock exchange must obtain the approval of the CSRC prior to the listing and trading of such offshore companys securities on an overseas stock exchange. On September 21, 2006 the CSRC, pursuant to the M&A Rule, published on its official web site procedures specifying documents and materials required to be submitted to it by offshore companies seeking CSRC approval of their overseas listings.

In connection with the proposed listing of our testing service business on the New Third Board, ATA Learning (Beijing) Inc., or ATA Learning, our wholly owned PRC subsidiary, acquired 90% of the equity interest of ATA Online in May 2015. In connection therewith, we terminated a series of contractual arrangements with ATA Online and its original shareholders, which provided us control over ATA Online. See Item 7. Major Shareholders and Related Party TransactionsB. Related Party Transactions.

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Our PRC counsel, Jincheng Tongda & Neal Law Firm, advised us that CSRC approval was not required for our initial public offering in February 2008 because the CSRC approval required under the M&A Rule only applies to an offshore company that has acquired a domestic PRC company for the purpose of listing the domestic PRC companys equity interest on an overseas stock exchange, while (i) we obtained our equity interest in each of our PRC subsidiaries by means of direct investment other than by acquisition of the equity or assets of a PRC domestic company in 2008, (ii) our former contractual arrangements with ATA Online do not constitute the acquisition of ATA Online, (iii) the M&A Rule does not apply to the acquisition by ATA Learning, a wholly foreign owned foreign enterprise, and (iv) although Article 11 of the M&A Rule prohibits the circumvention of the M&A Rule through establishing FIEs, ATA Learning was established in 2003 before the M&A Rule was promulgated, which makes this acquisition not a circumvention of the M&A Rule. However, if it is determined that CSRC approval was required, we may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in China, limit our operating privileges in China, or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs.

Because we may rely on dividends and other distributions on equity paid by our current and future Chinese subsidiaries for our cash requirements, restrictions under Chinese law on their ability to make such payments could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct our businesses.

We have adopted a holding company structure, and our holding companies may rely on dividends and other distributions on equity paid by our current and future Chinese subsidiaries for their cash requirements, including the funds necessary to service any debt we may incur or financing we may need for operations other than through our Chinese subsidiaries. Chinese legal restrictions permit payments of dividends by our Chinese subsidiaries only out of their accumulated after-tax profits, if any, determined in accordance with PRC GAAP. Our Chinese subsidiaries are also required under Chinese laws and regulations to allocate at least 10% of their after-tax profits determined in accordance with PRC GAAP to statutory reserves until such reserves reach 50% of the companys registered capital. Allocations to these statutory reserves and funds can only be used for specific purposes and are not transferable to us in the form of loans, advances or cash dividends. As of March 31, 2015, our Chinese subsidiaries allocated RMB26.4 million ($4.3 million) to the general reserve fund, which is restricted for distribution to the Company. We are in full compliance with PRC laws and regulations relating to such allocations. Any limitations on the ability of our Chinese subsidiaries to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.

The discontinuation of any of the preferential tax treatments currently enjoyed by our subsidiaries in the PRC could materially increase our tax obligations.

Effective from January 1, 2008, the PRC Enterprise Income Tax Law, or EIT Law, imposes a tax rate of 25% on all enterprises, including foreign-invested enterprises, and terminates many of the tax exemptions, reductions and preferential treatments available under previous tax laws. However, enterprises that were established before March 16, 2007 and already enjoyed preferential tax treatments may continue to enjoy them (i) in the case of certain preferential tax rates that are specified by tax legislations for a transition period of five years from January 1, 2008 or (ii) in the case of tax exemption or reduction for a specified term, until the expiration of such term.

Under the EIT Law, qualified high-and-new technology enterprises eligible for key support from the State (HNTE) are entitled to a preferential tax rate of 15%, subject to an annual review during the valid period of their HNTE certificates. In December 2008, ATA Testing Authority (Beijing) Limited, or ATA Testing, was recognized as a HNTE and obtained its HNTE certificate, which entitled ATA Testing to a preferential tax rate of 15% for calendar years 2008 to 2010. In October 2011, ATA Testing successfully renewed its HNTE certificate for another three years from 2011 and therefore it is entitled to a preferential tax rate of 15% for calendar years 2011 to 2013. In October 2014, ATA Testing successfully renewed its HNTE certificate for another three years from 2014 and therefore it is entitled to a preferential tax rate of 15% for calendar years 2014 to 2016. In December 2009, each of ATA Learning (Beijing) Inc., or ATA Learning, ATA Online (Beijing) Education Technology Limited, or ATA Online, and Beijing Jindixin Software Technology Limited, or Beijing JDX, received an approval from the tax authority that it qualified as an HNTE for three years, entitling them to a preferential income tax rate of 15% for calendar years 2009 to 2011. In July, May and July of 2012, ATA Learning, ATA Online and Beijing JDX successfully renewed their HNTE certificates, respectively, for another three years from 2012 and therefore are entitled to a preferential tax rate of 15% for calendar years 2012 to 2014. Each of ATA Learning, ATA Online and Beijing JDX is currently in the process of renewing its HNTE certificate for another three years. Upon a successful renewal, each of ATA Learning, ATA Online and Beijing JDX should be entitled to a preferential tax rate of 15% retroactively from January 1, 2015. If any of ATA Learning, ATA Online or Beijing JDX is unable to renew its HNTE certificate, it will be subject to the standard statutory enterprise income tax rate of 25%. We cannot assure you that ATA Testing, ATA Learning, ATA Online and Beijing JDX will continue to qualify as an HNTE after the expiration of their HNTE certificates, or that the local tax authorities will not, in the future, change their position and revoke any of our past preferential tax treatments.

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The discontinuation of any of our preferential tax treatments could materially increase our tax obligations and adversely affect our business, operating results and financial condition.

Under the EIT Law, we may be classified as a resident enterprise of China. Such classification will likely result in unfavorable tax consequences to us and U.S. holders of our ADSs or common shares.

Under the EIT Law, an enterprise established outside of China with its de facto management body in China is considered a resident enterprise, meaning that it can be treated the same as a Chinese enterprise for enterprise income tax purposes. In addition, a tax circular, or Circular 82, issued by the State Administration of Taxation, or the SAT on April 22, 2009 regarding the standards used to classify certain Chinese controlled enterprises established outside of China as resident enterprises clarified that dividends and other income paid by such resident enterprises will be considered to be PRC source income, subject to PRC withholding tax currently at a rate of 10%, when paid to non-PRC enterprise shareholders. Circular 82 also subjects such resident enterprises to various reporting requirements with the PRC tax authorities. Under the Implementation Rules to the EIT Law, a de facto management body is defined as a body that exercises substantial and overall management and control over the manufacturing and business operations, personnel, and human resources, finances and properties of an enterprise. In addition, Circular 82 details that certain Chinese-controlled enterprises will be classified as resident enterprises if the following are located or resident in China: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, company seal, and minutes of board meetings and shareholders meetings; and half or more of the senior management or directors having voting rights.

Currently, a substantial majority of the members of our management team as well as the management team of some of our offshore holding companies are located in China. However, Circular 82 only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign entities like us. In the absence of detailed implementing regulations or other guidance determining that offshore companies controlled by PRC individuals or foreign entities like us are PRC resident enterprises, we do not currently consider our Company or any of our overseas subsidiaries to be a PRC resident enterprise.

However, the SAT may take the view that the determining criteria set forth in Circular 82 reflects the general position on how the de facto management body test should be applied in determining the tax resident status of all offshore enterprises. Or additional implementing regulations or guidance may be issued determining that our Cayman Islands holding company is a resident enterprise for PRC enterprise income tax purposes. If the PRC tax authorities determine that our Cayman Islands holding company is a resident enterprise for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we will be subject to enterprise income tax at a rate of 25% on our worldwide income as well as PRC enterprise income tax reporting obligations. This would mean that income such as interest on offering proceeds and other non-China source income would be subject to PRC enterprise income tax at a rate of 25%, in comparison to no taxation in the Cayman Islands. Second, although under the EIT Law and its implementing rules dividends paid to us by our PRC subsidiaries would qualify as tax-exempt income, we cannot guarantee that such dividends will not be subject to a 10% withholding tax, as the PRC foreign exchange control authorities, which enforce the withholding tax, have not yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income tax purposes. Finally, a 10% withholding tax will be imposed on dividends we pay to our non-PRC enterprise shareholders, and future guidance may extend the withholding tax to dividends we pay to our non-PRC individual shareholders and gains derived by our non-PRC shareholders from transferring our ADSs or common shares. Similar results would follow if our BVI holding company is considered a PRC resident enterprise. In addition to the uncertainty in how the new resident enterprise classification could apply, it is also possible that the rules may change in the future, possibly with retroactive effect. We are closely monitoring the development of this area of rules and are evaluating appropriate arrangements of our management activity to avoid being classified as a PRC resident enterprise.

Chinas regulation of loans and direct investments by offshore holding companies to their Chinese subsidiaries may restrict our ability to execute our business strategy.

In order to execute our business strategy, we must invest the funds in our Chinese subsidiaries through loans or capital contributions. Under applicable Chinese laws, any loan made by us to ATA Testing or ATA Learning, both of which are foreign-invested enterprises, cannot exceed statutory limits tied to each companys registered capital and total investment as approved by the Ministry of Commerce or its local counterpart, and all such loans must be registered with Chinas State Administration of Foreign Exchange, or SAFE, or its local counterpart. Loans by us to ATA Online, as a domestic PRC enterprise, must be approved by the relevant government authority and must also be registered with SAFE. We may also decide to finance ATA Learning and ATA Testing by increasing their registered capital through capital contributions. The Ministry of Commerce or its local counterpart must approve any capital contributions to ATA Learning and ATA Testing. SAFE promulgated the Circular of the State Administration of Foreign Exchange on Reforming the Management Approach regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises, or SAFE Circular 19, on March 30, 2015. According to the SAFE Circular 19, a foreign-invested enterprise will be able to convert foreign exchange in its capital account into RMB at any time. In order to use the converted RMB, the foreign-invested enterprise still needs to provide supporting documents and go through the review process with the banks. A failure by us to obtain the necessary government approvals or complete any required registrations or other procedures for a capital contribution, an increase in approved total investment or a loan on a timely basis, may restrict our ability to execute our business strategy.

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A failure by our shareholders who are Chinese citizens or residents in China to comply with regulations issued by SAFE could restrict our ability to distribute profits, restrict our overseas and cross-border investment activities or subject us to liability under Chinese laws, which could adversely affect our business and prospects.

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, on July 4, 2014. SAFE Circular 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a special purpose vehicle. SAFE Circular 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiary. Moreover, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for evasion of foreign exchange controls.

Our significant shareholder, Kevin Xiaofeng Ma, has completed his registration with SAFE, and we have urged our other Chinese resident shareholders to register under SAFE Circular 37 and they are currently in the application process. However, we cannot assure you that their applications will be accepted by SAFE. Failure by such shareholders to comply with SAFE Circular 37 could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiaries ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects. See Because we may rely on dividends and other distributions on equity paid by our current and future Chinese subsidiaries for our cash requirements, restrictions under Chinese law on their ability to make such payments could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct our businesses.

Furthermore, as these foreign exchange regulations are still relatively new and there is uncertainty concerning the reconciliation of the new regulations with other approval requirements, it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant government authorities. We cannot predict how these regulations will affect our business operations or future strategy. For example, we may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign currency-denominated borrowings, which may adversely affect our financial condition and results of operations. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.

We may be subject to fines and legal sanctions imposed by SAFE or other Chinese government authorities if we or our Chinese employees fail to comply with Chinese regulations relating to employee share options granted by offshore listed companies to Chinese citizens.

Under applicable PRC regulations, Chinese citizens who are granted share options by an offshore listed company are required, through a Chinese agent, which can be a Chinese branch or representative of the offshore listed company, a Chinese institution which has controlling relationship or actual control relationship with the offshore listed company or a Chinese institution qualified for asset custody business, to register with the SAFE and complete certain other procedures, including applications for foreign exchange payment quotas and opening special bank accounts. We and our Chinese employees who have been granted share options are subject to such PRC regulations. If we or our Chinese employees fail to comply with these regulations, we or our Chinese employees may be subject to fines and legal sanctions imposed by the SAFE or other Chinese government authorities, which may prevent us from further granting options under our share incentive plans to our employees. Such events could adversely affect our business operations. See Item 4.B. Information on the Company Business overview Regulations SAFE Regulations on Employee Share Options.

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Risks Relating to Doing Business in the Peoples Republic of China

Chinas economic, political and social conditions, as well as changes in any government policies, laws and regulations, could adversely affect the overall economy in China or the prospects of the industries in which we operate, which in turn could reduce our net revenues.

Substantially all of our operations are conducted in China. Accordingly, our business, financial condition, results of operations and prospects are subject, to a significant extent, to economic, political and social developments in China.

The Chinese economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese economy has been transitioning from a planned economy to a more market-oriented economy since the late 1970s, 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 Chinas economic growth through the allocation of resources, controlling the incurrence and payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Changes in any of these policies, laws and regulations could adversely affect the overall economy in China or the prospects of the industries in which we operate, which could harm our business.

Chinas social and political conditions are also not as stable as those of the United States and other developed countries. Any sudden changes to Chinas political system or the occurrence of widespread social unrest could have negative effects on our business and results of operations. In addition, China has contentious relations with some of its neighbors, most notably Taiwan. A significant further deterioration in such relations could have negative effects on the Chinese economy and lead to changes in governmental policies that would be adverse to our business interests.

The Chinese legal system embodies uncertainties that could limit the legal protections available to you and us.

Unlike common law systems, the Chinese legal system is based on written statutes and decided legal cases have little precedential value. In 1979, the Chinese government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation since then has been to significantly enhance the protections afforded to various forms of foreign investment in China. Our Chinese operating subsidiaries, ATA Learning and ATA Testing, are wholly foreign-owned enterprises, which are enterprises incorporated in China and wholly owned by foreign investors, and are subject to laws and regulations applicable to foreign investment in China in general and laws and regulations applicable to wholly foreign-owned enterprises in particular. Our Chinese operating subsidiary, ATA Online, is subject to laws and regulations governing the formation and conduct of domestic PRC companies. Relevant Chinese laws, regulations and legal requirements may change frequently, and their interpretation and enforcement involve uncertainties. In addition, we may have to resort to administrative and court proceedings to enforce the legal protection that we enjoy either by law or contract. However, since Chinese administrative and court authorities have significant discretion in interpreting and implementing statutory 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 in more developed legal systems. Such uncertainties, including the inability to enforce our contracts and intellectual property rights, could materially and adversely affect our business and operations. In addition, confidentiality protections in China may not be as effective as in the United States or other countries. Accordingly, we cannot predict the effect of future developments in the Chinese legal system, particularly with regard to the computer-based testing services sectors, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. These uncertainties could limit the legal protections available to us and other foreign investors, including you.

Restrictions on currency exchange may limit our ability to utilize our revenues effectively and the ability of our Chinese subsidiaries to obtain financing.

A substantial majority of our revenues and operating expenses are denominated in Renminbi. Restrictions on currency exchange imposed by the Chinese government may limit our ability to utilize revenues generated in Renminbi to fund our business activities outside China, if any, or expenditures denominated in foreign currencies. Under current Chinese regulations, Renminbi may be freely converted into foreign currency for payments relating to current account transactions, which include among other things dividend payments and payments for the import of goods and services, by complying with certain procedural requirements. Revenues generated in the PRC can be converted into foreign currency to pay salaries of employees located outside of the PRC upon the employee completing registration procedures. Revenues generated in the PRC can also be used to pay off debt generated outside of the PRC, provided that the Company completes relevant foreign debt registration or approval requirements. Although the Renminbi has been fully convertible for current account transactions since 1996, we cannot assure you that the relevant Chinese government authorities will not limit or eliminate our ability to purchase and retain foreign currencies for current account transactions in the future.

Conversion of Renminbi into foreign currencies and of foreign currencies into Renminbi for payments relating to capital account transactions, which include among other things investments, loans and acquisitions of land and other fixed assets overseas, generally requires the approval of SAFE and other relevant Chinese governmental authorities. Restrictions on the convertibility of the Renminbi for capital account transactions could affect the ability of our Chinese subsidiaries to make investments overseas or to obtain foreign exchange through debt or equity financing, including by means of loans or capital contributions from us.

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Fluctuations in exchange rates could result in foreign currency exchange losses.

Because substantially all of our revenues and expenditures are denominated in Renminbi, fluctuations in the exchange rate between the U.S. dollar and Renminbi will affect our balance sheet and earnings per share in U.S. dollars. In addition, appreciation or depreciation in the value of the Renminbi relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations in the exchange rate will also affect the relative value of any dividend we issue that will be exchanged into U.S. dollars and earnings from and the value of any U.S. dollar-denominated investments we make in the future.

The value of the Renminbi against the U.S. dollar and other currencies is affected by, among other things, changes in Chinas political and economic conditions and Chinas foreign exchange policies. The Peoples Bank of China regularly intervenes in the foreign exchange market to limit fluctuations in Renminbi exchange rates and achieve policy goals. Very limited hedging transactions 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 hedging transactions may be limited and we may not be able to successfully hedge our exposure at all. In addition, our currency exchange losses may be magnified by Chinese exchange control regulations that restrict our ability to convert Renminbi into foreign currency.

Any future outbreak of severe acute respiratory syndrome or avian flu in China, or similar adverse public health developments, may disrupt our business and operations.

Our business and operations could be materially and adversely affected by the outbreak of avian influenza, severe acute respiratory syndrome, or SARS, or other similar adverse public health development. In recent years, there have been reports on the occurrences of avian influenza in various parts of China and neighboring countries, including confirmed human cases. Any prolonged adverse public health development may result in health or other government authorities requiring the closure of our offices or the offices of our clients, or the cancellation of exams or classes to avoid students and others from congregating in closed spaces. Such occurrences would disrupt our business operations and adversely affect our results of operations. We have not adopted any written preventive measures or contingency plans to combat any future outbreak of avian flu, SARS or any other epidemic.

Risks Relating to Our ADSs

Our ADS price and the ADS or stock prices of other companies with business operations primarily in China have fluctuated widely in recent years, which could result in substantial losses to investors.

The trading prices of our ADSs are volatile, and this volatility may continue. For instance, between April 1, 2014 and June 1, 2015, our ADS price as reported on Nasdaq ranged between a low of $2.5 and a high of $5.6. Numerous factors that are beyond our control may cause the market price of our ADSs to fluctuate significantly. In particular, the performance and fluctuation of the market prices of other technology companies with business operations mainly in China that have listed their securities in the United States may affect the volatility in the price of and trading volumes for our ADSs. In recent years, a number of Chinese companies have listed their securities, or are in the process of preparing for listing their securities, on U.S. stock markets. Some of these companies have experienced significant volatility, including significant price declines in connection with their initial public offerings. The trading performances of these Chinese companies securities at the time of or after their offerings may affect the overall investor sentiment towards Chinese companies listed in the United States and consequently may impact the trading performance of our ADSs. These broad market and industry factors may significantly affect the market price and volatility of our ADSs, regardless of our actual operating performance.

In addition to market and industry factors, the price and trading volume for our ADSs may be highly volatile for specific business reasons. Factors such as variations in our revenues, earnings and cash flow, announcements of new investments, cooperation arrangements or acquisitions, and fluctuations in market prices for our services could cause the market price for our ADSs to change substantially. Any of these factors may result in large and sudden changes in the volume and price at which our ADSs will trade. We cannot give any assurance that these factors will not occur in the future.

Although publicly traded, the trading market in our ADSs has been substantially less liquid than the ADSs or stock of many companies quoted on the Nasdaq Global Market, and this low trading volume may adversely affect the price of our ADSs.

Although our ADSs are traded on the Nasdaq Global Market, the trading volume of our ADSs has generally been very low. Reported average daily trading volume of our ADSs for the three-month period ended May 31, 2015 was approximately 12,713 ADSs. Limited trading volume will subject our ADSs to greater price volatility and may make it difficult for our shareholders to sell their ADSs at a price that is attractive to them.

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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 future ability to raise capital through offerings of our ADSs.

As of June 18, 2015, there were 45,857,786 common shares outstanding. In addition, there were outstanding options to purchase an aggregate of 3,854,667 common shares, including options to purchase an aggregate of 2,385,207 common shares immediately exercisable as of June 18, 2015. All of the ADSs sold in our initial public offering are freely tradable without restriction or further registration under the U.S. Securities Act of 1933, or the Securities Act, unless held by our affiliates as that term is defined in Rule 144 under the Securities Act. Subject to applicable restrictions and limitations under Rule 144 of the Securities Act of 1933, all of our shares outstanding as of the date of this annual report are eligible for sale in the public market. In addition, the common shares subject to options for the purchase of our common shares will become eligible for sale in the public market to the extent permitted by the provisions of various vesting agreements, and Rules 144 and 701 under the Securities Act of 1933. If these additional shares are sold, or if it is perceived that they will be sold in the public market, the trading price of our common shares could decline.

A significant percentage of our outstanding common shares are held by a small number of our existing shareholders, and these shareholders may have significantly greater influence on us and our corporate actions by nature of the size of their shareholdings relative to our public shareholders.

Three of our existing shareholders, Kevin Xiaofeng Ma, Lijun Mai and SB Asia Investment Fund II L.P., beneficially own, collectively, approximately 55.1% of our outstanding common shares as of June 18, 2015. SB Asia Investment Fund II L.P. has one board representative on our four-director board, and beneficially owns approximately 33.0% of our outstanding common shares as of June 18, 2015. Accordingly, these shareholders have had, and may continue to have, significant influence in determining the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, election of directors and other significant corporate actions. In addition, without the consent of these shareholders, we could be prevented from entering into transactions that could be beneficial to us.

Anti-takeover provisions in our organizational documents may discourage our acquisition by a third party, which could limit your opportunity to sell your shares at a premium.

Our amended and restated memorandum and articles of association include provisions that could limit the ability of others to acquire control of us, modify our structure or cause us to engage in change of control transactions, including, among other things, the following:

· provisions that provide for a staggered board which operates to prevent a third party from obtaining control of our board in a relatively short period of time because at least two annual shareholders meetings, instead of one, would generally be required to effect a change in majority of the board.

· provisions that restrict the ability of our shareholders to call meetings and to propose special matters for consideration at shareholder meetings; and

· provisions that authorize our board of directors, without action by our shareholders, to issue preferred shares and to issue additional common shares, including common shares represented by ADSs.

These provisions could have the effect of depriving you of an opportunity to sell your ADSs at a premium over prevailing market prices by discouraging third parties from seeking to acquire control of us in a tender offer or similar transactions.

The voting rights of holders of ADSs must be exercised in accordance with the terms of the deposit agreement, the ADRs, and the procedures established by the depositary. The process of voting through the depositary may involve delays that limit the time available to you to consider proposed shareholders actions and also may restrict your ability to subsequently revise your voting instructions.

A holder of ADSs may exercise its voting rights with respect to the underlying common shares only in accordance with the provisions of the deposit agreement and the ADRs. We do not recognize holders of ADSs representing our common shares as our shareholders, and instead we recognize the ADS depositary as our shareholder.

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When the depositary receives from us notice of any shareholders meeting, it will distribute the information in the meeting notice and any proxy solicitation materials to you. The depositary will determine the record date for distributing these materials, and only ADS holders registered with the depositary on that record date will, subject to applicable laws, be entitled to instruct the depositary to vote the underlying common shares. The depositary will also determine and inform you of the manner for you to give your voting instructions, including instructions to give discretionary proxies to a person designated by us. Upon receipt of voting instructions of a holder of ADSs, the depositary will endeavor to vote the underlying common shares in accordance with these instructions. You may not receive sufficient notice of a shareholders meeting for you to withdraw your common shares and cast your vote with respect to any proposed resolution, as a holder of our common shares. In addition, the depositary and its agents may not be able to send materials relating to the meeting and voting instruction forms to you, or to carry out your voting instructions, in a timely manner. We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your shares. The additional time required for the depositary to receive from us and distribute to you meeting notices and materials, and for you to give voting instructions to the depositary with respect to the underlying common shares, will result in your having less time to consider meeting notices and materials than holders of common shares who receive such notices and materials directly from us and who vote their common shares directly. If you have given your voting instructions to the depositary and subsequently decide to change those instructions, you may not be able to do so in time for the depositary to vote in accordance with your revised instructions. The depositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote.

Except in limited circumstances, the depositary for our ADSs will give us a discretionary proxy to vote our common shares underlying your ADSs if you do not vote at shareholders meetings, which could adversely affect your interests.

Under the deposit agreement for the ADSs, the depositary will give us a discretionary proxy to vote our common shares underlying your ADSs at shareholders meetings if you do not vote, unless we notify the depositary that:

· we do not wish to receive a discretionary proxy;

· we think there is substantial shareholder opposition to the particular question; or

· we think the subject of the particular question would have a material adverse impact on our shareholders.

The effect of this discretionary proxy is that, absent the situations described above, you cannot prevent our common shares underlying your ADSs from being voted and it may make it more difficult for shareholders to influence the management of our company. Holders of our common shares are not subject to this discretionary proxy.

You may not receive distributions on our common shares or any value for them if such distribution is illegal or if any required government approval cannot be obtained in order to make such distribution available to you.

The depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian for our ADSs receives on our common shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of our common shares your ADSs represent. However, the depositary is not responsible to make a distribution available to any holders of ADSs if it decides that it is unlawful to make such distribution. For example, it would be unlawful to make a distribution to a holder of ADSs if it consisted of securities that required registration under the Securities Act but that were not properly registered or distributed pursuant to an applicable exemption from registration. The depositary is not responsible for making a distribution available to any holders of ADSs if any government approval or registration required for such distribution cannot be obtained after reasonable efforts made by the depositary. We have no obligation to take any other action to permit the distribution of our ADSs, common shares, rights or anything else to holders of our ADSs. This means that you may not receive the distributions we make on our common shares or any value for them if it is unlawful or unreasonable from a regulatory perspective for us to make them available to you. These restrictions may have a material adverse effect on the value of your ADSs.

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

Your ADSs represented by ADRs 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 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 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 any government or government body, or under any provision of the deposit agreement, or for any other reason.

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We are a Cayman Islands company and, because judicial precedent regarding the rights of shareholders is more limited under Cayman Islands law than under U.S. federal or state laws, you may have less protection of your shareholder rights than you would under U.S. federal or state laws.

Our corporate affairs are governed by our amended and restated memorandum and articles of association, the Cayman Islands Companies Law and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities 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 English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities 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 has a less developed body of securities laws than the United States. In addition, some jurisdictions, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. As a result of all of the above, 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 U.S. company.

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

We are a Cayman Islands company and substantially all of our assets are located outside of the United States. Nearly all of our current operations are conducted in China. In addition, most of our directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons are located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons. It may also be difficult for you to enforce in U.S. court judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, none of whom is resident in the United States and the substantial majority of whose assets is located outside of the United States. In addition, there is uncertainty as to whether the courts of the Cayman Islands or China would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state. In addition, there is uncertainty as to whether such Cayman Islands or Chinese courts would be competent to hear original actions brought in the Cayman Islands or China against us or such persons predicated upon the securities laws of the United States or any state.

Your right to participate in any future rights offerings may be limited, which may cause dilution to your holdings.

We may from time to time distribute rights to our shareholders, including rights to acquire our securities. However, we cannot make rights available to you in the United States unless we register the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. Accordingly, you may be unable to participate in our rights offerings and may experience dilution in your holdings.

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

Our predecessor company, American Testing Authority, Inc., a New York company, began operations in 1999, and in the 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. In 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. Initially, we held a 40% equity interest in ATA Learning. In May 2005, we acquired Yinchuan Holdings 60% equity interest 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.

In February 2009, we completed the acquisition of the entire equity interest of Beijing Jindixin Software Technology Company Limited, or Beijing JDX, and JDX Holdings Limited, or JDX BVI, which are related companies incorporated in China and the British Virgin Islands, respectively, engaged in the development and marketing of software for computer-based tests. JDX BVI was dissolved in October 2009.

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In November 2013, we completed the acquisition of the entire equity interest of Xing Wei, a private education technology company that provides training solutions as well as online and mobile training platforms for corporations in China.

In connection with the proposed listing of our testing service business on the New Third Board, we acquired the entire equity interest of ATA Online through ATA Learning and Zhongxiao Zhixing in May 2015, with ATA Learning owning 90% and Zhongxiao Zhixing owning 10% of ATA Onlines share equity. In connection therewith, we terminated a series of contractual arrangements with ATA Online and its original shareholders, which provided us control over ATA Online. As a result, ATA Online became our wholly owned subsidiary. See Item 7. Major Shareholders and Related Party TransactionsB. Related Party Transactions. In addition, we transferred the non-testing services business from ATA Online to ATA Learning, and as a result, ATA Online transferred to ATA Learning 20% and 33% equity investments in Satech and Master Mind, respectively, in May 2015.

The following diagram illustrates our current corporate structure. Except for ATA BVI and Xing Wei Institute (Hong Kong) Limited, which are incorporated in the British Virgin Islands and Hong Kong Special Administrative Region of the PRC, respectively, all of our subsidiaries are incorporated in mainland China.

Our principal executive offices are located at 1/F East Gate, Building No. 2, Jian Wai Soho, No. 39 Dong San Huan Zhong Road, Chao Yang District, Beijing, China, and our telephone number is (86-10) 6518-1122. Our web site address is http://www.ata.net.cn. From July 31, 2015, our current web site will be replaced with http://www.atai.net.cn. The information on our web site does not form a part of this annual report. On February 1, 2008, we completed our initial public offering, which involved the sale by us of 4,874,012 of our ADSs, representing 9,748,024 of our common shares. Our agent for service of process in the United States in CT Corporation System, located at 111 Eight Avenue, New York, New York 10011.

B. Business overview

Overview

We believe that we are the leading provider of computer-based testing services in China, based on test delivery capacity and geographic coverage. We offer comprehensive services for the creation and delivery of computer-based tests utilizing our nation-wide test delivery platform, proprietary testing technologies and extensive experience providing testing services in China. Our computer-based testing services are used for professional licensure and certification tests in various industries, including IT services, banking, securities, teaching and insurance. Our computer-based testing services clients principally include professional associations, such as SAC, CICPA and CBA, and Chinese governmental agencies, including the PRC Ministry of Human Resources and Social Security.

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Our test center network, which we believe is the largest test center network of any commercial testing service provider in China, comprised 2,989 authorized test centers located throughout China as of March 31, 2015. Combined with our test delivery technologies, this network allows our clients to administer large-scale nationwide computer-based and paper-based tests in a consistent, secure and cost-effective manner. From our inception in 1999 through March 31, 2015, we have delivered approximately 77.8 million tests, including approximately 11.7 million free tests for business development purposes. Over the course of two days on September 13 and September 14, 2014, we delivered tests for the third consecutive year to more than 1.6 million test takers for the CPA, demonstrating our ability to administer computer-based tests across the country on a massive scale through our nationwide test delivery platform. During the fiscal year ended March 31, 2015, approximately 8.8 million tests were delivered using our computer-based testing technologies and services.

Our proprietary computer-based testing technologies include our E-testing platform for delivering computer-based tests, our patented mobile testing platform called the Mobile Testing Service, or MTS, and our content creation and management technologies. 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 large-scale tests and quickly and securely transmitting, processing and storing large amounts of data. Our MTS platform enhances the mobility, security, efficiency and cost-effectiveness of test administration by utilizing state-of-the-art cloud technology to transmit test data through portable mobile devices. Our self-developed test content creation and management technologies include our Dynamic Simulation Technology, an advanced performance-based testing technology which leading IT certification sponsors have adopted for their computer-simulated tests delivered around the world. We have also developed content creation technologies for the conversion of paper-based tests into computer-based formats to make test administration easier and cheaper. In December 2013, we won the Best Solution in the Testing and Assessment Field Award at the 2013 China Software Technology Conference the 12th China Software and Information Service Summit, which was organized by the MIIT and sponsored by China Electronic Information Industry Development Institution.

Leveraging our testing platform, technologies and expertise, we administer an ever expanding portfolio of test titles in China and have expanded our service offerings beyond our core computer-based testing services to include other test-focused services. ATA Online has launched online training web sites to help candidates across China attain continuing educational requirement after their professional licensure and certification tests, which are delivered through our test delivery platform. In March 2009, we launched HR Select, our self-developed online system that utilizes our proprietary software and a large inventory of test titles to assist companies in streamlining and optimizing their employee selection and assessment processes. HR Select offers tools for filtering and categorizing employee candidates, testing candidates and analyzing the test results. In June 2014, we launched our self-developed Exam Inventory Navigator, a new iOS- and Android-compatible mobile application that functions as an exam navigation tool for test takers, allowing them to access information on exams being administered throughout China, such as exam offerings, pricing, dates and locations. Our Exam Inventory Navigator was named one of the top ten examination-focused mobile applications by Sina Education in December 2014. We plan to further expand our services to test takers through online education technologies, career-oriented training and soft skills development.

Our total net revenues increased from RMB366.7 million in the fiscal year ended March 31, 2013 to RMB384.7 million in the fiscal year ended March 31, 2014 and RMB350.2 million ($56.5 million) in the fiscal year ended March 31, 2015. We had net income of RMB23.2 million in the fiscal year ended March 31, 2013, RMB27.3 million in the fiscal year ended March 31, 2014 and RMB23.1 million ($3.7 million) in the fiscal year ended March 31, 2015.

Our Test Delivery Platform and Technologies

We offer our clients a comprehensive platform and suite of technologies for the development and delivery of computer-based tests. Our E-testing platform integrates all aspects of the test delivery process for computer-based tests, from test form compilation to test scoring and results analysis. Our test delivery services are further enhanced by our nation-wide network of test centers, which allows us to deliver both computer-based and paper-based tests on a large scale in a consistent, secure and cost-effective manner. We also offer our clients advanced technologies and software applications for the creation of sophisticated computer-based tests, including advanced performance-based tests. While we still offer a choice between paper-based testing and computer-based testing for our institutional clients, currently all of our national public exams are delivered using computer-based testing, and we expect the trend towards computer-based exams to continue. For example, we have been helping Beijing Municipal Commission of Tourism Development to transfer its Beijing Tour Guide Exam from paper-based testing to computer-based testing since 2014. By combining our advanced test content creation technologies with our test delivery platform and network of test centers, we can offer our clients a comprehensive and integrated solution to enhance the effectiveness of the entire testing process, as shown in the following diagram.

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Our E-Testing Platform

Our E-testing platform incorporates a number of technologies and protocols designed to ensure the stable, cost-effective, secure, accurate, fast and easy-to-manage delivery of computer-based tests on a large scale. It is flexible and easily customized for many types of test content and the specific requirements of the test sponsor. Tests delivered through our E-testing platform may be conducted at our ATA authorized test centers or at other locations at the test sponsors discretion. Our E-testing platform is composed of a set of tools and applications for facilitating the computer-based testing process, including a network sub-system for managing and transferring test content, test taker information and test results data in a secure and efficient manner. Our E-testing platform software applications are pre-installed on designated personal computers at the testing site prior to the test date and are designed to handle large-scale testing environments and are capable of transmitting, receiving, processing and storing large amounts of information in a short time span. We currently have the capability to deliver more than 1,000,000 tests per day using our 110 servers, which can be increased to enlarge capacity. We periodically upgrade our equipment and software applications to handle increasing testing volume as required.

