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What changed in ATIF Holdings Ltd's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ATIF Holdings Ltd's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+169 added−159 removedSource: 10-K (2024-11-13) vs 10-K (2023-11-13)

Top changes in ATIF Holdings Ltd's 2024 10-K

169 paragraphs added · 159 removed · 110 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

16 edited+7 added−1 removed120 unchanged
Biggest changeOn October 6, 2022, we established ATIF Business Consulting which is engaged in IPO consulting services in North America.
Biggest changeOn October 6, 2022, we established ATIF Business Consulting which is engaged in IPO consulting services in North America. On October 7, 2022, we established ATIF Business Management which plans to provide comprehensive services, such as investors’ relationships and secretarial services in North America in future.
Due to significant volatility in stock market, the private equity fund lost $1.5 million in fiscal year 2022 as compared to gain $0.2 million in fiscal year 2021.
Due to significant volatility in stock market, the private equity fund lost $1.5 million in fiscal year 2022 as compared to gain $0.2 million in fiscal year 2021.
The termination of the VIE agreement with Qianhai did not adversely affect Huaya, our business, financial condition, and results of operations. On January 14, 2021, the Company entered into the sales and purchase agreement (the “Sales and Purchase Agreement”) with the majority shareholders of Leaping Group Co., Ltd.
The termination of the VIE agreement with Qianhai did not adversely affect Huaya, our business, financial condition, and results of operations. 1 On January 14, 2021, the Company entered into the sales and purchase agreement (the “Sales and Purchase Agreement”) with the majority shareholders of Leaping Group Co., Ltd.
We create a going public strategy for each client based on many factors, including our assessment of the client’s financial and operational situations, market conditions, and the client’s business and financing requirements. Since our inception and up to July 31, 2023, we have successfully helped nine Chinese enterprises to be quoted on the U.S.
We create a going public strategy for each client based on many factors, including our assessment of the client’s financial and operational situations, market conditions, and the client’s business and financing requirements. Since our inception and up to July 31, 2024, we have successfully helped nine Chinese enterprises to be quoted on the U.S.
As a result, we had four and three clients that accounted for more than 10% of our total revenues, for the fiscal years ended July 31, 2023 and 2022, respectively. As we continue to expand and grow the number of clients, we expect the risks arising from customer concentration will be mitigated accordingly.
As a result, we had two and four clients that accounted for more than 10% of our total revenues, for the fiscal years ended July 31, 2024 and 2023, respectively. As we continue to expand and grow the number of clients, we expect the risks arising from customer concentration will be mitigated accordingly.
The following table illustrates the breakdown of our total revenue, organized by customers’ locations for the years ended July 31, 2023 and 2022.
The following table illustrates the breakdown of our total revenue, organized by customers’ locations for the years ended July 31, 2024 and 2023.
Competition We face competition from a number of consulting companies providing going public consulting services such as Greenpro Capital Corp., Forward Capital, and Dragon Victory, who recently entered going public consulting services in 2018. We believe that our relatively mature operating history of nearly three years differentiates our company from other competitors.
Competition We face competition from a number of consulting companies providing going public consulting services such as Greenpro Capital Corp., Forward Capital, and Metalpha Technology Holding Limited, who recently entered going public consulting services in 2018. We believe that our relatively mature operating history of nearly three years differentiates our company from other competitors.
Employees As of July 31, 2023, we had 13 full-time employees, including 1 in China and 12 in America. None of our employees are subject to collective bargaining agreements governing their employment with us. We believe our employee relations are good.
Employees As of July 31, 2024, we had 8 full-time employees, including 1 in China and 7 in America. None of our employees are subject to collective bargaining agreements governing their employment with us. We believe our employee relations are good.
Corporate Office Our principal executive office and production facility is located in Lake Forest, California, USA, where we lease approximately 7237 square feet of office space and is located in 25391 Commercentre Dr. Ste 200, Lake Forest, CA 92630. The telephone number at our principal executive office is 308-888-8888.
Corporate Office Our principal executive office and production facility is located in Lake Forest, California, USA, where we lease approximately 7237 square feet of office space and is located in 25391 Commercentre Dr. Ste 120, Lake Forest, CA 92630. The telephone number at our principal executive office is 646-828-8710.
As of the date of this annual report, the 5,555,548 ordinary shares owned by the LGC Buyers have been returned to the Company and the $2.3 million cash payment has not yet been received from the LGC Buyers.
As of July 31, 2024, the 5,555,548 ordinary shares owned by the LGC Buyers have been returned to the Company and the $2.3 million cash payment has not yet been received from the LGC Buyers.
Major Customers The majority of our clients are small to medium-sized enterprises seeking growth and expansion through going public on recognized exchanges, and $2.5 million and $1.6 million was generated from our consulting services for the fiscal years ended July 31, 2023 and 2022, respectively.
Major Customers The majority of our clients are small to medium-sized enterprises seeking growth and expansion through going public on recognized exchanges, and $0.6 million and $2.5 million was generated from our consulting services for the fiscal years ended July 31, 2024 and 2023, respectively. For the year ended July 31, 2024, our clients were based in North America.
The following table illustrates the breakdown of our cash transfer within our organization as of July 31, 2023: Lender Borrower Amount Due ATIF BVI ATIF USA $ 2,357,000 ATIF BVI ATIF INVESTMENT LTD $ 397,172 ATIF Business Consulting LLC ATIF BVI $ 935,000 The following table illustrates the breakdown of our cash transfer within our organization as of the day of the year ended July 31, 2022: Lender Borrower Amount Due ATIF BVI ATIF HK $ 8,278,243.47 ATIF BVI ATIF USA $ 1,200,000.00 ATIF HK VIE $ - ATIF HK Huaya $ 640,964.92 Following the completion of the transfer of equity interest in ATIF HK and termination of VIE structure, the Company doesn’t have any interest or obligation in relation to the outstanding loan between ATIF HK, VIE and Huaya.
The following table illustrates the breakdown of our cash transfer within our organization as of July 31, 2024: Lender Borrower Amount Due ATIF BVI ATIF USA $ 3,968,000 ATIF BVI ATIF INVESTMENT LTD $ 400,672 ATIF Business Consulting LLC ATIF BVI $ 1,525,000 The following table illustrates the breakdown of our cash transfer within our organization as of the day of the year ended July 31, 2023: Lender Borrower Amount Due ATIF BVI ATIF USA $ 2,357,000 ATIF BVI ATIF INVESTMENT LTD $ 397,172 ATIF Business Consulting LLC ATIF BVI $ 935,000 Following the completion of the transfer of equity interest in ATIF HK and termination of VIE structure, the Company doesn’t have any interest or obligation in relation to the outstanding loan between ATIF HK, VIE and Huaya.
Year ended July 31, 2023 Percentage of Total Year ended July 31, 2022 Percentage of Total Revenue revenue Revenue revenue Hong Kong 600,000 24.5 % 497,594 29.8 % Mainland China - 1,128,508 67.7 % USA 1,200,000 49.0 % 41,208 2.5 % Mexico 650,000 26.5 % - - Total revenue, net $ 2,450,000 100 % $ 1,667,310 100 % 1 Recent Developments On January 4, 2021, we announced the relocation of our operating headquarter to California, USA, through our wholly owned subsidiary ATIF USA.
Year ended July 31, 2024 Percentage of Total Year ended July 31, 2023 Percentage of Total Revenue revenue Revenue revenue Hong Kong 600,000 24 % Mainland China USA 620,000 100 % 1,200,000 49 % Mexico 650,000 27 % Total revenue, net $ 620,000 100 % 2,450,000 100 % Recent Developments On January 4, 2021, we announced the relocation of our operating headquarter to California, USA, through our wholly owned subsidiary ATIF USA.
Due to the nature of our consulting business, which requires us to dedicate a large amount of resources to each of our clients, we were able to generate a relatively large revenue from a small number of clients.
The number of our consulting service clients was eight and three for the fiscal years ended July 31, 2024 and 2023, respectively. Due to the nature of our consulting business, which requires us to dedicate a large amount of resources to each of our clients, we were able to generate a relatively large revenue from a small number of clients.
OTC markets along with one client getting listed on Nasdaq Stock Market and are currently assisting our other clients in their respective going public efforts. All of our current and past clients have been Chinese companies, and we plan to expand our operations to other Asian countries, such as Malaysia, Vietnam, and Singapore, by as opportunities arises.
OTC markets along with three client getting listed on Nasdaq Stock Market and are currently assisting our other clients in their respective going public efforts. Most of our clients are Chinese companies and American companies, and we plan to expand our operations to North America such as Mexico because we believe there is a huge market potential there.
On October 7, 2022, we established ATIF Business Management which plans to provide comprehensive services, such as investors’ relationships and secretarial services in North America in future. 2 Corporate Structure The following diagram illustrates our current corporate structure : Competitive Strengths We believe that the following strengths enable us to stand out in the financial service industry and differentiate us from our competitors: Experienced and Highly Qualified Team We have a highly qualified professional service team with extensive experience in going public consulting services.
Liu at a per share price of $0.91 which was the Nasdaq consolidated closing bid price per share of the Company’s ordinary shares on April 29, 2024. 2 Corporate Structure The following diagram illustrates our current corporate structure : Competitive Strengths We believe that the following strengths enable us to stand out in the financial service industry and differentiate us from our competitors: Experienced and Highly Qualified Team We have a highly qualified professional service team with extensive experience in going public consulting services.
Removed
For the year ended July 31, 2023, our clients were based in North America and Hong Kong. The number of our new consulting service clients was four and five for the fiscal years ended July 31, 2023 and 2022, respectively.
Added
On April 16, 2024, the Company entered into a Securities Purchase Agreement (the “April 16 Purchase Agreement”) with a non-U.S investor named in the Purchase Agreement (the “Purchaser”), pursuant to which the Company agreed to sell an aggregate of 1,092,512 newly issued ordinary shares of the Company, $0.001 par value per ordinary share (the “Ordinary Shares”) at a purchase price of $1.23 per share (the “April 16 Private Placement”).
Added
In connection with the Private Placement, the Company received gross proceeds in the amount of $1,343,789.76.