Our Mobile Testing Service

Our patented mobile test administration platform the Mobile Testing Service, or MTS, significantly enhances the mobility, security, efficiency and cost-effectiveness of test administration. MTS obviates the need to pre-install software on designated personal computers at the testing site prior to the test date and allows us to monitor the status and process of an entire exam through a safe, non-public LAN, thus reducing the cost of test administration and improving test admininstration efficiency. Through the MTS, test packets can be downloaded to personal electronic devices prior to the exam, and candidate responses can be synced with the test server during the exam. MTS consists of three main components: (i) a small MTS Box that is placed in the testing center and operated by onsite proctors to wirelessly connect between the MTS Cloud Server and the test takers own electronic device, such as a personal computer or tablet; (ii) an MTS Cloud Server that processes the exchange of data, such as the upload or download of test data, between the MTS Box and our servers; and (iii) MTS Test Client, an app that supports multiple operating systems and enables secure data transmission between the MTS Box and test takers personal electronic devices during live exams. MTS has already been deployed for use in our administration of the Cambridge English Junior Exam in 18 countries or regions and we expect it to garner widespread use in the future.

Our ATA Authorized Test Center Network

To help our clients reach a broad base of test takers, we have established a large network of authorized test centers across China and in Macau, which we refer to as our ATA authorized test centers. As of March 31, 2015, we had contractual relationships with 2,989 ATA authorized test centers. Our network of ATA authorized test centers provides the means for delivering and administering tests nationally both simultaneously and on a regularly scheduled basis under consistent and secure testing conditions.

The following map shows the geographic distribution of our ATA authorized test centers as of March 31, 2015:

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Extensive Network of Test Centers

We do not own any of our ATA authorized test centers but instead enter into a standard form of contract with qualified independent operators to act as ATA authorized test centers. Most of our ATA authorized test centers are owned by Chinese vocational schools, which we believe enhances the quality and reliability of the centers. Under our contracts with the test centers, we license our E-testing platform technology and provide ongoing technical support and training during the contract period. We require each test center to provide sufficient facilities to properly administer computer-based tests and to follow prescribed guidelines for facility maintenance and test administration. We also conduct regular reviews of their facilities and operations. We assist our clients in liaising and coordinating testing arrangements with our ATA authorized test centers.

Our ATA authorized test centers are divided into general test centers, which offer a wide range of tests and have the right to use our ATA brand name and logo, and special test centers with which we enter into contracts to carry out specific tests for specific test sponsor clients. We receive license fees from our general test center operators in the form of either a single initial license fee or a combination of initial license fee and continuing annual license fees. Under either fee arrangement, we and our licensees can extend the licensing agreement indefinitely.

Our Test Content Creation and Management Technologies

We offer our clients advanced technologies and software applications for the creation of sophisticated computer-based tests, including advanced performance-based tests.

Our Dynamic Simulation Technology is a performance-based testing technology that creates, illustrates, runs and scores tests in a virtual computer environment that accurately and realistically simulates the operating environment and functions of the software applications being tested without requiring the installation or use of those applications. Our Dynamic Simulation Technology is designed to provide maximum interactivity and allow the test taker to perform tasks in the simulated environment and operate through multi-level testing paths. The current version of Dynamic Simulation Technology, version 5.0, is an interpreter-based simulation technology, which represents our fifth generation of simulation testing technologies.

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Interpreter-based simulation offers high flexibility, adaptability to most applications, low disk space usage and short lead times for developing new tests once the system is in place. Based on feedback from our clients, we believe that we are the only company in the world that has developed and marketed interpreter-based simulation technology for testing and educational use. For this reason, we believe that our Dynamic Simulation Technology is the worlds leading technology for the creation and illustration of performance-based tests through simulation. Currently content in over eight languages has been delivered through this technology around the world.

We also have two non-simulation testing technologies: Real Environment Technology and ATA Markup Language. Our Real Environment Technology is used for creating and running performance-based tests and learning exercises that track and score within the actual operating system or software application being tested. Our ATA Markup Language is used for the creation and illustration of knowledge-based test items that require the test taker to respond to specific questions in a traditional question-and-answer format. While less sophisticated than our performance-based testing technologies, ATA Markup Language remains a key technology for our large base of clients who contract with us for the conversion of paper-based tests to computer-based tests. In addition, many performance-based tests also include traditional multiple-choice questions created and run by our ATA Markup Language and related software applications.

We have developed test item authoring tool applications for our Dynamic Simulation Technology, Real Environment Technology and ATA Markup Language. We have also developed other authoring tools, such as user interface cloning and translation software, for increasing the efficiency of the test content creation and revision process. To meet individual client needs, we have developed test engine applications for integrating tests using our testing technologies on multiple testing platforms.

In addition to incorporating our technologies into our test service offerings, we also directly generate revenue from our Dynamic Simulation Technology and related simulation authoring tools by licensing them to international IT certification sponsors, such as Citrix and CompTIA, for the creation of test items and test preparation course exercise items delivered to students and test takers all over the world.

Our Service Offerings

Testing Development and Delivery Services

Computer-based test authoring, delivery and result analysis services. Our test delivery platform and technologies allow us to offer our clients a comprehensive set of services for the authoring, test delivery and result analysis of computer-based tests as well as logistical services such as test registration, scheduling, fee collection and certification fulfillment. We assist our clients with creating and delivering a wide range of computer-based tests, including governmental agencies with licensure tests required for positions within various governmental agencies and industry associations with tests that test the competence of individuals who operate in certain industries that require technical expertise and which carry professional titles, such as:

· the National Unified Certified Public Accountants Exam, sponsored and regulated by the CICPA;

· the Certification of China Banking Professionals Exam, sponsored and regulated by CBA under the supervision of the China Banking Regulatory Commission;

· the Qualifications Exam for Individuals Engaged in the Securities Industry, sponsored and regulated by SAC under the supervision of the China Securities Regulatory Commission;

· the National Security Guard Exam, sponsored and regulated by the Ministry of Public Security of the Peoples Republic of China;

· IT vendor tests that certify the technical skills and competence of IT professionals in relation to specific types of IT applications, computer operating systems or other IT skill sets, and that allow test takers to obtain a professional license or certification in a specific subject area; and

· corporate assessment services for large scale/daily recruitment exercise and internal talent assessment purposes.

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Utilizing our comprehensive and advanced item authoring system and rendering technologies, we assist our clients in developing sophisticated computer-based tests, including performance-based items. Creation of effective and reliable computer-based tests involves a multi-step process:

· Test design. Our content development consultants work together with the client to determine the test purpose, target audience, test objectives and required competency level to formulate an overall test blueprint. We then arrange for the client to work with our internal subject matter experts, or to engage outside subject matter experts with specific experience in the subject area, to work with us on the scope of knowledge covered by the test and to design and author specific testing items for required knowledge points.

· Test item authoring. Based on the test blueprint and using our advanced test engine technologies, we work together with subject matter experts to create individual test items designed to determine a test takers proficiency and effectiveness in solving both practical and conceptual problems. The test items are designed to support immediate test scoring and results analysis. Test items generally fall into two types: standardized items and constructed responses items. Once all of the test items have been created, our content development consultants and subject matter experts commence a review process to ensure the validity of each test item, clarity of language and overall quality. All of the test items are then deposited in a master test item pool.

· Test form and item bank construction. Once the test items are ready, we tag properties to test items for building up test item banks, which enable test forms to be formulated based on the blueprint of a test. Test forms with the same level of difficulty are generated from the test item bank to ensure fairness across test forms.

· Final user acceptance test. Before publication, the test undergoes a final user acceptance test during which selected test takers take the test and provide feedback. Based on the test results from the beta test, we evaluate the efficacy of the test, eliminate problematic test items and otherwise fine tune the test items to ensure quality.

· Continuous upgrades through result analysis and user feedback. As we deliver tests in real-world environments, we monitor and analyze the quality and adequacy of the test content and update test items as we develop or adopt new technologies and techniques. We also communicate with test users and collect feedback from the test sponsors and test takers to ensure that test items are up-to-date.

Our services are modularized, and depending on the clients needs, we perform some or all of the above services to individual client. For example, in some cases, clients may have already created all of the test items and may only require us to build the test using our E-testing platform. Computer-based tests can also be scheduled on an on-demand basis, or as regularly scheduled tests, which are prescheduled and taken by test takers at a designated time.

Our computer-based testing delivery services generally include the following, subject to the test sponsors specific needs:

· installing our E-testing platform on the computer system of our authorized test centers to enable centralized administrative tasks to be implemented for the test or, in the case of repeated clients, updating the platform as necessary, for new tests;

· providing technical support throughout the test administration process;

· updating test session information and performing test rehearsals and final test environment inspection;

· administering the test sessions and collecting responses from candidates; and

· processing test scores, summarizing and analyzing test scores and generating results.

We also offer a number of logistical support services relating to test administration that we incorporate into the testing fee for our test delivery platform based on clients customized needs. These support services include:

· managing test taker registration and scheduling;

· managing test fee collection;

· preparing and conducting pre-test training of personnel at each ATA authorized test center;

· providing test data management, such as test score publishing and inquiry; and

· printing and delivering certificates for test takers who have satisfied the test sponsor certification requirements.

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We usually offer test content creation services and test delivery services as an integrated solution and collect a fixed fee per test per test taker. The fee we charge depends on the length and complexity of the test, the amount of effort it takes to transform the testing content into computer-based test format and other factors in the test development and administration process, such as security levels and the amount of logistical services provided.

Administration of TOEIC exams in China. We have been a long-time distributor and test administrator of TOEIC exams in China, which are products of ETS, the worlds largest educational research and assessment organization. Originally designed in 1979 by ETS for governmental agencies and corporations, TOEIC measures the ability of non-native speakers of English to communicate in English in the workplace. According to ETS, the TOEIC exam is being used by over 14,000 companies, government agencies and English language learning programs in 150 countries, with around seven million TOEIC exams administered around the world last year. TOEIC has become the top professional English language assessment tool in the world, according to ETS.

TOEIC tests include large-scale, fixed-date testing open to the general public for a set fee as well as on-demand testing given for specific enterprises or organizations. We administered our first TOEIC exam in three cities in China in March 2009. We collect a per-test taker fee for each test delivered. TOEIC exams in China used to be only available in a paper-based format, but since August 2011, we began also delivering computer-based TOEIC exams through our delivery system at our authorized test centers.

On February 28, 2014, our exclusive TOEIC distributor contract with ETS ended and we no longer exclusively administer TOEIC exams in China due to ETS decision to change its distribution model; however, we are still a distributor and administrator of TOEIC exams in China and signed a non-exclusive distributor contract with ETS on June 23, 2014 to continue delivery of certain TOEIC exams to our existing institutional clients from April 1, 2014 through December 31, 2016.

Distribution and administration of ACT exams in China. We entered into a three-year Master Agreement in October 2012 with ACT, Inc. (ACT) to distribute and market certain ACT test titles and assessment-related products. Under a separate addendum signed on the same day, we will administer the ACT college admission test at schools running the Global Assessment Certificate Program in China, and collect a per-test taker fee for each test delivered. At end of May 2014, we received notice of termination from ACT, Inc. on this addendum effective from August 31, 2014. We are under discussions with ACT, Inc. to continue our relationship centered on marketing consultative services.

Distribution and administration of Cambridge tests. We entered into an exclusive ten-year Master Distribution and Services Agreement in March 2013 with The Chancellor, Masters and Scholars of the University of Cambridge (Cambridge), an affiliate of the University of Cambridge which has the largest dedicated research department of any UK-based language assessment organization. Under this agreement, we will host, support, market and deliver platform services to certain Cambridge tests and collect a per-test taker fee for each test delivered. As of March 31, 2015, we have enabled the delivery of 4,129 Cambridge English Junior Exam in 18 countries or regions through our MTS and expect to expand delivery of this and other Cambridge test titles to other jurisdictions in the future.

In the third quarter of the fiscal year ended March 31, 2015, we began to collaborate with Master Mind Education (Master Mind), a provider of digitized services to K-12 after-school touring institutions in China, to serve K-12 after-school tutoring institutions and students across China and deliver MTS boxes to Master Mind which are then being distributed to different institutions through its network. We also work with Master Mind on its marketing strategy in China.

HR Select Employee Assessment Solution

In March 2009, we launched our self-developed HR Select employee assessment solution. HR Select is a service that enables corporate human resources departments to test, benchmark and analyze job applicants based on general, industry-specific and job-specific profiles and individual skill-sets, making it an invaluable tool for campus recruitment, lateral hiring and internal promotions. Employers using HR Select can choose to adopt any of a multitude of evaluation parameters, including:

· General work skills, including among others foreign language skills, software application skills, management skills, reading comprehension ability and data processing skills;

· Position-specific skills, including customized tests for IT, finance, management, customer service, administrative and sales positions; and

· Compatibility traits, which look at non-skills elements that indicate a candidates likelihood of success, such as personal values, self-image, motivation and other personality traits.

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HR Select leverages our computer-based testing technologies and expertise to allow employers to evaluate candidates on each of these properties and to analyze and categorize the results to make effective recruitment decisions. Candidates are tested using our E-testing platform at our authorized test centers or online at a place of their choosing. We have also leveraged our particular expertise in certain industries where we have been delivering computer-based tests and educational services, including the IT and finance industries, to provide targeted services to employer clients. For example, Saville, which is a career personality test, is available via the HR Select service to assess a candidates personality and predict his workplace behavior. Employers may adopt ready-made tests available in the HR Select system, or use their own self-developed tests. If they use their own tests, they can choose to keep the test confidential or permit other HR Select clients to view the tests. By allowing test content to be shared, we believe HR Select can facilitate the standardization of recruitment criteria within industries. HR Select incorporates our computer-based testing technologies to allow clients to deliver the evaluation tests online in a secure, accurate and easy-to-manage manner. HR Select can be administered at ATA authorized test centers or via our customized online platform.

Our current HR Select clients principally include large domestic and foreign-invested companies in professional industries such as insurance and banking. Since the end of the fiscal year ended March 31, 2011, the four largest Chinese state-owned banks have all become customers of our computer-based testing services that incorporate our HR Select solution. We expect to market HR Select to the large and growing small- and medium-enterprise market in China where recruitment resources are limited and where the consequences of poor hiring decisions are greater. Pricing starts at a volume-limited annual subscription, with additional fees charged depending on the volume, specific test titles utilized and whether ATA authorized test centers are used.

To complement our HR Select offerings, we signed an exclusive ten-year partnership agreement with Saville Consulting, a global human resources assessment firm whose products are available in over 80 countries, in August 2011 to deliver Savilles unique and proprietary psychometric measurement instruments and specialized personality instrument through our testing platform. Savilles psychometric assessment has enhanced our HR Select product portfolio and moved us one step closer to our goal of being a premium provider of international, brand name test content.

Test Preparation and Training Solutions

We offer test preparation and training programs and services to test candidates preparing to take professional certification tests as well as candidates aiming to fulfill their post qualification continuing educational requirement. Our test preparation and training solutions integrate our testing and assessment technologies with test preparation and training content targeted at professional licensure and certification tests in China.

Online test preparation and training platform for the securities and banking industries. Leveraging the scale of ATA-delivered securities and futures certification test, ATA Online launched an online test preparation web site to provide a flexible and scalable platform aimed at helping candidates across China to fulfill their Continuous Professional Development (CPD) requirement after passing their professional licensure and certification tests delivered through our testing platform for the SAC and China Futures Association. Test preparation and training customers gain access to Internet web sites that contain the latest training materials provided by the test sponsors and streaming video of teaching sessions and practice tests developed by ATA. Since late 2011, the SAC has been in the process of assessing the feasibility to run its online training program internally rather than outsourcing its operation to us. In place of our previous contract under which we operated the online training program on behalf of the SAC, we entered into a new contract with SAC in November 2011 to deliver online training platform development and maintenance services during the assessment period. We did not earn any revenue for providing such services in the fiscal year ended March 31, 2015. We do not expect any further revenue coming from the provision of test preparation services to the SAC in future.

Online education and training website for professionals in China. In July 2014, we and the New Oriental Education & Technology Group formed a joint venture to provide online and mobile education solutions to growing base of professionals in China, with an initial focus on the healthcare, accounting and finance industries. In April 2015, the joint venture launched a new online education and training website.

Career-Oriented Services

Career-oriented educational services. Our career-oriented educational services include single course programs, degree major course programs and pre-occupational training programs focusing on preparing students for particular job titles and to qualify for internationally recognized IT and other vocational certification programs. Each single course program we offer is typically centered on a specific type of computer software application or other technology that requires significant training and practice to master and for which certification is offered. Our degree major course programs are designed to help graduates prepare for particular types of jobs and career paths. These programs are essentially combinations of multiple single course programs designed to help students acquire a cluster of skill sets. In general, the entire degree major course program can be completed within two to three years and comprises all courses necessary for the students college major. Our pre-occupational training programs provide students with a simulated internship environment replicating what these students would experience in an actual internship and that are designed to prepare students for actual job positions. A typical pre-occupational training program will last for two to three months. We plan to gradually exit from career-oriented educational services delivered through single course programs, degree major course programs and pre-occupational training programs in IT and vocational schools and shift our focus to our new business providing soft skills and career-oriented training for corporate employees in China. We do not expect any further revenue coming from the provision of career-oriented educational services in future.

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Data Storage and Security

One of the most important aspects of our computer-based testing services is ensuring the integrity and security of the test-taking process. To accomplish this, we use multiple technologies and methods to ensure the security of test content, test results and other sensitive data used or obtained in relation to our services.

We have developed and implemented the following technologies and measures to protect security throughout all stages of test development and delivery:

Preparation and Storage of Test Items

To reduce the risks associated with potential unauthorized disclosure or misuse of test questions by ATA personnel during the process of creating test item banks, we divide test item authoring and management tasks among multiple persons and limit each persons access to the test item content through the use of access permissions. Each test item author is only responsible for creating a limited amount of test item content and is permitted access only to that content for which that person is responsible. As a result, no one has full access to the contents beyond his or her scope of work. Test item bank managers receive limited permissions and are not given access to the content of individual test items. Moreover, our test item authoring and test item bank management tools record and track all access and modifications to test items or the test item pool to detect any breaches to the security protocols. Once the test item banks are created, the content is encrypted and stored on our secure central servers or the clients servers. Our servers are located in a central machine room operated by one of the most well-established server hosting service providers in China. These servers are protected by firewalls and stored using NetApp TM equipment, which permits real-time back-up. We encrypt all test item banks using our self-developed encryption algorithm, which prevent decryption or reverse engineering through the use of electronic fingerprinting, anti-tracking and trapping technologies.

Creation of Test Forms and Transmission of Test Materials to the Test Site

Our software applications automatically compile individual test forms from the test item bank according to the test blueprint and pre-arranged parameters. During this process, no access of the content of individual test items is permitted and all steps in the process are digitally recorded. The encrypted test forms are delivered to the test sites server either on hard disc or through a secure network, generally one day before the day of the test. The relevant information on each test taker is separately transferred in encrypted format to the test site via the Internet. A hardware dongle containing an encrypted time stamp is used to ensure that the test begins and ends on time. A hardware dongle is a hardware device that must be inserted into the USB port of the test sites central computer to decrypt and operate the test content. We design our own hardware dongles, which incorporate ATA-owned integrated circuit technology, and outsource its production to multiple factories in China. A decryption algorithm used along with the hardware dongle to complete decryption of test materials and commence the test.

Conduct of the Test

We train all test center personnel on protocols and supervision techniques to be used during test time. Test center administrators confirm test takers identities through photographs, fingerprints and other biometric data. We also issue to each test taker upon registration a password that must be inputted on the test day to start the test. Once the test session has begun, software installed as part of each test tracks all actions and operations taken during the test and records them on the test site central server in real time. The testing software prevents test takers from accessing any network during test time. When a test taker opens up a question, it is decrypted and displayed. To protect against cheating, we have invested in surveillance equipment and the order in which test answer choices appear is randomly generated with each answer choice encoded as a unique number and letter chain. Immediately upon the test takers completion of each test item, the recorded data is re-encoded and re-encrypted.

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Transmission, Reading and Storage of Test Results

In most instances, tests are scored on the test site server immediately following conclusion of the test and subsequently uploaded to our central servers. All transferred data is encrypted and data code integrity is verified using MD5 and Hash technologies. Following scoring, we store all test content and results on our firewall-protected central servers.

Intellectual Property

Intellectual property protections, including copyrights, trademarks, patents, and trade secrets are important to our success. We rely on copyright, trademark and patent law, trade secret protection and confidentiality agreements with our employees, clients, business partners and others to protect our intellectual property rights. All of our senior management and engineering employees are required to sign agreements acknowledging that all inventions, trade secrets, works of authorship, innovations and other processes generated by them that relate to our business are our property, and to assign to us any ownership rights in those works. Despite our efforts, it may be possible for third parties to obtain and use our intellectual property without authorization.

We have registered 163 software copyrights relevant to our product and service offerings with the Copyright Protection Center of China.

As of March 31, 2015, we have also registered 250 domain names relating to our web sites, including www.ata.net.cn, the primary URL for our web site, with the Internet Corporation for Assigned Names and Numbers and the China Internet Network Information Center, a domain name registration service provider in China.

We have also sought patent protection relating to our testing technology. On February 22, 2013, we submitted two applications with Chinas State Intellectual Property Office seeking dual invention patent protection and utility model protection for our testing transmission technology. Our application for utility model protection was granted on August 28, 2013, which gives us a protection period of 10 years starting from the date of application. We expect to obtain approval for the invention patent in the second half of 2016. Once approved, we are entitled to a protection period of 20 years for the invention patent from the date of application. In addition, our testing technologies also enjoy protection in China as trade secrets under Chinas Anti-Unfair Competition Law.

Clients

The quality and flexibility of our product and service offerings has attracted a broad base of clients. Our clients principally include Chinese governmental agencies, professional associations, well-known IT vendors and Chinese educational institutions as well as individual test preparation services consumers. SAC, CICPA, CBA and Ministry of Human Resources and Social Security accounted for 19.1%, 18.5%, 18.3% and 10.0%, respectively, of our total net revenues for the fiscal year ended March 31, 2015. No other client accounted for more than 10% of our total net revenues for the fiscal year ended March 31, 2015.

As of March 31, 2015, we had 279 contracts with test sponsors for our computer-based testing services. For the fiscal year ended March 31, 2015, our five largest computer-based testing services clients based on revenue were:

· SAC, which has been designated by the China Securities Regulatory Commission as the sole administrator of securities industry qualification tests in China;

· CICPA, which has been designated by Ministry of Finance of the Peoples Republic of China as the sole administrator of CPA qualification tests in China;

· CBA, which has been designated by the PRC Ministry of Human Resources and Social Security and the China Banking Regulatory Commission as the sole administrator of banking industry qualification tests in China;

· the Professional Skills Qualification Center of the PRC Ministry of Human Resources and Social Security; and

· China Futures Association.

These five clients represented an aggregate of 68.6% of our total net revenues for the fiscal year ended March 31, 2015.

Sales and Business Development

Our sales and business development department, primarily composed of members of our senior management and professional sales team, is responsible for identifying and developing new markets and client opportunities for our product and service offerings.

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For our computer-based testing services, we target key governmental agencies, professional associations, enterprises and other potential clients to help them develop standardized certification, qualification or assessment policies. Once we identify a potential client, we generally submit an initial proposal outlining the services we can provide based on our analysis of their test-related needs. We may develop and conduct trial tests tailored to the clients needs based on the terms of a memorandum of understanding signed with the client. We generally enter into a final contract with the client only after successful completion of the trial tests. During this process, we also actively seek opportunities to cross-sell and up-sell our services, including test preparation services and ancillary testing services to the client. The following diagram illustrates the key stages in our testing services business development process.

Marketing

To generate demand and market awareness, we engage in a variety of marketing activities to promote our product and service offerings. We host and invite potential clients, such as key governmental agencies and governing bodies, to industry conferences on topics such as the development of computer-based testing technologies. We also attend conferences and trade shows to demonstrate and promote our technologies, product and service offerings. We conduct marketing for our service offerings through promotional activities in cooperation with local governmental departments and educational institutions and through our local sales agents. Our on-campus marketing activities include promoting the licensure and certification tests linking to our ATA brand name, through prominently placed marketing materials like posters and other advertising means. We promote wider recognition of our ATA brand by placing our logo prominently outside ATA authorized test centers and in test and course program materials. We are also developing joint marketing efforts with certain independent operators of our ATA authorized test centers.

Competition

In the computer-based testing services market, we compete primarily on the basis of technology, price, management experience and established infrastructure. We believe that our overall testing services and technologies, along with our nationwide test center network, provide us with a competitive advantage. We believe that we are currently the market leader in computer-based testing services in China due to a combination of our experience in and familiarity with the China computer-based testing services market, our advanced technologies, our large nationwide network of test centers, our established relationships with key test sponsors and governmental agencies and our competitive cost levels.

We believe that we have the largest test center network of any commercial computer-based testing service provider in China. We had 2,989 authorized test centers in China, including centers in every province in China, as of March 31, 2015. To our knowledge, based on interactions with clients and others in the market, there are no other commercial computer-based testing service providers in China with a test center network as large as ours. Our vast network of test centers allows our clients to administer large-scale nationwide computer-based tests in a consistent, secure and cost-effective manner. During the fiscal year ended March 31, 2015, approximately 8.8 million tests were delivered using our computer-based testing technologies and services, and our capacity for test delivery, which can be easily expanded if necessary, is already more than 1,000,000 tests per day.

For our HR Select employee assessment solution, while there are other companies providing recruitment services to corporate human resources departments, we are differentiated by our comprehensive service and focus on offering more professional testing services with proprietary testing contents and technologies.

While we anticipate new market entrants and increased efforts by existing international players to expand their presence in China, we believe that relatively high entry barriers, such as the time and costs associated with establishing a large-scale test center network, will make it difficult for new entrants or international competitors to quickly gain market share from us in China. We believe that potential domestic entrants lack the technology and commercial relationships that we possess. International competitors will likely face challenges in establishing effective relationships with key Chinese government and industry test sponsors or local educational institutions.

Seasonality

We have experienced seasonality and expect in the future to continue to experience seasonality in net revenues and accounts receivable related to our test delivery services, with the quarters ending June 30 and December 31 typically having higher net revenues from testing services and the quarters ending September 30 and March 31 typically having lower net revenues from testing services. This is primarily because the tests from which we derive substantial revenues are mostly delivered in the quarters ending June 30 and December 31.

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Regulation

This section sets forth a summary of the most significant laws, regulations, policies and requirements that affect our business activities in China, the industries in which we operate, and our shareholders right to receive dividends and other distributions from us.

Regulation of the Software Industry

In China, holders of computer software copyrights enjoy protection under the Copyright Law of the Peoples Republic of China, or the Copyright Law. Under the Copyright Law, Chinas State Council and the State Copyright Administration have also promulgated various regulations relating to the protection of software copyrights in China. Under these regulations, computer software that is independently developed and exists in a physical form will be protected, and software copyright owners may license or transfer their software copyrights to others. Registration of software copyrights and exclusive licensing and transfer contracts with the Copyright Protection Center of China (previously, the State Copyright Administration) or its local branches are encouraged. Such registration is not mandatory under Chinese law, but can enhance the protections available to the registering parties. For example, the registration certificate serves an evidentiary function enabling the registering parties to prove they have protectable rights. We have registered 163 software copyrights with the Copyright Protection Center of China.

Chinas Ministry of Industry and Information Technology (and its predecessors), or MIIT, has promulgated regulations to regulate the production, sale, import or export of software products in China. Under these regulations, all domestically produced software products to be operated or sold in China must be duly registered and filed with the provincial branches of MIIT. We have complied with the registration and filing requirements necessary to sell our software products in China. These registrations generally remain in effect for five years and are subject to renewal.

Regulation of Vocational Education

Chinese laws and regulations impose restrictions on foreign investment in educational institutions in China. However, Chinese laws and regulations do not impose restrictions on foreign investment in companies providing course and test content or related products and services to educational institutions. In addition, the Chinese government has issued a series of circulars and regulations promoting the development of vocational education, including The Decision to Enhance the Promotion of the Reform and Development of Vocational Education, The Decision to Enhance the Development of Vocational Education and The Decision to Enhance the Development of Modern Vocational Education published by the State Council on September 24, 2002, October 28, 2005 and May 2, 2014, respectively. These circulars and regulations require all levels of governments in China to intensify their support for vocational education and to gradually increase the financial resources that local and provincial governments allocate to vocational education.

Regulations regarding Internet Content Provider Licensure Requirements

We planned to engage in online testing preparation business, which are subject to PRC regulations including but not limited to Telecommunications Regulations, the Administrative Rules on Foreign-Invested Telecommunications Enterprises, the Notice on Strengthening the Administration of Foreign Investment in Operating Value-added Telecom Business, the Internet Information Services Administrative Measures, the Administrative Measures for Telecommunications Business Operating Licenses, and Certain Rules on Regulating the Order of Internet Information Service Market. ATA Online holds an ICP license issued by the Beijing Telecommunications Administration Bureau, a local branch of the MIIT, which allows ATA Online to provide Internet content distribution services. As ATA Online has not engaged in online testing preparation business since its incorporation, it is not required under PRC law to hold the ICP license. In connection with the proposed listing of ATA Online and the termination of contractual arrangements, ATA Online is in the process of de-registering its ICP license.

In the opinion of Jincheng Tongda & Neal Law Firm, our PRC legal counsel:

· the ownership structures of our wholly owned subsidiaries in China are in compliance with existing published Chinese laws and regulations; and

· the business operations of our company, all of our Chinese subsidiaries, as described in this annual report, are in compliance with existing published Chinese laws and regulations in all material aspects.

Regulation of Online and Distance Education

Pursuant to the Administrative Regulations on Educational Web sites and Online and Distance Education Schools issued by the Ministry of Education in 2000, educational web sites and online education schools may provide education 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 web sites refers to organizations providing education or education-related information services to web site 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 web sites providing academic education services or training services with the issuance of various certificates.

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Setting up educational web sites and online education schools is subject to approval from relevant education authorities, depending on the specific types of education provided. Any educational web site and online education school shall, upon receipt of approval, indicate on its web site such approval information as well as the approval date and file number.

According to the Administrative License Law promulgated by the National Peoples Congress on August 27, 2003 and effective as of July 1, 2004, only laws promulgated by the National Peoples Congress and regulations and decisions promulgated by the State Council may set down administrative license requirements. On June 29, 2004, the State Council promulgated the Decision on Setting Down Administrative Licenses for the Administrative Examination and Approval Items Really Necessary to be Retained, in which the administrative license for online education schools was retained, while the administrative license for educational web sites was not retained. ATA Online is not required to obtain a license as an online education school because ATA Online does not intend to offer through its web site academic education services or training services that result in the issuance of a degree or other certification.

Regulation of Broadcasting Audio-Visual Programs through the Internet or Other Information Network

The State Administration of Radio, Film and Television, or SARFT, promulgated the Rules for Administration of Broadcasting of Audio-Visual Programs through the Internet and Other Information Networks, or the Broadcasting Rules, in 2004, which became effective on October 11, 2004. The Broadcasting Rules apply to the activities of broadcasting, integrating, transmitting and downloading of audio-visual programs with computers, televisions or mobile phones as the main terminals and through various types of information networks. Pursuant to the Broadcasting Rules, a Permit for Broadcasting Audio-Visual Programs via Information Network is required to engage in these Internet broadcasting activities. On April 13, 2005, the State Council announced a policy on private investments in businesses in China relating to cultural matters that prohibits private investments in businesses relating to the dissemination of audio-visual programs through information networks. On December 20, 2007, SARFT and MIIT jointly promulgated the Administrative Provisions on Internet Audio-Visual Program Service, or the Audio-Visual Service Provisions, which became effective on January 31, 2008. Pursuant to the Audio-Visual Service Provisions, a Permit for Disseminating Audio-Visual Programs via Information Network issued by the competent radio, film and television authority, or completion of the relevant filing formalities with such authority, is required to engage in the Internet audio-visual program service. One of the criteria that any entity applying to engage in the Internet audio-visual program service must meet is that such entity should be a wholly state-owned entity or state-controlled entity, which should have the legal status of legal person, and there is no record indicating that such entity has violated laws or regulations within three years prior to its application. According to the clarification by SARFT and MIIT in their Answers to Questions of Press regarding the Administrative Provisions on Internet Audio-Visual Program Service, entities that have been incorporated to engage in the Internet audio-visual program service in compliance with the applicable laws or regulations prior to the promulgation of the Audio-Visual Service Provisions and have no record of violating laws or regulations can re-register and continue their businesses. As these regulations are relatively new, there are significant uncertainties relating to their interpretation and implementation, including the definition of audio-visual programs as specified in these regulations. We cannot assure you that ATA Online will be able to obtain a Permit for Broadcasting Audio-Visual Programs via Information Network if it is determined that one is required to operate the online test preparation business.

Regulation of Information Security

Internet content in China is also regulated and restricted by the PRC government to protect State security. The National Peoples Congress, Chinas national legislative body, has enacted a law that may subject to criminal punishment in China any effort to: (1) gain improper entry into a computer or system of strategic importance; (2) disseminate politically disruptive information; (3) leak State secrets; (4) spread false commercial information; or (5) infringe intellectual property rights.

The Ministry of Public Security has promulgated measures that prohibit use of the Internet in ways that, among other things, result in a leakage of State secrets or a spread of socially destabilizing content. The Ministry of Public Security has supervision and inspection rights in this regard, and we may be subject to the jurisdiction of the local security bureaus. If an ICP license holder violates these measures, the PRC government may revoke its ICP license and shut down its web sites.

Regulation of Domain Names and Web Site Names

PRC law requires owners of Internet domain names to register their domain names with qualified domain name registration agencies approved by MIIT and obtain a registration certificate from such registration agencies. A registered domain name owner has an exclusive use right over its domain name. Unregistered domain names may not receive proper legal protections and may be misappropriated by unauthorized third parties. As of March 31, 2015, we have registered 250 domain names relating to our web sites, including www.ata.net.cn, the primary URL for our web site, with the Internet Corporation for Assigned Names and Numbers and the China Internet Network Information Center, a domain name registration service provider in China.

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PRC law requires entities operating commercial web sites to register their web site names with SAIC or its local offices and obtain a commercial web site name registration certificate. If any entity operates a commercial web site without obtaining such certificate, it may be charged a fine or suffer other penalties by the SAIC or its local offices. Our web sites used in connection with our testing and education services are considered non-commercial web sites as we do not provide products and services through those web sites, and therefore the names of those web sites are not required to be registered with SAIC. ATA Online has registered the web site name used in connection with the online test preparation business with Beijing municipal SAIC.

Regulation of Privacy Protection

PRC law does not prohibit Internet content providers from collecting and analyzing personal information from their users. PRC law prohibits Internet content providers from disclosing to third parties any information transmitted by users through their networks unless otherwise permitted by law. If an Internet content provider violates these regulations, MIIT or its local offices may impose penalties and the Internet content provider may be liable for damages caused to its users.

On July 16, 2013, the MIIT issued the Order for the Protection of Telecommunication and Internet User Personal Information. Most requirements under the order that are relevant to internet content provision operators are consistent with pre-existing requirements, but the new requirements are often more stringent and have a wider scope. If an internet content provision operator wishes to collect or use personal information, it may do so only if such collection is necessary for the services it provides. Further, it must disclose to its users the purpose, method and scope of any such collection or use, and must obtain consent from its users whose information is being collected or used. Internet content provision operators are also required to establish and publish their rules relating to personal information collection or use, keep any collected information strictly confidential, and take technological and other measures to maintain the security of such information. Internet content provision operators are required to cease any collection or use of the user personal information and de-register the relevant user account when a given user stops using the relevant internet service. Internet content provision operators are further prohibited from divulging, distorting or destroying any such personal information, or unlawfully selling or providing such information to other parties. In addition, if an internet content provision operator appoints an agent to undertake any marketing and technical services that involve the collection or use of personal information, the internet content provision operator is still required to supervise and manage the protection of such information. As for penalties, violators may face warnings, fines, and disclosure to the public and, in most severe cases, criminal liability under the order.

Regulation of Foreign Exchange

Chinas government imposes restrictions on the convertibility of the Renminbi and on the collection and use of foreign currency by Chinese entities. Under current regulations, the Renminbi is convertible for current account transactions, which include dividend distributions, interest payments, and the import and export of goods and services. Conversion of Renminbi into foreign currency and foreign currency into Renminbi for capital account transactions, such as direct investment, portfolio investment and loans, however, is still generally subject to the prior approval of the PRC State Administration of Foreign Exchange, or SAFE.

Under current Chinese regulations, foreign-invested enterprises such as our Chinese subsidiaries are required to apply to SAFE for a Foreign Exchange Registration Certificate for Foreign-Invested Enterprise. With such a foreign exchange registration certificate (which is subject to review and renewal by SAFE on an annual basis), a foreign-invested enterprise may open foreign exchange bank accounts at banks authorized to conduct foreign exchange business by SAFE and may buy, sell and remit foreign exchange through such banks, subject to documentation and approval requirements. Foreign-invested enterprises are required to open and maintain separate foreign exchange accounts for capital account transactions and current account transactions. In addition, there are restrictions on the amount of foreign currency that foreign-invested enterprises may retain in such accounts.

According to Article 26 of the Regulations on the Foreign Exchange System of the Peoples Republic of China, if the Companys PRC subsidiaries liquidate, the Renminbi distributable to its foreign shareholders after the liquidation and payment of relevant taxes can be freely converted into foreign currency and remitted abroad. Therefore, there are no legal impediments to remitting the proceeds from a liquidation of our PRC subsidiaries outside of China to investors who are not PRC nationals.

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SAFE promulgated the Circular of the State Administration of Foreign Exchange on Reforming the Management Approach regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises, or SAFE Circular 19, on March 30, 2015. According to SAFE Circular 19, up to all of the foreign exchange capital in the capital account of foreign-invested enterprises can be settled at the banks based on the actual operation needs of the foreign-invested enterprises. The capital in Renminbi obtained by foreign-invested enterprises from the discretionary settlement of foreign exchange capital shall be managed under the account pending foreign exchange settlement payment. The expenditure scope of the such account includes: the expenditure within the scope of business, the payment of the capital of domestic equity investment and deposits in Renminbi, the repayment of the used loans in Renminbi, the purchase payment of foreign exchange or direct external repayment of foreign debts or other expenditure approved by the foreign exchange bureaus, but the capital of foreign-invested enterprises and capital in Renminbi obtained by them from foreign exchange settlement shall not be used for the following purposes: (1) directly or indirectly used for the payment beyond the business scope of the enterprises or the payment prohibited by national laws and regulations; (2) directly or indirectly used for investment in securities unless otherwise provided by laws and regulations; (3) directly or indirectly used for granting the entrust loans in Renminbi (unless permitted by the scope of business), repaying the inter-enterprise borrowings (including advances by the third party) or repaying the bank loans in Renminbi that have been sub-lent to the third party; and (4) paying the expenses related to the purchase of real estate not for self-use, except for the foreign-invested real estate enterprises.

Regulation of Foreign Exchange in Certain Onshore and Offshore Transactions

Failure by such shareholders to comply with SAFE Circular 37 could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiaries ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.

Regulation of Overseas Listings

On August 8, 2006, six PRC regulatory agencies, including the Chinese Securities Regulatory Commission, or CSRC, promulgated the Provisions Regarding Mergers and Acquisitions of Domestic Enterprise by Foreign Investors, or the M&A Rule, which became effective on September 8, 2006 without retroactive effect. The M&A Rule, among other things, requires that an offshore company controlled by PRC companies or individuals that has acquired a PRC domestic company for the purpose of listing the PRC domestic companys equity interest on an overseas stock exchange must obtain the approval of the CSRC prior to the listing and trading of such offshore companys securities on an overseas stock exchange. On September 21, 2006, the CSRC, pursuant to the M&A Rule, published on its official web site procedures specifying documents and materials required to be submitted to it by offshore companies seeking CSRC approval of their overseas listings.

We believe CSRC approval was not required for our initial public offering in February 2008 because the CSRC approval required under the M&A Rule only applies to an offshore company that has acquired a domestic PRC company for the purpose of listing the domestic PRC companys equity interest on an overseas stock exchange, while (i) we obtained our equity interest in each of our PRC subsidiaries by means of direct investment other than by acquisition of the equity or assets of a PRC domestic company in 2008, (ii) our former contractual arrangements with ATA Online do not constitute the acquisition of ATA Online, (iii) the M&A Rule does not apply to the acquisition by ATA Learning, a wholly foreign owned foreign enterprise, and (iv) although Article 11 of M&A Rule prohibits the circumvention of the M&A Rule through establishing FIEs, ATA Learning was established in 2003 before the M&A Rule was promulgated, which makes this acquisition not a circumvention of the M&A Rule. See Item 3.D. Key Information Risk Factors Risks Relating to Regulation of Our Business If the China Securities Regulatory Commission, or CSRC, or another PRC regulatory agency determines that CSRC approval was required in connection with our initial public offering, we may become subject to penalties.

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SAFE Regulations on Employee Share Options

On February 15, 2012, SAFE issued the Notice on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, or the Stock Option Rules. According to the Stock Option Rules, PRC residents who participate in an employee share incentive plan of an overseas publicly-listed company are required to register with the SAFE and complete certain other procedures. These participates should retain a PRC agent, which can be a branch or representative office of the overseas listed company in China, a Chinese institution which has controlling relationship or actual control relationship with the offshore listed company, or a Chinese institution qualified for asset custody business, to handle various foreign exchange matters associated with their employee share incentive plan. The PRC agent should file on behalf of the PRC resident an application with SAFE to register such employee share incentive plan, apply annually for a quota for the payment of foreign currencies in connection with the exercise of the employee share options by the PRC resident and open a special foreign exchange account at a PRC domestic bank to hold the funds required in connection with the share incentive plan. In addition, the PRC agent is required to amend the SAFE registration with respect to the stock incentive plan if there is any material change to the employee share incentive plan, PRC agent or overseas entrusted institution.

In addition, the State Administration of Taxation has issued a few circulars concerning employee share options. Under these circulars, our employees working in China who exercise share options will be subject to PRC individual income tax. Our PRC subsidiaries have obligations to file documents relating to employee share options with relevant tax authorities and withhold individual income taxes of those employees who exercise their share options. If our employees fail to pay and we fail to withhold their income taxes, we may face sanctions imposed by tax authorities or other PRC government authorities.

C. Organizational Structure

For information on our organizational structure and a detailed description of the Companys significant subsidiaries, see Item 4.A. History and Development of the Company.

D. Property, Plant and Equipment

Our principal executive offices are located in approximately 3,023 square meters of office space used by us at 1/F East Gate, Building No.2, Jian Wai Soho, No.39 Dong San Huan Zhong Road, Chao Yang District, Beijing 100022, China. We also own 1,062 square meters of office space at Tower E, 6 Gongyuan West Street, Jian Guo Men Nei, Beijing 100005, China, which we have leased to another tenant. We also occupy approximately 2,658 square meters of total leased office space in our subsidiaries and branches located in Shanghai, Chengdu and Guangdong. We believe that our existing facilities are adequate for our current requirements and that additional space can be obtained on commercially reasonable terms to meet our future requirements.

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A. Operating Results

Overview

Our Business

We believe that we are the leading provider of computer-based testing services in China, based on test delivery capacity and geographic coverage. We offer comprehensive services for the creation and delivery of computer-based tests utilizing our nation-wide test delivery platform, proprietary testing technologies and extensive experience providing testing services in China. Our total net revenues increased from RMB366.7 million in the fiscal year ended March 31, 2013 to RMB384.7 million in the fiscal year ended March 31, 2014 and then decreased to RMB350.2 million ($56.5 million) in the fiscal year ended March 31, 2015. We had net income of RMB23.2 million in the fiscal year ended March 31, 2013, RMB27.3 million in the fiscal year ended March 31, 2014 and RMB23.1 million ($3.7 million) in the fiscal year ended March 31, 2015.

We started our business in 1999 focusing on providing computer-based testing services to test sponsors. Our testing services revenues have grown primarily as a result of increases in the number of testing services clients and the number of test takers who take tests created or delivered using our testing technologies. Revenues from testing services accounted for 91.6%, 93.3% and 91.1% of our total net revenues in the fiscal years ended March 31, 2013, 2014 and 2015, respectively. We expect our testing services revenues to continue to be the largest source of our total net revenues. In March 2009, we launched HR Select, our self-developed online system that utilizes our proprietary software and large test titles to assist companies in streamlining and optimizing their employee selection and assessment processes. HR Select offers tools for filtering and categorizing employee candidates, testing candidates and analyzing the test results. We are also a distributor and administrator of certain TOEIC exams to our institutional clients in China. Revenues from HR Select and distribution and administration of TOEIC exams are included in testing services revenues. The following graph shows the growth in the number of tests delivered using our testing technologies for the twelve months ended March 31, 2011, 2012, 2013, 2014 and 2015.

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Number of Exams Delivered (1)

(1) Includes Microsoft royalty tests overseas, tests delivered through our test delivery platform and tests using our Dynamic Simulation Technology. Also includes free tests delivered for business development purposes. The number of tests delivered excluding the free tests in the fiscal years ended March 31, 2011, 2012, 2013, 2014 and 2015 was 6,907,158, 8,026,639, 8,744,859, 9,411,226 and 8,767,389, respectively.

We also offer targeted test preparation and training solutions for certain professional licensure and certification tests in the securities industries. ATA Online operates online test preparation and training web sites to help candidates across China fulfill their continuing educational requirement after passing their professional licensure and certification tests delivered through our test delivery platform for the SAC and China Futures Association. Revenues from our test preparation and training solutions accounted for 3.1%, 1.5% and 1.6% of our total revenue in the fiscal years ended March 31, 2013, 2014 and 2015, respectively.

As of March 31, 2015, we operated our business and generated our net revenues primarily through our wholly owned subsidiaries in China, ATA Testing and ATA Learning, and our consolidated VIE, ATA Online. Due to PRC laws and regulations restricting foreign ownership in distributors of Internet content, ATA BVI, ATA Learning, ATA Online and ATA Onlines shareholders entered into a series of contractual arrangements, through which we effectively controlled and enjoyed the economic benefits of ATA Online. As a result of those contractual arrangements, under U.S. GAAP, we were considered the primary beneficiary of ATA Online. Accordingly, we consolidated ATA Onlines results in our consolidated financial statements for the fiscal year ended March 31, 2015. Since May 2015, we restructured our testing services business into ATA Online for purposes of listing it separately on the New Third Board. In connection therewith, we terminated the abovementioned contractual arrangements. See Item 4.A. Information on the Company History and Development of the Company.

Factors Affecting Our Results of Operations

The key factors affecting our results of operations are:

· growth in Chinas professional services sector resulting in increasing demand for qualified and certified talent in China and in the finance industry in particular;

· overall economic growth and rising income levels in China contributing to increased spending on education, testing and test preparation;

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· government and industry initiatives to standardize and license professionals in industries such as securities, futures, banking, law and accounting;

· growth in the use of computer-based tests and performance-based tests and willingness of test sponsors to outsource test content development and delivery for sophisticated computer-based tests as well as online test preparation and training programs;

· the increasing importance of identifying qualified talent contributing to increasing demand for testing and certification programs that can confirm the qualifications of the applicant or job seeker; and

· our ability to continue to introduce new services and testing platforms and the market success of such services and platforms, such as our HR Select service, distribution and administration of certain test titles, such as mobile device-based Cambridge English Junior Exams, our MTS testing platform and our career-oriented trainings.

Although we anticipate the above factors will continue to increase demand for our products and services in China, a slowing or reversal of any of the above factors could cause our revenue growth to slow or stop, or to not grow as fast as we might expect.

In addition, our results of operations have been, and may continue to be, significantly affected by the following factors:

· share-based compensation;

· the impact of PRC tax policies, including certain preferential tax rates and tax holidays; and

· the relative proportion of our net revenues derived from higher-gross margin and lower-gross margin service offerings.

Net Revenues

We derive revenues from sale of computer-based testing services, test preparation and training solutions, and other products and services. Our net revenues are presented net of PRC business taxes and value added tax. The following table sets forth a breakdown of our total net revenues for the periods.

	For the fiscal year ended March 31,
	2013			2014			2015
	RMB	% of net revenues		RMB	% of net revenues		RMB	US$	% of net revenues
	(in thousands, except or percentages)
Net Revenues
Testing services	335,791	91.6	%	358,837	93.3	%	319,055	51,469	91.1	%
Test preparation and training solutions	11,343	3.1	%	5,949	1.5	%	5,711	921	1.6	%
Other	19,541	5.3	%	19,882	5.2	%	25,392	4,096	7.3	%
Total net revenues	366,675	100.0	%	384,668	100.0	%	350,158	56,486	100.0	%

Testing Services

We derive testing services revenues primarily from fees charged to test sponsors, including governmental agencies and other sponsors of licensure and certification tests, for our test delivery services. We also offer testing services to private enterprises as part of our HR Select employee assessment solution and administer TOEIC exams in China.

We offer our clients a comprehensive set of services for the compilation, delivery and analysis of computer-based tests using our E-testing platform, as well as logistical services such as test registration and fee collection. We generate revenues from our test delivery services through fees charged to test sponsors based on the total number of test takers taking a requested test. Our clients typically pay us within two to six months after delivery of the test. We recognize revenue for test delivery services upon completion of the relevant test.

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Significant Factors Affecting Testing Services

The most significant factor directly affecting our revenues from fees charged for our testing services are the number of test takers. The number of test takers for a test is driven by our ability to secure contracts with test sponsors for the creation and delivery of computer-based test titles popular with test takers. The volume of tests we offer is determined by the willingness of test sponsors to use our services. Growth in the number of enterprises adopting our HR Select service in China also impact our testing services revenues. Our revenues from fees charged for our testing services are also affected by the price we can charge per test, which generally remains fairly stable once we are engaged by a test sponsor to help deliver a particular test.

Demand and pricing for a test is affected by whether a certain profession, career or job position for which the certification, licensure or qualification test is being given is considered desirable by potential test takers. Some industries may experience fluctuations in the number of people attempting to become qualified to participate in the industry, which will depend on the overall health of the relevant industry, changes in average salary levels in the relevant industry, the popularity of certain types of careers and employers, governmental policies that impact the relevant industry, or other factors. For example, we believe our net revenues from tests delivered for the SAC reflect a favorable impact of Chinas booming stock market, which has increased demand for qualified securities professionals.

In addition, obtaining contracts from test sponsors for new test titles and for upgrade of existing test titles often requires considerable time and resources. Many of our clients administer tests to a large number of people on a regular basis, and maintaining consistency and stability from year to year in the test delivery format is important to them. The decision process involved in adopting a new type of test or a new test delivery format can be difficult and complex. These factors often result in significant delays in our ability to secure contracts, and make it difficult to predict our revenues from fees from test sponsors in any given year. On the other hand, for test sponsors that administer many tests on a regular basis, our ability to secure an initial contract and to effectively meet their test delivery requirements under the contract can help us obtain future test title contracts from that test sponsor. This enables us to increase and diversify our revenues and to hinder competitors from obtaining contracts with that test sponsor.

Test Preparation and Training Solutions

We derive test preparation and training solutions revenues from the provision of online test preparation and training services.

ATA Online provides online test preparation and training for professional licensure and certification tests delivered through our testing platform for the SAC and China Futures Association. Revenues from online test preparation and training services are generated by selling online training to end users directly or through distributors on a consignment basis. The online training entitles the end users access to online test preparation and training services during a specified service period, which normally ranges between 90 to 365 days from the activation. Revenue of online membership is recognized on a straight-line basis ratably over the service period commencing at the point of time the online training is activated. If the online training sold to the end users are not activated before the expiration date, related online service revenue is recognized on the expiration date. In November 2011, we entered into a new contract with SAC to deliver online training platform development and maintenance service. Fees from online training platform development and maintenance service are recognized, when collectability is reasonably assured, on a straight-line basis over the contractual period.

Significant Factors Affecting Test Preparation and Training Solutions

A number of factors affect our revenues from test preparation and training solutions. Demand for test preparation and training solutions for a particular test depends on the relative level of importance or difficulty of the test, with greater demand for test preparation and training solutions for more important and more difficult tests. Therefore, our ability to secure test delivery services contracts for more important and more difficult tests may affect our test preparation and training solutions business. As we generally offer test preparation and training solutions for tests that are delivered through our test delivery platform, our ability to grow our test preparation and training solutions business is also affected by the willingness of our test sponsor clients to permit us to provide test preparation and training solutions for their tests. Some test sponsor clients may not permit us to provide test preparation and training solutions in relation to tests for which we provide test delivery and other services due to a perceived conflict of interest. In addition, because we generally do not develop the learning content used in our test preparation and training solutions, our ability to license test preparation learning content and materials from the relevant test sponsor or third party content provider is critical to the expansion of the number of tests for which we offer test preparation and training solutions.

Since late 2011, the SAC has been in the process of assessing the feasibility to run its online training program internally rather than outsourcing its operation to us. In place of our previous contract under which we operated the online training program on behalf of the SAC, we entered into a new contract with SAC in November 2011 to deliver online training platform development and maintenance services during the assessment period. We received nil in revenues from test preparation services to the SAC in the fiscal year ended March 31, 2015 compared to RMB0.9 million in the fiscal year ended March 31, 2014. We do not expect any further revenue from providing test preparation services to the SAC in the future.

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Other Revenues

We derive other revenues from test-based educational services, test content creation services, issuance of certificates delivered to passing candidates, licensing fees paid to us by operators of our ATA authorized test centers, and other fees and services.

Test-based educational services. We offer, and receive fees for, single course programs, degree major course programs and pre-occupational training programs focusing on preparing students to pass IT and other vocational certification tests. We do not expect any further revenue coming from the test-based educational services in future.

Test content creation services. Our test content creation services include the installation of our technology on client testing platforms, the conversion of paper-based test items into computer-based tests items, and other related services. We charge service fees for these test content creation services.

Certificate delivery. Many of our testing services clients charge passing candidates a separate fee to receive a certificate for a test passed. We deliver upon request, and charge a per-certificate fee for, these certificates to these candidates.

Licensing fees from ATA authorized test centers. We license our ATA name and E-testing platform technology and provide ongoing technical support, upgrades and training during the contract period in exchange for license fees.

Test administration software products. We offer our test administration software products to our clients and charge a per-software copy price for the software.

Other fees and services. From time to time and as requested by our clients, we may provide teacher training services, IT consulting and system integration services, commission charges and other testing-related services to our clients.

Cost of Revenues

Our cost of revenues consists primarily of test monitoring costs, payroll compensation, royalty fees, cost of inventories sold, technical support and other related costs, all of which are directly attributable to the provision of our testing services, test preparation and training solutions and our other services. The following table shows our cost of revenues and gross profit for the periods indicated:

	For the fiscal year ended March 31,
	2013		2014		2015
	RMB	%	RMB	%	RMB	US$	%
	(in thousands, except for percentages)
Net Revenues	366,675	100.0%	384,668	100.0%	350,158	56,486	100%
Cost of Revenues	188,832	51.5%	188,480	49.0%	172,539	27,833	49.3%
Gross Profit	177,843	48.5%	196,188	51.0%	177,619	28,653	50.7%

Test Monitoring Costs

Test monitoring costs consist of fees paid to test centers, including a fixed fee per test taker, which varies for different tests, for hire of test proctors, rental of testing facilities and a fee for the peripheral items used for the provision of our testing services, such as USB flash drives used for security control keys, computer cameras used during testing for communication and identification, compact discs used to store and deliver our testing software, and signage used to identify and brand our ATA authorized test centers.

Payroll Compensation

Payroll compensation consists of base salary and related welfare benefits paid to staff in our services implementation and customer support departments.

Royalty Fees

Royalty fees primarily consist of fees paid to IT vendors for the use of their proprietary content in our course programs and our computer-based tests, fees paid to ETS for the distribution right in mainland China for TOEIC exams, and license fees paid to Saville Consulting for its psychometric assessment tests used in our HR Select service. For fees paid to IT vendors, we pay substantially all of these royalty fees under an enrollment model, whereby royalty fees are determined based on the number of students who enroll in the course.

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Cost of Inventory

Cost of inventory is comprised of cost of the printed learning material and test paper that are pre-printed by third parties and that we record as inventory and the cost of inventory write-down due to obsolescence. In the case of learning material, when a school contracts with us for degree major and single course programs, we deliver the related compact discs and textbooks and other course materials prior to the start of the course programs. These learning materials will be recognized as costs upon delivery. In the case of test paper, cost is recognized when the test papers are used in delivering the paper-based exam. Cost of inventory is recognized on a first-in-first-out basis.

Factors Affecting Gross Margin

Our gross margin is primarily affected by changes in gross margins from our testing services, which in turn are significantly affected by our revenue per test and test related costs, including the fees we pay for test monitoring to test centers.

Operating Expenses

Our operating expenses consist of general and administrative expenses, sales and marketing expenses, research and development expenses, provision for doubtful accounts and impairment of intangible assets.

General and Administrative Expenses

Our general and administrative expenses consist primarily of salaries and benefits, travel, administration and share-based compensation expenses for our administrative, management and finance personnel, as well as other expenses including professional fees, office expenses and rental costs.

Sales and Marketing Expenses

Our sales and marketing expenses consist primarily of salaries and benefits, travel, and share-based compensation expenses for our sales and marketing personnel, as well as other expenses including sales agency fees, conference hosting expenses, advertising and promotional expenses, entertainment expenses and other sales and marketing expenses.

Research and Development Expenses

Our research and development expenses consist primarily of costs of equipment used in our research and development activities, salaries and benefits for our research and development personnel, cost of outsourcing services and other costs relating to the design, development, testing and enhancement of our products and services.

Provision for Doubtful Accounts

The provision for doubtful accounts represents our best estimate of the amount of probable credit losses resulting from our customers or non-customer business partners inability to make required payments. We consider the age of doubtful receivable, historical collection experience, and business partners individual facts.

Impairment of Intangible Assets

The impairment of intangible assets is the amount by which the carrying value exceeds the fair value of our intangible assets such as brands and trademarks, relationships with test sponsors and customers, or other intangibles.

Taxation

Cayman Islands and British Virgin Islands

Under the current laws of the Cayman Islands and the British Virgin Islands, the Company and ATA BVI are not subject to income tax. In addition, upon any payments of dividends by the Company or ATA BVI, no Cayman Islands or British Virgin Islands withholding tax is imposed.

Hong Kong

Xing Wei did not derive any income that is subject to Hong Kong profits tax for the taxable year ended March 31, 2015. Accordingly, no provision for Hong Kong profit tax was required. The payment of dividends by Hong Kong companies is not subject to any Hong Kong withholding tax.

Peoples Republic of China

Our subsidiaries operating in the PRC are subject to PRC taxes as described below:

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Enterprise income tax. Effective from January 1, 2008, the EIT Law imposes a tax rate of 25% on all enterprises, including foreign-invested enterprises, and terminates many of the tax exemptions, reductions and preferential treatments available under previous tax laws and regulations. Under the EIT Law, qualified high-and-new technology enterprises eligible for key support from the State (HNTE) are entitled to a preferential tax rate of 15% and subject to an annual review during the valid period of their HNTE certificates. In December 2008, ATA Testing was recognized as a HNTE and obtained a HNTE certificate, which entitled ATA Testing to a preferential tax rate of 15% for calendar years from 2008 to 2010. ATA Testing successfully renewed its HNTE certificate for another three years starting from 2011, and therefore it is entitled to a preferential tax rate of 15% retroactively from January 1, 2011 to December 31, 2013. In October 2014, ATA Testing successfully renewed its HNTE certificate for another three years from 2014 and therefore it is entitled to a preferential tax rate of 15% for calendar years 2014 to 2016. In December 2009, each of ATA Learning, ATA Online and Beijing JDX received approval from the tax authority that it qualified as an HNTE for three years, entitling them to a preferential income tax rate of 15% for calendar years 2009 to 2011. In July, May and July of 2012, ATA Learning, ATA Online and Beijing JDX successfully renewed their HNTE certificates, respectively, for another three years from 2012 and therefore are entitled to a preferential tax rate of 15% for calendar years 2012 to 2014. Each of ATA Learning, ATA Online and Beijing JDX is currently in the process of renewing its HNTE certificate for another three years. Upon a successful renewal, each of ATA Learning, ATA Online and Beijing JDX should be entitled to a preferential tax rate of 15% retroactively from January 1, 2015. If any of ATA Learning, ATA Online or Beijing JDX is unable to renew its HNTE certificate, it will be subject to the standard statutory enterprise income tax rate of 25%. In the event ATA Testing, ATA Learning, ATA Online and Beijing JDX are unable to renew their HNTE certificates, they will be subject to the standard statutory enterprise income tax rate of 25%. See Item 3. Key InformationD. Risk FactorsRisks Relating to Regulation of Our BusinessThe discontinuation of any of the preferential tax treatments currently enjoyed by our subsidiaries in the PRC could materially increase our tax obligations. Zhongxiao Zhixing Education Technology (Beijing) Limited (Zhongxiao Zhixing), a PRC subsidiary of Xing Wei, is subject to an income tax of 25%.

In addition, under the EIT Law, an enterprise established under the laws of a foreign country or region whose de facto management body is located within the PRC territory is considered a resident enterprise and will generally be subject to the enterprise income tax at the rate of 25% on its global income. According to the Implementation Rules to the EIT Law, de facto management body refers to a managing body that exercises, in substance, overall management and control over the production and business, personnel, accounting and assets of an enterprise. We have preliminarily determined that our overseas entities are not PRC resident enterprises for PRC income tax purposes. However, if we and our overseas entity were considered PRC resident enterprises, we would be subject to the enterprise income tax at the rate of 25% on our global income. See Item 3. Key InformationD. Risk FactorsRisks Relating to Regulation of Our BusinessUnder the EIT Law, we may be classified as a resident enterprise of China. Such classification will likely result in unfavorable tax consequences to us and U.S. holders of our ADSs or common shares, and Item 10. Additional Information E. Taxation Peoples Republic of China Taxation.

In addition, the EIT Law revokes the exemption of withholding tax on dividends paid by a PRC enterprise to its foreign investors under the old tax law and its Implementation Rules provide that a withholding tax of 10% (or other applicable withholding tax rates based on tax treaties between the PRC and other jurisdictions) will generally be applicable to dividends payable to foreign investors. To the extent we and our overseas entity are not considered as PRC resident enterprises, the dividends that our PRC subsidiaries pay to us will be subject to this withholding tax. See Item 3. Key InformationD. Risk FactorsRisks Relating to Regulation of Our BusinessUnder the EIT Law, we may be classified as a resident enterprise of China. Such classification will likely result in unfavorable tax consequences to us and U.S. holders of our ADSs or common shares. The undistributed earnings generated before January 1, 2008 shall be exempt from withholding tax when such earnings are distributed to the foreign investor in the year 2008 or thereafter. As of March 31, 2015, we have not provided for income taxes on other undistributed earnings of RMB131.8 million ($21.3 million) generated by our PRC consolidated entities since January 1, 2008 as we plan to indefinitely reinvest these earnings in the PRC.

Under applicable Chinese tax laws, foreign-invested enterprises and domestic Chinese companies may carry forward tax losses up to five years. In view of cumulated losses noted by certain of our PRC subsidiaries and affiliated entity, as of March 31, 2015, we provided full valuation allowance for their deferred income tax assets after consideration of the schedule reversal of existing deferred income tax liabilities.

Value-added tax, or VAT, refunds. Pursuant to Notice on Printing and Distribution of Several Policies to Further Stimulate the Development of Software and Integrated Circuit Industries promulgated by the State Council on January 28, 2011, Beijing JDX is currently entitled to a VAT refund for the portion of VAT paid in excess of the effective VAT burden of 3% after it pays its VAT at the statutory rate of 17% for sales of certain software products.

VAT pilot program and VAT exemption of offshore outsourcing services. ATA Testing, ATA Learning, ATA Online and Beijing JDX subject to VAT at a rate of 6% for net revenues (i.e. VAT excluded) generated from service and license fees under the VAT pilot program under which Business Tax is being replaced by VAT gradually. This VAT is not a deduction from revenue in our consolidated statements of operations. Zhongxiao Zhixing is subject to VAT at a rate of 3% since it is classified as a Small Scale VAT payer. In addition, ATA Testing is currently exempt from VAT on income generated from providing certain services to customers outside of China until December 31, 2018.

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Critical Accounting Policies

We prepare our consolidated financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect the reported amounts of our assets and liabilities, disclosure of contingent assets and liabilities on the date of each set of consolidated financial statements and the reported amounts of revenues and expenses during each financial reporting period. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates as a result of changes in our estimates or changes in the facts or circumstances underlying our estimates and assumptions.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements. Some of our accounting policies require higher degrees of judgment than others in their application. We consider the policies discussed below to be critical to an understanding of our consolidated financial statements as their application places the most significant demands on our managements judgment. When reviewing our consolidated financial statements, you should take into account:

· our critical accounting policies discussed below;

· the related judgments made by us and other uncertainties affecting the application of these policies;

· the sensitivity of our reported results to changes in prevailing facts and circumstances and our related estimates and assumptions; and

· the risks and uncertainties described under Item 3.D. Key Information Risk Factors.

See note 2 to our audited consolidated financial statements for additional information regarding our significant accounting policies.

Basis of Consolidation

Our consolidated financial statements included elsewhere in this annual report include the financial statements of ATA Inc., its subsidiaries and variable interest entity, or VIE. All significant transactions and balances among ATA Inc., its subsidiaries and VIE have been eliminated upon consolidation.

ATA Inc. and its subsidiaries had no legal ownership interest in ATA Online for the fiscal years ended March 31, 2013, 2014 and 2015. As of March 31, 2015, the legal registered capital interests of ATA Online were held by Mr. Kevin Xiaofeng Ma, the Companys co-founder, chairman and chief executive officer, and Mr. Walter Lin Wang, our co-founder and director, both of whom were also the beneficial owners of the ATA Inc. In April 2015, Mr. Walter Lin Wang transferred all of his equity in ATA Online to Mr. Haichang Xiong, our general counsel. Through a series of contractual agreements, including loan agreements, a call option and cooperation agreement, an equity pledge agreement, a technical support agreement, a strategic consulting service agreement and powers of attorney (collectively, the VIE Agreements) which were entered among ATA BVI, ATA Learning, ATA Online and ATA Onlines shareholders, we had a controlling financial interest in ATA Online because we had (i) the power to direct activities of ATA Online that most significantly impact the economic performance of ATA Online; and (ii) the obligation to absorb the expected losses and the right to receive expected residual return of ATA Online that could potentially be significant to ATA Online. These contractual agreements were terminated with effect from May 20, 2015. See Item 7. Major Shareholders and Related Party TransactionsB. Related Party Transactions.

Accordingly, the financial statements of ATA Online were consolidated in our consolidated financial statements for the fiscal years ended March 31, 2013, 2014 and 2015. All of the equity (net assets) and net income or losses of ATA Online were attributed to us; therefore, non-controlling interest in ATA Online was not presented in our consolidated financial statements.

In order to list ATA Online on the New Third Board, we terminated those contractual arrangements and the 100% equity interest of ATA Online originally held by nominee shareholders were transferred to ATA Learning and Zhongxiao Zhixing pursuant to the agreements dated May 20, 2015. As a result, ATA Online became a wholly owned subsidiary of the Company. See the discussion in Note 2(w) of the consolidated financial statements included in this annual report.

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Bad Debt Allowance

We perform ongoing credit evaluations of our customers financial conditions and generally do not require collateral on accounts receivable.

The activity in the allowance for doubtful accounts for accounts receivable for the fiscal years ended March 31, 2013, 2014 and 2015 is as follows:

	For the fiscal year ended March 31,
	2013		2014		2015
	RMB		RMB		RMB		US$
Beginning allowance for doubtful accounts	30,100,005		35,005,069		4,688,433		756,321
Additions charged to (reversal of) bad debt expense	9,140,062		(3,738,232	)	845,965		136,468
Write-off of accounts receivable(1)	(4,234,998	)	(26,578,404	)	(531,280	)	(85,704	)
Ending allowance for doubtful accounts	35,005,069		4,688,433		5,003,118		807,085

(1) For the fiscal year ended March 31, 2014, we wrote off the accounts receivable from sales of NTET Tutorial Platform software, whose bad debt allowance was provided in the fiscal year ended March 31, 2010.

Income Taxes

We assess the likelihood that our net deferred income tax assets will be realized. To the extent that we believe that it is more likely than not that some portion or the entire amount of deferred income tax assets will not be realized, we establish a valuation allowance.

In assessing the realizability of deferred income tax assets, we consider whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible or tax loss carried forward are utilized. We consider the scheduled reversal of deferred income tax liability, projected future taxable income and tax planning strategies in making this assessment.

As of March 31, 2015, we believe it is more likely than not that we will realize the deferred income tax assets, net of the valuation allowance of RMB3.9 million ($0.6 million). The amount of the deferred income tax assets considered realizable as of March 31, 2015 could be reduced in the near term if estimates of future taxable income are reduced.

For each of the year ended March 31, 2013, 2014 and 2015, we had no unrecognized tax benefits relating to uncertain tax positions. Also, we do not expect that the amount of unrecognized tax benefits will significantly increase within the next twelve months.

According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances where the underpayment of taxes is more than RMB100,000. In the case of transfer pricing issues, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. The income tax return of each of our companys PRC consolidated entities is subject to examination by the relevant tax authorities for the calendar tax years beginning in 2010.