Added
On April 18, 2024, the Company entered into two securities purchase agreements (the “April 18 Purchase Agreements”) in a private placement (the “April 18 Private Placement”) of the Company’s 813,010 newly issued ordinary shares, par value $0.001 per ordinary share, with one (1) U.S. accredited investor, as defined under Rule 501 of Regulation D, and one (1) non-U.S. investor (individually, an “Investor” and collectively, the “Investors”), at the purchase price of $1.23 per ordinary share.
Added
The Company received gross proceeds in the amount of $1,000,002.38 in connection with the Private Placement. Each of the April 18 Purchase Agreements and April 16 Purchase Agreement contained customary representations, warranties and covenants by the parties for offerings of similar sizes.
Added
The Company agreed that within a reasonable time after the Closing, the Company shall file a registration statement on Form S-3 (or other appropriate form if the Company is not then S-3 eligible) providing for the resale by the Investors of the purchased ordinary shares.
Added
We are filing the registration statement of which this prospectus forms a part to satisfy this obligation. On April 29, 2024, the Company entered into a deferred salary conversion agreement (“ Deferred Salary Conversion Agreement ”) with Mr. Jun Liu, the president, chief executive officer and chairman of the board of directors of the Company.
Added
Pursuant to the Agreement, the Company agreed to issue and Mr. Liu agreed to accept 384,478 ordinary shares (“ Deferred Salary Debt Shares ”), $0.001 par value in lieu of an unpaid salary of $349,875 owed to Mr.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

43 edited+29 added−23 removed182 unchanged
Biggest changeIn addition, we are now required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States domestic issuers, and we are now required to disclose in our periodic reports all of the information that United States domestic issuers are required to disclose. 25 If we were deemed an investment company under the Investment Company Act of 1940, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business and the price of our Ordinary Shares.
Biggest changeIf we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business. 26 If we were deemed an investment company under the Investment Company Act of 1940, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business and the price of our Ordinary Shares.
The common law of the BVI is derived in part from judicial precedent in the BVI as well as from English common law, which has persuasive, but not binding, authority on a court in the BVI.
The common law of the BVI is derived in part from judicial precedent in the BVI as well as from English common law, which has persuasive, but not binding, authority on a court in the BVI.
Factors impacting volatility in the market price of our ordinary shares include, amongst others: ● general market and economic conditions; ● our results of operations; ● issuance of new or changed securities analysts’ reports or recommendations; ● developments impacting the industry or our competitors; ● declines in the market prices of stocks generally; ● strategic actions by us or our competitors; ● announcements by us or our competitors of significant contracts, new products, acquisitions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments; ● the public’s reaction to press releases, other public announcements by us or third parties, including our filings with the SEC; ● guidance, if any, that we provide to the public, any changes in this guidance or failure to meet this guidance; 29 ● changes in the credit rating of our debt; ● sale, or anticipated sale, of large blocks of our stock; ● additions or departures of key personnel; ● regulatory or political developments; ● our performance on ESG matters ● litigation and governmental investigations; ● changing economic conditions; ● exchange rate fluctuations; ● changes in accounting principles; and ● other events or factors, including those resulting from natural disasters, war, acts of terrorism or responses to those events.
Factors impacting volatility in the market price of our ordinary shares include, amongst others: ● general market and economic conditions; ● our results of operations; ● issuance of new or changed securities analysts’ reports or recommendations; ● developments impacting the industry or our competitors; ● declines in the market prices of stocks generally; ● strategic actions by us or our competitors; ● announcements by us or our competitors of significant contracts, new products, acquisitions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments; ● the public’s reaction to press releases, other public announcements by us or third parties, including our filings with the SEC; ● guidance, if any, that we provide to the public, any changes in this guidance or failure to meet this guidance; 30 ● changes in the credit rating of our debt; ● sale, or anticipated sale, of large blocks of our stock; ● additions or departures of key personnel; ● regulatory or political developments; ● our performance on ESG matters ● litigation and governmental investigations; ● changing economic conditions; ● exchange rate fluctuations; ● changes in accounting principles; and ● other events or factors, including those resulting from natural disasters, war, acts of terrorism or responses to those events.
Generally, the areas in which the courts will intervene are the following: (i) a company is acting or proposing to act illegally or beyond the scope of its authority; (ii) the act complained of, although not beyond the scope of the authority, could only be effected if duly authorized by more than the number of votes which have actually been obtained; (iii) the individual rights of the plaintiff shareholder have been infringed or are about to be infringed; or (iv) those who control the company are perpetrating a “fraud on the minority.” These rights may be more limited than the rights afforded to minority shareholders under the laws of states in the United States. 28 There are no pre-emptive rights in favor of holders of ordinary shares so you may not be able to participate in future equity offerings.
Generally, the areas in which the courts will intervene are the following: (i) a company is acting or proposing to act illegally or beyond the scope of its authority; (ii) the act complained of, although not beyond the scope of the authority, could only be effected if duly authorized by more than the number of votes which have actually been obtained; (iii) the individual rights of the plaintiff shareholder have been infringed or are about to be infringed; or (iv) those who control the company are perpetrating a “fraud on the minority.” These rights may be more limited than the rights afforded to minority shareholders under the laws of states in the United States. 29 There are no pre-emptive rights in favor of holders of ordinary shares so you may not be able to participate in future equity offerings.
Any significant compromise of our information management systems or data could impede or interrupt our business operations and may result in negative consequences including loss of revenue, fines, penalties, litigation, reputational damage, inability to accurately and/or timely complete required filings with government entities including the SEC and the Internal Revenue Service, unavailability or disclosure of confidential information (including personal information) and negative impact on our stock price. 18 We may not be successful in the implementation of our business strategy or our business strategy may not be successful, either of which will impede our development and growth.
Any significant compromise of our information management systems or data could impede or interrupt our business operations and may result in negative consequences including loss of revenue, fines, penalties, litigation, reputational damage, inability to accurately and/or timely complete required filings with government entities including the SEC and the Internal Revenue Service, unavailability or disclosure of confidential information (including personal information) and negative impact on our stock price. 19 We may not be successful in the implementation of our business strategy or our business strategy may not be successful, either of which will impede our development and growth.
As of the date of this annual report, we have not been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor have we received any inquiry, notice, or sanction related to cybersecurity review under the Cybersecurity Review Measures. 20 We have been closely monitoring China’s regulatory developments regarding any approvals from the CSRC, the CAC, or other PRC regulatory authorities required for our business operations.
As of the date of this annual report, we have not been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor have we received any inquiry, notice, or sanction related to cybersecurity review under the Cybersecurity Review Measures. 21 We have been closely monitoring China’s regulatory developments regarding any approvals from the CSRC, the CAC, or other PRC regulatory authorities required for our business operations.
Accordingly, if we rely on the exemptions, during the period we remain a controlled company and during any transition period following a time when we are no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. 23 We do not intend to pay dividends for the foreseeable future.
Accordingly, if we rely on the exemptions, during the period we remain a controlled company and during any transition period following a time when we are no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. 24 We do not intend to pay dividends for the foreseeable future.
The Chinese government has implemented various measures to encourage economic growth and guided the allocation of various types of resources. Some of these measures may benefit the overall Chinese economy, but others may have a negative effect on our operations. 19 The legal system in the PRC is not as developed as in some other jurisdictions, such as the U.S.
The Chinese government has implemented various measures to encourage economic growth and guided the allocation of various types of resources. Some of these measures may benefit the overall Chinese economy, but others may have a negative effect on our operations. 20 The legal system in the PRC is not as developed as in some other jurisdictions, such as the U.S.
Our future growth will depend substantially on our ability to address these and the other risks described in this annual report. If we do not successfully address these risks, our business would be significantly harmed. We have incurred net losses for the year ended July 31, 2023 and expect losses to continue in the near future.
Our future growth will depend substantially on our ability to address these and the other risks described in this annual report. If we do not successfully address these risks, our business would be significantly harmed. We have incurred net losses for the year ended July 31, 2024 and expect losses to continue in the near future.
In its order and opinion, the United States District Court for the Southern District of New York allowed Boustead to move for leave to amend its causes of action against us as to breach of contract and tortious interference with business relationships, but not breach of the implied covenant of good faith and fair dealing and quantum meruit.
In its order and opinion, the United States District Court for the Southern District of New York allowed Boustead to move for leave to amend its causes of action against ATIF as to breach of contract and tortious interference with business relationships, but not breach of the implied covenant of good faith and fair dealing and quantum meruit.
If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of our Ordinary Shares and the trading volume to decline. 24 The market price of our Ordinary Shares may be volatile or may decline regardless of our operating performance.
If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of our Ordinary Shares and the trading volume to decline. 25 The market price of our Ordinary Shares may be volatile or may decline regardless of our operating performance.
In appropriate circumstances, a BVI Court may give effect in the British Virgin Islands to other kinds of final foreign judgments such as declaratory orders, orders for performance of contracts and injunctions. 27 You may have more difficulty protecting your interests than you would as a shareholder of a U.S. corporation.
In appropriate circumstances, a BVI Court may give effect in the British Virgin Islands to other kinds of final foreign judgments such as declaratory orders, orders for performance of contracts and injunctions. 28 You may have more difficulty protecting your interests than you would as a shareholder of a U.S. corporation.
On October 6, 2020, we filed a motion to dismiss Boustead’s Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) and 12(b)(5). On October 9, 2020, the United States District Court for the Southern District of New York directed Boustead to respond to the motion or amend its Complaint by November 10, 2020.
On October 6, 2020, ATIF filed a motion to dismiss Boustead’s Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) and 12(b)(5). On October 9, 2020, the United States District Court for the Southern District of New York directed Boustead to respond to the motion or amend its Complaint by November 10, 2020.
Even if you are successful in bringing an action of this kind, the laws of the BVI may not permit you to enforce a judgment against our assets outside of the United States or the assets of our directors and officers. 26 Our board of directors may decline to register transfers of ordinary shares in certain circumstances.
Even if you are successful in bringing an action of this kind, the laws of the BVI may not permit you to enforce a judgment against our assets outside of the United States or the assets of our directors and officers. 27 Our board of directors may decline to register transfers of ordinary shares in certain circumstances.
Any cybersecurity review could also result in uncertainty to their US stock exchange listing, future offerings, negative impacts on our share trading prices and diversion of our managerial and financial resources. 21 We may face negative tax implications due to the termination of the VIE structure.
Any cybersecurity review could also result in uncertainty to their US stock exchange listing, future offerings, negative impacts on our share trading prices and diversion of our managerial and financial resources. 22 We may face negative tax implications due to the termination of the VIE structure.
Changes in the U.S. capital markets could make our services less attractive to our clients and adversely affect our business and financial condition. Our consulting services help our clients become public companies. For the year ended July 31, 2023, our clients were primarily based in Hong Kong and North America.
Changes in the U.S. capital markets could make our services less attractive to our clients and adversely affect our business and financial condition. Our consulting services help our clients become public companies. For the year ended July 31, 2024, our clients were primarily based in Hong Kong and North America.
Depending on the amount of assets held for the production of passive income, it is possible that, for our 2022 taxable year or for any subsequent year, more than 50% of our assets may be assets which produce passive income. We will make this determination following the end of any particular tax year.
Depending on the amount of assets held for the production of passive income, it is possible that, for our 2024 taxable year or for any subsequent year, more than 50% of our assets may be assets which produce passive income. We will make this determination following the end of any particular tax year.
As of July 31, 2023, 563,855 warrants have been exercised for 459,986 Ordinary Shares, among which 389,855 warrants were exercised at $2.74 per ordinary share for an aggregate total of $1.1 million, and the remaining 174,000 warrants were cashless exercises.
As of July 31, 2024, 563,855 warrants have been exercised for 459,986 Ordinary Shares, among which 389,855 warrants were exercised at $2.74 per ordinary share for an aggregate total of $1.1 million, and the remaining 174,000 warrants were cashless exercises.
Furthermore, on June 22, 2021, the U.S. Senate passed the AHFCAA, which w as signed into law on December 29, 2022, amending the HFCAA and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years.
Furthermore, on June 22, 2021, the U.S. Senate passed the AHFCAA, which was signed into law on December 29, 2022, amending the HFCAA and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years.
This may result in confusion between those companies and our company and may lead to the dilution of our brand value, which could adversely affect our business. 17 We depend heavily on a limited number of clients.
This may result in confusion between those companies and our company and may lead to the dilution of our brand value, which could adversely affect our business. 18 We depend heavily on a limited number of clients.
We cannot predict the effect that future sales of our Ordinary Shares would have on the market price of our Ordinary Shares. Our largest shareholder owns approximately 54.7% of our Ordinary Shares, which will allow him the ability to elect directors and approve matters requiring shareholder approval by way of resolution of members. Mr.
We cannot predict the effect that future sales of our Ordinary Shares would have on the market price of our Ordinary Shares. Our largest shareholder owns approximately 47.4% of our Ordinary Shares, which will allow him the ability to elect directors and approve matters requiring shareholder approval by way of resolution of members. Mr.
Because of our losses from operations, working capital deficit, and our requirement of additional capital to fund our current operating plan, at July 31, 2023, these factors indicate the existence of an uncertainty that raises substantial doubt about our ability to continue as a going concern and is dependent on our ability to raise addition working capital through debt or equity financings.
Because of our losses from operations, cash outflow in operating activities, and our requirement of additional capital to fund our current operating plan, at July 31, 2024, these factors indicate the existence of an uncertainty that raises substantial doubt about our ability to continue as a going concern and is dependent on our ability to raise addition working capital through debt or equity financings.
Boustead filed its opposition on February 1, 2022 and the Company replied on February 8, 2022. On July 6, 2022, the Court denied our motion to dismiss the second amended complaint. Thereafter, on August 3, 2022, the Company filed a motion to compel arbitration. Thereafter, on August 3, 2022, the Company filed a motion to compel arbitration.
Boustead filed its opposition on February 1, 2022 and the Company replied on February 8, 2022. On July 6, 2022, the Court denied our motion to dismiss the second amended complaint. Thereafter, on August 3, 2022, the Company filed a motion to compel arbitration of Boustead’s claims in California.
Hacking is the process of attempting to gain or successfully gaining unauthorized access to computer system. As with any website, our websites may be subject to hacking regardless of whether we have in place securities systems which limit access to our platform.
We may be subject to damages resulting from unauthorized access or hacking and other cyber risks. Hacking is the process of attempting to gain or successfully gaining unauthorized access to computer system. As with any website, our websites may be subject to hacking regardless of whether we have in place securities systems which limit access to our platform.
For the fiscal year ended July 31, 2023, we incurred a loss of $2.9 million. Our operations have been adversely affected by the effect of Covid 19. In addition, the PRC has recently issued statements that may have the effect of slowing down our business consulting services of assisting PRC companies to go public in the United States.
For the fiscal year ended July 31, 2024, we incurred a loss of $3.2 million. Our operations have been adversely affected by the effect of declining Economic environment. In addition, the PRC has recently issued statements that may have the effect of slowing down our business consulting services of assisting PRC companies to go public in the United States.
Boustead opted to amend its complaint and filed the amended complaint on November 10, 2020. Boustead’s first amended complaint asserted the same four causes of action against LGC and us as its original complaint. We filed another motion to dismiss Boustead’s amended complaint on December 8, 2020.
Boustead opted to amend its complaint and filed the amended complaint on November 10, 2020. Boustead’s amended complaint asserts the same four causes of action against ATIF and LGC as its original complaint. The Company filed another motion to dismiss Boustead’s amended complaint on December 8, 2020.
The audit report included in our annual report on Form 20-F for the year ended July 31, 2021, was issued by ZH CPA, a U.S.-based accounting firm that is registered with the PCAOB and can be inspected by the PCAOB.
The audit report included in our annual report on Form 10-K for the years ended July 31, 2024 and 2023, was issued by ZH CPA, a U.S.-based accounting firm that is registered with the PCAOB and can be inspected by the PCAOB.
Thus, in additional to any financial or reputation losses that we may sustain, it is possible that a court or administrative body may hold us liable for damages sustained by others. Any such losses could materially impair our financial condition and our ability to conduct business.
Thus, in additional to any financial or reputation losses that we may sustain, it is possible that a court or administrative body may hold us liable for damages sustained by others.
If a registrant is identified as a Commission-Identified Issuer based on its annual report for the fiscal year ended Dec. 31, 2021, the registrant will be required to comply with the submission or disclosure requirements in its annual report filing covering the fiscal year ended Dec. 31, 2022. 22 Risks Relating to the our Ordinary Shares The Warrants we sold in a Private Placement Completed on November 5, 2020 contain repricing features which may have the effect of limiting our ordinary share price and make it more expensive to raise capital in the future.
A Commission-Identified Issuer will be required to comply with the submission and disclosure requirements in the annual report for each year in which it was identified. 23 Risks Relating to the our Ordinary Shares The Warrants we sold in a Private Placement Completed on November 5, 2020 contain repricing features which may have the effect of limiting our ordinary share price and make it more expensive to raise capital in the future.
If we fail to retain our senior management, our business and results of operations could be materially and adversely affected. Our consulting service personnel are critical to maintaining the quality and consistency of our services, brand, and reputation.
Finding suitable replacements for our current senior management could be difficult, and competition for such personnel of similar experience is intense. If we fail to retain our senior management, our business and results of operations could be materially and adversely affected. Our consulting service personnel are critical to maintaining the quality and consistency of our services, brand, and reputation.
Liu, and the remaining 19.0% that may be deemed to be beneficially owned by Mr. Liu through the assignment of a proxy agreement entered with Eno Group Limited on September 30, 2018 to Tianzhen Investments Limited on February 10, 2021). Mr.
Liu including 28.9% directly held by Tianzhen Investments Limited which is an entity that 100% owned by Mr. Liu, and the remaining 15.3% that may be deemed to be beneficially owned by Mr. Liu through the assignment of a proxy agreement entered with Eno Group Limited on September 30, 2018 to Tianzhen Investments Limited on February 10, 2021). Mr.
On March 10, 2023, Boustead filed Demand for Arbitration against ATIF (the Respondent) before JAMS in California and the case Ref. No. is 5220002783. On May 25, 2023, ATIF filed its answer to deny Boustead’s Demand for Arbitration, which was unsuccessful and the arbitration process was initiated.
No. is 5220002783. On May 25, 2023, ATIF filed its answer to deny Boustead’s Demand for Arbitration, which was unsuccessful and the arbitration process was initiated.
Briefing on the Company’s motion to compel concluded on August 23, 2022 Since the agreement between ATIF and Boustead contains a valid arbitration clause that applies to Boustead’s breach of contract claim, and the parties have not engaged in discovery, on February 14, 2023, the Court ordered that ATIF’s motion to compel arbitration is granted and this case is stayed pending arbitration.
Since the agreement between ATIF and Boustead contains a valid arbitration clause that applies to Boustead’s breach of contract claim, and the parties have not engaged in discovery, on February 14, 2023, the Court ordered that ATIF’s motion to compel arbitration is granted and this case is stayed pending arbitration. 16 On March 10, 2023, Boustead, filed Demand for Arbitration against ATIF (the Respondent) before JAMS in California and the assigned JAMS case Ref.
As a result, until the PRC further clarifies its views and regulations regarding PRC companies seeking to go public in the United States, and PRC companies are comfortable with the business climate and seeking our services, we anticipate that we continue to experience losses in the future. 12 Raising additional capital may cause dilution to our existing stockholders As of July 31, 2023, we had cash of $0.6 million.
As a result, until the PRC further clarifies its views and regulations regarding PRC companies seeking to go public in the United States, and PRC companies are comfortable with the business climate and seeking our services, we anticipate that we continue to experience losses in the future.
We may not be able to sustain our historical rapid growth and/or may not be able to grow our business at all. Our net revenue increased from $3.6 million for the fiscal year ended July 31, 2017 and $5.3 million for the fiscal year ended July 31, 2018.
We may not be able to sustain our historical rapid growth and/or may not be able to grow our business at all. Our net revenue was $0.6 million and $2.5 million for the years ended July 31, 2024 and 2023, respectively. Our net loss was $3.2 million and $2.9 million for the years ended July 31, 2024 and 2023, respectively.