Share-based payment

We measure the cost of employee share options or similar equity instruments based on the grant date fair value of the award and recognize that cost over the period during which an employee is required to provide services in exchange for the award, which generally is the vesting period. When no future services are required to be performed by the employee in exchange for an award of equity instruments, and if such award does not contain a performance or market condition, the cost of the award is expensed on the grant date. When there is a modification of the terms and conditions of an award of equity instruments, our company measures the pre-modification and post-modification fair value of the equity instruments as of the modification date and recognizes the incremental value as compensation cost over the remaining service period.

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When there is a change in the grantee status from an employee to a non-employee, if grantee retains the awards on a change in status and continues to provide substantive services to the Group, the change in status results in a new measurement date for the unvested awards with compensation costs measured as if the awards were newly issued to the grantee on the date of the change in status. If grantee retains the awards on a change in status and is not required to provide substantive services to the grantor subsequent to that change in status, the change in status is, in substance, an acceleration of the vesting of the arrangement.

Results of Operations

The following table sets forth a summary, for the periods indicated, of our consolidated results of operations and each item expressed as a percentage of our total net revenues. Our historical results presented below are not necessarily indicative of the results that may be expected for any future period.

	For the fiscal year ended March 31,
	2013			2014				2015
	RMB	% of net revenues		RMB		% of net revenues		RMB		US$		% of net revenues
	(In thousands, except for percentages)
Net revenues:
Testing services	335,791	91.6	%	358,837		93.3	%	319,055		51,469		91.1	%
Test preparation and training solutions	11,343	3.1	%	5,949		1.5	%	5,711		921		1.6	%
Other	19,541	5.3	%	19,882		5.2	%	25,392		4,096		7.3	%
Total net revenues	366,675	100.0	%	384,668		100.0	%	350,158		56,486		100.0	%
Cost of revenues	188,832	51.5	%	188,480		49.0	%	172,539		27,833		49.3	%
Gross profit	177,843	48.5	%	196,188		51.0	%	177,619		28,653		50.7	%

Operating expenses:
Research and development	21,846	6.0	%	27,673		7.2	%	36,837		5,943		10.5	%
Sales and marketing	49,394	13.5	%	47,259		12.3	%	45,186		7,289		12.9	%
General and administrative	70,449	19.2	%	71,606		18.6	%	64,759		10,447		18.5	%
Impairment of intangible assets				12,009		3.1	%	310		50		0.1	%
Provision for (reversal of) doubtful accounts	9,140	2.5	%	(3,738	)	(1.0	)%	846		136		0.2	%
Total operating expenses	150,830	41.2	%	154,809		40.2	%	147,938		23,865		42.2	%
Other operating income				1,072		0.3	%	2,078		335		0.6	%
Income from operations	27,013	7.3	%	42,451		11.1	%	31,759		5,123		9.1	%
Share of losses of equity method investments								(2,197	)	(354	)	(0.6	)%
Interest income	3,122	0.9	%	4,770		1.2	%	4,136		667		1.2	%
Foreign currency exchange gains(losses), net	77	0.0	%	(49	)	(0.0	)%	(1,067	)	(172	)	(0.3	)%
Earnings before income tax	30,213	8.2	%	47,172		12.3	%	32,631		5,264		9.4	%
Income tax expense	7,005	1.9	%	19,895		5.2	%	9,575		1,545		2.7	%
Net income	23,208	6.3	%	27,276		7.1	%	23,056		3,719		6.7	%

	For the fiscal year ended March 31,
	2013	2014	2015
	RMB	RMB	RMB	US$
Basic earnings per common share	0.50	0.59	0.49	0.08
Diluted earnings per common share	0.50	0.59	0.49	0.08

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Fiscal Year Ended March 31, 2015 Compared to Fiscal Year Ended March 31, 2014

Net Revenues

Our total net revenues decreased by RMB34.5 million, or 9.0%, to RMB350.2 million ($56.5 million) in the fiscal year ended March 31, 2015 from RMB384.7 million in the fiscal year ended March 31, 2014, as a result of decreases in net revenues from our testing services.

Testing services. Testing services net revenues decreased by RMB39.8 million, or 11.1%, to RMB319.1 million ($51.5 million) in the fiscal year ended March 31, 2015 from RMB358.8 million in the fiscal year ended March 31, 2014, primarily due to the decreases in the volume of certain exams. Our net revenues from testing services provided to the customs decreased from RMB7.0 million in the fiscal year ended March 31, 2014 to RMB2.2 million ($0.3 million) in the fiscal year ended March 31, 2015. Our net revenues from testing services provided to CBA decreased from RMB67.5 million in the fiscal year ended March 31, 2014 to RMB64.2 million ($10.4 million) in the fiscal year ended March 31, 2015. Our net revenues from testing services provided to the Ministry of Public Security for the National Security Guard Exam decreased from RMB9.7 million in the fiscal year ended March 31, 2014 to RMB5.2 million ($0.8 million) in the fiscal year ended March 31, 2015. Our net revenues from TOEIC and HR Select decreased from RMB109.9 million in the fiscal year ended March 31, 2014 to RMB76.8 million ($12.4 million) in the fiscal year ended March 31, 2015 due to the termination of the exclusive distributor contract between ETS and ATA in February 2014. However, our net revenues from testing services provided to the CICPA increased from RMB61.6 million in the fiscal year ended March 31, 2014 to RMB64.9 million ($10.5 million) in the fiscal year ended March 31, 2015. Our net revenues from TOFEL Junior increased from RMB0.9 million in the fiscal year ended March 31, 2014 to RMB2.6 million ($0.4 million) in the fiscal year ended March 31, 2015.The total number of billable tests delivered decreased to 8,767,389 in the fiscal year ended March 31, 2015 from 9,411,226 in the fiscal year ended March 31, 2014.

Test preparation and training solutions. Our revenues from test preparation and training solutions decreased by RMB0.2 million, or 4.0%, to RMB5.7 million ($0.9 million) in the fiscal year ended March 31, 2015 from RMB5.9 million in the fiscal year ended March 31, 2014.

Other revenues. Other revenues increased by RMB5.5 million, or 27.7%, to RMB25.4 million ($4.1 million) in the fiscal year ended March 31, 2015 from RMB19.9 million in the fiscal year ended March 31, 2014, primarily due to income from renting office space in our previous headquarters building.

Gross Profit

Our gross profit decreased by RMB18.6 million to RMB177.6 million ($28.7 million) in the fiscal year ended March 31, 2015 from RMB196.2 million in the fiscal year ended March 31, 2014. Our gross margin decreased to 50.7% in the fiscal years ended March 31, 2015 from 51.5% in the fiscal years ended March 31, 2014.

Operating Expenses

Our operating expenses decreased by RMB6.9 million, or 4.4%, to RMB147.9 million ($23.9 million) in the fiscal year ended March 31, 2015 from RMB154.8 million in the fiscal year ended March 31, 2014.

General and administrative expenses. Our general and administrative expenses decreased by RMB6.8 million, or 9.6%, to RMB64.8 million ($10.4 million) in the fiscal year ended March 31, 2015 from RMB71.6 million in the fiscal year ended March 31, 2014, primarily due to a decrease in labor and welfare expenses and share-based compensation.

Sales and marketing expenses. Our sales and marketing expenses decreased by RMB2.1 million, or 4.4%, to RMB45.2 million ($7.3 million) in the fiscal year ended March 31, 2015 from RMB47.3 million in the fiscal year ended March 31, 2014. Sales and marketing expenses as a percentage of our total net revenues increased to 12.9% in the fiscal year ended March 31, 2015 from 12.3% in the fiscal year ended March 31, 2014.

Research and development expenses. Our research and development expenses increased by RMB9.1 million, or 33.1%, to RMB36.8 million ($5.9 million) in the fiscal year ended March 31, 2015 from RMB27.7 million in the fiscal year ended March 31, 2014, mainly due to increased expenses for consumer market initiatives in the fiscal year ended March 31, 2015.

Provision for doubtful accounts. Accrual of bad debt expenses was RMB0.8 million ($0.1 million) in the fiscal year ended March 31, 2015 compared to reversal of bad debt expenses of RMB3.7 million in the fiscal year ended March 31, 2014, primarily due to the collection of long aging receivable during the fiscal year ended March 31, 2014. .

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Impairment of intangible assets. Our impairment of intangible assets was RMB0.3 million ($50,033) in the fiscal year ended March 31, 2015 compared to RMB12.0 million in the fiscal year ended March 31, 2014, primarily due to a write off of royalty fee in the amount of RMB12.0 million in the fiscal year ended March 31, 2014 in connection with the termination of our exclusive distributorship agreement with ETS for TOEIC exams in China. For more information, please see Item 4.B. Business Overview Our Service Offerings Testing Development and Delivery Services Administration of TOEIC exams in China.

Interest Income

Our interest income decreased to RMB4.1 million ($0.7 million) in the fiscal year ended March 31, 2015 from RMB4.8 million in the fiscal year ended March 31, 2014, primarily due to our decreased cash balance.

Foreign Currency Exchange Gains (Losses), Net

We recorded a net foreign currency exchange loss of RMB1.1 million ($0.2 million) in the fiscal year ended March 31, 2015, compared with a net loss of RMB0.05 million in the fiscal year ended March 31, 2014. Our net foreign currency exchange loss primarily reflects the effects of devaluation of the Renminbi against the U.S. dollar in relation to the remeasurement of our RMB denominated bank deposits held by ATA Inc., whose functional currency is in the U.S. dollar.

Income Tax Expense

We had income tax expense of RMB9.6 million ($1.5 million) in the fiscal year ended March 31, 2015, compared to RMB19.9 million in the fiscal year ended March 31, 2014. The decrease in our income tax expense was primarily due to payment of withholding income tax of RMB11.3 million in connection with a special dividend distribution from ATA Testing to ATA BVI in the fiscal year ended March 31, 2014.

Net Income

As a result of the above factors, our net income decreased to RMB23.1 million ($3.7 million) in the fiscal year ended March 31, 2015 from net income of RMB27.3 million in the fiscal year ended March 31, 2014.

Our basic earnings per common share and diluted earnings per common share decreased to RMB0.49 ($0.08) and RMB0.49 ($0.08) in the fiscal year ended March 31, 2015 from RMB0.59 and RMB0.59 in the fiscal year ended March 31, 2014.

Fiscal Year Ended March 31, 2014 Compared to Fiscal Year Ended March 31, 2013

Net Revenues

Our total net revenues increased by RMB18.0 million, or 4.9%, to RMB384.7 million in the fiscal year ended March 31, 2014 from RMB366.7 million in the fiscal year ended March 31, 2013, as a result of increases in net revenues from our testing services.

Testing services. Testing services net revenues increased by RMB23.0 million, or 6.9% to RMB358.8 million in the fiscal year ended March 31, 2014 from RMB335.8 million in the fiscal year ended March 31, 2013, primarily due to a growth of TOEIC and HR Select and an increase in the volume of exams for the CICPA and CBA as well as the National Security Guard Exam. Our net revenues from TOEIC and HR Select increased from RMB88.4 million in the fiscal year ended March 31, 2013 to RMB109.9 million in the fiscal year ended March 31, 2014 due to new HR Select customers gained through greater marketing activities. Our net revenues from testing services provided to the CICPA increased from RMB54.3 million in the fiscal year ended March 31, 2013 to RMB61.6 million in the fiscal year ended March 31, 2014. Our net revenues from testing services provided to CBA increased from RMB60.6 million in the fiscal year ended March 31, 2013 to RMB67.5 million in the fiscal year ended March 31, 2014. Our net revenues from testing services provided to the Ministry of Public Security for the National Security Guard Exam increased from RMB4.1 million in the fiscal year ended March 31, 2013 to RMB9.7 million in the fiscal year ended March 31, 2014. However, our net revenues from testing services provided to the SAC and the China Futures Association (CFA) decreased by RMB7.7 million and RMB2.1 million, respectively, in the fiscal year ended March 31, 2014 due to a year-over-year decrease in exam volumes attributable to existing securities professionals reduced demand for the test as most of them have already obtained their certifications, leaving incoming candidates to comprise the majority of the test-takers. In addition, our net revenues from testing services provided to the Asset Management Association of China and the Financial Planning Standards Board for the Associate Financial Planner (AFP) exam decreased by RMB5.7 million and RMB8.5 million, respectively, in the fiscal year ended March 31, 2014 due to seasonal delay for the fund test managed by the Asset Management Association of China and the decision by the Financial Planning Standards Board to conduct the AFP test internally. The total number of billable tests delivered increased to 9,411,226 in the fiscal year ended March 31, 2014 from 8,744,859 in the fiscal year ended March 31, 2013.

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Test preparation and training solutions. Our revenues from test preparation and training solutions decreased by RMB5.4 million, or 47.6%, to RMB5.9 million in the fiscal year ended March 31, 2014 from RMB11.3 million in the fiscal year ended March 31, 2013, primarily as a result of a 88.3% reduction in revenues from online training courses for the SAC due to a change in our contract with SAC under which revenue was recognized from a per training hour basis prior to December 2011 to a fixed annual fee from December 2011 as we stop to operate the online training program on behalf of the SAC, which has decided to run its online training program internally. We do not expect any further revenue from providing test preparation services to the SAC in the future.

Other revenues. Other revenues increased by RMB0.4 million, or 1.7%, to RMB19.9 million in the fiscal year ended March 31, 2014 from RMB19.5 million in the fiscal year ended March 31, 2013, primarily due to a 320.7% increase to 4.5 million for certificate delivery services, partially offset by a 51.2% decrease to RMB3.3 million for test-based education services.

Gross Profit

Our gross profit increased by RMB18.4 million to RMB196.2 million in the fiscal year ended March 31, 2014 from RMB177.8 million in the fiscal year ended March 31, 2013. Our gross margin increased to 51.0% in the fiscal year ended March 31, 2013 from 48.5% in the fiscal year ended March 31, 2013 primarily due to a decrease in average monitoring cost and RMB3.4 million in revenue recognition for royalty fees associated with Microsofts use of our Dynamic Simulation Technology.

Operating Expenses

Our operating expenses increased by RMB4.0 million, or 2.6%, to RMB154.8 million in the fiscal year ended March 31, 2014 from RMB150.8 million in the fiscal year ended March 31, 2013, due to increased research and development.

General and administrative expenses. Our general and administrative expenses increased by RMB1.2 million, or 1.6%, to RMB71.6 million in the fiscal year ended March 31, 2014 from RMB70.4 million in the fiscal year ended March 31, 2013, primarily due to an increase in employee bonuses.

Sales and marketing expenses. Our sales and marketing expenses decreased by RMB2.1 million, or 4.3%, to RMB47.3 million in the fiscal year ended March 31, 2014 from RMB49.4 million in the fiscal year ended March 31, 2013. Sales and marketing expenses as a percentage of our total net revenues decreased to 12.3% in the fiscal year ended March 31, 2014 from 13.5% in the fiscal year ended March 31, 2013. This decrease was primarily related to a headcount reduction of sales personnel and restructuring of our branch offices as well as the immediate cessation of all promotional activities for TOEIC exams in China due to the termination of our exclusive distributorship agreement with ETS.

Research and development expenses. Our research and development expenses increased by RMB5.8 million, or 26.7%, to RMB27.7 million in the fiscal year ended March 31, 2014 from RMB21.8 million in the fiscal year ended March 31, 2013, mainly due to a headcount increase in research and development staff to further develop our MTS technology.

Provision for doubtful accounts. Reversal of bad debt expenses of RMB3.7 million in the fiscal year ended March 31, 2014 compared to accrual of bad debt expenses of RMB9.1 million in the fiscal year ended March 31, 2013, primarily due to our cash collection of several long aging accounts.

Impairment of intangible assets. Primarily due to a royalty fee write off of RMB12.0 million due to the termination of our exclusive distributorship agreement with ETS for TOEIC exams in China. For more information, please see Item 4.B. Business Overview Our Service Offerings Testing Development and Delivery Services Administration of TOEIC exams in China.

Interest Income

Our interest income increased to RMB4.8 million in the fiscal year ended March 31, 2014 from RMB3.1 million in the fiscal year ended March 31, 2013, primarily due to our increased cash balance and a higher interest rate earned.

Foreign Currency Exchange Gains (Losses), Net

We recorded a net foreign currency exchange loss of RMB49,200 in the fiscal year ended March 31, 2014, compared with a net gain of RMB77,240 in the fiscal year ended March 31, 2013. Our net foreign currency exchange loss primarily reflects the effects of devaluation of the Renminbi against the U.S. dollar in relation to the remeasurement of our RMB denominated bank deposits held by ATA Inc., whose functional currency is in the U.S. dollar.

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Income Tax Expense

We had income tax expense of RMB19.9 million in the fiscal year ended March 31, 2014, compared to RMB7.0 million in the fiscal year ended March 31, 2013. The increase in our income tax expense was primarily due to payment of withholding income tax of RMB11.3 million in connection with a special dividend distribution from ATA Testing to ATA BVI. As of March 31, 2014, we plan to indefinitely reinvest the undistributed earnings of our PRC subsidiaries, including ATA Testing. Therefore, no dividend distribution from our PRC subsidiaries is expected in the foreseeable future.

Net Income

As a result of the above factors, our net income increased to RMB27.3 million in the fiscal year ended March 31, 2014 from net income of RMB23.2 million in the fiscal year ended March 31, 2013.

Our basic earnings per common share and diluted earnings per common share increased to RMB0.59 and RMB0.59 in the fiscal year ended March 31, 2014 from RMB0.50 and RMB0.50 in the fiscal year ended March 31, 2013.

B. Liquidity and Capital Resources

We have financed our working capital and capital expenditure requirements primarily through cash provided by operating activities.

As of March 31, 2015, we had RMB240.3 million ($38.8 million) in cash. Our cash was primarily deposited with reputable banks in China and Hong Kong. We intend to finance our future additional working capital and capital expenditure needs principally from cash provided by operating activities.

We believe that our current cash and expected future cash flows from operating activities, particularly from testing services and test preparation and training solutions, is sufficient to meet our present working capital requirements. Our current expansion plans do not require significant capital commitments. We do not expect our short-term and long-term cash requirements to be materially different. Nevertheless, we may require additional sources of liquidity in the event of changes in business conditions or other future developments. Factors affecting our sources of liquidity include our sales performance and changes in working capital. Any changes in the significant factors affecting our revenues from testing services, test-based educational services and test preparation and training solutions may cause material fluctuations in our cash generated from operations. See Net Revenues for a description of these significant factors. Changes in working capital, including any significant shortening or lengthening of our accounts receivable cycle or client prepayment cycles, may also cause fluctuations in our cash generated from operations. If our sources of liquidity are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities to meet our cash needs. The sale of convertible debt securities or additional equity securities could result in dilution to our shareholders. The incurrence of indebtedness would result in debt service obligations and could result in operating and financial covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

The following table summarizes our net cash flows with respect to operating activities, investing activities and financing activities in the fiscal years ended March 31, 2013, 2014 and 2015:

	For the fiscal year ended March 31,
	2013		2014		2015
	RMB		RMB		RMB		US$
	(In thousands)
Net cash provided by operating activities	67,778		37,344		45,852		7,397
Net cash used in investing activities	(7,967	)	(13,959	)	(52,759	)	(8,511	)
Net cash used in financing activities	(26,574	)	(701	)	(63,661	)	(10,270	)
Effect of foreign exchange rate changes on cash	(375	)	(767	)	(1,084	)	(174	)
Net increase (decrease) in cash	32,862		21,917		(71,652	)	(11,558	)
Cash at beginning of year	257,168		290,030		311,947		50,322
Cash at end of year	290,030		311,947		240,295		38,764

Operating Activities

Net cash provided by operating activities was RMB45.9 million ($7.4 million) in the fiscal year ended March 31, 2015, mainly attributable to cash collection from revenues of RMB385.1 million, partially offset by cash paid for test monitoring costs and royalty fees of RMB121.2 million and cash paid for payroll and other operating expenses of RMB218.0 million.

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Net cash provided by operating activities was RMB37.3 million in the fiscal year ended March 31, 2014, mainly attributable to cash collection from revenues of RMB398.3 million, partially offset by cash paid for test monitoring costs and royalty fees of RMB147.1 million and cash paid for payroll and other operating expenses of RMB213.9 million.

Net cash provided by operating activities was RMB67.8 million in the fiscal year ended March 31, 2013, mainly attributable to cash collection from revenues of RMB372.1 million, partially offset by cash paid for test monitoring costs and royalty fees of RMB141.1 million and cash paid for payroll and other operating expenses of RMB163.2 million.

Investing Activities

Net cash used in investing activities in the fiscal year ended March 31, 2015 of RMB52.8 million ($8.5 million) was primarily attributable to capital expenditures for the leasehold improvements and equity investments.

Net cash used in investing activities in the fiscal year ended March 31, 2014 of RMB14.0 million was primarily attributable to the acquisition of Xing Wei.

Net cash used in investing activities in the fiscal year ended March 31, 2013 of RMB8.0 million was primarily attributable to capital expenditures for the construction of the Chengdu test center and purchase of IT infrastructure and security equipment for a data center in Beijing.

Financing Activities

Net cash used in financing activities in the fiscal years ended March 31, 2015 of RMB63.7 million ($10.3 million) was primarily attributable to payment of dividends. On May 30, 2014, we declared a special cash dividend of $0.205 per common share, or $0.41 per ADS. The total amount of cash dividend distributed was $9.5 million, which was paid from cash held by ATA Inc. The dividend was paid to all shareholders of record as of the close of business on June 30, 2014.

Net cash used in financing activities in the fiscal years ended March 31, 2014 was primarily attributable to income tax for net-settlement of vested shares for individual employees.

Net cash used in financing activities in the fiscal years ended March 31, 2013 was primarily attributable to payment of dividends. On August 7, 2012, we declared a special cash dividend of $0.087 per common share, or $0.174 per ADS. The total amount of cash dividend distributed was $4.0 million, which was paid from cash held by ATA Inc. The dividend was paid to all shareholders of record as of the close of business on August 20, 2012. For a discussion of the limitations on the ability of our operating subsidiaries to pay dividends to us, see Item 8.A. Financial Information Dividend Policy.

Capital Expenditures

The following table sets forth our historical capital expenditures for the periods indicated. Actual future capital expenditures may differ from the amounts indicated below.

	For the fiscal year ended March 31,
	2013	2014	2015
	RMB	RMB	RMB	US$
	(In thousands)
Total capital expenditures	7,967	4,150	14,836	2,393

Historically, our capital expenditures have been made primarily for the purchase of office space, leasehold improvements, software, computer equipment and servers.

Foreign Currency Exchange

ATA Inc., ATA BVI and Xing Weis functional currency is the U.S. dollar. As of March 31, 2015, we had RMB240.3 million ($38.8 million) in cash, including RMB8.1 million ($1.3 million) RMB-denominated bank deposits in Hong Kong held by ATA Inc. The functional currency of our PRC subsidiaries is Renminbi. The non-Renminbi portion of our revenues primarily consists of U.S. dollar-denominated licensing fees and royalty payments, while the non-Renminbi portion of our expenditures primarily consists of professional fees and royalty payments, either denominated in U.S. dollars or Hong Kong dollars. Fluctuations in exchange rates, primarily those involving the U.S. dollar against the Renminbi, may affect our costs and operating margins and our reported operating results. Under the current foreign exchange system in China, our operations in China may not be able to hedge effectively against currency risk, including any possible future Renminbi devaluation. See Item 3.D. Key Information Risk Factors Risks Relating to Doing Business in the Peoples Republic of China Fluctuations in exchange rates could result in foreign currency exchange losses.

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Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASU 2014-09). ASU 2014-09 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity should also disclose sufficient quantitative and qualitative information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The new standard is effective for annual reporting periods beginning after December 15, 2017. We will implement the provision of ASU 2014-09 as of April 1, 2018. We have not yet determined the impact of the new standard on our current policies for revenue recognition.

C. Research and Development, Patents and Licenses, Etc.

Research and development is important to our continued success. Our research and development initiatives are designed to improve our existing testing technologies and to develop new and innovative technologies. We conduct our research and development activities primarily in-house but may also from time to time outsource certain research and development activities. We have an experienced team of engineers with expertise in the fields of computing, software, system design, and test design and conversion. Our research and development team consisted 115 people as of March 31, 2015. We will continue to look selectively for experienced software engineers and other technology talent to further increase our technological capabilities. While we focus on development of technologies that can be commercialized and integrated into our service offerings in the short term, we also invest in the research and development of testing technologies for the medium and long term in preparation for the next generation and cutting-edge products and services. In addition, we are developing upgrades of our key technologies, including our E-testing platform, our HR Select interface and our MTS platform. Our total expenses for research and development were RMB21.8 million, RMB27.7 million and RMB36.8 million ($5.9 million) in the fiscal years ended March 31, 2013, 2014 and 2015, respectively.

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 period from April 1, 2012 to March 31, 2015 that are reasonably likely to have a material adverse effect on our revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

E. Off-Balance Sheet Arrangements

We do not currently have, and do not expect in the future to have, any off-balance sheet arrangements or commitments. In our ongoing business, we do not plan to enter into transactions involving, or otherwise form relationships with, unconsolidated entities or financial partnerships established for the purpose of facilitating off-balance sheet arrangements or commitments.

F. Tabular Disclosure of Contractual Obligations

Contractual Obligations and Commercial Commitments

The following table sets forth our contractual obligations as of fiscal year ended March 31, 2015:

	Payment Due
	Total	Within 1 Year	1-3 Years	3-5 Years	More than 5 Years
	(In thousands of RMB)
Operating Lease Obligations (1)	55,351	14,093	19,804	21,454
Unconditional purchase Obligation (2)	4,608	3,456	1,152

(1) Our operating lease obligations are comprised of our office lease obligations for our offices in China. These office leases expire at different times over the period from the date of this annual report through May 2020, and will become subject to renewal. We will evaluate the need to renew each office lease on a case-by-case basis prior to its expiration.

(2) On August, 11, 2011, we entered into an agreement with a consulting company which granted us a license to market, distribute, sell, promote, demonstrate, supply, and install and support the consulting companys products in Mainland China for 10 years. Each party may terminate this agreement at any time for any reason by giving the other party not less than twelve months written notice provided that the termination date shall not be earlier than the fifth anniversary of this agreement unless either party is in breach of this agreement.

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Indebtedness

We currently do not have any outstanding debt, debt securities, contingent liabilities, mortgages, or liens.

G. Safe Harbor

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. See IntroductionForward-Looking Statements.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

The following table sets forth certain information relating to our directors and executive officers as of the date of this annual report. The business address of each of our directors and executive officers is 1/F East Gate, Building No. 2, Jian Wai Soho, No. 39 Dong San Huan Zhong Road, Chao Yang District, Beijing 100022, China.

Name	Age	Position
Kevin Xiaofeng Ma	51	Chairman of the Board of Directors and Chief Executive Officer
Benson Tsang (1)	50	Chief Financial Officer, Principal Financial and Accounting Officer
Andrew Yan	57	Director
Hope Ni	43	Director
Alec Tsui	66	Director
Jianmin Ding	49	Senior Vice President
Alex Tong	52	Vice President of Business Development and Investor Relations
Shuqiu Zhao	43	Vice President

(1) Following the filing with the SEC of this annual report on Form 20-F, Mr. Tsang will resign as our Chief Financial Officer, effective from June 30, 2015. He will remain as an independent consultant to our company advising on our corporate and financial strategy. Following Mr. Tsangs resignation, Shelly Jiang, our Vice President of Finance since April 2015, will serve as our interim Chief Financial Officer until a successor has been appointed.

Kevin Xiaofeng Ma is co-founder, chairman of the board and chief executive officer of our company. Prior to co-founding our company, Mr. Ma co-founded Dynamic Technology Corporation and served as its chief executive officer from 1996 to 1998. From 1990 to 1996, Mr. Ma served as a general manager in the Hainan High-Tech Industry International Cooperation Center. Previously, Mr. Ma gained experience as a vice president at the Beijing MDI High-Tech Center, as a director of Beijing Zhongjia Integrated Intelligent System Engineering, and as a reporter for China Radio International. Mr. Ma is a member of the board of directors of a number of private enterprises with operations in China, which do not compete with our business. Mr. Ma graduated from Nanjing University with a bachelors degree in economics.

Benson Tsang became our chief financial officer and financial and principal accounting officer in March 2010. Mr. Tsang has more than 25 years of experience in accounting, financial management, and the capital markets. He has held senior financial and management positions in multinational corporations and international accounting firms, and has financial and accounting experience with companies listed on the New York Stock Exchange, The Stock Exchange of Hong Kong, and the Singapore Exchange. Mr. Tsang served as the chief financial officer of WuXiPharmatech (Cayman) Inc. (NYSE: WX) from July 2006 to February 2009. Prior to that, Mr. Tsang held senior financial and management positions in private and public companies, including PCCW Ltd. and Global Tech Holdings Ltd. He served with PricewaterhouseCoopers and Deloitte Touche Tohmatsu from 1988 to 1996, and between March 2009 and March 2010, Mr. Tsang provided consulting services through his own firm, the Benita Consulting Company. Mr. Tsang is a member of the Canadian Institute of Chartered Accountants and the Hong Kong Institute of Certified Public Accountants. He received a bachelors degree in commerce and an MBA degree from McMaster University in Canada.

Andrew Yan is a director of our company, and is an independent director pursuant to Nasdaq Stock Market Rule 5605(a)(2). He is the founding managing partner of SAIF Partners IV, III and SB Asia Investment Fund II L.P., and president & executive managing director of Softbank Asia Infrastructure Fund. Before joining Softbank Asia Infrastructure Fund in 2001, Mr. Yan was a managing director and the head of the Hong Kong office of Emerging Markets Partnership, the management company of AIG Asian Infrastructure Funds, from 1994 to 2001. From 1989 to 1994, he worked in the World Bank, the Hudson Institute and US Sprint Co. as an economist, research fellow and director for Asia, respectively, in Washington, DC. From 1982 to 1984, he was the chief engineer at the Jianghuai Airplane Corp. Mr. Yan is a recipient of 2012 Chinas National Thousand Talents Program and was a member of its selection committee. He is a director of Peking University Endowment Investment Committee. He was voted by the China Venture Capital Association as The Venture Investor of the Year in both 2004 and 2007. He was also selected as one of the Fifty Finest Private Equity Investors in the World by the Private Equity International in 2007; No. 1 Venture Capitalist of the Year by Forbes (China) in 2008 and 2009, and the Venture Capital Professional of the Year by Asia Venture Capital Journal in 2009. He is currently an independent non-executive director of China Petroleum & Chemical Corporation, CPMC Holdings Limited, China Resources Land Limited and Cogobuy Group; non-executive director of Guodian Technology & Environment Group Corporation Limited, Digital China Holdings Limited, eSun Holdings Limited and China Huiyuan Juice Group Limited, an independent director of BlueFocus Communication Group, TCL Corporation and Sky Solar Holdings Limited (all 11 companies are listed in the Hong Kong Stock Exchange, NYSE, NASDAQ, ChiNext, London or Shanghai Stock Exchanges). He also holds directorship in several SAIF portfolio companies. Mr. Yan received a Master of Arts degree from Princeton University as well as a bachelors degree in engineering from the Nanjing Aeronautic Institute in the PRC.

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Hope Ni has been an independent director of ATA, Inc. Ms. Ni is an executive director and the chief investment officer of Cogobuy Group (listed on the Main Board of The Stock Exchange of Hong Kong). Ms. Ni is currently the chairman of Inspire Capital. She currently also serves on the boards of KongZhong Corporation (NASDAQ: KONG), JA Solar Holdings Co (NASDAQ: JASO), ATA, Inc. and Digital China Holdings Ltd. (Stock code: 00861.HK). From 2004 to 2007, Ms. Ni was the chief financial officer and director of Viewtran Group, Inc. (NASDAQ: VIEW), during which time, Viewtran Group increased market capitalization approximately seven times. In 2008, Ms. Ni served as the vice chairman of Viewtran Group, Inc. Prior to that, Ms. Ni spent six years as a practicing attorney at Skadden, Arps, Slate, Meagher & Flom LLP in New York and Hong Kong. Earlier in her career, Ms. Ni worked at Merrill Lynchs investment banking division in New York. Ms. Ni received her J.D. degree from University of Pennsylvania Law School and her B.S. degree in applied economics and business management from Cornell University.

Alec Tsui is an independent director on our board. Mr. Tsui is currently an independent non-executive director of a number of companies listed in Hong Kong, Shanghai, Philippines and in on the Nasdaq Global Market, including, COSCO International Holdings Limited, China Power International Development Limited, Pacific Online Limited, China Oilfield Services Limited, Summit Ascent Holdings Limited, Melco Crown Entertainment Limited and Melco Crown (Philippines) Resorts Corporation. He was the chairman of the Hong Kong Securities Institute from 2001 to 2004. He was an advisor and a council member of the Shenzhen Stock Exchange from 2001 to 2002. He joined the Hong Kong Stock Exchange in 1994 as an executive director of the finance and operations services division and became its chief executive in 1997. Prior to that Mr. Tsui served at the Securities and Futures Commission of Hong Kong from 1989 to 1993. Mr. Tsui graduated from the University of Tennessee with a B.S. degree and a masters degree in industrial engineering. He completed a program for senior managers in government at the John F. Kennedy School of Government of Harvard University.

Jianmin Ding is our senior vice president in charge of marketing and business development. Mr. Ding has been with ATA since 2001. Prior to joining us, Mr. Ding was the chairman and CEO of Shanghai Linping Property Ltd. Mr. Ding graduated from Nanjing University with a bachelors degree in economics.

Alex Tong is our vice president in charge of business development and investor relations. Prior to joining us in September 2005, Mr. Tong worked as a general manager for the Asia Pacific region at the Royal Institution of Charted Surveyors from 2003 to 2005. Prior to that, Mr. Tong worked for Thomson Prometric in the position of executive director from 1999 to 2003 and as the managing director at Pearson NCS Hong Kong Ltd. from 1997 to 1999. Mr. Tong graduated from University of Nottingham with a bachelors degree in education and a masters degree of philosophy in education and from the Chinese University of Hong Kong with an executive MBA.

Shuqiu Zhao is our vice president and assistant to CEO. Mr. Zhao is in charge of government-related business development and also oversees our test delivery services and has been with ATA since 2000. Prior to joining us, Mr. Zhao worked as the general manager of the computer education center of the Shanghai Pudong New Area. Mr. Zhao graduated from Harbin Institute of Technology with a bachelors degree in technology.

Shelly Jiang will serve as our interim Chief Financial Officer starting from July 1, 2015. Ms. Jiang joined our company in 2004 and has served as our Vice President of Finance since April 2015. From 2002 to 2004, Ms. Jiang served as a project manager in the investment banking department at Yinchuan Economic & Technical Development Zone Investment Holding Co., Ltd. From 1997 to 2002, she served as a senior auditor at Deloitte Touche Tohmatsu. Ms. Jiang possesses the Certified Public Accountant qualification in China. She received a bachelors degree in finance from Peking Universitys Guanghua Management School and a masters degree in accounting and finance from Queen Mary University of Londons School of Business and Management.