It is possible that our tax for past taxes may be higher than those amounts if the authorities determine that we are subject to penalties or that we have not paid the correct amount.
We recorded tax liabilities of approximately $3,300 and $31,200 as of July 31, 2024 and 2023, respectively, for the possible underpayment of income and business taxes. It is possible that our tax for past taxes may be higher than those amounts if the authorities determine that we are subject to penalties or that we have not paid the correct amount.
Jun Liu, who is our President, Chief Executive Officer and Chairman of the Board, is currently the beneficial owner of 5,268,330 ordinary shares (as adjusted to reflect the Reverse Split), or 54.7% of our current outstanding Ordinary Shares (36.0% directly held by Tianzhen Investments Limited, an entity 100% owned by Mr.
Jun Liu, who is our President, Chief Executive Officer and Chairman of the Board, is currently the beneficial owner of 5,652,808 ordinary shares (as adjusted to reflect the Reverse Split), or 47.4% of our current outstanding Ordinary Shares (32.2% directly held by Mr.
We may seek additional capital through a combination of private and public equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements.
Raising additional capital may cause dilution to our existing stockholders As of July 31, 2024, we had cash of $1.2 million. We may seek additional capital through a combination of private and public equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements.
Boustead claims that we breached that consulting agreement and is entitled to fees in connection with our acquiring control of LGC. Boustead’s complaint alleges four causes of action against us including breach of contract; breach of the implied covenant of good faith and fair dealing; tortious interference with business relationships and quantum meruit.
Therefore, Boustead is attempting to recover from the Company an amount equal to a percentage of the value of the transaction it conducted with LGC. Boustead’s Complaint alleges four causes of action against the Company, including breach of contract; breach of the implied covenant of good faith and fair dealing; tortious interference with business relationships and quantum meruit.
If we fail to hire, train, and retain qualified managerial and other employees, our business and results of operations could be materially and adversely affected. We place substantial reliance on the consulting and financial service industry experience and knowledge of our senior management team as well as their relationships with other industry participants.
We place substantial reliance on the consulting and financial service industry experience and knowledge of our senior management team as well as their relationships with other industry participants. The loss of the services of one or more members of our senior management could hinder our ability to effectively manage our business and implement our growth strategies.
As discussed below, we are engaged in a lawsuit relating to certain engagement agreements we had in connection with our and Leaping Group Co.’s initial public offering. On May 14, 2020, Boustead Securities, LLC (“Boustead”) filed its original complaint in the United States District Court for the Southern District of New York (CV-03749) against LGC and us.
As discussed below, we are engaged in a lawsuit relating to certain engagement agreements we had in connection with our and Leaping Group Co.’s initial public offering.
In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.
In the past, stockholders have filed securities class action litigation following periods of market volatility.
If we were to default on such indebtedness, we could lose such assets and intellectual property. If we do not continue to satisfy the Nasdaq Capital Market continued listing requirements, our Ordinary Shares could be delisted.
If we were to default on such indebtedness, we could lose such assets and intellectual property. 12 If we fail to comply with the continued listing requirements of NASDAQ, we would face possible delisting, which would result in a limited public market for our shares and make obtaining future debt or equity financing more difficult for us.
Removed
The listing of our Ordinary Shares on the Nasdaq Capital Market is contingent on our compliance with the Nasdaq Capital Market’s conditions for continued listing. On December 16, 2020, we received notice from The Nasdaq Stock Market (“Nasdaq”) indicating we were not in compliance with the minimum bid price requirement of $1.00 per share under the Nasdaq Listing Rules.
Added
Stockholders’ Equity Requirement As previously reported on November 22, 2023, the Company received a letter from Nasdaq (the Stockholder Equity Letter), regarding its non-compliance with the minimum stockholders’ equity requirement for continued listing on the Nasdaq Capital Market.
Removed
In addition, on December 17, 2020, we received notice from Nasdaq stating that because we had not yet filed our Annual Report on Form 20-F for the year ended July 31, 2020 (the “Form 20-F”) by its due date, we were no longer in compliance with Listing Rule which requires listed companies to timely file all required periodic financial reports with the Securities and Exchange Commission.
Added
The letter notified the Company that its stockholders’ equity, reported at $1,539,353 in the Annual Report on Form 10-K for the period ending July 31, 2023, did not meet the Nasdaq Capital Market’s minimum stockholders’ equity requirement of $2,500,000 for continued listing as per Nasdaq Listing Rule 5550(b)(1) (the Stockholders’ Equity Requirement).
Removed
On December 31, 2020, we filed our Form 20-F with the SEC and on January 28,2021 Nasdaq provide us confirmation that our closing bid price traded over $1.00 for ten consecutive business days. Accordingly, we are now in compliance with the Nasdaq Listing Rules.
Added
Nasdaq gave the Company until January 8, 2024, to submit a plan to regain compliance with the minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1).
Removed
On July 26, 2021, we received another notice from Nasdaq indicating we that were not in compliance with the minimum bid price requirement of $1.00 per share under the Nasdaq Listing Rules. The July 26, 2021 notice indicated that it had 180 calendar days, or until January 24, 2022, to regain compliance with the Listing Rules.
Added
As previously reported in a Current Report on Form 8-K April 16, 2024 the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a non- U.S investor named in the Purchase Agreement (the “Purchaser”), pursuant to which the Company agreed to sell an aggregate of 1,092,512 newly issued ordinary shares of the Company, $0.001 par value per ordinary share (the “Ordinary Shares”) at a purchase price of $1.23 per share (the “Private Placement”).
Removed
On August 23, 2021, we effected the Reverse Split in order to the meet the minimum bid price of $1.00, and on September 14, 2021, we received notice from Nasdaq that we were back in compliance. In the future, should we fail to meet the Nasdaq Listing Rules, we may be subject to delisting by Nasdaq.
Added
In connection with the Private Placement, the Company received gross proceeds in the amount of $1,343,789.76.
Removed
In the event our Ordinary Shares are no longer listed for trading on the Nasdaq Capital Markets, our trading volume and share price may decrease and we may experience difficulties in raising capital which could materially affect our operations and financial results.
Added
As previously reported in a Current Report on Form 8-K, on April 18, 2024, the Company entered into two securities purchase agreements (the “April 18 Purchase Agreements”) in a private placement (the “April 18 Private Placement”) of the Company’s 813,010 newly issued ordinary shares, par value $0.001 per ordinary share, with one (1) U.S. accredited investor, as defined under Rule 501 of Regulation D, and one (1) non-U.S. investor (individually, an “Investor” and collectively, the “Investors”), at the purchase price of $1.23 per ordinary share.
Removed
Further, delisting from the Nasdaq Capital Market could also have other negative effects, including potential loss of confidence by partners, lenders, suppliers and employees. Finally, delisting could make it harder for us to raise capital and sell securities. We lost our foreign private issuer status, which could result in significant additional costs and expenses.
Added
The Company received gross proceeds in the amount of $1,000,002.38 in connection with the April 18 Private Placement. As previously reported in a Form 8-K, on April 29, 2024, the Company entered into a deferred salary conversion agreement (“ Deferred Salary Conversion Agreement ”) with Mr.
Removed
The regulatory and compliance costs under U.S. federal securities laws as a U.S. domestic issuer may be significantly more than the costs incurred as a foreign private issuer.
Added
Jun Liu, the president, chief executive officer and chairman of the board of directors of the Company. Pursuant to the Agreement, the Company issued 384,478 ordinary shares to Mr. Liu (“ Deferred Salary Debt Shares ”), $0.001 par value in lieu of an unpaid salary of $349,875 owed to Mr.
Removed
Because we are no longer deemed to be a foreign private issuer, we are required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer.
Added
Liu at a per share price of $0.91 which was the Nasdaq consolidated closing bid price per share of the Company’s ordinary shares on April 29, 2024.
Removed
In addition, we lost the ability to rely upon certain exemptions from the Nasdaq Capital Market’s corporate governance requirements that are available to foreign private issuers. 13 Our historical financial results may not be indicative of our future performance.
Added
On May 16, 2024, Nasdaq granted the Company an extension of time until May 20, 2024 to provide evidence of compliance, by filing a Current Report on Form 8-K which includes (1) disclosure of Nasdaq’s deficiency letter and the specific deficiency or deficiencies cited; (2) a description of the completed transaction or event that enabled the Company to satisfy the stockholders’ equity requirement for continued listing; (3) an affirmative statement that, as of the date of the report, the Company believes it has regained compliance with the stockholders’ equity requirement based upon the specific transaction or event referenced in item (2) above; and (4) a disclosure stating that Nasdaq will continue to monitor the Company’s ongoing compliance with the stockholders’ equity requirement and, if at the time of its next periodic report the Company does not evidence compliance, that it may be subject to delisting.
Removed
However, our net revenue decreased to $1.7 million, $0.9 million and $0.6 million for the fiscal year ended July 31, 2022, 2021 and 2020, respectively.
Added
As of May 16, 2024, the Company submitted to Nasdaq that it believes its shareholders’ equity as of April 30, 2024, on a pro forma basis after giving effect to the transactions described above would be $2,683,042 and therefore, believes it has regained compliance with the stockholders’ equity requirement based upon the specific transactions and events referenced above.
Removed
Our net income was $0.6 million for the fiscal year ended July 31, 2017, $1.9 million for the fiscal year ended July 31, 2018, and $0.4 million for the fiscal year ended July 31, 2019, and decreased to a net loss of $17.3 million for the fiscal year ended July 31, 2020, and a net loss of $9.0 million for the fiscal year 2021, and our net losses were $2.9 million and $3.4 million for the years ended July 31, 2023 and 2022 respectively.
Added
Nasdaq will continue to monitor the Company’s ongoing compliance with the stockholders’ equity requirement, and if at the time of its next periodic report, which will be its annual report on Form 10-K for the year ended July 31, 2024, the Company does not evidence compliance, it may be subject to delisting.
Removed
We recorded tax liabilities of approximately $31,200 and $0.1 million as of July 31, 2023 and 2022, respectively, for the possible underpayment of income and business taxes.
Added
As of July 31, 2024, the Company’s stockholders’ equity was $1,753,754. There can be no assurance that the company will continue to have a minimum stockholders’ equity of $2,500,000 and satisfy Nasdaq’s requirements for continued listing under Nasdaq Listing Rule 5550(b)(1), the Stockholders’ Equity Requirement.
Removed
The case arises from a consulting agreement between us and Boustead, wherein Boustead claims that it is entitled to fees in connection with our cancellation of an $1,851,000 outstanding debt owed by LGC and issuance of 9,940,002 ordinary shares (1,988,000 ordinary shares retrospectively restated for effect of reverse stock split on August 30, 2021) to LGC in exchange for a 51.2% interest in LGC.
Added
If we fail to satisfy any of Nasdaq’s continued listing requirements, Nasdaq may take steps to delist our ordinary shares, which could have a materially adverse effect on our ability to raise additional funds as well as the price and liquidity If the Company fails to regain compliance with Nasdaq’s Listing Rules, we could be subject to suspension and delisting proceedings.
Removed
Simultaneously, the Company was granted until February 12, 2024, to present its response brief. Our management believes it is premature to assess and predict the outcome of this pending arbitration. 16 We may be subject to damages resulting from unauthorized access or hacking and other cyber risks.
Added
If our securities lose their status on The NASDAQ Capital Market, our securities would likely trade in the over-the-counter market.
Removed
The loss of the services of one or more members of our senior management could hinder our ability to effectively manage our business and implement our growth strategies. Finding suitable replacements for our current senior management could be difficult, and competition for such personnel of similar experience is intense.
Added
If our securities were to trade on the over-the-counter market, selling our securities could be more difficult because smaller quantities of securities would likely be bought and sold, transactions could be delayed, and security analysts’ coverage of us may be reduced.
Removed
A Commission-Identified Issuer will be required to comply with the submission and disclosure requirements in the annual report for each year in which it was identified.
Added
In addition, in the event our securities are delisted, broker-dealers have certain regulatory burdens imposed upon them, which may discourage broker-dealers from effecting transactions in our securities, further limiting the liquidity of our securities. These factors could result in lower prices and larger spreads in the bid and ask prices for our securities.
Removed
As we are an “emerging growth company,” we are expected to first include a management report on our internal controls over financial reporting in our annual report in the second fiscal year end following the effectiveness of our IPO. As such, these requirements applied to our annual report on Form 10-K for the fiscal year ending on July 31, 2023.
Added
Such delisting from The NASDAQ Capital Market and continued or further declines in our share price could also greatly impair our ability to raise additional necessary capital through equity or debt financing, and could significantly increase the ownership dilution to shareholders caused by our issuing equity in financing or other transactions. 13 Our historical financial results may not be indicative of our future performance.
Removed
Because we are an “emerging growth company,” we may not be subject to requirements that other public companies are subject to, which could affect investor confidence in us and our Ordinary Shares.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our principal executive office and production facility is located in Lake Forest, California, USA, where we lease approximately 7237 square feet of office space. We lease an aggregate of 7237 square feet of property from an unrelated third party pursuant to the terms of a lease agreement.
Biggest changeITEM 2. PROPERTIES Our principal executive office and production facility is located in Lake Forest, California, USA, where we lease approximately 7,237 square feet of office space from a related party. The term of the lease is from June 1, 2022 to May 31, 2027, with monthly rental expenses of $20,000.
We believe that our current leased property is in good condition and suitable for the conduct of our business. 30
We believe that our current leased property is in good condition and suitable for the conduct of our business.
As of August 25, 2022, we have subleased this office space to an unrelated third party company from August 25, 2022 to March 1, 2024. Our total rent expense was approximately $0.5 million and $0.5 million for the years ended July 31, 2023 and 2022, respectively.
As of August 25, 2022, we have subleased this office space to an unrelated third party company from August 25, 2022 to March 1, 2024. Our total rent expense was approximately $0.2 million and $0.5 million for the years ended July 31, 2024 and 2023, respectively. The Company did not extend the lease term upon maturity.
The term of the lease is from June 1, 2021 to May 31, 2027, with monthly rental expenses of $20,000. In addition, we also lease an office space in Irvine, California, for approximately 4182 square feet of office space for a term of three years from March 1, 2021 to February 29, 2024, and with monthly rental expenses of $20,073.
In addition, we also lease an office space in Irvine, California, for approximately 4,182 square feet of office space for a term of three years from March 1, 2021 to February 29, 2024, and with monthly rental expenses of $20,073.
Added
On March 1, 2024, the Company modified the office lease arrangement, pursuant to which the remaining lease term was modified from 38 months to 24 months which will expire on February 28, 2026, and the office space is reduced from 7,237 square feet to 1,555 square feet. The monthly rental expense was reduced to $3,000.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeBriefing on the Company’s motion to compel concluded on August 23, 2022 Since the agreement between ATIF and Boustead contains a valid arbitration clause that applies to Boustead’s breach of contract claim, and the parties have not engaged in discovery, on February 14, 2023, the Court ordered that ATIF’s motion to compel arbitration is granted and this case is stayed pending arbitration.
Biggest changeSince the agreement between ATIF and Boustead contains a valid arbitration clause that applies to Boustead’s breach of contract claim, and the parties have not engaged in discovery, on February 14, 2023, the Court ordered that ATIF’s motion to compel arbitration is granted and this case is stayed pending arbitration. 32 On March 10, 2023, Boustead, filed Demand for Arbitration against ATIF (the Respondent) before JAMS in California and the assigned JAMS case Ref.
Therefore, Boustead is attempting to recover from the Company an amount equal to a percentage of the value of the transaction it conducted with LGC. Boustead’s Complaint alleged four causes of action against the Company, including breach of contract; breach of the implied covenant of good faith and fair dealing; tortious interference with business relationships and quantum meruit.
Therefore, Boustead is attempting to recover from the Company an amount equal to a percentage of the value of the transaction it conducted with LGC. Boustead’s Complaint alleges four causes of action against the Company, including breach of contract; breach of the implied covenant of good faith and fair dealing; tortious interference with business relationships and quantum meruit.
In its order and opinion, the United States District Court for the Southern District of New York allowed Boustead to move for leave to amend its causes of action against us as to breach of contract and tortious interference with business relationships, but not breach of the implied covenant of good faith and fair dealing and quantum meruit.
In its order and opinion, the United States District Court for the Southern District of New York allowed Boustead to move for leave to amend its causes of action against ATIF as to breach of contract and tortious interference with business relationships, but not breach of the implied covenant of good faith and fair dealing and quantum meruit.
On October 6, 2020, we filed a motion to dismiss Boustead’s Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) and 12(b)(5). On October 9, 2020, the United States District Court for the Southern District of New York directed Boustead to respond to the motion or amend its Complaint by November 10, 2020.
On October 6, 2020, ATIF filed a motion to dismiss Boustead’s Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) and 12(b)(5). On October 9, 2020, the United States District Court for the Southern District of New York directed Boustead to respond to the motion or amend its Complaint by November 10, 2020.
Boustead alleged that the acquisition transaction between the Company and LGC was entered into during the lockup period of the exclusive agreement between Boustead and LGC, and therefore deprived Boustead of compensation that Boustead would otherwise have been entitled to receive under its exclusive agreement with LGC.
Boustead alleged that the acquisition transaction between the Company and LGC was entered into during the tail period of the exclusive agreement between Boustead and the Company, and therefore deprived Boustead of compensation that Boustead would otherwise have been entitled to receive under its exclusive agreement with the Company and LGC.
Boustead filed its opposition on February 1, 2022 and the Company replied on February 8, 2022. On July 6, 2022, the Court denied our motion to dismiss the second amended complaint. Thereafter, on August 3, 2022, the Company filed a motion to compel arbitration.
Boustead filed its opposition on February 1, 2022 and the Company replied on February 8, 2022. On July 6, 2022, the Court denied our motion to dismiss the second amended complaint. Thereafter, on August 3, 2022, the Company filed a motion to compel arbitration of Boustead’s claims in California.
Boustead opted to amend its complaint and filed the amended complaint on November 10, 2020. Boustead’s first amended complaint asserted the same four causes of action against LGC and us as its original complaint. We filed another motion to dismiss Boustead’s amended complaint on December 8, 2020.
Boustead opted to amend its complaint and filed the amended complaint on November 10, 2020. Boustead’s amended complaint asserts the same four causes of action against ATIF and LGC as its original complaint. The Company filed another motion to dismiss Boustead’s amended complaint on December 8, 2020.
On March 10, 2023, Boustead, filed Demand for Arbitration against ATIF (the Respondent) before JAMS in California and JAMS case Ref. No. is 5220002783. On May 25, 2023, ATIF filed its answer to deny Boustead’s Demand for Arbitration, which was unsuccessful and the arbitration process was initiated.
No. is 5220002783. On May 25, 2023, ATIF filed its answer to deny Boustead’s Demand for Arbitration, which was unsuccessful and the arbitration process was initiated.
On May 14, 2020, Boustead filed a lawsuit against the Company and Leaping Group Co., Ltd. a limited liability organized under the laws of Cayman Islands (“LGC”) for breaching the underwriting agreement Boustead had with each of the Company and LGC, in which Boustead was separately engaged as the exclusive financial advisor to provide financial advisory services to the Company and LGC.
Legal Proceeding with Boustead Securities, LLC (“Boustead”) On May 14, 2020, Boustead filed a lawsuit against the Company and LGC for breaching the underwriting agreement Boustead had with each of the Company and LGC, in which Boustead was separately engaged as the exclusive financial advisor to provide financial advisory services to the Company and LGC.
Simultaneously, the Company was granted until February 12, 2024, to present its response brief. Our management believes it is premature to assess and predict the outcome of this pending arbitration.
Simultaneously, the Company was granted until February 12, 2024, to present its response brief. On September 24, 2024, the Company and Boustead entered into a settlement agreement, pursuant to which the Company shall pay a total amount of $1,000,000 to Boustead.
Added
Briefing on the Company’s motion to compel concluded on August 23, 2022.
Added
The payment is made in three instalments, the first instalment of $250,000 is payable upon execution of the settlement agreement, the second instalment of $500,000 is payable before March 1, 2025, and the final instalment of $250,000 is payable before December 31, 2025.