B. Compensation

For the fiscal year ended March 31, 2015, we and our subsidiaries paid aggregate cash compensation of approximately RMB9.0 million ($1.4 million) to our directors and executive officers as a group, and RMB2.8 million ($0.5 million) restricted share was granted to directors and selected executive officers. We do not pay or set aside any amounts for pension, retirement or other benefits for our officers and directors.

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Share Incentives

We adopted a share incentive plan, or the 2005 Plan, in April 2005. We adopted our 2008 Employee Share Incentive Plan, or the 2008 Plan, in January 2008. Our share incentive plans are intended to promote our success and to increase shareholder value by providing an additional means to attract, motivate, retain and reward selected directors, officers, employees and other eligible persons. An aggregate of 3,310,300 common shares are reserved for issuance under the 2005 Plan. Subject to any amendment of our 2008 Plan by our directors, the maximum aggregate number of common shares that may be issued pursuant to all awards under the 2008 Plan is 336,307 shares, plus, unless the board of directors determines a lesser amount, an annual increase on January 1 of each calendar year beginning in 2009 equal to the lesser of (x) one percent (1%) of the number of shares issued and outstanding on December 31 of the immediately preceding calendar year, and (y) 336,307 shares. As of March 31, 2015, 2,690,456 shares were authorized for issuance under the 2008 Plan.

We have granted share options and restricted shares under the 2005 Plan and 2008 Plan to selected directors, officers, employees and individual consultants and advisors. As of June 18, 2015, we have granted a total of 3,854,667 share options that are outstanding under such plans, of which 2,385,207 have vested. The contractual term of these options is ten years. As of June 18, 2015, we have also granted 195,000 restricted shares that are unvested and outstanding and 1,486,366 restricted shares that have vested.

Options and restricted shares granted under our share incentive plans generally do not vest unless the grantee remains under our employment or in service with us on the given vesting date.

Generally, if the grantees employment or service with us is terminated for cause, all such grantees options under our share incentive plans, vested and unvested, immediately terminate and become unexercisable. On the other hand, if the grantees employment or service with us is terminated for any reason other than for cause, all such grantees vested options terminate and become unexercisable ninety days following the grantees last day of employment or service with us. In circumstances where there is a death or total disability of the grantee, generally all unvested options immediately terminate and become unexercisable while vested options terminate and become unexercisable twelve months after the last date of employment or service with us.

Our board of directors may amend, alter, suspend, or terminate our share incentive plans at any time, provided, however, that our board of directors must first seek the approval of the participants of our share incentive plans if such amendment, alteration, suspension or termination would adversely affect the rights of participants under any option granted prior to that date. Without further action by our board of directors, the 2005 Plan will terminate in 2015 and the 2008 Plan will terminate in 2018.

The table below sets forth the share option and restricted share grants made to our current directors and executive officers pursuant to our share incentive plans:

Share options

Name

Number of Common
Shares to be Issued
Upon Exercise of
Options

Exercise Price per
Common Share

Date of Grant

Vesting Start Date

Date of Expiration

Andrew Yan

330,400

2.263

April 12, 2005

May 1, 2005

April 11, 2015

Hope Ni

50,000

4.75

January 7, 2008

January 6, 2018

Alec Tsui

50,000

4.75

January 28, 2008

January 27, 2018

Jianmin Ding

303,800

2.263

April 12, 2005

May 1, 2005

April 11, 2015

Alex Tong

100,000

3.60

December 29, 2005

September 1, 2005

December 28, 2015

Shuqiu Zhao

23,000

2.263

April 12, 2005

May 1, 2005

April 11, 2015

8,000

3.60

October 1, 2007

July 1, 2007

September 30, 2017

Kevin Xiaofeng Ma

1,469,460

2.24

February 10, 2015

February 9, 2025

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Restricted shares

Name	Restricted Shares	Date of Grant	Vesting Start Date
Kevin Xiaofeng Ma	200,000	May 30, 2011	June 1, 2011
	114,314	February 10, 2015	February 10, 2015
Andrew Yan	100,000	May 30, 2011	June 1, 2011
Jianmin Ding	160,000	May 30, 2011	June 1, 2011
	100,000	February 10, 2015	February 10, 2015
Shuqiu Zhao	100,000	May 30, 2011	June 1, 2011
	30,000	February 12, 2009	February 12, 2009
Benson Tsang	60,000	February 16, 2012	February 17, 2012
Hope Ni	60,000	February 16, 2012	February 17, 2012
Alec Tsui	60,000	February 16, 2012	February 17, 2012
Alex Tong	100,000	June 13, 2013	June 13, 2013

C. Board Practices

Duties of Directors

Under Cayman Islands Law, our directors have a statutory duty of loyalty to act honestly in good faith with a view to our best interests. Our directors also have a duty to exercise the care, diligence and skills that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our amended and restated memorandum and articles of association. A shareholder has the right to seek damages if a duty owed by our directors is breached.

The functions and powers of our board of directors include, among others:

· convening shareholders annual general meetings and reporting its work to shareholders at such meetings;

· issuing authorized but unissued shares;

· declaring dividends and distributions;

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

· approving the transfer of shares of our company, including the registering of such shares in our share register; and

· exercising any other powers conferred by the shareholders meetings or under our amended and restated memorandum and articles of association.

Terms of Directors

We have a board of four directors divided into class A, class B and class C directors. As of the date of this annual report, the class A director is Kevin Xiaofeng Ma, the class B director is Andrew Yan, and the class C directors are Hope Ni and Alec Tsui. One third of our directors for the time being (or, if their number is not a multiple of three (3), the number nearest to but not greater than one third) shall retire from office every year at our annual general meeting of shareholders on a rotating basis. Our class A director Kevin Xiaofeng Ma was re-elected at our 2014 annual general meeting, and our class B director Andrew Yan will retire from office and will be eligible for re-election at our 2015 annual general meeting. Our chief executive officer, which currently is Kevin Xiaofeng Ma, shall not, while holding office, be subject to retirement or be taken into account in determining the number of directors to retire in any year. Neither we nor our subsidiaries have any directors service contracts providing for benefits upon termination of employment.

Board Practices

Our board of directors has established an audit committee, a compensation committee and a nominations committee.

Audit Committee

Our audit committee consists of Hope Ni and Alec Tsui. Hope Ni is the chairman of our audit committee. Our board of directors has determined that Hope Ni and Alec Tsui are independent directors within the meaning of Nasdaq Stock Market Rule 5605(a)(2) and meet the criteria for independence set forth in Rule 10A-3(b) of the Exchange Act. Hope Ni meets the criteria of an audit committee financial expert as set forth under the applicable rules of the SEC. The third seat on our audit committee is vacant in reliance on Nasdaq Stock Market Rule 5615(a)(3), which permits a foreign private issuer like us to follow home country practices in relation to the composition of its audit committee. In this regard we have elected to adopt the practices of our home country, the Cayman Islands, which does not require us to have a three member audit committee or to fill all three seats on the audit committee at this time.

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Our audit committee is responsible for, among other things:

· appointing the independent auditor;

· pre-approving all auditing and non-auditing services permitted to be performed by the independent auditor;

· annually reviewing the independent auditors report describing the auditing firms internal quality-control procedures, any material issues raised by the most recent internal quality-control review, or peer review, of the independent auditor and all relationships between the independent auditor and our company;

· setting clear hiring policies for employees and former employees of the independent auditor;

· reviewing with the independent auditor any audit problems or difficulties and managements responses;

· reviewing and approving all related party transactions on an ongoing basis;

· reviewing and discussing the annual audited financial statements with management and the independent auditor;

· reviewing and discussing with management and the independent auditor major issues regarding accounting principles and financial statement presentations;

· reviewing reports prepared by management or the independent auditor relating to significant financial reporting issues and judgments;

· discussing earnings press releases with management, as well as financial information and earnings guidance provided to analysts and rating agencies;

· reviewing with management and the independent auditor the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on our financial statements;

· discussing policies with respect to risk assessment and risk management with management, internal auditors and the independent auditor;

· timely reviewing reports from the independent auditor regarding all critical accounting policies and practices to be used by our company, all alternative treatments of financial information within U.S. GAAP that have been discussed with management and all other material written communications between the independent auditor and management;

· establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;

· annually reviewing and reassessing the adequacy of our audit committee charter;

· such other matters that are specifically delegated to our audit committee by our board of directors from time to time;

· meeting separately, periodically, with management, internal auditors and the independent auditor; and

· reporting regularly to the full board of directors.

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Compensation Committee

Our compensation committee consists of Andrew Yan, Hope Ni and Alec Tsui. Andrew Yan is the chairman of our compensation committee. Our board of directors has determined that all of our compensation committee members are independent directors within the meaning of Nasdaq Stock Market Rule 5605(a)(2).

Our compensation committee is responsible for:

· reviewing and approving our overall compensation policies;

· reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer, evaluating our chief executive officers performance in light of those goals and objectives, reporting the results of such evaluation to the board of directors, and determining our chief executive officers compensation level based on this evaluation;

· determining the compensation level of our other executive officers;

· making recommendations to the board of directors with respect to our incentive-compensation plan and equity-based compensation plans;

· administering our equity-based compensation plans in accordance with the terms thereof; and

· such other matters that are specifically delegated to the compensation committee by our board of directors from time to time.

Nominations Committee

Our nominations committee consists of Kevin Xiaofeng Ma, Andrew Yan and Alec Tsui. Kevin Xiaofeng Ma is the chairman of the nominations committee. Although Nasdaq Stock Market Rules generally require all members of the nominations committee of a listed company to be independent directors within the meaning of Nasdaq Stock Market Rule 5605(a)(2), Nasdaq Stock Market Rule 5615(a)(3) permits a foreign private issuer like us to follow home country practices in relation to composition of its nominations committee. In this regard, we have elected to adopt the practices of our home country, the Cayman Islands, which does not require that any of the members of a companys nominations committee be independent directors.

Our nominations committee is responsible for, among other things:

· seeking and evaluating qualified individuals to become new directors as needed;

· reviewing and making recommendations to the board of directors regarding the independence and suitability of each board member for continued service; and

· evaluating the nature, structure and composition of other board committees.

Corporate Governance

Our board of directors has adopted a code of ethics, which is applicable to our senior executive and financial officers. In addition, our board of directors has adopted a code of conduct, which is applicable to all of our directors, officers, employees and advisors. Our code of ethics and our code of conduct are publicly available on our web site, http://www.ata.net.cn. In addition, our board of directors has adopted a set of corporate governance guidelines. The guidelines reflect certain guiding principles with respect to our boards structure, procedures and committees. The guidelines are not intended to change or interpret any law, or our amended and restated memorandum and articles of association.

Interested Transactions

A director may vote with respect to any contract or transaction in which he or she is interested, provided that the nature of the interest of any director in such contract or transaction is disclosed by him or her at or prior to its consideration and any vote in that matter.

D. Employees

We had 500, 454 and 443 employees as of March 31, 2013, 2014 and 2015, respectively. As of March 31, 2015, we had 82 employees in sales and marketing, 115 in research and development, 180 in client service and support and 66 in general and administrative functions.

In April 2005, we adopted a share incentive plan, or the 2005 Plan. In January 2008, we adopted our 2008 Employee Share Incentive Plan, or the 2008 Plan. We use our share incentive plans as an additional means to further attract, motivate, retain and reward selected directors, officers, employees and third-party consultants and advisors. For more information, see Item 6.B. Directors, Senior Management and Employees Share Incentives Share Option Plan. We believe these initiatives have contributed to our ability to attract and retain talent.

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As required by Chinese laws and regulations, we participate in various employee benefit plans that are organized by municipal and provincial governments, including housing, pension, medical and unemployment benefit plans. We make monthly payments to these plans in respect of each employee based on the employees compensation. We believe that we maintain a good working relationship with our employees and we have not experienced any significant labor disputes. Our employees have not entered into any collective bargaining agreements.

According to our contracts with our employees, our employees are generally prohibited from engaging in any activities that compete with our business during the period of their employment and for two years after termination of their employment with us. Furthermore, all employees are prohibited, for a period of two years following termination, from soliciting other employees to leave us and, for a period of five years following termination, from soliciting our existing clients. However, we may have difficulty enforcing these non-competition and non-solicitation terms in China because the Chinese legal system, especially with respect to the enforcement of such terms, is still developing.

E. Share Ownership

The following table sets forth information with respect to the beneficial ownership, within the meaning of Section 13(d)(3) of the Exchange Act, of our common shares as of June 18, 2015 by:

· each person known to us to own beneficially more than 5% of our common shares, and

· each of our directors and executive officers

	Common shares beneficially owned
	Number (1)	Number (2)
Directors and Executive Officers:
Kevin Xiaofeng Ma (3)	5,288,988	11.5	%
Jianmin Ding	563,800	1.2	%
Andrew Yan	*	*
Benson Tsang	*	*
Shuqiu Zhao	*	*
Hope Ni	*	*
Alec Tsui	*	*
Alex Tong	*	*
Directors and Executive Officers Combined	7,338,502	16.0	%
Principal Shareholders:
SB Asia Investment Fund II L.P. (5)	15,147,208	33.0	%
HSBC International Trustee Limited (6)	9,988,986	21.8	%
Able Knight Development Limited (3)	4,998,988	10.9	%
Lijun Mai (7)	4,845,000	10.6	%
Xing Wei Institute Inc.(4)	3,400,000	7.4	%

* Beneficially owns less than 1% of our common shares.

(1) The number of common shares beneficially owned by each of the listed persons includes common shares that such person has the right to acquire within 60 days after June 18, 2015.

(2) Percentage of beneficial ownership for each of the persons listed above is determined by dividing (i) the number of common shares beneficially owned by such person by (ii) the total number of common shares outstanding, plus the number of common shares such person has the right to acquire within 60 days after June 18, 2015. The total number of our common shares outstanding as of June 18, 2015 is 45,857,786.

(3) Includes (i) 290,000 common shares held by Kevin Xiaofeng Ma and (ii) 4,998,988 common shares held by Able Knight Development Limited, which is a British Virgin Islands company ultimately wholly owned by HSBC International Trustee Limited as trustee of an irrevocable trust constituted under the laws of the Cayman Islands with Kevin Xiaofeng Ma as the settlor and certain family members of Kevin Xiaofeng Ma as the beneficiaries. Kevin Xiaofeng Ma is the sole director of Able Knight Development Limited. The business address of Able Knight Development Limited is Portcullis TrustNet Chambers, P.O. Box 3444, Road Town, Tortola, British Virgin Islands.

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(4) Based on Schedule 13D filed jointly by Cheng-Yaw Sun, Twittering World Limited and Xing Wei Institute Inc. on November 13, 2013. Includes 936,936 Common Shares and 531,532 ADSs (representing 1,063,064 Common Shares) held of record by Twittering World Limited and 1,400,000 Common Shares held of record by Xing Wei Institute Inc. Cheng-Yaw Sun, as sole director and shareholder of Twittering World and sole director of Xing Wei may be deemed to have sole voting and dispositive power over the Shares held of record by Twittering World Limited and Xing Wei Institute Inc.

(5) Based on Schedule 13D filed jointly by SB Asia Investment Fund II L.P., SAIF II GP L.P., SAIF Partners II L.P. and SAIF II GP Capital Ltd. on April 26, 2013. Includes 12,707,436 common shares and 1,219,886 ADSs, representing 2,439,772 common shares held by SB Asia Investment Fund II L.P., a Cayman Islands limited partnership. SAIF II GP Capital Ltd. is the sole general partner of SAIF Partners II L.P., which is the sole general partner of SAIF II GP L.P., which is in turn the sole general partner of SB Asia Investment Fund II L.P., which is the record owner of the common shares.

(6) Based on a Schedule 13G filed by HSBC International Trustee Limited on January 21, 2014. Includes 5,098,988 common shares and 2,444,999 American Depositary Shares (representing 4,889,998 common shares) beneficially held by HSBC International Trustee Limited solely in its capacity as trustee of various trusts. The registered address of HSBC International Trustee Limited is 21 Collyer Quay, #09-01 HSBC Building, Singapore 049320.

(7) Based on a Schedule 13G filed jointly by Lijun Mai, Mutual Step Holdings Limited, Magnificent Trio Company Limited, Wealth Trust, Art Kind Technology Limited, New Knight Holdings Limited, Sunrise Trust, Art Grace Development Limited, Unique Icon Limited and Value Trust on February 17, 2009. Includes 1,645,000 common shares held by Mutual Step Holdings Limited, 1,600,000 common shares held by Art Kind Technology Limited and 1,600,000 common shares held by Art Grace Development Limited. Each of Mutual Step Holdings Limited, Art Kind Technology Limited and Art Grace Development Limited is a British Virgin Islands company ultimately wholly owned by HSBC International Trustee Limited as trustee of an irrevocable trust constituted under the laws of Cayman Islands with Lijun Mai or certain family members of Lijun Mai as the settler and beneficiaries. Lijun Mai is the sole director of Mutual Step Holdings Limited. The business address of each of Mutual Step Holdings Limited, Art Kind Technology Limited and Art Grace Development Limited is Portcullis TrustNet Chambers, P.O. Box 3444, Road Town, Tortola, British Virgin Islands.

None of our shareholders have different voting rights from other shareholders. To our knowledge, we are not owned or controlled, directly or indirectly, by another corporation, by any foreign government or by any other natural or legal persons, severally or jointly. None of our shareholders has different voting rights from other shareholders. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. See Item 6.B. Compensation Share Incentives for information on options granted to our current directors and executive officers. To our knowledge, as of June 18, 2015, none of our common shares were held by holders of record in the United States. However, 25,219,426 common shares were registered in the name of a nominee of Citibank, N.A., the depositary of our ADSs. It is likely that a large number of beneficial owners of our ADSs reside in the United Sates.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

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

B. Related Party Transactions

Agreements among ATA BVI, ATA Learning and ATA Online

We previously operated most of our business in China through ATA Online, a PRC company that was previously held by PRC citizens and then became a wholly-owned subsidiary of our company in May 2015. We did not own any equity interest in ATA Online before it became our subsidiary in May 2015. Through ATA Learning, our wholly-owned subsidiary in the PRC, we had entered into a series of contractual arrangements with ATA Online and its shareholders, including loan agreements, a call option and cooperation agreement, an equity pledge agreement, a technical support agreement, a strategic consulting service agreement and powers of attorney.

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The following is a summary of certain provisions of these prior agreements. All of these agreements were terminated with effect from May 20, 2015. For more complete information you should read them in their entirety.

Technical support agreement, dated October 27, 2006. Under this prior agreement, ATA Learning provided ATA Online with exclusive technical support services for the maintenance of ATA Onlines servers, networks and other equipment, software and systems. In return, ATA Online paid a quarterly service fee to ATA Learning. The service fee was mutually agreed by both parties, and was determined based on certain objective criteria such as the actual services required by ATA Online and the actual labor costs, as determined by the number of days and personnel involved, incurred by ATA Learning for providing the services during the relevant period. In addition, ATA Online reimbursed ATA Learning for out of pocket costs ATA Learning incurred in connection with providing the services.

Strategic consulting service agreement, dated October 27, 2006. Under this prior agreement, ATA Learning provided ATA Online with strategic consulting and related services for ATA Onlines business, including (1) valuation of new products; (2) industry investigation and survey; (3) marketing and promotion strategies; and (4) other services related to ATA Onlines online test preparation services business. The fees for these services were confirmed by ATA Learning and calculated monthly but paid quarterly based on actual time spent providing the services. In addition, ATA Learning had the right to adjust the fees payable by ATA Online in accordance with its performance.

Equity pledge agreement, dated October 27, 2006, as amended and restated on February 12, 2007, as amended on July 7, 2009 and as amended on April 13, 2015. To secure the payment obligations of ATA Online under the exclusive technical support agreement and the strategic consulting service agreement described above and provide additional covenants, ATA Onlines shareholders had pledged to ATA Learning their entire equity ownership interests in ATA Online. Upon the occurrence of certain events of default specified in this agreement, ATA Learning could bring a suit against ATA Online in a local PRC court to confirm the debt amount and enforce the pledge by foreclosing on the pledged equity interest. Upon foreclosure, the pledged assets would be sold off by the court in a public auction and the proceeds used to satisfy ATA Onlines outstanding liabilities under the equity pledge agreement. ATA Learning or its designee could also take part in the auction to bid for the pledged assets itself. The purpose of the equity pledges was to act as collateral for ATA Onlines performance under those agreements.

Loans to the Shareholders of ATA Online, dated October 27, 2006, as amended on February 12, 2007, on July 7, 2009 and on April 13, 2015. ATA BVI entered into loan agreements with each of Kevin Xiaofeng Ma, Haichang Xiong, Walter Lin Wang and Jianguo Wang, the shareholders of ATA Online to extend each of Kevin Xiaofeng Ma, Haichang Xiong, Walter Lin Wang and Jianguo Wang an interest free loan in the amount of RMB9 million, RMB1 million, RMB1 million and RMB50,000, respectively, for the sole purpose of investing in ATA Online as ATA Onlines registered capital. The initial term of these loans in each case was ten years, which could be extended upon the parties agreement. Kevin Xiaofeng Ma, Haichang Xiong, Walter Lin Wang and Jianguo Wang could only repay the loans by transferring all of their interest in ATA Online to ATA BVI or to a third party designated by ATA BVI.

Call option and cooperation agreement, dated October 27, 2006, as amended and restated on February 12, 2007, as amended on July 7, 2009 and April 13, 2015. Through the prior call option and cooperation agreement entered into between ATA BVI and ATA Online and its shareholders, ATA BVI or any third party designated by ATA BVI had the right to acquire, in whole or in part, the respective equity interests in ATA Online of its shareholders or ATA Onlines assets when permitted by applicable PRC laws and regulations. The proceeds from the exercise of the call option would be applied to repay the loans under the loan agreement described above. Further, without ATA BVIs prior written consent, ATA Online and its shareholders were prohibited from selling, assigning, mortgaging or otherwise disposing, or creating any encumbrance on, any of ATA Onlines assets or operation or any legal or beneficial interests with respect to its revenues, entering into any transaction which may materially affect ATA Onlines assets, liability, operations, equity or other legal rights, or distributing any dividend to its shareholders.

Power of Attorney, dated March 27, 2013, April 3, 2013 and April 13, 2015. Under these prior agreements, Haichang Xiong and Kevin Xiaofeng Ma, each irrevocably and exclusively appointed and constituted ATA Learning or its designee as his attorney-in-fact to exercise on his behalf any and all rights that he had as the shareholder of ATA Online.

Shareholders Agreement

In connection with the Shareholders Agreement that we entered into with the shareholders of our Cayman Islands holding company in November 2006, our preferred shareholders are entitled to certain registration rights, including demand registration rights, piggyback registration rights, and Form F-3 or Form S-3 registration rights. Prior to the expiration of these registration rights on March 31, 2013, we entered into a Registration Rights Extension Agreement with SB Asia Investment Fund II L.P. on March 5, 2013, extending its prior registration rights until March 31, 2017.

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C. Interests of Experts and Counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated statements and other financial information.

Our consolidated financial statements are included at the end of this annual report.

Legal Proceedings

We are not currently involved in any litigation, arbitration or administrative proceedings that could have a material adverse effect on our financial condition or results of operations. From time to time, we may be subject to various claims and legal actions arising in the ordinary course of business.

Dividend Policy

On May 30, 2014, we declared a special cash dividend of $0.205 per common share, or $0.41 per ADS. The total amount of cash dividend distributed was $9.5 million, which was paid from the cash held by ATA Inc. on July 18, 2014. The dividend was paid to all shareholders of record as of the close of business on June 30, 2014.

On August 7, 2012, we declared a special cash dividend of $0.087 per common share, or $0.174 per ADS. The total amount of cash dividend distributed was $4.0 million, which was paid from the cash held by ATA Inc. The dividend was paid to all shareholders of record as of the close of business on August 20, 2012.

Any future determination to pay dividends will be made at the discretion of our board of directors and will be based upon our future operations and earnings, capital requirements and surplus, general financial condition, shareholders interests, contractual restrictions and other factors our board of directors may deem relevant.

Holders of our ADSs will be entitled to receive dividends, if any, subject to the terms of the deposit agreement, to the same extent as the holders of our common shares. Cash dividends will be paid to the depositary in U.S. dollars, which will distribute them to the holders of ADSs according to the terms of the deposit agreement. Other distributions, if any, will be paid by the depositary to the holders of ADSs in any means it deems legal, fair and practical.

Under Chinas EIT Law and its Implementation Rules, both of which became effective on January 1, 2008, dividends from our PRC subsidiaries to us may be subject to a 10% withholding tax if such dividends are derived from profits generated after January 1, 2008. If we are deemed to be a PRC resident enterprise, the withholding tax may be exempted, but we will be subject to a 25% tax on our worldwide income, and our non-PRC enterprise investors may be subject to PRC income tax withholding at a rate of 10%. See Item 3. Key Information D. Risk Factors Risks Relating to Regulation of Our Business Under the EIT Law, we may be classified as a resident enterprise of China. Such classification will likely result in unfavorable tax consequences to us and U.S. holders of our ADSs or common shares, and Item 10. Additional Information E. Taxation Peoples Republic of China Taxation.

B. Significant Changes

Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited financial statements included in this report.

ITEM 9. THE OFFER AND LISTING

A. Offering and Listing Details.

Price Range of Our ADSs

Our ADSs are listed for trading on the Nasdaq Global Market under the symbol ATAI. The following table sets forth the monthly high and low trading prices of our ADSs on the Nasdaq Global Market for the periods indicated:

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	High		Low
Yearly Highs and Lows:
Fiscal year ended March 31, 2012	$	13.09	$	5.49
Fiscal year ended March 31, 2013	$	7.45	$	3.09
Fiscal year ended March 31, 2014	$	6.41	$	3.78
Fiscal year ended March 31, 2015	$	5.53	$	2.50

Quarterly Highs and Lows:
Quarter ended June 30, 2013	$	4.80	$	3.90
Quarter ended September 30, 2013	$	5.40	$	4.33
Quarter ended December 31, 2013	$	5.00	$	3.78
Quarter ended March 31, 2014	$	6.41	$	3.79
Quarter ended June 30, 2014	$	5.53	$	3.88
Quarter ended September 30, 2014	$	5.22	$	3.79
Quarter ended December 31, 2014	$	4.80	$	2.50
Quarter ended March 31, 2015	$	5.00	$	3.50

Monthly Highs and Lows:
December 2014	$	4.80	$	2.50
January 2015	$	5.00	$	4.03
February 2015	$	4.95	$	4.03
March 2015	$	4.37	$	3.50
April 2015	$	4.89	$	3.89
May 2015	$	5.60	$	4.33
June 2015 (through June 18, 2015)	$	5.92	$	4.74

On June 18, 2015, the closing sale price of our ADSs as reported on the Nasdaq Global Market was US$5.84 per ADS.

B. Plan of Distribution

Not applicable.

C. Markets

See Item 9.A. above.

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 incorporate by reference into this annual report the description of our third amended and restated memorandum and articles of association contained in Description of Share Capital of our F-1 registration statement (File No. 333-148512) originally filed with the Securities and Exchange Commission on January 8, 2008, as amended.

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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 5. Operating and Financial Review and Prospects, Item 7. Major Shareholders and Related Party Transactions or elsewhere in this annual report on Form 20-F.

D. Exchange Controls

Regulation of Foreign Exchange

Under current Chinese regulations, Foreign-Invested Enterprises such as our Chinese subsidiaries are required to apply to SAFE for a Foreign Exchange Registration Certificate for Foreign-Invested Enterprise. With such a foreign exchange registration certificate (which is subject to review and renewal by SAFE on an annual basis), a foreign-invested enterprise may open foreign exchange bank accounts at banks authorized to conduct foreign exchange business by SAFE and may buy, sell and remit foreign exchange through such banks, subject to documentation and approval requirements. Foreign-invested enterprises are required to open and maintain separate foreign exchange accounts for capital account transactions and current account transactions. In addition, there are restrictions on the amount of foreign currency that foreign-invested enterprises may retain in such accounts.

The value of the Renminbi against the U.S. dollar and other currencies is affected by, among other things, changes in Chinas political and economic conditions and Chinas foreign exchange policies. The Peoples Bank of China regularly intervenes in the foreign exchange market to limit fluctuations in Renminbi exchange rates and achieve policy goals.

Dividend Distributions

We have adopted a holding company structure, and our holding companies may rely on dividends and other distributions on equity paid by our current and future Chinese subsidiaries for their cash requirements, including the funds necessary to service any debt we may incur or financing we may need for operations other than through our Chinese subsidiaries. Chinese legal restrictions permit payments of dividends by our Chinese subsidiaries only out of their accumulated after-tax profits, if any, determined in accordance with Chinese accounting standards and regulations. Our Chinese subsidiaries are also required under Chinese laws and regulations to allocate at least 10% of their after-tax profits determined in accordance with PRC GAAP to statutory reserves until such reserves reach 50% of the companys registered capital. Allocations to these statutory reserves and funds can only be used for specific purposes and are not transferable to us in the form of loans, advances or cash dividends. As of March 31, 2015, our Chinese subsidiaries allocated RMB26.4 million ($4.3 million) to the general reserve fund, which is restricted for distribution to the Company. Any limitations on the ability of our Chinese subsidiaries to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.

E. Taxation

The following is a general summary of the material Cayman Islands, U.S. federal and Peoples Republic of China income tax consequences relevant to an investment in our ADSs and common shares. The discussion is not intended to be, nor should it be construed as, legal or tax advice to any particular prospective purchaser or current holders of our ADSs. The discussion is based on laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change or different interpretations, possibly with retroactive effect. The discussion does not address United States state or local tax laws, or tax laws of jurisdictions other than the Cayman Islands and the United States. You should consult your own tax advisors with respect to the consequences of acquisition, ownership and disposition of our ADSs and common shares.

Cayman Islands Taxation

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty or withholding tax applicable to us or to any holder of ADSs or common shares. 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. No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies except those which hold interests in land in the Cayman Islands. The Cayman Islands is a party to a double tax treaty entered into with the United Kingdom in 2010 but is otherwise not party to any double tax treaties. There are no exchange control regulations or currency restrictions in the Cayman Islands.

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Pursuant to Section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, we have obtained an undertaking from the Governor-in-Cabinet:

· that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits or income or gains or appreciations shall apply to the Company or its operations; and

· that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on the shares, debentures or other obligations of the Company.

The undertaking for us is for a period of twenty years from October 3, 2006.

Peoples Republic of China Taxation

In 2007 China passed a new Enterprise Income Tax Law, or the EIT Law, and its Implementing Rules, both of which became effective on January 1, 2008. The EIT Law created a new resident enterprise classification, which, if applied to us, would impose a 10% withholding tax on our non-PRC enterprise shareholders and potentially 20% to our non-PRC individual shareholders on dividends we pay to them if such dividends are derived from profits generated after January 1, 2008 and with respect to gains derived by our non-PRC shareholders from disposition of our shares or ADSs, if such dividends or gains are determined to have been derived from sources within China. See Item 3. Key Information D. Risk Factors Risks Relating to Regulation of Our Business Under the EIT Law, we may be classified as a resident enterprise of China. Such classification will likely result in unfavorable tax consequences to us and U.S. holders of our ADSs or common shares.

If we are not deemed as a resident enterprise, then dividends payable to our non-PRC shareholders and gains from disposition of our shares of ADSs by our non-PRC shareholders will not be subject to PRC withholding income tax.

United States Federal Income Taxation

This discussion describes the material U.S. federal income tax consequences to U.S. Holders (as defined below) of the purchase, ownership and disposition of our ADSs or common shares. This discussion does not address any aspect of U.S. federal gift or estate tax, the Medicare tax, or the state, local or non-U.S. tax consequences of an investment in our ADSs and common shares. This discussion applies to you only if you beneficially own our ADSs or common shares as capital assets for U.S. federal income tax purposes. This discussion does not apply to U.S. Holders who are members of a class of holders subject to special rules, such as:

· dealers in securities or currencies;

· traders in securities that elect to use a mark-to-market method of accounting for securities holdings;

· banks or certain financial institutions;

· insurance companies;

· tax-exempt organizations;

· partnerships or other entities treated as partnerships or other pass-through entities for U.S. federal income tax purposes or persons holding ADSs or common shares through any such entities;

· regulated investments companies or real estate investment trusts;

· persons that hold ADSs or common shares as part of a hedge, straddle, constructive sale, conversion transaction or other integrated investment;

· persons whose functional currency for tax purposes is not the U.S. dollar;

· persons liable for alternative minimum tax; or

· persons who actually or constructively own 10% or more of the total combined voting power of all classes of our shares (including ADSs and common shares) entitled to vote.

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This discussion is based on the U.S. Internal Revenue Code of 1986, as amended, which we refer to in this discussion as the Code, its legislative history, existing and proposed regulations promulgated thereunder, published rulings and court decisions, all as of the date hereof. These laws are subject to change, possibly on a retroactive basis. In addition, this discussion relies on our assumptions regarding the value of our ADSs and common shares and the nature of our business over time. Finally, this discussion is based in part upon the representation of the depositary and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.

Prospective purchasers are urged to consult their own tax advisor concerning the particular U.S. federal income tax consequences to them of the purchase, ownership and disposition of our ADSs and common shares, as well as the consequences to them arising under the laws of any other taxing jurisdiction.

For purposes of the U.S. federal income tax discussion below, you are a U.S. Holder if you beneficially own ADSs or common shares as capital assets within the meaning of Section 1221 of the Code and are:

· an individual citizen or resident of the United States for U.S. federal income tax purposes;

· a corporation, or other entity taxable as a corporation, that was created or organized in or under the laws of the United States or any state thereof or the District of Columbia;

· an estate the income of which is subject to U.S. federal income tax regardless of its source; or

· a trust if (a) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (b) the trust has a valid election in effect to be treated as a U.S. person.

For U.S. federal income tax purposes, income earned through a U.S. or non-U.S. partnership or other flow-through entity is attributed to its owners. Accordingly, if a partnership or other flow-through entity holds ADSs or common shares, the tax treatment of the holder will depend on the status of the partner or other owner and the activities of the partnership or other flow-through entity.

The U.S. Treasury has expressed concerns that intermediaries in the chain of ownership between the holder of an ADS and the issuer of the security underlying the ADS may be taking actions that are inconsistent with the claiming of foreign tax credits for U.S. holders of ADSs. Such actions would also be inconsistent with the claiming of the reduced rate of tax, as described below, applicable to dividends received by certain non-corporate holders. Accordingly, the availability of the reduced tax rate for dividends received by certain non-corporate holders could be affected by actions taken by intermediaries in the chain of ownership between the holder of an ADS and our company.