Added
Pending Legal Proceeding with J.P Morgan Securities LLC (“JPMS”) On December 22, 2023, J.P Morgan Securities LLC (“JPMS”) filed a lawsuit in the Superior Court of California, County of Orange, bearing Case Number 30-2023-01369978-CU-FR-CJC against ATIF Holdings Limited (“Holdings”), ATIF Inc., ATIF-1 GP, LLC (ATIF-1 GP”), and two officers of Holdings and ATIF Inc., Jun Liu and Zhiliang “Ian” Zhou, alleging and asserting that it is entitled to recover $5,064,160 in damages plus interest and attorneys’ fees relating to a stock transaction by ATIF-1 GP.
Added
The parties have agreed to attempt to mediate the dispute before proceeding to litigation. A mediation was held on May 6, 2024, but the parties could not come to a resolution. The Defendants’ time to respond to the lawsuit was May 20, 2024.
Added
On May 15, 2024, the Defendants filed a Petition with the Superior Court of California seeking to compel arbitration under the operative agreements and stay the underlying State Court action.
Added
On or about August 16, 2024, the parties agreed that JPMS and ATIF-1 GP, LLC would submit any disputes between the two of them only, to FINRA arbitration, and stay the California state court case pending such arbitration. At this time, the management is still in the process of evaluating the claims and defenses.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+8 added−2 removed4 unchanged
Biggest changeMINE SAFETY DISCLOSURES Not applicable. 31 PART II ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Ordinary shares Our Ordinary Shares have been listed on the Nasdaq Capital Market since May 3, 2019, under the symbol “ATIF.” Holders of Record of Ordinary Shares As of November 13, 2023, we had approximately 29 shareholders of record for our ordinary shares.
Biggest changeMINE SAFETY DISCLOSURES Not applicable. 33 PART II ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Ordinary shares Our Ordinary Shares have been listed on the Nasdaq Capital Market since May 3, 2019, under the symbol “ATIF.” Holders of Record of Ordinary Shares As of November 12, 2024, we had approximately 34 shareholders of record for our ordinary shares.
Removed
On November 6, 2020, in a private placement, we sold to three accredited investors 869,565 Ordinary Shares and warrants to purchase a total of 869,565 Ordinary Shares at an exercise price of $4.60 per share which are exercisable for five years from the date of issuance.
Added
On April 16, 2024, the Company entered into a Securities Purchase Agreement (the “April 16 Purchase Agreement”) with a non- U.S investor named in the Purchase Agreement (the “Purchaser”), pursuant to which the Company agreed to sell an aggregate of 1,092,512 newly issued ordinary shares of the Company, $0.001 par value per ordinary share (the “Ordinary Shares”) at a purchase price of $1.23 per share (the “April 16 Private Placement”).
Removed
We also issued to the placement agent warrants to purchase 78,261 ordinary shares at an exercise price equal to $4.60 and are exercisable 180 days after November 3, 2020.
Added
In connection with the Private Placement, the Company received gross proceeds in the amount of $1,343,789.76.
Added
On April 18, 2024, the Company entered into two securities purchase agreements (the “April 18 Purchase Agreements”) in a private placement (the “April 18 Private Placement”) of the Company’s 813,010 newly issued ordinary shares, par value $0.001 per ordinary share, with one (1) U.S. accredited investor, as defined under Rule 501 of Regulation D, and one (1) non-U.S. investor (individually, an “Investor” and collectively, the “Investors”), at the purchase price of $1.23 per ordinary share.
Added
The Company received gross proceeds in the amount of $1,000,002.38 in connection with the Private Placement. Each of the April 18 Purchase Agreements and April 16 Purchase Agreement contained customary representations, warranties and covenants by the parties for offerings of similar sizes.
Added
The Company agreed that within a reasonable time after the Closing, the Company shall file a registration statement on Form S-3 (or other appropriate form if the Company is not then S-3 eligible) providing for the resale by the Investors of the purchased ordinary shares.
Added
We are filing the registration statement of which this prospectus forms a part to satisfy this obligation. On April 29, 2024, the Company entered into a deferred salary conversion agreement (“ Deferred Salary Conversion Agreement ”) with Mr. Jun Liu, the president, chief executive officer and chairman of the board of directors of the Company.
Added
Pursuant to the Agreement, the Company agreed to issue and Mr. Liu agreed to accept 384,478 ordinary shares (“ Deferred Salary Debt Shares ”), $0.001 par value in lieu of an unpaid salary of $349,875 owed to Mr.
Added
Liu at a per share price of $0.91 which was the Nasdaq consolidated closing bid price per share of the Company’s ordinary shares on April 29, 2024.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 32 ITEM 6. [RESERVED] 32 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 33 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 39 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 39
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 34 ITEM 6. [RESERVED] 34 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 35 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 41 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 41

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

35 edited+8 added−23 removed23 unchanged
Biggest changeFor the years ended Changes July 31, 2023 July 31, 2022 Amount Increase (Decrease) Percentage Increase (Decrease) Revenues – third parties $ 1,150,000 $ 905,310 $ 244,690 27 % Revenues – a related party 1,300,000 762,000 538,000 71 % Revenues $ 2,450,000 $ 1,667,310 $ 782,690 47 % Cost of revenues - 660,000 (660,000 ) (100 )% Gross profit 2,450,000 1,007,310 1,442,690 143 % Operating expenses: Selling expenses 207,238 569,529 (362,291 ) (64 )% General and administrative expenses 2,241,626 2,651,361 (409,735 ) (15 )% Provision against accounts receivable due from a related party 762,000 - 762,000 100 % Total operating expenses 3,210,864 3,220,890 10,026 0 % Loss from operations (760,864 ) (2,213,580 ) (1,452,716 ) (66 )% Other income (expenses): Interest income, net 1,874 354,832 (352,958 ) (99 )% Other income (expenses), net 314,518 (123,296 ) (437,814 ) (355 )% Provision against due from buyers of LGC (2,654,767 ) - 2,654,767 100 % Gain (loss) from investment in trading securities 192,102 (2,432,107 ) (2,624,209 ) (108 )% Gain from disposal of subsidiaries and VIE 56,038 1,043,052 (987,014 ) (95 )% Total other expense, net (2,090,235 ) (1,157,519 ) 932,716 81 % Loss before income taxes (2,851,099 ) (3,371,099 ) (522,000 ) (15 )% Income tax provision (31,200 ) - (31,200 ) 100 % Net loss $ (2,882,299 ) $ (3,371,099 ) $ (488,800 ) (14 )% Revenues.
Biggest changeFor the years ended Changes July 31, 2024 July 31, 2023 Amount Increase (Decrease) Percentage Increase (Decrease) Revenues – third parties $ 420,000 $ 1,150,000 $ (730,000 ) (63 )% Revenues – a related party 200,000 1,300,000 (1,100,000 ) (85 )% Revenues $ 620,000 $ 2,450,000 $ (1,830,000 ) (75 )% Operating expenses: Selling expenses 333,500 207,238 126,262 61 % General and administrative expenses 2,265,612 2,241,626 23,986 1 % (Reversal of provision) provision against accounts receivable due from a related party (19,103 ) 762,000 (781,103 ) (103 )% Total operating expenses 2,580,009 3,210,864 (630,855 ) (20 )% Loss from operations (1,960,009 ) (760,864 ) 1,199,145 158 % Other income (expenses): Interest income, net 26 1,874 (1,848 ) (99 )% Other (expenses) income, net (846,871 ) 314,518 (1,161,389 ) (369 )% Provision against due from buyers of LGC - (2,654,767 ) (2,654,767 ) (100 )% (Loss) gain from investment in trading securities (381,370 ) 192,102 (573,472 ) (299 )% Gain from disposal of subsidiaries and VIE - 56,038 (56,038 ) (100 )% Total other expense, net (1,228,215 ) (2,090,235 ) (862,020 ) (41 )% Loss before income taxes (3,188,224 ) (2,851,099 ) 337,125 12 % Income tax provision (3,300 ) (31,200 ) (27,900 ) (89 )% Net loss $ (3,191,524 ) $ (2,882,299 ) $ 309,225 11 % Revenues.
Investing Activities Net cash provided by investing activities was $0.4 million in fiscal year 2023, primarily consisting of proceeds of $0.3 million from disposal of investments in two equity securities, redemption of $94,799 from short-term investments, proceeds of $72,000 from disposal of property and equipment, and collection of loans of $59,000 from a related party, partially offset against loans of $0.1 million made to a related party.
Net cash provided by investing activities was approximately $0.4 million in fiscal year 2023, primarily consisting of proceeds of approximately $0.3 million from disposal of investments in two equity securities, redemption of $94,799 from short-term investments, proceeds of $72,000 from disposal of property and equipment, and collection of loans of $59,000 from a related party, partially offset against loans of approximately $0.1 million made to a related party.
Net cash used in operating activities was primarily comprised of net loss of $2.9 million, adjusted for provision of $2.7 million against due from buyers of LGC, and provision of $0.8 million against accounts receivable due from a related party, and net changes in our operating assets and liabilities, principally comprising of (i) an increase of accounts receivable of $0.7 million due from third parties and $0.6 million due from a related party, respectively.
Net cash used in operating activities was primarily comprised of net loss of approximately $2.9 million, adjusted for provision of approximately $2.7 million against due from buyers of LGC, and provision of approximately $0.8 million against accounts receivable due from a related party, and net changes in our operating assets and liabilities, principally comprising of (i) an increase of accounts receivable of approximately $0.7 million due from third parties and approximately $0.6 million due from a related party, respectively.
We plan to focus on providing consulting services to customers based in North America and other areas and intend to continue cooperating with Huaya in connection with the expansion and provision of our business services in China.
We focus on providing consulting services to customers based in North America and other areas and intend to continue cooperating with Huaya in connection with the expansion and provision of our business services in China.
We would create a going public strategy for each client based on many factors of such client, including our assessment of the client’s financial and operational situations, market conditions, and the client’s business and financing requirements. Since our inception and up to the date of this report, we have successfully helped three Chinese enterprises to be quoted on the U.S.
We would create a going public strategy for each client based on many factors of such client, including our assessment of the client’s financial and operational situations, market conditions, and the client’s business and financing requirements. Since our inception and up to the date of this report, we have successfully helped nine Chinese enterprises to be quoted on the U.S.
We do not plan to pay any dividends out of our restricted net assets as of July 31, 2023.
We do not plan to pay any dividends out of our restricted net assets as of July 31, 2024.
Our ability to sustain our growth will depend on our ability to attract qualified personnel and retain our current staff. 34 Results of Operations The following table summarizes the results of our operations for the years ended July 31, 2023 and 2022, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such periods.
Our ability to sustain our growth will depend on our ability to attract qualified personnel and retain our current staff. 36 Results of Operations The following table summarizes the results of our operations for the fiscal years ended July 31, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such periods.
For the years ended July 31, 2023 and 2022, we provided consulting services to three and three customers, respectively, which primarily engaged the Company to provide consulting services relating to going public in the US through IPO, reverse merger and acquisition.
For the fiscal years ended July 31, 2024 and 2023, we provided consulting services to eight and three customers, respectively, which primarily engaged the Company to provide consulting services relating to going public in the US through IPO, reverse merger and acquisition.
Because of losses from operations, working capital deficit, and the requirement of additional capital to fund our current operating plan at July 31, 2023, these factors indicate the existence of an uncertainty that raises substantial doubt about the Company’s ability to continue as a going concern.
Because of losses from operations, cash out from operating activities, and the requirement of additional capital to fund our current operating plan at July 31, 2024, these factors indicate the existence of an uncertainty that raises substantial doubt about the Company’s ability to continue as a going concern.
Liquidity and Going concern For the years ended July 31, 2023 and 2022, the Company reported a net loss of approximately $2.9 million and $3.4 million, respectively, and operating cash outflows from continuing operations of approximately $2.3 million and $0.1 million.
Liquidity and Going concern For the years ended July 31, 2024 and 2023, the Company reported a net loss of approximately $3.2 million and $2.9 million, respectively, and operating cash outflows approximately $0.1 million and $2.3 million.
In order to acquire customers, we have made significant efforts in building mutually beneficial long-term relationships with local government, academic institutions, and local business associations. In addition, we also market our consulting services through social media, such as WeChat and Weibo.
Our customer acquisition channels primarily include our sales and marketing campaigns and existing customer referrals. In order to acquire customers, we have made significant efforts in building mutually beneficial long-term relationships with local government, academic institutions, and local business associations. In addition, we also market our consulting services through social media, such as WeChat and Weibo.
However, the Company may need to raise the cash flow from related parties, and there is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all.
We plan to support our future operations primarily from cash generated from our operations and cash on hand. However, the Company may need to raise the cash flow from related parties, and there is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all.
The increase was in line with increase of revenues, and (ii) a decrease of accrued expenses and other current liabilities of $2.0 million as the Company was no longer liable to an investment bank for loss making since disposal of ATIF GP. Net cash used in operating activities was $0.1 million in fiscal year ended July 31, 2022.
The increase was in line with increase of revenues, and (ii) a decrease of accrued expenses and other current liabilities of approximately $2.0 million as the Company was no longer liable to an investment bank for loss making since disposal of ATIF GP.
For the year ended July 31, 2023, the Company provided full provision of $2,654,767 against the balances due from buyers of LGC as the management assessed it is remote to collect the outstanding balance. The balance due from buyers of LGC arose from our disposition of 51.2% of the equity interest of LGC in January 2021.
Provision against due from buyers of LGC. For the fiscal year ended July 31, 2023, we provided full provision of $2,654,767 against the balances due from buyers of LGC as the management assessed it is remote to collect the outstanding balance.
The balance due to related parties are payable on demand and may be extended. The Company’s ability to continue as a going concern is dependent on management’s ability to successfully execute its business plan, which includes increasing revenue while controlling operating cost and expenses to generate positive operating cash flows and obtain financing from outside sources.
The Company’s cash on hand could well cover the current liabilities. The Company’s ability to continue as a going concern is dependent on management’s ability to successfully execute its business plan, which includes increasing revenue while controlling operating cost and expenses to generate positive operating cash flows and obtain financing from outside sources.
Gain (loss ) from investment in trading securities. Loss from investment in trading securities represented fair value changes from investment in trading securities, which was measured at market price. For the years ended July 31, 2023 and 2022, we recorded an investment gain of $0.2 million and a loss of $2.4 million, respectively. Gain from disposal of subsidiaries .
Loss (gains) from investment in trading securities represented fair value changes from investment in trading securities, which was measured at market price. For the fiscal years ended July 31, 2024 and 2023, we recorded an investment loss of approximately $0.4 million and an investment gain of approximately $0.2 million, respectively. Income taxes. We are incorporated in the British Virgin Islands.
Our services were designed to help small and medium-sized enterprises (“SME”) in China achieve their goal of becoming public companies. In May 2022, we shifted our geographic focus from China to North America emphasizing on helping mid and small companies in North America become public companies on the U.S. capital markets.
In May 2022, we shifted our geographic focus from China to North America emphasizing on helping mid and small companies in North America become public companies on the U.S. capital markets.
Critical Accounting Policies and Estimate We prepare our audited consolidated financial statements in accordance with U.S. GAAP, which requires our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods.
GAAP, which requires our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods.
We will continue to monitor the potential impact going forward. Income tax expense was $31,200 for the year ended July 31, 2023 because our USA subsidiaries were making taxable income during the year of 2023.
Income tax expense was $31,200 for the fiscal years ended July 31, 2023, because our USA subsidiaries were making taxable income during the year of 2023. Net loss.
As of July 31, 2023, the Company had cash of $0.6 million and accounts receivables of $0.6 million due from a related party, which were highly liquid. On the other hand, the Company had current liabilities of $1.5 million, among which $0.7 million was due to related parties.
As of July 31, 2024, the Company had cash of $1.2 million, short-term investment in trading securities of $0.4 million, due from a related party of $0.9 million and accounts receivables of $0.2 million due from a related party, which were highly liquid. On the other hand, the Company had current liabilities of $1.0 million.
Provision against accounts receivable due from a related party. For the year ended July 31, 2023, the Company provided full provision of $762,000 against the accounts receivable due from Huaya as the management assessed it is remote to collect the outstanding balance. Interest income, net. For the year ended July 31, 2023, interest income arose from bank deposits.
For the fiscal year ended July 31, 2023, we provided full provision of $762,000 against the accounts receivable due from Huaya as the management assessed it is remote to collect the outstanding balance. For the fiscal year ended July 31, 2024, we reversed provision of $19,103 because Huaya paid salary expenses of $19,103 on our behalf.
Net cash used in operating activities was primarily comprised of net loss of $3.4 million, adjusted for loss of $2.4 million from investment in trading securities, and net changes in our operating assets and liabilities, principally comprising of an increase of accounts receivable of $0.8 million due from a related party, and an increase of accrued expenses and other current liabilities of $1.8 million as the Company is liable to an investment bank for loss making during the year ended July 31, 2022.
Net cash used in operating activities was primarily comprised of net loss of approximately $3.2 million, adjusted for loss of approximately $0.4 million from investment in trading securities, and net changes in our operating assets and liabilities, principally comprising of (i) a decrease of accounts receivable of approximately $0.7 million due from third parties and $0.4 million due from a related party, respectively.
Under the Income Tax Laws of the PRC, Huaya is subject to income tax at a rate of 10% under the preferential tax treatment to Smaller-scale Taxpayers for the year ended July 31, 2022. 36 ATIF Inc, ATIF GP, ATIF LP, ATIF BD, ATIF BC and ATIF BM were established in the U.S and are subject to federal and state income taxes on its business operations.
ATIF Inc, ATIF BD, ATIF BC and ATIF BM were established in the U.S and are subject to federal and state income taxes on its business operations. The federal tax rate is 21% and state tax rate is 8.84%.
Our aim was to assist Chinese enterprises by filling the gaps and forming a bridge between PRC companies and overseas stock markets and exchanges. We have a team of qualified and experienced personnel with legal, regulatory, and language expertise in several jurisdictions outside the U.S.
Our financial consulting services Currently we provide consulting services to the companies based in North America seeking listing in U.S.. We launched our consulting services in 2015. Our aim was to assist Chinese enterprises by filling the gaps and forming a bridge between PRC companies and overseas stock markets and exchanges.
Our total revenue increased by $0.8 million, or 47%, from $1.7 million in fiscal year 2022, to $2.5 million in fiscal year 2023, primarily attributable to an increase of $0.5 million from consulting services to related parties. The increase in revenues from related parties was primarily because we provided consulting services to more customers on behalf of related parties.
Our total revenue decreased by approximately $1.8 million, or 75%, from approximately $2.5 million in fiscal year 2023, to approximately $0.6 million in fiscal year 2024, primarily attributable to a decrease of approximately $0.7 million and $1.1 million, respectively, from consulting services to third parties and related parties.
As a percentage of sales, our general and administrative expenses were 91% and 159% of our total revenues for the years ended July 31, 2023 and 2022, respectively. Provision against due from buyers of LGC.
Jun Liu from $20,000 to $1 since February 2024, and a decrease of approximately $0.1 million in office expenses. As a percentage of sales, our general and administrative expenses were 365% and 91% of our total revenues for the fiscal years ended July 31, 2024 and 2023, respectively. (Reversal of provision) provision against accounts receivable due from a related party.
From April 2022 through the date of this report, the Company entered into consulting agreements with five customers, among which four are based in the North America. Our total revenue generated from consulting services amounted to $2.5 million and $1.7 million for the years ended July 31, 2023 and 2022, respectively.
From April 2022 through the date of this report, the Company entered into consulting agreements with nine customers, among which three are based in the North America.
For the year ended July 31, 2023, we provided consulting services to two customers on behalf of a related party, while for the same period ended July 31, 2022, we provided consulting services to one customer on behalf of a related party. Cost of revenues.
For the fiscal year ended July 31, 2024 and 2023, we provided consulting services to one and two customers on behalf of a related party, respectively. 37 Selling expenses. Selling expenses increased by approximately $0.1 million, or 61%, from approximately $0.2 million in year ended July 31, 2023 to approximately $0.3 million in the same period ended July 31, 2024.