Dividends on ADSs or Common Shares

Subject to the Passive Foreign Investment Company discussion below, if we make distributions and you are a U.S. Holder, the gross amount of any distributions with respect to your ADSs or common shares (including the amount of any taxes withheld therefrom) will be includible in your gross income on the day you actually or constructively receive such income as dividend income if the distributions are made from our current or accumulated earnings and profits, calculated according to U.S. federal income tax principles. With respect to non-corporate U.S. holders, certain dividends received from a qualified foreign corporation may be subject to a reduced capital gains rate of taxation. A non-U.S. corporation (other than passive foreign investment corporation) is treated as a qualified foreign corporation with respect to dividends from that corporation on shares (or ADSs backed by such shares) that are readily tradable on an established securities market in the United States. U.S. Treasury Department guidance indicates that our ADSs, which are listed on the Nasdaq Global Market, but not our common shares, will be readily tradable on an established securities market in the United States. You should consult your own tax advisor as to the rate of tax that will apply to you with respect to dividend distributions, if any, that you receive from us.

Subject to the Passive Foreign Investment Company discussion below, to the extent, if any, that the amount of any distribution by us on ADSs or common shares exceeds our current and accumulated earnings and profits as determined under U.S. federal income tax principles, it will be treated first as a tax-free return of the U.S. Holders adjusted tax basis in the ADSs or common shares and thereafter as capital gain. However, we do not intend to calculate our earnings and profits according to U.S. federal income tax principles. Accordingly, distributions on our ADSs or common shares, if any, will generally be reported to you as dividend distributions for U.S. tax purposes. Corporations will not be entitled to claim a dividends-received deduction with respect to distributions made by us. Dividends may constitute foreign source passive income for purposes of the U.S. foreign tax credit rules. You should consult your own tax advisors as to your ability, and the various limitations on your ability, to claim foreign tax credits in connection with the receipt of dividends.

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Sales and Other Dispositions of ADSs or Common Shares

Subject to the Passive Foreign Investment Company discussion below, when you sell or otherwise dispose of ADSs or common shares, you will recognize capital gain or loss in an amount equal to the difference between the amount realized on the sale or other disposition and your adjusted tax basis in the ADSs or common shares. Any such gain or losses that you recognize will be treated as U.S. source income for foreign tax credit purposes. Your adjusted tax basis will equal the amount you paid for the ADSs or common shares. Any gain or loss you recognize will be long-term capital gain or loss if your holding period in our ADSs or common shares is more than one year at the time of disposition. If you are a non-corporate U.S. Holder, including an individual, any such long-term capital gain will be taxed at preferential rates. Your ability to deduct capital losses will be subject to various limitations.

Passive Foreign Investment Company

We will be classified as a PFIC in any taxable year if either: (a) the average quarterly value of our gross assets that produce passive income or are held for the production of passive income is at least 50% of the average quarterly value of our total gross assets or (b) 75% or more of our gross income for the taxable year is passive income (such as certain dividends, interest or royalties). For purposes of the first test: (a) any cash and cash invested in short-term, interest bearing, debt instruments, or bank deposits that are readily convertible into cash will count as producing passive income or held for the production of passive income, and (b) the total value of our assets is calculated based on our market capitalization.

We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock.

If we were a PFIC for any taxable year during which you held ADSs or common shares, certain adverse U.S. federal income tax rules would apply. You would be subject to additional taxes and interest charges on certain excess distributions we make and on any gain realized on the disposition or deemed disposition of your ADSs or common shares, regardless of whether we continue to be a PFIC in the year in which you receive an excess distribution or dispose of or are deemed to dispose of your ADSs or common shares. Distributions in respect of your ADSs or common shares during a taxable year would constitute excess distributions if, in the aggregate, they exceed 125% of the average amount of distributions with respect to your ADSs or common shares over the three preceding taxable years or, if shorter, the portion of your holding period before such taxable year.

To compute the tax on excess distributions or any gain, (a) the excess distribution or the gain would be allocated ratably to each day in your holding period, (b) the amount allocated to the current year and any tax year prior to the first taxable year in which we were a PFIC would be taxed as ordinary income in the current year, (c) the amount allocated to other taxable years would be taxable at the highest applicable marginal rate in effect for that year, and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. In addition, if we were a PFIC, no distribution that you receive from us would qualify for taxation at the preferential rate discussed in the Dividends on ADSs or Common Shares section above.

Under certain attribution rules, if we are a PFIC, you will be deemed to own your proportionate share of lower-tier PFICs, and will be subject to U.S. federal income tax on (a) a distribution on the shares of a lower-tier PFIC and (b) a disposition of shares of a lower-tier PFIC, both as if you directly held the shares of such lower-tier PFIC.

Each U.S. Holder of a PFIC is required to file an annual report containing such information as the U.S. Treasury may require and may be required to file Internal Revenue Service Form 8621 regarding distributions received on the ADSs or common shares and any gain realized on the disposition of the ADSs or common shares. You should consult with your own tax advisor regarding reporting requirements with regard to your ADSs and common shares.

If we were a PFIC in any year, you would generally be able to avoid the excess distribution rules described above by making a timely so-called mark-to-market election with respect to your ADSs provided our ADSs are marketable. Our ADSs will be marketable as long as they remain regularly traded on a national securities exchange, such as the Nasdaq Global Market. If you made this election in a timely fashion, you would recognize as ordinary income or ordinary loss the difference between the fair market value of the ADSs as of the close of your taxable year over your adjusted basis in such ADSs. Any ordinary income resulting from this election would be taxed at ordinary income rates and would not be eligible for the reduced rate of tax applicable to qualified dividend income. Any ordinary losses would be limited to the extent of the net amount of previously included income as a result of the mark-to-market election, if any. Your basis in the ADSs would be adjusted to reflect any such income or loss. You should consult your own tax advisor regarding potential advantages and disadvantages to you of making a mark-to-market election with respect to your ADSs. The mark-to-market election will not be available for any lower tier PFIC that is deemed owned pursuant to the attribution rules discussed above. We do not intend to provide you with the information you would need to make or maintain a Qualified Electing Fund election and therefore, you will not be able to make or maintain such an election with respect to your ADSs or common shares.

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U.S. Information Reporting and Backup Withholding Rules

Dividend payments with respect to the ADSs or common shares and the proceeds received on the sale or other disposition of ADSs or common shares may be subject to information reporting to the IRS and to backup. Backup withholding will not apply, however, if you (a) are a corporation or come within certain other exempt categories and, when required, can demonstrate that fact or (b) provide a taxpayer identification number, certify as to no loss of exemption from backup withholding and otherwise comply with the applicable backup withholding rules. To establish your status as an exempt person, you will be required to provide certification on IRS Form W-9. Backup withholding is not an additional tax. The amount of any backup withholding will generally be allowed as a refund or a credit against your U.S. federal income tax liability, provided that you furnish the required information to the IRS. Certain individuals holding the ADSs or common shares other than in an account at a U.S. financial institution may be subject to additional information reporting requirements.

PROSPECTIVE PURCHASERS OF OUR ADSS AND COMMON SHARES SHOULD CONSULT THEIR OWN TAX ADVISOR REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES RESULTING FROM PURCHASING, HOLDING OR DISPOSING OF OUR ADSS AND COMMON SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF THE TAX LAWS OF ANY STATE, LOCAL OR NON-US JURISDICTION AND INCLUDING ESTATE, GIFT AND INHERITANCE LAWS.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts.

Not applicable.

H. Documents on Display

We previously filed with the Securities and Exchange Commission our registration statement on Form F-1 as amended.

We have filed this annual report on Form 20-F with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. Statements made in this annual report as to the contents of any document referred to are not necessarily complete. With respect to each such document filed as an exhibit to this annual report, reference is made to the exhibit for a more complete description of the matter involved, and each such statement shall be deemed qualified in its entirety by such reference.

We are subject to the informational requirements of the Exchange Act and file reports and other information with the Securities and Exchange Commission. Reports and other information which the Company filed with the Securities and Exchange Commission, including this annual report on Form 20-F, may be inspected and copied at the public reference room of the Securities and Exchange Commission at 100 F Street, N.E. Washington D.C. 20549.

You can also obtain copies of this annual report on Form 20-F by mail from the Public Reference Section of the Securities and Exchange Commission, 100 F Street, N.E., Washington D.C. 20549, at prescribed rates. Additionally, copies of this material may be obtained from the Securities and Exchange Commissions Internet site at http://www.sec.gov. The Commissions telephone number is 1-800-SEC-0330.

I. Subsidiaries Information

Not applicable.

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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

Our exposure to interest rate risk primarily relates to interest income generated by excess cash, which is mostly held in interest-bearing bank deposits. We have not used derivative financial instruments in our investment portfolio. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed, nor do we anticipate being exposed, to material risks due to changes in market interest rates. However, our future interest income may fall short of expectations due to changes in market interest rates.

Foreign Currency Risk

The value of the Renminbi against the U.S. dollar and other currencies is affected by, among other things, changes in Chinas political and economic conditions and Chinas foreign exchange policies. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar. However, the Peoples Bank of China regularly intervenes in the foreign exchange market to limit fluctuations in Renminbi exchange rates and achieve policy goals. 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. Since reaching a high against the U.S. dollar in July 2008, however, the Renminbi has traded within a narrow range against the U.S. dollar. On June 19, 2010, the Peoples Bank of China announced the removal of the de facto peg. Following this announcement, the Renminbi has appreciated modestly, from 6.7968 Renminbi per U.S. dollar on June 21, 2010 to 6.2081 Renminbi per U.S. dollar on June 15, 2015, though there also have been periods when the Renminbi has lost value against the U.S. dollar.

Very limited hedging transactions 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 hedging transactions may be limited and we may not be able to successfully hedge our exposure at all. In addition, our currency exchange losses may be magnified by Chinese exchange control regulations that restrict our ability to convert Renminbi into foreign currency.

ATA Inc. and ATA BVIs functional currency is the U.S. dollar, which resulted in our exposure to foreign currency exchange risk. Primarily as a result of the appreciation of the Renminbi against the U.S. dollar, the translation of the net assets of ATA Inc. and ATA BVI to Renminbi during consolidation resulted in translation gain of RMB30,753 ($4,961) which we recognized as a component of comprehensive loss as of March 31, 2015. If the Renminbi against U.S. dollar as of March 31, 2015 had further appreciated by 10% from 6.1422 to 5.5838 as of March 31, 2015, the translation loss would have increased by RMB3.4 million ($0.5 million). Further, we recognized a net foreign currency exchange loss of RMB1.1 million ($0.2 million) as a result of the remeasurement of the foreign currency denominated monetary assets and liabilities. If the Renminbi against U.S. dollar as of March 31, 2015 had further appreciated by 10% from 6.1422 to 5.5838 as of March 31, 2015, the foreign currency exchange gain would have increased by RMB4.0 million ($0.6 million).

Inflation

China has generally not experienced significant inflation in recent years. According to Chinas National Bureau of Statistics, the change in Chinas consumer price index was 2.6%, 2.6% and 2.0% in the years 2012, 2013 and 2014, respectively. In April 2015, the year-over-year change in Chinas consumer price index was 1.5%. Neither inflation nor deflation has had a material impact on our results of operations to date, and we do not currently expect the recent inflation in China to have a significant effect on our operations.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

A. Debt Securities

Not applicable.

B. Warrants and Rights

Not applicable.

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C. Other Securities

Not applicable.

D. American Depositary Shares

Fees Payable by ADS Holders

Citibank, N.A., the depositary of our ADR program, collects its fees for issuance and cancellation of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. Such fees are typically paid to the depositary by the brokers (on behalf of their clients) receiving the newly issued ADSs from the depositary and by the brokers (on behalf of their clients) delivering the ADSs to the depositary for cancellation. The brokers in turn charge these transaction fees to their clients. Depositary fees payable in connection with distributions of cash or securities to ADS holders and the depositary service fee are charged by the depositary to the holders of record of ADSs as of the applicable ADS record date. In the case of cash distributions, the depositary fees are generally deducted from the cash being distributed. In the case of distributions other than cash (e.g., stock dividends, rights, etc.), the depositary 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 in DRS), the depositary sends invoices to the applicable record date ADS holders. In the case of ADSs held in brokerage and custodian accounts (via DTC), the depositary generally collects its fees through the settlement 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.

In the event of refusal to pay the depositary fees the depositary 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 (subject payment of the applicable fees) from any distribution to be made to the ADS holder.

An ADS holder is required to pay the following service fees to the depositary:

Service		Fees

· Issuance of ADSs		US$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) issued

· Cancellation of ADSs		US$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) issued

Service		Fees

· Distribution of cash dividends or other cash distributions		US$2.00 (or less) per 100 ADSs (or portion of 100 ADSs) issued

· Distribution of ADSs pursuant to stock dividends, free stock distributions or exercise of rights		US$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) issued

· Distribution of securities other than ADSs or rights to purchase additional ADSs		US$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) issued

· Depositary services		US$2.00 (or less) per 100 ADSs (or portion of 100 ADSs) issued

An ADS holder will also be responsible to pay certain fees and expenses incurred by the depositary bank and certain taxes and governmental charges such as:

· taxes (including applicable interest and penalties) and other governmental charges;

· such registration fees as may from time to time be in effect for the registration of shares or other deposited securities on the share register and applicable to transfers of shares or other deposited securities to or from the name of the custodian, the depositary or any nominees upon the making of deposits and withdrawals, respectively;

· such cable, telex and facsimile transmission and delivery expenses as are expressly provided in the deposit agreement to be at the expense of the person depositing or withdrawing shares or holders and beneficial owners of ADSs;

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· the expenses and charges incurred by the depositary in the conversion of foreign currency;

· such fees and expenses as are incurred by the depositary in connection with compliance with exchange control regulations and other regulatory requirements applicable to shares, deposited Securities, ADSs and ADRs; and

· the fees and expenses incurred by the depositary, the custodian, or any nominee in connection with the servicing or delivery of deposited securities. The fees and charges an ADS holder may be required to pay may vary over time and may be changed by us and by the depositary bank. ADS holders will receive prior notice of such changes.

Fees and Other Payments Made by the Depositary to Us

As of March 31, 2014, we had received from our depositary a reimbursement of $0.8 million for professional expenses incurred in connection with the advancement of our ADR and investor relations programs. We did not receive any direct reimbursement from our depositary in the fiscal year ended March 31, 2015.

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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

The rights of securities holders have not been materially modified.

ITEM 15. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this annual report, an evaluation has been carried out under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on that evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures are effective in ensuring that material information required to be disclosed in this annual report is recorded, processed, summarized and reported to them for assessment, and required disclosure is made within the time period specified in the rules and forms of the Securities and Exchange Commission.

Managements Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended, for our company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with generally accepted accounting principles 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 a companys assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that a companys receipts and expenditures are being made only in accordance with authorizations of a companys management and directors, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of a companys assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance with respect to consolidated financial statement preparation and presentation and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk 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, management assessed the effectiveness of our internal control over financial reporting as of March 31, 2015 using criteria established in Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, management concluded that the internal control over financial reporting was effective as of March 31, 2015 based on the criteria established in this Internal Control-Integrated Framework (1992).

KPMG, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of March 31, 2015, as stated in their report which is included below.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

ATA Inc.:

We have audited ATA Inc.s internal control over financial reporting as of March 31, 2015, based on criteria established in Internal Control Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). ATA Inc.s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on ATA Inc.s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed 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. A companys internal control over financial reporting 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 the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, ATA Inc. maintained, in all material respects, effective internal control over financial reporting as of March 31, 2015, based on criteria established in Internal Control Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of ATA Inc. and subsidiaries as of March 31, 2015 and 2014, and the related consolidated statements of comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended March 31, 2015, and our report dated June 24, 2015 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG

Hong Kong, China

June 24, 2015

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Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this annual report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16. RESERVED

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

ITEM 16B. CODE OF ETHICS

Our board of directors has adopted a code of ethics that is applicable to our senior executive and financial officers. In addition, our board of directors adopted a code of conduct that is applicable to all of our directors, officers and employees. Our code of ethics and our code of conduct are publicly available on our web site, http://www.ata.net.cn .

ITEM 16C. PRINCIPAL ACCOUNTANT FEE AND SERVICES

The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by KPMG, our principal accountant, for the periods indicated.

	For the fiscal year ended March 31,
	2014	2015	2015
	RMB	RMB	US$
Audit fees (1)	4,831,999	5,049,838	814,621
Audit-related fees (2)	1,627,450	1,601,524	258,352
Tax fees (3)	302,153	316,007	50,977

(1) Audit fees means the aggregate fees billed or payable for professional services rendered by our principal accountant for the audit of our consolidated financial statements.

(2) Audit-related fees means the aggregate fees billed or payable for assurance and related services by our principal accountant that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under Audit fees. Services comprising the fees disclosed under the category of Audit-related fees in the fiscal years ended March 31, 2014 and 2015 involve principally the agreed-upon procedures in connection with our quarterly financial information.

(3) Tax fees means the aggregate fees billed or payable for services rendered by our principal accountant for tax compliance and tax advice.

The audit committee or our board of directors is to pre-approve all auditing services and permitted non-audit services to be performed for us by our independent registered public accounting firm, including the fees and terms thereof (subject to the de minimums exceptions for non-audit services described in Section 10A(i)(l)(B) of the Exchange Act which are approved by the audit committee or our board of directors prior to the completion of the audit).

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

None.

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ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

					(c) Total Number	(d) Maximum
					of ADSs	Approximate Dollar
	(a) Total				Purchased as Part	Value of ADSs that May
	Number	(b) Average			of	Yet
	of ADSs	Price			Publicly	Be Purchased Under the
Period	Purchased	Paid per ADS(1)			Announced Plan	Plan(1), (2)
August 5 August 31, 2014	67,919	$	4.6742		67,919	$	4,682,533
		RMB	(28.9754	)		RMB	(29,027,022	)
September 1 September 30, 2014	61,742	$	4.5572		61,742	$	4,401,162
		RMB	(28.2501	)		RMB	(27,282,803	)
October 1 October 31, 2014	27,963	$	4.3382		27,963	$	4,279,853
		RMB	(26.8925	)		RMB	(26,530,809	)
November 1 November 30, 2014	23,721	$	3.9697		23,721	$	4,185,688
		RMB	(24.6082	)		RMB	(25,947,080	)
December 1 December 31, 2014	38,955	$	3.6745		38,955	$	4,042,548
		RMB	(22.7782	)		RMB	(25,059,755	)
January 1 January 31, 2015	85,857	$	4.6952		85,857	$	3,639,432
		RMB	(29.1055	)		RMB	(22,560,839	)

(1)	All translations from U.S. dollar to Renminbi were made at a rate of RMB6.1990 to US$1.00, which was the noon buying rate in effect as of March 31, 2015.

(2)	On November 1, 2012, we announced a share repurchase plan. Under the plan, we are approved to repurchase up to US$5.0 million worth of our outstanding ADSs from time to time through March 31, 2013. On January 31, 2013, our board of director reviewed and approved the continuation of the share repurchase program through May 31, 2013. In the fiscal year ended March 31, 2014, we repurchased a total of 5,339 ADSs from the open market at an average price of $3.9956 per ADS pursuant to this share repurchase program. On August 5, 2014, we announced a share repurchase plan. Under the Plan, we are approved to repurchase up to US$5.0 million worth of our outstanding ADSs from time to time through January 31, 2015. As of January 31, 2015, we repurchased a total of 306,157 ADS from the open market at an average price of $4.4440 per ADS pursuant to this share repurchase program.

Other than shown in the table above, there were no other repurchases during the fiscal year ended March 31, 2015.

ITEM 16F. CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G. CORPORATE GOVERNANCE

As a foreign private issuer with shares listed on the Nasdaq Global Market we are subject to corporate governance requirements imposed by Nasdaq. Under Nasdaq Stock Market Rule 5615(a)(3), a foreign private issuer such as us may follow its home-country corporate governance practices in lieu of certain of the Nasdaq Stock Market Rules corporate governance requirements. We are committed to a high standard of corporate governance. As such, we strive to comply with most of the Nasdaq corporate governance practices. However, our current corporate governance practices differ from Nasdaq corporate governance requirements for U.S. companies in certain respects, as summarized below:

· Nasdaq Stock Market Rule 5605(b)(1) requires a Nasdaq-listed company to have a board of directors composed of at least a majority of independent directors. In this regard we have elected to adopt the practices of our home country, the Cayman Islands, which does not require us to have a majority of the board of directors composed of independent directors at this time.

· Nasdaq Stock Market Rule 5605(c)(2) requires a Nasdaq-listed company to have an audit committee composed of at least three independent members. In this regard we have elected to adopt the practices of our home country, the Cayman Islands, which does not require us to have a three member audit committee or to fill all three seats on the audit committee at this time.

· Nasdaq Stock Market Rule 5605(e)(1) requires a Nasdaq-listed company to have a nominations committee composed solely of independent directors to select or recommend for selection director nominees. In this regard we have elected to adopt the practices of our home country, the Cayman Islands, which does not require that any of the members of a companys nominations committee be independent directors.

· Nasdaq Stock Market Rule 5635(a) requires a Nasdaq-listed company to obtain shareholder approval for issuance of securities in connection with acquisitions under certain circumstances. As a foreign private issuer, however, we may adopt the practices of our home country, the Cayman Island, which do not require shareholder approval for issuance of securities in connection with acquisitions.

· Nasdaq Stock Market Rule 5635(c) requires a Nasdaq-listed company to obtain shareholder approval for the establishment of or material amendments to equity compensation plans. As a foreign private issuer, however, we may adopt the practices of our home country, the Cayman Island, which do not require shareholder approval for establishment or material amendments to equity compensation plans. Neither the 2005 Plan nor the 2008 Plan require shareholder approval for material amendments to the plan or awards granted under the plan, including without limitation increasing the number of share awards that may be issued under the plan or the repricing of outstanding options.

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ITEM 16H. MINE SAFETY DISCLOSURE

Not applicable.

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PART III.

ITEM 17. FINANCIAL STATEMENTS

Not Applicable.

ITEM 18. FINANCIAL STATEMENTS

Our consolidated financial statements are included at the end of this annual report.

ITEM 19. EXHIBITS

Index to Exhibits

Exhibit Number		Description

1.1		Third Amended and Restated Memorandum and Articles of Association of the Registrant.*

2.1		Form of Common Share Certificate.*

2.2		Form of Deposit Agreement between the Registrant and Citibank, N.A., as depositary. (1)

2.3		Form of American depositary receipt evidencing American depositary shares (included in Exhibit 2.2).*

2.4		Registration Rights Extension Agreement, dated March 5, 2013, between the Registrant and SB Asia Investment Fund II, L.P.**

4.1		2005 Share Incentive Plan of ATA Testing Authority (Holdings) Limited.*

4.2		2008 Employee Share Incentive Plan of the Registrant and form of ISO Option Agreement and NQSO Option Agreement.*

4.3		Form of Indemnification Agreement between the Registrant and its directors.*

4.4		Technical Support Agreement between ATA Online (Beijing) Education Technology Limited and ATA Learning (Beijing) Inc., dated October 27, 2006.*

4.5		Strategic Consulting Service Agreement between ATA Online (Beijing) Education Technology Limited and ATA Learning (Beijing) Inc., dated October 27, 2006.*

4.6		Loan Agreement between ATA Testing Authority (Holdings) Limited and Xiaofeng Ma, dated October 27, 2006, which was amended on February 12, 2007.*

4.6.1		Amendment to Loan Agreement between ATA Testing Authority (Holdings) Limited and Xiaofeng Ma, dated July 7, 2009.**

4.7		Loan Agreement between ATA Testing Authority (Holdings) Limited and Lin Wang, dated October 27, 2006, which was amended on February 12, 2007.*

4.7.1		Amendment to Loan Agreement between ATA Testing Authority (Holdings) Limited and Lin Wang, dated July 7, 2009.**

4.8		Call Option and Cooperation Agreement among ATA Testing Authority (Holdings) Limited, Xiaofeng Ma, Lin Wang, Jianguo Wang and ATA Online (Beijing) Education Technology Limited, dated October 27, 2006.*

4.9		Framework Agreement for Option Right Exercise among ATA Testing Authority (Holdings) Limited, Lin Wang, Jianguo Wang, ATA Online (Beijing) Education Technology Limited and ATA Learning (Beijing) Inc., dated February 12, 2007.*

4.10		Option Exercise Notice between ATA Testing Authority (Holdings) Limited and Jianguo Wang, dated February 12, 2007.*

4.11		Call Option and Cooperation Agreement among ATA Testing Authority (Holdings) Limited, Xiaofeng Ma, Lin Wang and ATA Online (Beijing) Education Technology Limited, dated February 12, 2007.*

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4.12		Equity Pledge Agreement among Xiaofeng Ma, Lin Wang and ATA Learning (Beijing) Inc., dated February 12, 2007.*

4.13		Extended Control Agreement among Xiaofeng Ma, Lin Wang, ATA Online (Beijing) Education Technology Limited, ATA Learning (Beijing) Inc., and ATA Testing Authority (Holdings) Limited, amending the Technical Support Agreement (Exhibit 4.5), the Strategic Consulting Service Agreement (Exhibit 4.6), the Call Option and Cooperation Agreement (Exhibit 4.12), and the Equity Pledge Agreement (4.13), dated July 7, 2009. **

4.14		Power of Attorney by Xiaofeng Ma in favor of ATA Learning (Beijing) Inc., dated March 27, 2013.***

4.15		Power of Attorney by Lin Wang in favor of ATA Learning (Beijing) Inc., dated April 3, 2013.***

4.16		Framework Agreement on Restructuring, May 20, 2015

8.1		List of Subsidiaries.

11.1		Code of Conduct.*

12.1		CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

12.2		CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

13.1		CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

13.2		CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

23.1		Consent of KPMG.

23.2		Consent of Jincheng Tongda & Neal Law Firm

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	Previously filed with the Registrants registration statement on Form F-1 (File No. 333-148512), as amended.
**	Previously filed with the Registrants annual report on Form 20-F, filed with the SEC on September 15, 2009.
***	Previously filed with the Registrants annual report on Form 20-F, filed with the SEC on June 26, 2013.

(1)	Incorporated by reference to the Registration Statement on Form F-6 (File No. 333-148641) filed with the Securities and Exchange Commission with respect to American depositary shares representing our common shares.

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SIGNATURE

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.

	ATA INC.

	/s/ Benson Tsang
	Name:	Benson Tsang
	Title:	Chief Financial Officer


Date: June 24, 2015

S-1

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ATA Inc.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-2
CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS	F-3
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	F-4
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS	F-6 - F-7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	F-8 - F-41

F-1

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

ATA Inc.:

We have audited the accompanying consolidated balance sheets of ATA Inc. and subsidiaries as of March 31, 2015 and 2014, and the related consolidated statements of comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended March 31, 2015. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ATA Inc. and subsidiaries as of March 31, 2015 and 2014, and the results of their operations and their cash flows for each of the years in the three-year period ended March 31, 2015, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements as of and for the year ended March 31, 2015 have been translated into United States dollars solely for the convenience of the reader. We have audited the translation and, in our opinion, the consolidated financial statements expressed in Renminbi have been translated into United States dollars on the basis set forth in Note 2(d) of the notes to the consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), ATA Inc.s internal control over financial reporting as of March 31, 2015, based on criteria established in Internal Control Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated June 24, 2015 expressed an unqualified opinion on the effectiveness of the Companys internal control over financial reporting.

/s/ KPMG

Hong Kong, China

June 24, 2015

F-2

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ATA INC.

Consolidated Balance Sheets

		March 31,
	Note	2014		2015		2015
		RMB		RMB		USD
ASSETS	(2)(w)
*Current assets:*
Cash and cash equivalents (including cash of VIE of RMB33,698,280 and RMB18,397,974 as of March 31, 2014 and 2015, respectively)		311,947,098		240,295,371		38,763,570
Restricted cash		2,700,000
Accounts receivable, net (including accounts receivable, net of VIE of RMB19,564,392 and RMB23,145,899 as of March 31, 2014 and 2015, respectively)	(3)	68,353,075		48,150,046		7,767,389
Prepaid expenses and other current assets (including prepaid expenses and other current assets of VIE of RMB1,455,916 and RMB5,228,560 as of March 31, 2014 and 2015, respectively)	(4)	15,092,674		24,505,249		3,953,097
Total current assets		398,092,847		312,950,666		50,484,056

Equity method investments (including equity method investments of VIE of RMB nil and RMB35,729,848 as of March 31, 2014 and 2015, respectively)	(5)			35,729,848		5,763,808
Property and equipment, net (including property and equipment, net of VIE of RMB894,182 and RMB562,021 as of March 31, 2014 and 2015, respectively)	(6)	55,814,182		62,720,375		10,117,821
Goodwill		31,011,902		31,011,902		5,002,727
Intangible assets, net	(7)	1,792,935		943,769		152,245
Other assets (including other assets of VIE of RMB nil and RMB8,171,895 as of March 31, 2014 and 2015, respectively)		4,524,858		11,887,740		1,917,687
Total assets		491,236,724		455,244,300		73,438,344

LIABILITIES AND SHAREHOLDERS EQUITY
*Current liabilities:*	(2)(w)
Accrued expenses and other payables (including accrued expenses and other payables of VIE without recourse to ATA Inc. of RMB14,280,824 and RMB15,011,489 as of March 31, 2014 and 2015, respectively)	(8)	68,766,143		54,415,425		8,778,097
Deferred revenues (including deferred revenues of VIE without recourse to ATA Inc. of RMB1,308,993 and RMB731,490 as of March 31, 2014 and 2015, respectively)	(9)	8,383,327		21,742,735		3,507,458
Total current liabilities		77,149,470		76,158,160		12,285,555

Deferred revenues	(9)	2,195,382		1,763,732		284,519
Total liabilities		79,344,852		77,921,892		12,570,074
*Shareholders equity:*
Common shares:
Par value USD 0.01, authorized: 500,000,000 shares
Issued: 46,224,876 and 46,490,940 shares as of March 31, 2014 and 2015, respectively
Outstanding: 45,281,518 and 45,460,582 shares as of March 31, 2014 and 2015, respectively	(13)	3,474,894		3,513,718		566,820
Treasury shares133,358 and 585,358 common shares as of March 31, 2014 and 2015, respectively, at cost	(13)	(1,029,766	)	(8,201,045	)	(1,322,963	)
Additional paid-in capital		437,964,776		387,502,800		62,510,534
Accumulated other comprehensive loss		(27,145,929	)	(27,176,682	)	(4,384,043	)
Retained earnings (accumulated deficit)		(1,372,103	)	21,683,617		3,497,922
Total shareholders equity		411,891,872		377,322,408		60,868,270
Commitments and contingencies	(16)
Total liabilities and shareholders equity		491,236,724		455,244,300		73,438,344

See accompanying notes to consolidated financial statements.

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ATA INC.

Consolidated Statements of Comprehensive Income

		Year Ended March 31,
	Note	2013		2014		2015		2015
		RMB		RMB		RMB		USD
Net revenues	(10)	366,675,495		384,668,378		350,157,824		56,486,179
Cost of revenues		188,831,873		188,480,346		172,539,260		27,833,402
Gross profit		177,843,622		196,188,032		177,618,564		28,652,777

*Operating expenses:*
Research and development		21,846,305		27,673,298		36,836,338		5,942,303
Sales and marketing		49,394,470		47,259,273		45,186,175		7,289,268
General and administrative		70,449,357		71,605,616		64,759,122		10,446,704
Impairment of intangible assets				12,009,457		310,153		50,033
Provision for (reversal of) doubtful accounts		9,140,062		(3,738,232	)	845,965		136,468
Total operating expenses		150,830,194		154,809,412		147,937,753		23,864,776

Other operating income				1,072,453		2,077,500		335,135
Income from operations		27,013,428		42,451,073		31,758,311		5,123,136

*Other income:*
Share of losses of equity method investments						(2,196,750	)	(354,372	)
Interest income		3,122,304		4,770,024		4,136,454		667,278
Foreign currency exchange gains (losses), net		77,240		(49,200	)	(1,067,149	)	(172,149	)
Total other income, net		3,199,544		4,720,824		872,555		140,757

Earnings before income taxes		30,212,972		47,171,897		32,630,866		5,263,893

Income tax expense	(11)	7,004,982		19,895,462		9,575,146		1,544,628
Net income		23,207,990		27,276,435		23,055,720		3,719,265

*Other comprehensive income:*
Foreign currency translation adjustment, net of nil income taxes		(374,747	)	(766,783	)	(30,753	)	(4,961	)
Comprehensive income		22,833,243		26,509,652		23,024,967		3,714,304

Basic earnings per common share	(18)	0.50		0.59		0.49		0.08
Diluted earnings per common share	(18)	0.50		0.59		0.49		0.08

See accompanying notes to consolidated financial statements.

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ATA INC.

Consolidated Statements of Changes in Equity

	Common shares							Accumulated
	Number of shares		Amount	Treasury Shares		Additional paid-in capital		other comprehensive loss		Accumulated deficit		Total shareholders equity
			RMB	RMB		RMB		RMB		RMB		RMB

Balance as of March 31, 2012	44,815,626		3,442,803			440,832,695		(26,004,399	)	(51,856,528	)	366,414,571
Net income										23,207,990		23,207,990
Foreign currency translation adjustment, net of nil tax								(374,747	)			(374,747	)
Share-based compensation (Note 12)						12,874,056						12,874,056
Issuance of common shares with net-settlement of employee individual income tax (Note 12)	316,126		18,257			(931,710	)					(913,453	)
Repurchase of common shares (Note 13)	(26,440	)		(329,357	)							(329,357	)
Special cash dividend (Note 14)						(25,331,341	)					(25,331,341	)
Balance as of March 31, 2013	45,105,312		3,461,060	(329,357	)	427,443,700		(26,379,146	)	(28,648,538	)	375,547,719
Net income										27,276,435		27,276,435
Foreign currency translation adjustment, net of nil tax								(766,783	)			(766,783	)
Share-based compensation (Note 12)						10,534,910						10,534,910
Issuance of common shares with net-settlement of employee individual income tax (Note 12)	186,884		13,834	(567,881	)	(13,834	)					(567,881	)
Repurchase of common shares (Note 13)	(10,678	)		(132,528	)							(132,528	)
Balance as of March 31, 2014	45,281,518		3,474,894	(1,029,766	)	437,964,776		(27,145,929	)	(1,372,103	)	411,891,872
Net income										23,055,720		23,055,720
Foreign currency translation adjustment, net of nil tax								(30,753	)			(30,753	)
Share-based compensation (Note 12)	214,314			2,983,072		4,128,244						7,111,316
Issuance of common shares with net-settlement of employee individual income tax (Note 12)	577,064		38,824	(1,792,215	)	3,814,809						2,061,418
Repurchase of common shares (Note 13)	(612,314	)		(8,362,136	)							(8,362,136	)
Special cash dividend (Note 14)						(58,405,029	)					(58,405,029	)
Balance as of March 31, 2015	45,460,582		3,513,718	(8,201,045	)	387,502,800		(27,176,682	)	21,683,617		377,322,408

Balance as of March 31, 2015-USD			566,820	(1,322,963	)	62,510,534		(4,384,043	)	3,497,922		60,868,270

See accompanying notes to consolidated financial statements.

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ATA INC.

Consolidated Statements of Cash Flows

	Year Ended March 31,
	2013		2014		2015		2015
	RMB		RMB		RMB		USD
Cash flows from operating activities:

Net income	23,207,990		27,276,435		23,055,720		3,719,265
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for (reversal of) doubtful accounts	9,140,062		(3,738,232	)	845,965		136,468
Impairment of intangible assets			12,009,457		310,153		50,033
Depreciation and amortization	10,617,534		10,754,370		7,583,790		1,223,389
Loss (gain) from disposal of property and equipment	(64,608	)	429,642		734		118
Share-based compensation	12,874,056		10,534,910		7,111,316		1,147,171
Deferred income tax expense (benefit)	(3,221,555	)	(717,083	)	(849,689	)	(137,069	)
Share of losses of equity method investments					2,196,750		354,372
Foreign currency exchange loss					997,149		160,856
Changes in operating assets and liabilities, net of effect of an acquisition:
Restricted cash			(2,700,000	)	2,700,000		435,554
Accounts receivable	21,589,791		(12,790,125	)	19,357,064		3,122,611
Income tax payable	12,564,291		(1,743,871	)	(11,258,806	)	(1,816,229	)
Prepaid expenses and other current assets	786,842		(132,091	)	(893,856	)	(144,194	)
Other assets	1,358,490		(1,539,462	)	(7,574,162	)	(1,221,836	)
Accrued expenses and other payables	(662,767	)	(858,078	)	(10,657,651	)	(1,719,254	)
Deferred revenues	(20,412,383	)	557,888		12,927,758		2,085,459
Net cash provided by operating activities	67,777,743		37,343,760		45,852,235		7,396,714

Cash flows from investing activities :
Cash paid for property and equipment	(7,966,826	)	(4,150,169	)	(14,836,069	)	(2,393,300	)
Cash receipt from property and equipment disposal			17,690		30,490		4,919
Payment for XingWei acquisition, net of cash acquired			(9,826,706	)
Cash paid for equity method investments					(37,953,864	)	(6,122,578	)
Net cash used in investing activities	(7,966,826	)	(13,959,185	)	(52,759,443	)	(8,510,959	)

Cash flows from financing activities :
Cash paid for employee individual income tax for net-settlement of vested shares	(913,453	)	(567,881	)	(853,404	)	(137,668	)
Cash paid for repurchase of common shares	(329,357	)	(132,528	)	(8,362,136	)	(1,348,949	)
Proceeds from exercise of share options					3,903,952		629,771
Special cash dividend	(25,331,341	)			(58,349,122	)	(9,412,667	)
Net cash used in financing activities	(26,574,151	)	(700,409	)	(63,660,710	)	(10,269,513	)

See accompanying notes to consolidated financial statements.

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ATA INC.

Consolidated Statements of Cash Flows (Continued)

	Year Ended March 31,
	2013		2014		2015		2015
	RMB		RMB		RMB		USD

Effect of foreign exchange rate changes on cash	(374,747	)	(766,783	)	(1,083,809	)	(174,836	)
Net increase (decrease) in cash	32,862,019		21,917,383		(71,651,727	)	(11,558,594	)
Cash and cash equivalents at beginning of year	257,167,696		290,029,715		311,947,098		50,322,164
Cash and cash equivalents at end of year	290,029,715		311,947,098		240,295,371		38,763,570

Supplemental disclosures of cash flow information :
Cash paid for income tax	3,920,712		22,590,270		23,104,750		3,727,174
Cash refunded for income tax	(6,258,466	)	(233,853	)	(1,421,109	)	(229,248	)
Non-cash investing and financing activities:
Acquisition of property and equipment included in accrued expenses and other payables	1,841,182				146,126		23,573

See accompanying notes to consolidated financial statements.

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ATA INC.

Notes to the Consolidated Financial Statements

(1) DESCRIPTION OF BUSINESS, ORGANIZATION AND SIGNIFICANT CONCENTRATIONS AND RISKS

Description of Business and Organization

ATA Inc. (the Company), through its wholly-owned subsidiaries, ATA Testing Authority (Holdings) Limited (ATA BVI), Xing Wei Institute (Hong Kong) Limited (Xing Wei), ATA Testing Authority (Beijing) Limited (ATA Testing), Beijing JinDiXin Software Technology Limited (Beijing JDX), ATA Learning (Beijing) Inc. (ATA Learning), Zhong Xiao Zhi Xing Education Technology Company Limited (Zhi Xing), and its consolidated variable interest entity (VIE), ATA Online (Beijing) Education Technology Limited (ATA Online) (collectively, referred to as the Group), provides computer-based testing services, test-based educational services, test preparation and training solutions and other related services in the Peoples Republic of China (the PRC).

Significant Concentrations and Risks

The Group is subject to the following significant concentration and risks:

Country risk

The Group is subject to special risks associated with the PRC. These include risks associated with, among others, the political, economic, legal and social environment in the PRC, including the relative difficulty of protecting and enforcing intellectual property rights in the PRC. The interpretation and application of current or proposed requirements and regulations may have an adverse effect on the Groups business, financial condition and results of operations. In addition, the ability to negotiate and implement specific business development projects in a timely and favorable manner may be impacted by political considerations unrelated to or beyond the control of the Group. Although the PRC government has been pursuing economic reform policies for over three decades, no assurance can be given that the PRC government will continue to pursue such policies or that such policies may not be significantly altered. Any change in PRC government policies and regulations affecting the education and testing service industry may have a negative impact on the Groups operating results and financial condition.

Revenue concentration

For the years ended March 31, 2013, 2014 and 2015, RMB246.9 million, RMB250.3 million and RMB246.2 million, representing 67.3%, 65.1% and 70.3% of the Groups net revenues, respectively, were generated from service fees from Chinese government controlled entities including governmental agencies, educational institutions and industry associations controlled by the PRC government. The demand for the Groups products and services by these agencies, institutions and associations is affected by government budgetary cycles, funding availability and government policies. Funding reductions, reallocations or delays could adversely impact demand for the Groups products and services or reduce the fees these customers are willing to pay for the Groups products and services.

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

Net revenues from customers that individually exceeded 10% of the Groups net revenues are as follows:

	Year Ended March 31,
	2013		2014		2015
	RMB	%	RMB	%	RMB	%

Securities Association of China	84,244,267	23.0%	64,057,268	16.7%	66,847,350	19.1%
The Chinese Institute of Certified Public Accountants	54,255,662	14.8%	61,654,948	16.0%	64,944,327	18.5%
China Banking Association	60,573,979	16.5%	67,516,046	17.6%	64,169,577	18.3%
Ministry of Human Resources and Social Security	22,747,389	6.2%	29,333,419	7.6%	35,132,028	10.0%

Accounts receivable, net from customers, that individually exceeded 10% of the Groups accounts receivable, net are as follows:

	March 31,
	2014		2015
	RMB	%	RMB	%
Securities Association of China	17,481,156	25.6%	21,601,986	44.9%

Concentration of cash and cash equivalent balances held at financial institutions

Cash and cash equivalents balances include deposits in:

	March 31,
	2014	2015
	RMB	RMB
Financial institutions in the mainland of the PRC
Denominated in Renminbi (RMB)	291,498,542	190,964,354
Denominated in United Stated Dollars (USD)	6,517,884	721

Total cash and cash equivalents balances held at mainland PRC financial institutions	298,016,426	190,965,075

Financial institutions in Hong Kong Special Administrative Region (HKSAR) of the PRC
Denominated in RMB	12,052,519	43,214,291
Denominated in Hong Kong Dollar	307,363	33,442
Denominated in USD	1,570,790	5,973,846
Denominated in GBP		108,717

Total cash balances held at HKSAR financial institutions	13,930,672	49,330,296

Total cash and cash equivalents balances held at financial institutions	311,947,098	240,295,371

Management believes these financial institutions have high credit ratings. Cash and cash equivalents denominated in currencies other than functional currency are subject to foreign currency risk due to the appreciation or depreciation of the RMB under the current exchange rate regime in the PRC and HKSAR.

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Principles of consolidation

The consolidated financial statements include the financial statements of the Company, its subsidiaries and its VIE for which the Group is the primary beneficiary. All significant intercompany balances and transactions have been eliminated upon consolidation.

(b) Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).

(c) Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management of the Group to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include the determination of primary beneficiary of VIE, the fair values of assets acquired and liabilities assumed in business combination, the fair values of share-based payments, the plans for indefinite reinvestment of undistributed earnings of the PRC subsidiaries in PRC, the collectability of accounts receivable, the realizability of deferred income tax assets, the estimate for useful lives and residual values of long-lived assets, the recoverability of the carrying values of long-lived assets, goodwill and equity method investments, realizable value of inventories and with respect to revenue recognition, the expected service period for course programs and the expected licensing period for perpetual licenses. Actual results could differ from those estimates.

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

(d) Foreign currency translation and risks

The accompanying consolidated financial statements have been expressed in RMB, the Companys reporting currency.

The Company, ATA BVI and Xing Weis functional currency is the USD. The functional currency of the Companys PRC subsidiaries and VIE is the RMB.

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting foreign exchange gains and losses are included in the consolidated statements of comprehensive income in the line item Foreign currency exchange gains (losses), net.

Assets and liabilities of the Company, ATA BVI and Xing Wei are translated into RMB using the applicable exchange rate at each balance sheet date. Revenues and expenses are translated into RMB at average rates prevailing during the year. The resulting foreign currency translation adjustments are recognized as a separate component of accumulated other comprehensive loss within equity.

For the convenience of the readers, the 2015 RMB amounts included in the accompanying consolidated financial statements have been translated into USD at the rate of USD1.00 = RMB6.1990, the noon buying rate in New York cable transfers of RMB per USD as set forth in the H.10 weekly statistical release of Federal Reserve Board, as of March 31, 2015. No representation is made that the RMB amounts could have been, or could be, converted into USD at that rate or at any other rate on March 31, 2015.

(e) Commitments and contingencies

In the normal course of business, the Group is subject to contingencies, such as legal proceedings and claims that cover a wide range of matters. Liabilities for such contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

(f) Fair value measurements

The Group utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Group determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

· Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

· Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

· Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

The Group did not have any nonfinancial assets and liabilities that are measured at fair value on a nonrecurring basis as of March 31, 2015.

The Companys financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, advances to third parties, employees and suppliers, which are included in the prepaid expenses and other current assets, and accrued expenses and other payables, all of which have a carrying amount that approximate fair value because of the short maturity of these instruments.

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

(g) Revenue recognition

The Groups revenues are principally derived from the provision of testing services, test-based educational services and test preparation solutions. The Group recognizes revenues when all of the following have occurred:

· persuasive evidence of an agreement with the customer exists;

· services have been performed and/or delivery of goods has occurred;

· the fees for services performed and/or price of goods sold are fixed or determinable; and

· collectability of the fees and/or sales proceeds is reasonably assured.

The application of the above criteria for revenue recognition for each type of service or product is as follows:

i) Testing services

Fees for testing services are recognized upon the completion of the exam by the test taker since the Group has no significant future involvement after the completion of the examination. Fees received in advance of test delivery are recorded as deferred revenue.

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

ii) Test preparation and training solutions

The Group derives test preparation and training solutions revenues from online test preparation and training service and online training platform development and maintenance service.

a) Online test preparation and training service fees

The Group sells online training to end users directly or through distributors on a consignment basis. The online training entitles end users to access online test preparation and training services during a specified service period, which normally ranges between 90 to 365 days from activation.

Online training revenue is recognized on a straight-line basis over the service period commencing at the point of time the online training is activated. If the online training sold to end users is not activated before the expiration date, related online service revenue is recognized on the expiration date. For online training granted with fixed online hours, the Group compares the revenue recognized to the actual completion status, and makes any revenue adjustments to reflect the actual completion status.

The Group is not contractually obligated to accept, nor has the Group historically accepted, returns from end users.

b) Online training platform development and maintenance service fees

The Group develops online training platform based on customers requirements and provides maintenance services during the contract period. The online training platform enables end users to participate online training courses.

Fees from online training platform development and maintenance service are recognized, when the platform has been delivered, collectability is reasonably assured, and on a straight-line basis over the contractual period.

iii) Other revenue

a) Test-based educational services

Fees from educational institutions for degree major course programs are recognized, when collectibility is reasonably assured, on a straight-line basis over the contractual period , which typically starts in the month of September and ends in the month of June or August of the following year, or 10 to 12 months.

Fees from educational institutions for single course programs are recognized on a straight-line basis over the expected service period or the contractual period, whichever is longer. At the end of each reporting period upon the closing of the Groups financial records, the Group compares the revenue recognized at the onset of the contracts to the actual completion status of each contract, on a contract by contract basis, and makes any revenue adjustments to reflect the actual completion status.

Fees are not refundable if the student fails to complete one or more of the courses or the entire degree major course programs or fails any of the exams.

b) Licensing fees from authorized test centers

The Group receives a fixed fee for a perpetual license or an initial fee plus continuing annual fees for renewable annual licenses that provide authorized test centers the right to use the Groups brand name and E-testing platform.

The Group is obligated to provide ongoing technical support and unspecific system upgrades; and to provide training to authorized test centers staff. Initial fees for renewable annual license and fixed fees for perpetual licenses are recognized on a straight-line basis over the expected licensing period of 10 years, which is the period the Group is expected to have continuing involvement with the authorized test centers. Management estimates the expected licensing period based on its historical retention experience, factoring in the expected level of future competition, the risk of technological obsolescence, technological innovation, and the expected changes in the education training environment.

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

c) Test development services

Test development service fees are recognized upon the acceptance of the developed tests by the customer. The period to develop the tests is short, generally within two to six months from commencement of development.

d) Test administration software products

Test administration software products sales are recognized upon delivery and when collectibility is reasonably assured.

e) Operating leases

The Group rent out one floor of its own building and recognized the revenue from operating lease on a straight-line basis over the lease term.

iv) Business tax and value added tax (VAT)

Revenue is recognized net of business taxes at the rate of 5% of gross revenues or VAT at the rate of 3% or 6% of gross revenues. Business tax and VAT collected from customers, net of VAT paid for purchases, is recorded as a liability in the consolidated balance sheets until paid to the tax authorities.

(h) Cost of revenues

Cost of revenues consists primarily of cost of test monitoring, royalty fees for IT vendors and test sponsor licensing arrangements, cost of inventories, payroll compensation, technical support, and other related costs, which are directly attributable to the rendering of services and delivery of goods.

The test monitoring costs are recognized upon completion of examinations based on actual number of test takers. Royalty fees are recognized as cost of revenues based on actual usage according to contract provisions.

The test monitoring costs and royalty fees for the years ended March 31, 2013, 2014 and 2015 are as follows:

	Year Ended March 31,
	2013	2014	2015
	RMB	RMB	RMB

Test monitoring costs	129,127,028	124,427,159	113,042,449
Royalty fees	15,594,990	14,850,125	4,991,524

(i) Research and development costs

Research and development costs primarily consist of software developed for internal use and software developed for sale.

i) Software developed for internal use

The Group expenses all costs that are incurred in connection with the planning and implementation phases of the development of software. Costs incurred in the development phase are capitalized and amortized over the estimated product life. No costs were capitalized for any of the periods presented.

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

ii) Software developed for sale

Costs incurred internally in researching and developing a computer software product are charged to expense as research and development costs prior to technological feasibility being established for the product. Once technological feasibility is established, all computer software costs are capitalized until the product is available for general release to customers. Technological feasibility is established upon completion of all the activities that are necessary to substantiate that the computer software product can be produced in accordance with its design specifications, including functions, features, and technical performance requirements. No costs were capitalized for any of periods presented.

(j) Income taxes

Income taxes are accounted for under the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax loss carryforwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates or tax status is recognized in income in the period that includes the enactment date or the date of change in tax status. A valuation allowance is provided to reduce the amount of deferred income tax assets if it is considered more likely than not that some portion or all of the deferred income tax assets will not be realized.

The Group recognizes in the consolidated financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

A deferred tax liability is not recognized for the excess of the Companys financial statement carrying amount over the tax basis of its investment in a foreign subsidiary, if there exists specific plans for reinvestment of undistributed earnings of a subsidiary which demonstrate that remittance of the earnings will be postponed indefinitely.

The Groups accounting policy is to accrue interest and penalties related to unrecognized tax benefits, if and when required, as interest expense and a component of general and administrative expenses, respectively in the consolidated statements of comprehensive income.

(k) Share-based payment

The Group measures the cost of employee share options and nonvested shares based on the grant date fair value of the award and recognizes that cost over the period during which an employee is required to provide services in exchange for the award, which generally is the vesting period. For the graded vesting share options and nonvested shares, the Company recognizes the compensation cost over the requisite service period for each separately vesting portion of the award as if the award is, in substance, multiple awards. When no future services are required to be performed by the employee in exchange for an award of equity instruments, and if such award does not contain a performance or market condition, the cost of the award is expensed on the grant date. When there is a modification of the terms and conditions of an award of equity instruments, the Company measures the pre-modification and post-modification fair value of the equity instruments as of the modification date and recognizes the incremental value as compensation cost over the remaining service period.

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

(l) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, cash in banks and highly liquid investments with original maturity less than three months.

(m) Restricted cash

Restricted cash is restricted as to usage based on contracts entered into with third parties. The restricted cash balance was RMB 2,700,000 and RMB nil as of March 31, 2014 and 2015.

(n) Accounts receivable

Accounts receivable include amounts billed at the invoiced amount.

The allowance for doubtful accounts is the managements best estimate of the amount of probable credit losses resulting from the inability of the Groups customers to make required payments. The allowance for doubtful accounts is based on a review of specifically identified accounts, aging data and historical collection pattern. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Group does not have any off-balance-sheet credit exposure related to its customers.

(o) Equity method investments

The Company applies the equity method to account for an equity interest in an investee over which the Company has significant influence but does not own a majority equity interest or otherwise control.

Under the equity method of accounting, the Companys share of the investees results of operations is reported as share of income (losses) of equity method investments in the consolidated statements of comprehensive income.

The Company recognizes an impairment loss when there is a decline in value below the carrying value of the equity method investment that is considered to be other-than-temporary. The process of assessing and determining whether impairment on an investment is other-than-temporary requires a significant amount of judgment. To determine whether an impairment is other-than-temporary, management considers whether it has the ability and intent to hold the investment until recovery and whether evidence indicating the carrying value of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the decline in value, any change in value subsequent to the period end, and forecasted performance of the investee.

(p) Property and equipment, net

Property and equipment is stated at historical cost.

Depreciation is recognized over the following useful lives on the straight-line method, taking into consideration the assets estimated salvage value:

Building		30 years
Computer equipment		3 to 5 years
Furniture, fixtures and office equipment		5 years
Software		3 to 5 years
Motor vehicles		5 years
Leasehold improvements		the lease terms

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

(q) Intangible assets

Intangible assets acquired are initially recognized and measured at fair value. Intangible assets other than contracts in progress are amortized on a straight-line basis over their respective estimated useful lives, which range from 5 to 12 years.

Contracts in progress acquired in a business combination are subsequently accounted as a reduction of billings upon completion of contracts.

The Company has no intangible assets with indefinite useful lives.

(r) Impairment of long-lived assets, excluding goodwill

Long-lived assets, such as property and equipment, and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. The Company recognized an impairment loss of intangible assets of RMB nil, RMB 12,009,457 and RMB 310,153 for the years ended March 31, 2013, 2014 and 2015, respectively.

(s) Goodwill

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is reviewed for impairment at least annually. The Company performs a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount prior to performing the two-step goodwill impairment test. If this is the case, the two-step goodwill impairment test is required. If it is more-likely-than-not that the fair value of a reporting unit is greater than its carrying amount, the two-step goodwill impairment test is not required.

If the two-step goodwill impairment test is required, first, the fair value of the reporting unit is compared with its carrying amount (including goodwill). If the fair value of the reporting unit is less than its carrying amount, an indication of goodwill impairment exists for the reporting unit and the entity must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting units goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting units goodwill. Fair value of the reporting unit is determined using a discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying amount, step two does not need to be performed.

The Company performs its annual impairment review of goodwill at March 31, and when a triggering event occurs between annual impairment tests. No impairment loss was recorded for any of the periods presented.

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

(t) Employee benefit plans

As stipulated by the regulations of the PRC, the Companys PRC subsidiaries are required to contribute to various defined contribution plans, organized by municipal and provincial governments on behalf of their employees. The contributions to these plans are based on certain percentages of the employees standard salary base as determined by the local Social Security Bureau. The Group has no other obligation for the payment of employee benefits associated with these plans beyond the annual contributions described above.

Employee benefit expenses recognized under these plans for the years ended March 31, 2013, 2014 and 2015 are allocated to the following expense items:

	Year Ended March 31,
	2013	2014	2015
	RMB	RMB	RMB
Cost of revenues	4,898,098	5,375,566	5,597,846
Research and development	4,214,374	4,960,632	5,563,607
Sales and marketing	5,269,923	3,511,656	4,045,878
General and administrative	2,608,307	2,568,027	2,870,561
Total expense due to employee benefit plans	16,990,702	16,415,881	18,077,892

(u) Earnings per share

Basic earnings per share is computed by dividing net earnings by the weighted average number of common shares outstanding during the year using the two-class method. Under the two-class method, net income is allocated between common shares and other participating securities based on their participating rights in undistributed earnings. The Companys nonvested shares relating to the share-based awards under the share incentive plan were considered participating securities since the holders of these securities have non-forfeitable rights to cash dividends.

Diluted earnings per share is calculated by dividing net earnings adjusted for the effect of dilutive common equivalent shares, if any, by the weighted average number of common and dilutive common equivalent shares outstanding during the year. Common equivalent shares consist of common shares issuable upon the exercise of outstanding share options (using the treasury stock method). Common equivalent shares in the diluted earnings per share computation are excluded to the effect that they would be anti-dilutive. In calculating the diluted earnings per share, the undistributed earnings are not reallocated to the participating securities and the common and dilutive common equivalent shares.

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ATA INC.

Notes to the Consolidated Financial Statements (Continued)

(v) Segment reporting

The Group has one operating segment, testing and training services. Substantially all of the Groups operations and customers are located in the PRC. Consequently, no geographic information is presented.

(w) Variable interest entity (VIE)

PRC regulations prohibit direct foreign ownership of business entities that engage in internet content provision (ICP) services in the PRC. The Company and its subsidiaries are foreign owned business entities under the PRC law and accordingly are prohibited from providing ICP services in the PRC, including having ownership of entities engaged in providing such services. ATA Online has an ICP license for the provision of ICP services in the PRC. However, no ICP services were provided by ATA Online for the years ended March 31, 2013, 2014 and 2015.

Prior to May 20, 2015, the Group had no legal ownership interest in ATA Online but had control over ATA Online through a series of contractual agreements as further described below. The legal ownership interests of ATA Online were held by Mr. Kevin Xiaofeng Ma, the Companys co-founder and chairman and Mr. Walter Lin Wang, the Companys co-founder and director (the nominee shareholders).

In May 2015, the Company decided to list ATA Online on National Equities Exchange and Quotations System in the PRC. In preparation for the listing of ATA Online in the PRC, the contractual arrangements were terminated and entire equity interests of ATA Online were transferred from the nominee shareholders to ATA Learning and Zhongxiao Zhixing on May 20, 2015 at the consideration of RMB10 million determined based on the registered capital of ATA Online. As a result, ATA Online became a wholly equity-owned subsidiary of the Company. Further, ATA Online is in the process of de-registering its ICP license to be in compliance with PRC regulations.

VIE contractual agreements

A series of contractual agreements, including loan agreements, a call option and cooperation agreement, an equity pledge agreement, a technical support agreement, a strategic consulting service agreement and a power of attorney (collectively, the VIE Agreements) were entered among ATA BVI, ATA Learning, ATA Online, Mr. Kevin Xiaofeng Ma and Mr. Walter Lin Wang. These contractual agreements were terminated in May 2015 as aforementioned.

The following is a description of the impact of the VIE Agreements on the Groups consolidated financial statements during the reporting periods presented.

ATA Online was determined to be a VIE because although Mr. Kevin Xiaofeng Ma and Mr. Walter Lin Wang were the equity holders of ATA Online, (i) their equity investment of RMB10 million in ATA Online was financed by the Group and (ii) they did not participate in any profit or loss of ATA Online.

Although the Group did not have an equity investment in ATA Online, the Group had other variable interests in ATA Online through, among others, (i) the Groups subordinated loans to Mr. Kevin Xiaofeng Ma and Mr. Walter Lin Wang (used by them to finance their equity investment in ATA Online) and other subordinated loans to ATA Online, (ii) the Groups right, under the loan agreement, to receive all the dividends declared by ATA Online through its equity holders and (iii) the Groups exclusive purchase option to acquire (or to have the Groups designee acquire) 100% of the equity interest or assets in ATA Online for a consideration equal to the loans provided by the Group to Mr. Kevin Xiaofeng Ma and Mr. Walter Lin Wang, to the extent permitted under PRC law. As a result of these variable interests, the Group had the obligation to absorb the expected losses and the right to receive expected residual returns of ATA Online.

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ATA INC.

Notes to the Consolidated Financial Statements (Continued)

Through the VIE Agreements, the Group had a controlling financial interest in ATA Online because the Group had (i) the power to direct activities of ATA Online that most significantly impact the economic performance of ATA Online; and (ii) the obligation to absorb the expected losses and the right to receive expected residual return of ATA Online that could potentially be significant to ATA Online.

Accordingly, the financial statements of ATA Online are consolidated in the Companys consolidated financial statements for the years ended March 31, 2013, 2014 and 2015. All of the equity (net assets) and net incomes or losses of ATA Online are attributed to the Company; therefore, no non-controlling interest in ATA Online is presented in the Companys consolidated financial statements. The termination of the VIE Agreements in May 2015 has no net impact on the Groups consolidated financial statements and ATA Online continues to be accounted as a wholly-owned subsidiary of the Group.

The key terms of these VIE Agreements are as follows:

Loan agreements: ATA BVI lent to ATA Onlines equity holders, Mr. Kevin Xiaofeng Ma, and Mr. Walter Lin Wang, interest free loans in the amount of RMB10 million for the sole purpose of investing in ATA Online as ATA Onlines registered capital. The equity holders of ATA Online can only repay the loans by transferring all of their legal ownership interest in ATA Online to ATA BVI or to a third party designated by ATA BVI. The equity holders of ATA Online are required to pay to ATA BVI all dividend received from ATA Online. The initial terms of the loans are ten years, which may be extended upon the agreement of ATA BVI and ATA Onlines equity holders. The approval of ATA Online is not required for the renewal of the loan agreements nor can ATA Online terminate the loan agreement during the contract term. ATA BVI lent RMB 1 million on October 27, 2006 and RMB 9 million on July 7, 2009. As part of the termination of the VIE Agreement in May, the nominee shareholders will repay the RMB10 million loans to ATA BVI with the RMB10 million proceeds from the transfer of the legal ownership interests in ATA Online to ATA Learning and Zhongxiao Zhixing.

Technical support agreement: ATA Learning has the exclusive right to provide technical support services to ATA Online. The service fees are mutually agreed by both parties, and are determined based on certain objective criteria such as the actual services required by ATA Online and the actual labor costs, as determined by the number of days and personnel involved, incurred by ATA Learning for providing the services during the relevant period. The term of this agreement is ten years, automatically renewable for successive one year terms unless ATA Learning notifies ATA Online of its intention not to renew 30 days before the relevant term expires. ATA Online may not terminate this agreement during its term or upon its expiration. The agreement was entered into on October 27, 2006 with a remaining term of 1.6 years as of March 31, 2015, assuming no renewal of the agreement.

Strategic consulting service agreement: ATA Learning provides ATA Online with strategic consulting and related services to ATA Online. The fees for these services are determined by ATA Learning and calculated monthly based on actual time spent providing the services. ATA Learning has the right to adjust the fees payable by ATA Online in accordance with its performance. The term of this agreement is twenty years, automatically renewable for successive one year terms unless ATA Learning notifies ATA Online of its intention not to renew 30 days before the relevant term expires. ATA Online can only terminate this agreement if ATA Learning fails to perform its obligation under this agreement. The agreement was entered into on October 27, 2006 with a remaining term of 11.6 years as of March 31, 2015, assuming no renewal of the agreement.

For the years ended March 31, 2013, 2014 and 2015, ATA Learning billed RMB 12.6 million, RMB 8.0 million and RMB 18.0 million to ATA Online based on the technical support agreement and strategic consulting service agreement. For the years ended March 31, 2013, 2014 and 2015, RMB 12.6 million, RMB nil and RMB 8.0 million was collected, respectively.

Call option and cooperation agreement: Through the call option and cooperation agreement entered into among ATA BVI, ATA Online and its equity holders, ATA BVI or any party designated by ATA BVI, has an exclusive purchase option to acquire the equity interest in ATA Online from its equity holders or acquire ATA Onlines assets at any time when permitted by applicable Chinese laws and regulations. The proceeds from the exercise of the call option will be applied to repay the loans under the loan agreements described above. Further, without ATA BVIs prior written consent, ATA Online or its equity holders cannot sell, assign, mortgage or dispose any of ATA Onlines assets or operation, cannot enter into any transaction which may materially affect ATA Onlines assets, liability, operation, equity or other legal rights, and cannot distribute any dividend to its equity holders. ATA BVI is also obligated to provide financial support to ATA Onlines operation to which ATA BVI has no recourse right if ATA Online cannot repay such financing due to its losses. This agreement has an indefinite term and can only be terminated with the unanimous consent of all parties, except that ATA BVI may terminate this agreement with 30 days prior notice to the other parties.

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ATA INC.

Notes to the Consolidated Financial Statements (Continued)

Equity pledge agreement: To secure the payment obligations of ATA Online under the technical support agreement and the strategic consulting service agreement described above, ATA Onlines equity holders have pledged to ATA Learning their entire equity ownership interests in ATA Online. Under this agreement, equity holders of ATA Online may not transfer the pledged equity interest without ATA Learnings prior written consent. This agreement will also be binding upon successors of the pledgor and transferees of the pledged equity interest. The term of the pledge is the same as the term of the strategic consulting service agreement. ATA Online may terminate this agreement upon the completion of its contractual obligations under the technical support agreement and the strategic consulting service agreement as described above. As of March 31, 2015, the remaining term of this agreement is 11.6 years, assuming no renewal of the strategic consulting service agreement.

Power of attorney: Each of Mr. Kevin Xiaofeng Ma and Mr. Walter Lin Wang signed a power of attorney, on March 27, 2013 and April 3, 2013 respectively, with ATA Learning to exclusively assign their rights as an shareholder of ATA Online to ATA Learning, including but not limited to voting right and right to appoint director and executive management of ATA Online. The assignment of the shareholders rights is legally binding, irrevocable. The agreement is retrospectively effective when the call option and cooperation agreement and equity pledge agreement were effective and remains effective as long as the call option and cooperation agreement and equity pledge agreement are effective.

The Companys involvement with the VIEs under the VIE Agreements affected the Companys consolidated financial position, results of operations and cash flows as indicated below.

The assets and liabilities of ATA Online as of March 31, 2014 and 2015 and the net revenue and net income (loss) and cash flows for the years ended March 31, 2013, 2014 and 2015 are as follows:

	March 31,
	2014	2015
	RMB	RMB

Cash	33,698,280	18,397,974
Accounts receivable, net	19,564,392	23,145,899
Prepayment and other current assets	1,455,916	5,228,560
Amounts due from related parties	3,815,811	25,159
Total current assets	58,534,399	46,797,592
Equity method investments		35,729,848
Property and equipment, net	894,182	562,021
Other assets		8,171,895
Total assets	59,428,581	91,261,356

Accrued expenses and other payables	14,280,824	15,011,489
Amounts due to related parties	9,708,450	19,436,997
Deferred revenue	1,308,993	731,490
Total current liabilities and total liabilities	25,298,267	35,179,976

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ATA INC.

Notes to the Consolidated Financial Statements (Continued)

	Year ended March 31,
	2013		2014	2015
	RMB		RMB	RMB

Net revenue	24,960,260		100,204,186	154,454,044
Net income (loss)	(10,495,582	)	13,224,130	21,951,065

	Year ended March 31,
	2013		2014		2015
	RMB		RMB		RMB
Net cash provided by (used in) operating activities	(13,227,174	)	21,829,320		22,655,696
Net cash used in investing activities	(1,128,140	)	(249,904	)	(37,956,001	)
Net cash used in financing activities

Amounts due from related parties represent the amount due from ATA BVI, ATA Learning and ATA Testing, which are eliminated on consolidation.

Amounts due to related parties represent the amount due to ATA BVI, ATA Learning and ATA Testing, which are eliminated on consolidation.

All of the assets of ATA Online can be used only to settle obligations of ATA Online. None of the assets of ATA Online has been pledged or collateralized. The creditors of ATA Online do not have recourse to the general credit of ATA BVI or the Company.

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ATA INC.

Notes to the Consolidated Financial Statements (Continued)

(x) Recently issued accounting standards

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASU 2014-09). ASU 2014-09 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity should also disclose sufficient quantitative and qualitative information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The new standard is effective for annual reporting periods beginning after December 15, 2017. The Company will implement the provision of ASU 2014-09 as of April 1, 2018. The Company has not yet determined the impact of the new standard on its current policies for revenue recognition.

(3) ACCOUNTS RECEIVABLE, NET

Accounts receivable, net is summarized as follows:

	March 31,
	2014		2015
	RMB		RMB
Accounts receivable	73,041,508		53,153,164
Less: allowance for doubtful accounts	(4,688,433	)	(5,003,118	)
Accounts receivable, net	68,353,075		48,150,046

Management performs ongoing credit evaluations of its customers financial condition and generally does not require collateral on accounts receivable.

The activity in the allowance for doubtful accounts for accounts receivable for the years ended March 31, 2013, 2014 and 2015 is as follows:

	Year Ended March 31,
	2013		2014		2015
	RMB		RMB		RMB
Beginning allowance for doubtful accounts	30,100,005		35,005,069		4,688,433
Additions charged to (reversal of) provision for doubtful accounts	9,140,062		(3,738,232	)	845,965
Write-off of accounts receivable	(4,234,998	)	(26,578,404	)	(531,280	)
Ending allowance for doubtful accounts	35,005,069		4,688,433		5,003,118

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ATA INC.

Notes to the Consolidated Financial Statements (Continued)

(4) PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:

	March 31,
	2014	2015
	RMB	RMB
Income tax receivable	429,642	7,876,523
Deferred income tax assets (note 10)	8,429,138	9,490,107
Advances to employees	1,134,415	1,432,927
Other current assets	5,099,479	5,705,692
Total prepaid expenses and other current assets	15,092,674	24,505,249

(5) EQUITY METHOD INVESTMENTS

In August 2014, ATA Online made a 45% equity interest investment to establish Beijing Zhishang Education Technology Ltd. (Zhishang), an online professional training provider based in the PRC, by paying cash of RMB 13,500,000. The other shareholder of Zhishang is New Oriental Education & Technology Group. ATA online accounted for the investment under the equity method. As of March 31, 2015, the carrying value of the investment was RMB 12,396,725. ATA online recognized its share of loss from this equity investment of RMB 1,103,275 for the year ended March 31, 2015.

In December 2014, ATA Online made a 33% equity interest investment in Master Mind Education Company (Master Mind), a digital service provider for K-12 after-school tutoring institute based in the PRC, by paying cash of RMB 18,453,864 in December 2014, and RMB 12,302,000 in June 2015. Pursuant to the investment agreement, should Master Minds net revenue in the year ending March 31, 2017 is less than or equal to RMB 157,000,000, 236,000,000 or 315,000,000, the Companys equity interest in Master Mind will increase by 18%, 12% and 6% respectively without consideration by way of other shareholders contribution to the Company ratably. The Company accounted for its 33% equity interest in Master Mind under the equity method, and based on its assessment of Master Minds future financial performance, has determined that it is not likely that the Company will receive additional equity interest in Master Mind under the agreement with the other shareholders. As of March 31, 2015, the carrying value of the investment was RMB 17,543,789. The Company recognized its share of loss from this equity investment of RMB 882,809 for the year ended March 31, 2015.

In January 2015, ATA Online made a 20% equity interest investment in Beijing Satech Internet Educational Technology Ltd. (Satech), an online SAT learning platform provider based in the PRC, by paying cash of RMB 6,000,000. Pursuant to the investment agreement with Satech, should Satechs net revenue in the year ending March 31, 2017 is less than or equal to RMB 55,000,000, the Companys equity interest in Satech will increase by 31% without consideration by the way of other shareholders contribution to the Company ratably. The Company accounted for its 20% equity interest in Satech under the equity method, and based on its assessment of Satechs future financial performance, has determined that it is not likely that the Company will receive additional equity interest in Satech under the agreement with the other shareholders. As of March 31, 2015, the carrying value of the investment was RMB 5,789,334. The Company recognized its share of loss from this equity investment of RMB 210,666 for the year ended March 31, 2015.

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ATA INC.

Notes to the Consolidated Financial Statements (Continued)

(6) PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following:

	March 31,
	2014		2015
	RMB		RMB

Building	53,049,213		53,049,213
Computer equipment	25,831,772		26,720,083
Furniture, fixtures and office equipment	337,442		2,312,815
Software	13,676,153		15,473,639
Motor vehicles	2,277,113		2,277,113
Leasehold improvements	6,792,895		15,514,264
	101,964,588		115,347,127
Less: accumulated depreciation and amortization	(46,150,406	)	(52,626,752	)
Property and equipment, net	55,814,182		62,720,375

Total depreciation expense recognized for the years ended March 31, 2013, 2014 and 2015 is allocated to the following expense items:

	Year Ended March 31,
	2013	2014	2015
	RMB	RMB	RMB

Cost of revenues	1,746,736	1,774,066	2,218,458
Research and development	876,166	727,821	199,886
Sales and marketing	726,239	460,870	464,404
General and administrative	4,754,001	4,863,051	4,162,029
Total depreciation expense	8,103,142	7,825,808	7,044,777

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ATA INC.

Notes to the Consolidated Financial Statements (Continued)

(7) INTANGIBLE ASSETS, NET

The following table summarizes the Companys intangible assets, as of March 31, 2014 and 2015.

	March 31, 2014
							Weighted
	Gross	Accumulated				Net	Average
	carrying	amortization				carrying	Amortization
	amount	/deduction		Impairment		amount	Period
	RMB	RMB		RMB		RMB	Years
ETS TOEIC license	24,126,706	(12,117,249	)	(12,009,457	)		10
Customer relationships	1,300,000	(550,833	)			749,167	12
Training platform	422,700	(35,225	)			387,475	5
Contracts in progress (i)	1,225,380	(569,087	)			656,293
Total intangible assets	27,074,786	(13,272,394	)	(12,009,457	)	1,792,935

	March 31, 2015
							Weighted
	Gross	Accumulated				Net	Average
	carrying	amortization				carrying	Amortization
	amount	/deduction		Impairment		amount	Period
	RMB	RMB		RMB		RMB	Years
Customer relationships	1,300,000	(659,166	)			640,834	12
Training platform	422,700	(119,765	)			302,935	5
Contracts in progress (i)	1,225,380	(915,227	)	(310,153	)
Total intangible assets	2,948,080	(1,694,158	)	(310,153	)	943,769

(i) Contracts in progress of RMB 569,087 and RMB 346,140 recognized at the acquisition date was deducted from the billing upon completion of certain contracts as of March 31, 2014 and 2015. The Company recognized an impairment charge of RMB 310,153 upon the cancellation of certain contracts during the year ended March 31, 2015.

ETS TOEIC license represents the amounts paid to Educational Testing Service (ETS) under a master distributor agreement for the exclusive right to market, distribute, administer and sell the Test of English for International Communication (TOEIC) in mainland PRC for ten years commencing from March 2009. The TOEIC distributor contract with ETS was terminated on February 28, 2014 and the Company recognized an impairment loss of RMB 12,009,457 for the year ended March 31, 2014.

Amortization expenses for intangible assets recognized as cost of revenues were RMB 2,514,392, RMB 2,359,475 and RMB 192,873 for the years ended March 31, 2013, 2014 and 2015, respectively.

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ATA INC.

Notes to the Consolidated Financial Statements (Continued)

As of March 31, 2015, the estimated amortization expense for the next five years is as follows:

		March 31
		RMB
2016		192,873
2017		192,873
2018		192,873
2019		157,648
2020		108,333

(8) ACCRUED EXPENSES AND OTHER PAYABLES

Accrued expenses and other payables consist of the following:

	March 31,
	2014	2015
	RMB	RMB
Business tax, value-added tax and other taxes payable	8,556,910	4,377,930
Accrued payroll and welfare	19,379,016	13,748,579
Accrued test monitoring fees	14,183,667	12,235,005
Accrued certificates costs	2,702,086	3,982,958
Royalty fees payable	2,622,744	1,409,520
Income taxes payable	7,488,629	3,676,704
Other current liabilities	13,833,091	14,984,729
Total accrued expenses and other payables	68,766,143	54,415,425

Other current liabilities as of March 31, 2014 and 2015 mainly include accrued traveling expenses, rental expenses, meeting expense and other operating expenses, none of which individually exceed 5% of total accrued expenses and other payables.

(9) DEFERRED REVENUES

Deferred revenues consist of the following:

	March 31,
	2014	2015
	RMB	RMB
Testing services	4,704,072	19,223,983
Test preparation and training solutions	1,210,307	578,640
Other revenue test-based education services	327,735	295,135
Other revenue licensing fees from authorized test centers	3,036,530	2,425,333
Other revenue others	1,300,065	983,376
Total deferred revenues	10,578,709	23,506,467

Representing:
Current deferred revenues	8,383,327	21,742,735
Non-current deferred revenues	2,195,382	1,763,732

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ATA INC.

Notes to the Consolidated Financial Statements (Continued)

(10) NET REVENUES

The components of net revenues for the years ended March 31, 2013, 2014 and 2015 are as follows:

	Year Ended March 31,
	2013	2014	2015
	RMB	RMB	RMB
Testing services	335,790,689	358,837,352	319,055,019
Test preparation and training solutions	11,343,066	5,949,183	5,710,827
Other revenue	19,541,740	19,881,843	25,391,978
Net revenues	366,675,495	384,668,378	350,157,824

Other revenue primarily includes test-based educational services, licensing fees from authorized test centers, test development services, test certificate services, test administration software product sales and operating lease income. The net revenues from test-based educational services are RMB 6,778,429, RMB 3,309,944 and RMB 273,187 for the years ended March 31, 2013, 2014 and 2015, respectively. The net revenues from product sales are RMB 1,095,370, RMB 569,579 and RMB 1,252,673 for the years ended March 31, 2013, 2014 and 2015, respectively.

(11) INCOME TAXES

Cayman Islands and British Virgin Islands

Under the current laws of the Cayman Islands and the British Virgin Islands, the Group is not subject to any income tax in these jurisdictions.

Hong Kong

Peoples Republic of China

The Companys consolidated PRC entities file separate income tax returns.

On March 16, 2007, the National Peoples Congress passed the Enterprise Income Tax Law (EIT Law) which statutory income tax rate is 25% effective from January 1, 2008. According to the EIT Law, entities that qualify as high-and-new technology enterprises eligible for key support from the State (HNTE) are entitled to a preferential income tax rate of 15%.

The Companys PRC entities are subject to income tax at 25%, unless otherwise specified.

In December 2008, ATA Testing received approval from the tax authority that it qualified as an HNTE. The certificate entitled ATA Testing to the preferential income tax rate of 15% effective retroactively from January 1, 2008 to December 31, 2010. In October 2011, ATA Testing received approval from the tax authority on its renewal as an HNTE which entitled it to the preferential income tax rate of 15% effective retroactively from January 1, 2011 to December 31, 2013. In October 2014, ATA Testing received approval from the tax authority on its reapplication as an HNTE which entitled it to the preferential income tax rate of 15% effective retroactively from January 1, 2014 to December 31, 2016. ATA Testings applicable income tax rate from January 1, 2017 onwards is 25%.

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ATA INC.

Notes to the Consolidated Financial Statements (Continued)

In December 2009, ATA Learning, ATA Online and Beijing JDX received approvals from the tax authorities that they qualified as HNTEs. The certificates entitled them to the preferential income tax rate of 15% effectively retroactively from January 1, 2009 to December 31, 2011. In May and July 2012, ATA Learning, ATA Online and Beijing JDX received approvals from the tax authorities on its renewals as HNTEs which entitled them to the preferential income tax rate of 15% effective retroactively from January 1, 2012 to December 31, 2014. As of March 31, 2015, ATA Online met all the requirement of HNTE re-application. The Company believes that ATA Online will be granted as an HNTE which will entitle it to the preferential income tax rate of 15% effective from January 1, 2015 to December 31, 2017. As of March 31, 2015, ATA Learning and Beijing JDXs applicable income tax rate from January 1, 2015 onwards is 25%, ATA Onlines applicable income tax rate from January 1, 2018 onward is 25%.

Zhi Xing, a PRC subsidiary of Xing Wei, is subject to an income tax rate of 25%.

The EIT Law and its relevant regulations impose a withholding tax at 10%, unless reduced by a tax treaty or agreement, for dividends distributed by a PRC-resident enterprise to its immediate holding company outside the PRC for earnings generated beginning on January 1, 2008. Undistributed earnings generated prior to January 1, 2008 are exempt from withholding tax. During the year ended March 31, 2014 and as a result of managements reassessment of the Companys operating funding needs and future development initiatives, the Company revised the amount of undistributed earnings to be indefinitely reinvested in its PRC consolidated entities to RMB 89,611,563 as of March 31, 2014. A RMB 113,000,000 dividend distribution was made during the year ended March 31, 2014 to the holding company, for which dividend withholding tax of RMB 11,300,000 was recognized and paid during the year ended March 31, 2014. The unrecognized deferred income tax liabilities as of March 31, 2014 related to the undistributed earnings of the Companys PRC consolidated entities was RMB 8,961,156. As of March 31, 2015, the Company has not provided for income taxes on earnings of RMB 133,856,064 generated by its PRC consolidated entities since January 1, 2008 as the Company plans to reinvest these earnings indefinitely in the PRC. The unrecognized deferred income tax liability related to these earnings was RMB 13,385,606.

The earnings before income taxes were generated in the following jurisdictions:

	Year Ended March 31,
	2013		2014		2015
	RMB		RMB		RMB
Cayman Islands and British Virgin Islands	(19,373,510	)	(18,615,565	)	(15,524,612	)
PRC	49,586,482		65,782,659		48,142,932
Hong Kong			4,803		12,546
Earnings before income taxes	30,212,972		47,171,897		32,630,866

Income tax expense (benefit) recognized in the consolidated statements of comprehensive income consists of the following:

	Year Ended March 31,
	2013		2014		2015
	RMB		RMB		RMB
PRC
Current expense	10,226,537		9,312,545		10,424,835
Deferred expense (benefit)	(3,221,555	)	(717,083	)	(849,689	)
Dividend withholding tax			11,300,000
Total income tax expense	7,004,982		19,895,462		9,575,146

The actual income tax expense reported in the consolidated statements of comprehensive income differs from the respective amount computed by applying the PRC statutory income tax rate of 25% for each of the years ended March 31, 2013, 2014 and 2015 to earnings before income taxes due to the following:

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ATA INC.

Notes to the Consolidated Financial Statements (Continued)

	Year Ended March 31,
	2013		2014		2015
	RMB		RMB		RMB
Computed expected income tax expense	7,553,243		11,792,976		8,157,716
Increase (decrease) in valuation allowance	(735,773	)	737,572		1,307,368
Preferential income tax rate	(7,069,673	)	(6,208,364	)	(4,922,088	)
Entities not subject to income tax	1,624,864		2,018,962		2,100,188
Non-deductible expenses
Entertainment	1,213,569		972,624		1,225,250
Share-based compensation	3,218,514		2,633,728		1,777,829
Bad debt loss	1,058,750		462,751		1,383,597
Impairment of ETS TOEIC license			3,002,364
Changes in tax rates	429,667
Tax rate differential	1,977,043		(4,213,407	)	5,629,196
Dividend withholding tax			11,300,000
Additional deduction of research and development costs	(2,309,671	)	(2,805,937	)	(8,489,742	)
Other	44,449		202,193		1,405,832
Actual income tax expense	7,004,982		19,895,462		9,575,146

The applicable PRC statutory tax rate is used since the Groups taxable income is generated in the PRC.

The tax effects of the Groups temporary differences that give rise to significant portions of the deferred income tax assets and liabilities are as follows.

	March 31,
	2014		2015
	RMB		RMB
Deferred income tax assets:
Tax loss carryforwards	4,644,352		10,228,873
Share of loss of equity method investments			164,021
Property and equipment, net	1,494,298		1,091,914
Allowance for doubtful accounts	1,172,108
Write-down of inventories	24,237
Accrued expenses and other payables	5,572,175		3,375,252
Total gross deferred income tax assets	12,907,170		14,860,060
Less: valuation allowance	(2,575,187	)	(3,882,555	)
Net deferred income tax assets	10,331,983		10,977,505
Deferred income tax liabilities:
Customer relationships	179,202		160,243
Training platform	96,869		75,734
Contract in progress	164,073
Total gross deferred income tax liabilities	440,144		235,977
Net deferred income tax assets	9,891,839		10,741,528

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ATA INC.

Notes to the Consolidated Financial Statements (Continued)

	March 31,
	2014	2015
	RMB	RMB
Current deferred income tax assets, included in prepaid expenses and other current assets	8,429,138	9,490,107
Non-current deferred income tax assets, included in other assets	1,462,701	1,251,421
Net deferred income tax assets	9,891,839	10,741,528

The movements of the valuation allowance are as follows:

	Year Ended March 31,
	2013		2014	2015
	RMB		RMB	RMB

Balance at the beginning of the year	1,657,524		921,751	2,575,187
Additions from Xing Wei Group acquisition			915,864
Additions of valuation allowance excluding acquisition			737,572	1,307,368
Reduction of valuation allowance	(735,773	)
Balance at the end of the year	921,751		2,575,187	3,882,555

As of March 31, 2015, the valuation allowance of RMB 3,882,555 was mainly related to the deferred income tax assets of PRC entities at cumulative losses. As of March 31, 2015, management believes it is more likely than not that the Group will realize the deferred income tax assets, net of the valuation allowance. The amount of the deferred income tax assets, however, considered realizable as of March 31, 2015 could be reduced in the near term if estimates of future taxable income are reduced.

As of March 31, 2015, the Group had tax loss carry forwards for PRC income tax purpose of RMB 58,324,053, of which RMB 2,564,040, RMB nil, RMB nil, RMB 4,996,057, RMB 4,907,578 and RMB 45,856,378 will expire if unused by December 31, 2015, 2016, 2017, 2018, 2019 and 2020, respectively.

For the years ended March 31, 2013, 2014 and 2015, the Group had no unrecognized tax benefits, and thus no related interest and penalties were recorded. Also, the Group does not expect that the amount of unrecognized tax benefits will significantly increase within the next twelve months.

According to the PRC Tax Administration and Collection Law, the statute of limitation is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitation is extended to five years under special circumstances where the underpayment of taxes is more than RMB 100,000. In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion. The income tax return of each of the Companys PRC consolidated entities is subject to examination by the relevant tax authorities for the calendar tax years beginning in 2010.

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ATA INC.

Notes to the Consolidated Financial Statements (Continued)

(12) SHARE BASED COMPENSATION

2005 Share incentive plan

In April 2005, the Company adopted a share incentive plan (the 2005 Plan), pursuant to which the Company is authorized to issue options to officers, employees, directors and consultants of the Group to purchase up to 2,894,000 of its common shares. In October 2007, the Companys board of directors approved an increase in the number of shares reserved for issuance under the 2005 Plan to 3,310,300 shares. The 2005 Plan expired in April 2015. Options awards provide for accelerated vesting if there is a change in control (as defined in the 2005 Plan).

2008 Share incentive plan

On January 7, 2008, the Company adopted a share incentive plan (the 2008 Plan), pursuant to which the Company is authorized to issue options and other share-based awards to officers, employees, directors and consultants of the Group to purchase up to 336,307 of its common shares, plus, unless the board of directors determines a lesser amount, an annual increase on January 1 of each calendar year beginning in 2009 equal to the lesser of 1) one percent of the number of shares issued and outstanding on December 31 of the immediately preceding calendar year, and 2) 336,307 shares. The 2008 Plan expires in ten years. Options awards provide for accelerated vesting if there is a change in control (as defined in the 2008 Plan). As of March 31, 2015, 2,690,456 shares were reserved for issuance under the 2008 Plan.

Under both the 2005 Plan and 2008 Plan, share options are generally granted with 25% vesting on the first anniversary of the grant date and the remaining 75% vesting ratably over the following 36 months, unless a shorter or longer duration is established at the time of the option grant. Share options are granted at an exercise price equal to the fair market value of the Companys share at the date of grant and expire 10 years from the grant date.

Under the 2008 Plan, nonvested shares are granted with a graded vesting as to 25% at the end of each year from the grant date over 4 years.

For the graded vesting share options and nonvested shares, the Company recognizes the compensation cost over the requisite service period for each separately vesting portion of the award as if the award is, in substance, multiple awards.

During the year ended March 31, 2013, the Company extended the exercise period of vested share options of two employees upon their resignation. In addition, the Company also continued the vesting of certain unvested share options and nonvested shares of these former employees. The modification resulted in additional compensation expense of RMB1,294,834 recognized in the general and administrative expense for the year ended March 31, 2013.

In October 2013, 1,469,460 share options were granted to an officer, 25% of the options vest on the first anniversary of the grant date with the remaining 75% vesting evenly over the following three years. The exercise price of these options is USD2.50 per common share. In October 2014, the remaining 75% share options were forfeited upon the officers resignation. The expense of RMB 4,014,513 related to the unvested share options recognized previously was reversed.

In February 2015, 1,469,460 share options were granted to an officer, 25% of the options vest on the first anniversary of the grant date with the remaining 75% vest evenly over the following three years. The exercise price of these options is USD2.24 per common share.

In February 2015, 100,000 and 114,314 common shares of the Company were granted to two officers respectively, using the Companys treasury shares. These common shares were immediately vested on grant date. The fair value of the common shares on the grant date of RMB 2,831,396 was recognized as general and administrative expense for the year ended March 31, 2015. The difference between the cost of the treasury shares repurchased of RMB 2,983,072 and the fair value of the common shares on grant date of RMB 151,676 was recognized as a reduction of additional paid-in capital.

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

A summary of the shares options activities for the years ended March 31, 2013, 2014 and 2015 is presented below:

			Weighted	Weighted	Aggregate
			average	remaining	intrinsic
	Number of		exercise	contractual	value
	shares		USD	years	USD
Outstanding as of March 31, 2012	2,788,342		2.85
Granted
Exercised
Forfeited
Expired	(41,000	)	3.60
Outstanding as of March 31, 2013	2,747,342		2.84
Granted	1,469,460		2.50
Exercised
Forfeited
Expired	(2,135	)	2.69
Outstanding as of March 31, 2014	4,214,667		2.72
Granted	1,469,460		2.24
Exercised	(300,000	)	2.12
Forfeited	(1,102,095	)	2.50
Expired	(396,365	)	2.58
Outstanding as of March 31, 2015	3,885,667		2.66
Vested and expected to vest as of March 31, 2015	3,885,667		2.66	4.13	Nil
Exercisable as of March 31, 2015	2,416,207		2.92	0.62	Nil

The aggregate intrinsic value of options outstanding and exercisable at March 31, 2015, was determined based on the closing price of the Companys common shares on March 31, 2015.

The total intrinsic value of options exercised in the years ended March 31, 2015 is USD 46,500.

Information relating to options outstanding and exercisable as of March 31, 2015 is as follows:

Options outstanding as of March 31, 2015			Options exercisable as of March 31, 2015
	Exercise	Remaining		Exercise	Remaining
Number of	Price	Contractual	Number	Price	Contractual
Shares	per Share	Life	of Shares	per Share	Life
	USD	Years		USD	Years
1,312,600	2.26	0.1	1,312,600	2.26	0.1
665,000	3.60	0.7	665,000	3.60	0.7
250,000	3.60	1.6	250,000	3.60	1.6
81,000	3.60	2.7	81,000	3.60	2.7
100,000	4.75	2.5	100,000	4.75	2.5
7,607	2.69	3.9	7,607	2.69	3.9
1,469,460	2.24	9.9		2.24	9.9
3,885,667	2.66	4.13	2,416,207	2.92	0.62

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

The Company calculated the fair value of the share options on the grant date using the Black-Scholes-Merton pricing valuation model. The assumptions used in the valuation model are summarized as follows:

	Year Ended March 31,
	2013	2014	2015

Expected dividend yield		0%	0%
Expected volatility		75%	71%
Expected term		6.25	6.25
Risk-free interest rate (per annum)		1.77%	1.70%

The expected volatility was based on the historical volatilities of the Company. The expected term was related to the period of time the options are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the United States treasury yield curve in effect at the time of grant.

Compensation expense for share options of RMB 306,659, RMB 3,946,384 and RMB 984,595 was included in general and administrative expense for the years ended March 31, 2013, 2014 and 2015.

As of March 31, 2015, RMB 12,003,533 of total unrecognized compensation expense related to nonvested share options is expected to be recognized over a weighted average period of approximately 3.90 years.

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

Nonvested shares

A summary of the nonvested shares activities for the years ended March 31, 2013, 2014 and 2015 is presented below:

			Weighted average
	Number		grant date
	of shares		fair value
			USD
Outstanding at March 31, 2012	1,146,750		4.788
Granted	100,000		2.015
Vested	(334,250	)	(4.348	)
Forfeited	(17,500	)	1.904
Outstanding at March 31, 2013	895,000		4.633
Granted	280,000		2.145
Vested	(265,000	)	4.963
Forfeited	(100,000	)	2.015
Outstanding at March 31, 2014	810,000		3.989
Granted
Vested	(335,000	)	4.380
Forfeited	(30,000	)	2.145
Outstanding at March 31, 2015	445,000		3.819

The total fair value of shares vested during the years ended March 31, 2013, 2014 and 2015, was USD 829,077, USD 560,975 and USD 821,250 respectively.

In accordance with the share incentive agreement with the employees, upon the vesting of the nonvested shares, the Company may elect to repurchase certain number of vested shares at the fair market price, with the payment due employees withheld to meet the relevant minimum tax withholding requirements. For the years ended March 31, 2013, 2014 and 2015, the Company reacquired 44,564, 51,676 and 54,000 vested shares upon the vesting of the nonvested shares for a consideration of RMB 913,453, RMB 567,881 and RMB 853,404 respectively to satisfy the minimum tax withholding obligation.

Compensation expense recognized for nonvested shares for the years ended March 31, 2013, 2014 and 2015 is allocated to the following expense items:

	Year Ended March 31,
	2013	2014	2015
	RMB	RMB	RMB
Cost of revenues	21,813	228,854	164,741
Research and development	308,577	336,869	179,186
Sales and marketing	702,683	454,503	295,519
General and administrative	10,239,490	5,568,300	5,487,275
Total share based compensation expense	11,272,563	6,588,526	6,126,721

As of March 31, 2015, RMB 1,389,270 of total unrecognized compensation expense related to nonvested shares is expected to be recognized over a weighted average period of approximately 1.54 years.

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

(13) COMMON SHARES

The Companys board of directors approved a share repurchase program on November 1, 2012 to repurchase up to USD5 million worth of its issued and outstanding American Depository Shares (ADS) in both open-market and privately negotiated transactions. On January 31, 2013, the Companys board of director reviewed and approved the continuation of the share repurchase program through May 31, 2013. The Companys board of directors approved a share repurchase program on August 5, 2014 to repurchase up to USD5 million worth of its issued and outstanding ADSs in open-market through January 31, 2015. For the years ended March 31, 2013, 2014 and 2015, the Company repurchased 26,440, 10,678 and 612,314 common shares at a repurchase price of RMB 329,357, RMB132,528 and RMB 8,362,136, respectively.

(14) SPECIAL CASH DIVIDENDS

On August 7, 2012, the Companys board of directors declared a special cash dividend of USD0.087 per common share, or USD0.174 per ADS. The total amount of cash distributed in the dividend was USD4.0 million (RMB 25,331,341) and was paid from the cash held by ATA Inc. in September 2012.

On May 30, 2014, the Companys board of directors declared a special cash dividend of USD0.205 per common share, or USD0.41 per ADS. The total amount of cash distributed in the dividend was USD9.5 million (RMB 58,349,122) and was paid by cash in July 2014.

(15) STATUTORY RESERVES

In accordance with the relevant laws and regulations of the PRC, the Companys PRC consolidated entities are required to transfer 10% of their respective after tax profit, as determined in accordance with PRC accounting standards and regulations to a general reserve fund until the balance of the fund reaches 50% of the registered capital of the respective entity. The transfer to this general reserve fund must be made before distribution of dividends can be made. As of March 31, 2014 and 2015, the PRC consolidated entities had appropriated RMB 20,648,182 and RMB 26,389,274, respectively, to the general reserve fund, which is restricted for distribution to the Company.

(16) COMMITMENTS AND CONTINGENCIES

(a) Lease commitments

The Group entered into non-cancelable operating leases, primarily for office space, for initial terms of nineteen months to six years.

Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease, including any periods of free rent.

Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of March 31, 2015 are:

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

		Minimum
		Lease Payments Amount
		RMB
Year ended March 31:
2016		14,092,657
2017		9,688,776
2018		10,115,305
2019		10,467,905
2020		10,986,576
Thereafter
		55,351,219

Rental expense for operating leases (except leases with a term of one month or less that are not renewed) for the years ended March 31, 2013, 2014 and 2015 were RMB 6,517,907, RMB 7,848,918 and RMB 14,096,009 respectively.

(b) Purchase commitments

On August, 11, 2011, the Group entered into an agreement with a vender granting the Group a license to distribute the vendors test related products in Mainland China for 10 years. Each party may terminate this agreement at any time for any reason by giving the other party not less than twelve months written notice subject only that the earliest termination date may not be before the fifth anniversary of this agreement unless either party is in breach of this agreement. The future minimum payments under the non-cancelable purchase agreement as of March 31, 2015 are:

		Required Payments Amount
		RMB
Year ended March 31:
2016		3,456,000
2017		1,152,000
		4,608,000

License fee for the non-cancelable purchase agreement for the year ended March 31, 2013, 2014 and 2015 were RMB 2,897,395, RMB 2,820,414 and RMB 2,282,288 respectively.

(17) OPERATING LEASES

The Group leased one floor of its building on March 1, 2014. The operating lease term is six years and will expire on February 29, 2020.

Minimum rental income under operating lease is recognized on a straight-line basis over the term of the lease, including any periods of free rent.

Property on Operating Lease

	March 31, 2014		March 31, 2015
	RMB		RMB
Building	26,251,157		26,251,157
Less: Accumulated depreciation	(4,156,433	)	(5,038,472	)
	22,094,724		21,212,685

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

Rentals under Operating Lease

Future minimum rentals under non-cancelable operating lease as of March 31, 2015 are:

		Minimum
		Rentals Amount
		RMB
Year ended March 31:
2016		3,308,825
2017		3,475,825
2018		3,647,360
2019		3,830,195
2020		3,663,927
Thereafter
		17,926,132

(18) EARNINGS PER COMMON SHARE

Basic and diluted earnings per common share are calculated as follows:

	Year Ended March 31,
	2013		2014		2015
	RMB		RMB		RMB
Numerator:
Net earnings	23,207,990		27,276,435		23,055,720
Less: Dividends paid to participating securities	(525,049	)			(693,728	)
Net earnings attributable to participating securities			(509,201	)
Net earnings available to common shareholders	22,682,941		26,767,234		22,361,992
Denominator:
Denominator for basic earnings per share:
Weighted average common shares outstanding	44,967,823		45,227,159		45,597,580
Plus: Incremental shares issuable upon exercise of share options	147,794		4,396
Denominator for diluted earnings per share	45,115,617		45,231,555		45,597,580
Basic earnings per common share	0.50		0.59		0.49
Diluted earnings per common share	0.50		0.59		0.49

The following table summarizes potential common shares outstanding excluded from the calculation of diluted earnings per share for the years ended March 31, 2013, 2014 and 2015, because their effect is anti-dilutive:

	Year ended March 31,
	2013	2014	2015
Shares issuable under share options	1,134,742	3,914,667	3,885,667

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

(19) ACQUISITION

On October 31, 2013, ATA Inc. acquired the entire equity interest of Xing Wei and its wholly owned subsidiary Zhi Xing (collectively the Xing Wei Group) for cash consideration of USD 3.19 million (equivalent RMB 19,612,120). Xing Wei Group provides training solutions as well as mobile training platforms for corporations in the PRC. The Company expected the acquisition will provide the Company a more comprehensive set of service offerings, which will enable it to deepen its existing client relationships in the PRC.

The Company paid the selling shareholder of Xing Wei Group USD 3.19 million in cash on November 1, 2013.

This acquisition was accounted for under the acquisition method and resulted in Xing Wei Group becoming consolidated subsidiaries of the Company.

The acquired business contributed net revenue of RMB 305,607 and net loss of RMB 1,702,306 to the Company for the period from October 31, 2013 to March 31, 2014. The following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred on April 1, 2012:

	Pro forma year ended March 31, 2013(Unaudited)	Pro forma year ended March 31, 2014(Unaudited)
	RMB	RMB

Net revenue	367,598,801	386,386,238
Net income	20,640,931	23,342,382

The Company had no material, nonrecurring pro forma adjustment directly attributable to the business combination included in the reported pro forma net revenue and net income.

Acquisition related costs of RMB 676,237 were included in the general and administration expenses in the Companys consolidated statement of comprehensive income for the year ended March 31, 2014.

The following table summarizes the consideration paid to acquire Xing Wei Group and the amounts of identifiable assets acquired and liabilities assumed at the acquisition date:

	October 31, 2013
	RMB
Fair value of consideration transferred:
Cash	19,612,120

Fair values of identifiable assets acquired and liabilities assumed:
Cash	9,785,414
Accounts receivable and other current assets	710,300
Contracts in progress	1,225,380
Property and equipment	165,168
Training platform	422,700
Accrued expenses and other current liabilities	(285,894	)
Total identifiable net assets	12,023,068
Goodwill	7,589,052
	19,612,120

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

The goodwill represents the workforce of the acquired business and synergies expected to arise after the Companys acquisition of Xing Wei Group and expanding the product offering of testing services. All of the goodwill was assigned to the enterprise level. The goodwill is not expected to be deductible for income tax purpose.

(20) ATA INC. (Parent Company)

The following presents condensed financial information of the Parent Company only.

Condensed Balance Sheets

	March 31,
	2014		2015		2015
	RMB		RMB		USD
Cash	9,327,438		8,204,099		1,323,455
Prepaid expenses and other current assets	174,575		184,266		29,725
Investments in subsidiaries	403,522,684		370,397,418		59,751,156
Total assets	413,024,697		378,785,783		61,104,336

Accrued expenses and other current liabilities	1,132,825		1,463,375		236,066
Total liabilities	1,132,825		1,463,375		236,066

Common shares	3,474,894		3,513,718		566,820
Treasury shares	(1,029,766	)	(8,201,045	)	(1,322,963	)
Additional paid in capital	437,964,776		387,502,800		62,510,534
Accumulated other comprehensive loss	(27,145,929	)	(27,176,682	)	(4,384,043	)
Retained earnings (accumulated deficit)	(1,372,103	)	21,683,617		3,497,922
Total shareholders equity	411,891,872		377,322,408		60,868,270
Total liabilities and shareholders equity	413,024,697		378,785,783		61,104,336

Condensed Statements of Comprehensive Income

	Year Ended March 31,
	2013		2014		2015		2015
	RMB		RMB		RMB		USD

Operating expenses	(7,567,474	)	(5,415,249	)	(4,612,306	)	(744,040	)
Investment income	30,685,632		32,612,787		27,609,211		4,453,817
Interest income	112,656		40,889		144,869		23,370
Foreign currency exchange gains (losses), net	(22,824	)	38,008		(86,054	)	(13,882	)
Earnings before income taxes	23,207,990		27,276,435		23,055,720		3,719,265
Income tax expense
Net income	23,207,990		27,276,435		23,055,720		3,719,265
Foreign currency translation adjustment, net of nil income taxes	(374,747	)	(766,783	)	(30,753	)	(4,961	)
Comprehensive income	22,833,243		26,509,652		23,024,967		3,714,304

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ATA INC.
Notes to the Consolidated Financial Statements (Continued)

Condensed Statements of Cash Flows

	Year Ended March 31,
	2013		2014		2015		2015
	RMB		RMB		RMB		USD
Net cash used in operating activities	(6,675,424	)	(4,994,557	)	(4,304,976	)	(694,463	)
Cash flows from investing activities :
Collection from (payment to) subsidiaries	26,836,132		(6,911,210	)	7,670,574		1,237,389
Payment for XingWei acquisition			(19,612,120	)
Net cash provided by investing activities	26,836,132		(26,523,330	)	7,670,574		1,237,389

Cash flows from financing activities :
Proceeds from exercise of share options
Cash paid for employee individual income tax of net-settlement of vested shares	(913,453	)
Cash paid for repurchase of common shares	(329,357	)	(132,528	)	(8,362,136	)	(1,348,949	)
Proceeds from exercise of share options					3,903,952		629,771
Special cash dividend	(25,331,341	)
Net cash used in financing activities	(26,574,151	)	(132,528	)	(4,458,184	)	(719,178	)

Effect of foreign exchange rate changes on cash	(374,747	)	(766,783	)	(30,753	)	(4,961	)
Net decrease in cash	(6,788,190	)	(32,417,198	)	(1,123,339	)	(181,213	)
Cash at beginning of year	48,532,826		41,744,636		9,327,438		1,504,668
Cash at end of year	41,744,636		9,327,438		8,204,099		1,323,455

F-41