Liquidity and Capital Resources To date, we have financed our operations primarily through cash flows from operations, working capital loans from our major shareholders, proceeds from our initial public offering, and equity financing through public offerings of our securities. We plan to support our future operations primarily from cash generated from our operations and cash on hand.
As a result of foregoing, net loss was approximately $3.2 million for the fiscal year ended July 31, 2024, an increase of $0.3 million from net loss of $2.9 million in fiscal year 2023. 38 Liquidity and Capital Resources To date, we have financed our operations primarily through cash flows from operations, working capital loans from our major shareholders, proceeds from our initial public offering, and equity financing through public offerings of our securities.
Net cash used in investing activities was $1.6 million in fiscal year 2022, primarily consisting of purchase of investment of $1.4 million in listed equity securities, investment of $0.3 million in two equity securities, partially offset against proceeds of $0.2 million from disposal of property and equipment. 38 Financing Activities Net cash provided by financing activities was $0.7 million in fiscal year 2023, which was provided by borrowings of $0.7 million from a related party.
Investing Activities Net cash used in investing activities was approximately $1.6 million in fiscal year 2024, primarily consisting of loans of approximately $0.9 million made to a related party and investment of approximately $0.7 million in trading securities.
Our general and administrative expenses decreased by $0.4 million, or 15%, from $2.7 million in fiscal year 2022 to $2.2 million in fiscal year 2023. Our general and administrative expenses primarily consisted of salary and welfare expenses of management and administrative team, office expenses, operating lease expenses.
General and administrative expenses. Our general and administrative expenses kept stable at $2.3 million and $2.2 million For the fiscal years ended July 31, 2024 and 2023, respectively. Our general and administrative expenses primarily consisted of salary and welfare expenses of management and administrative team, professional expenses, office expenses, operating lease expenses.
We have limited financial obligations denominated in U.S. dollars, thus the foreign currency restrictions and regulations in the PRC on the dividends distribution will not have a material impact on our liquidity, financial condition, and results of operations. 37 The following table sets forth summary of our cash flows for the years indicated: For the Years Ended July 31, 2023 2022 Net cash used in by operating activities $ (2,333,899 ) $ (146,944 ) Net cash provided by (used in) investing activities 459,816 (1,591,535 ) Net cash provided by (used in) financing activities 729,968 (1,960,946 ) Effect of exchange rate change on cash - (147,178 ) Net decrease in cash (1,144,115 ) (3,846,603 ) Cash, beginning of year 1,750,137 5,596,740 Cash, end of year $ 606,022 $ 1,750,137 Operating Activities Net cash used in operating activities was $2.3 million in fiscal year ended July 31, 2023.
The following table sets forth summary of our cash flows for the years indicated: For the Years Ended July 31, 2024 2023 Net cash used in operating activities (120,483 ) (2,333,899 ) Net cash (used in) provided by investing activities (1,579,955 ) 459,816 Net cash provided by financing activities 2,343,792 729,968 Net increase (decrease) in cash 643,354 (1,144,115 ) Cash, beginning of year 606,022 1,750,137 Cash, end of year $ 1,249,376 $ 606,022 39 Operating Activities Net cash used in operating activities was approximately $0.1 million in fiscal year ended July 31, 2024.
Key Factors that Affect our Business We believe the following key factors may affect our consulting services: Our business success depends on our ability to acquire customers effectively. Our customer acquisition channels primarily include our sales and marketing campaigns and existing customer referrals.
Our total revenue generated from consulting services amounted to approximately $0.6 million and $2.5 million for the fiscal years ended July 31, 2024 and 2023, respectively. 35 Key Factors that Affect our Business We believe the following key factors may affect our consulting services: Our business success depends on our ability to acquire customers effectively.
Accordingly, the Company did not incur consulting expenses for the year ended July 31, 2023. 35 As a percentage of sales, our selling expenses were 8% and 34% of our total revenues for the years ended July 31, 2023 and 2022, respectively. General and administrative expenses.
Our selling expenses primarily consisted of promotion and advertising expenses. The increase in our selling expenses was primarily due to an increase of amortization expenses of approximately $0.1 million for TV promotion videos. As a percentage of sales, our selling expenses were 54% and 8% of our total revenues for the fiscal years ended July 31, 2024 and 2023, respectively.
As a result of foregoing, net loss was $2.9 million for the year ended July 31, 2023, a decrease of $0.5 million from net loss of $3.4 million in fiscal year 2022.
Net cash used in operating activities was approximately $2.3 million in fiscal year ended July 31, 2023.
Removed
Reverse Split On August 12, 2021, our Board of Directors approved a reverse stock split (the “Reverse Split”) of our issued and outstanding ordinary shares, par value $0.001 per share, at a ratio of 1 -for-5so that every five (5) shares issued and outstanding on the date of the Reverse Split was combined into one (1) ordinary share, US$0.005 par value.
Added
We have a team of qualified and experienced personnel with legal, regulatory, and language expertise in several jurisdictions outside the U.S. Our services were designed to help small and medium-sized enterprises (“SME”) in China achieve their goal of becoming public companies.
Removed
Shareholders otherwise entitled to receive a fractional share as a result of the reverse stock split will receive a whole share in lieu of such factional share, as relevant. Both before and after completion of the Reverse Split, the Company is and will be authorized to issue 100,000,000,000 ordinary shares of US$0.001 par value each.
Added
The decrease in revenues from third parties was primarily because we provided listing related consulting services for seven customers and earned consulting service fees of approximately $0.4 million for the fiscal year ended July 31, 2024, while we provided phase completed phase I and phase II services for two customers and earned consulting service fees of approximately $1.2 million for the fiscal year ended July 31, 2023.
Removed
As a result of the Reverse Split, the Company’s issued and outstanding ordinary shares was reduced from 45,806,952 ordinary shares of US$0.001 par value each to approximately 9,161,390 ordinary shares of par value $0.005 per share.
Added
The phase I and phase II service fees are higher than listing related consulting services, because the phase I and phase II services take longer time. The decrease in revenues from related parties was primarily because we provided consulting services to less customers on behalf of related parties.
Removed
On August 23, 2021, we amended our Memorandum of Association and Articles of Association in connection with our one -for- five reverse stock split to amend the par value back to $0.001 per ordinary share. Our ordinary shares, as adjusted per the Reverse Split, began trading on the Nasdaq Capital Market on August 30, 2021.
Added
The increase in general and administrative expenses was primarily due to an increase of legal expenses of approximately $0.5 million for legal proceedings with both Boustead Securities, LLC and J.P Morgan Securities LLC, partially offset by a decrease of approximately $0.2 million in rental expenses because we modified an office lease agreement, a decrease of approximately $0.1 million in payroll expenses because we adjusted monthly payroll expenses to Mr.
Removed
Recent Updates On October 6 and October 7, 2022, ATIF Inc., a wholly owned subsidiary of ATIF, established ATIF Business Consulting LLC (“ATIF BC”) and ATIF Business Management LLC (“ATIF BM”) under the laws of California of the United States, respectively.
Added
The balance due from buyers of LGC arose from our disposition of 51.2% of the equity interest of LGC in January 2021. We did not incur such expenses for the fiscal year ended July 31, 2024. Loss (gain) from investment in trading securities.
Removed
On August 1, 2022, ATIF USA entered into and closed a Sale and Purchase Agreement (the “Agreement”) with Asia Time (HK) International Finance Service Limited (the “Buyer”), pursuant to which the Company sold all of its equity interest in ATIF GP for cash consideration of US$50,000 (the “Agreement”).
Added
We will continue to monitor the potential impact going forward. Income tax expense was $3,300 for the fiscal years ended July 31, 2024, because three of our US subsidiaries are subject to state taxes during the year of 2024.
Removed
The management believed the disposition does not represent a strategic shift because it is not changing the way it is running its business. The Company has not shifted the nature of its operations. The termination is not accounted as discontinued operations in accordance with ASC 205-20.
Added
The decrease was because we collected outstanding balance due from customers, (ii) a decrease of prepaid expenses and other current assets of approximately $0.3 million, which was due to amortization of advertising service fees, and (iii) an increase of accrued expenses and other current liabilities of approximately $1.3 million.
Removed
Upon the closing of the Agreement, ATIF GP is no longer our subsidiary and ATIF USA ceased to be the investment manager of ATIF LP.
Added
Financing Activities Net cash provided by financing activities was approximately $2.3 million in fiscal year 2024, which was provided by proceeds of approximately $2.3 million from issuance of ordinary shares pursuant to a private placement Net cash provided by financing activities was approximately $0.7 million in fiscal year 2023, which was provided by borrowings of approximately $0.7 million from a related party. 40 Critical Accounting Policies and Estimate We prepare our audited consolidated financial statements in accordance with U.S.
Removed
As of July 31, 2023, we had one reporting segment, which is the provision of financial consulting services. 33 Our financial consulting services Currently we provide consulting services to the companies based in North America seeking listing in U.S.. We launched our consulting services in 2015.
Removed
On May 31, 2022, we completed the transfer of our equity interest in ATIF HK and Huaya, through which we provided consulting services to Chinese companies.
Removed
We incurred cost of revenues of $0.7 million in the year ended July 31, 2022 which was mainly incurred for direct costs including purchase of a shell company on the over-the-counter (“OTC”) market and consulting expenses for one customer. For the year ended July 31, 2023, we did not incur such expenses. Selling expenses.
Removed
Selling expenses decreased by $0.4 million, or 64%, from $0.6 million in year ended July 31, 2022 to $0.2 million in the same period ended July 31, 2023.
Removed
Our selling expenses primarily consisted of outsourced service fees charged by third-party service providers, business development expenses, potential customer referral commissions, salary and welfare expenses of our business development team, and business travel expenses. The decrease in our selling expenses was primarily due to a decrease of $0.3 million in consulting expenses.
Removed
For the year ended July 31, 2023, the Company identified potential customers on its own and did not engage consultants to develop new customers.
Removed
The decrease in general and administrative expenses was primarily because the general and administrative expenses of the year 2022 included the expenses of $0.4 million incurred by ATIF HK and Huaya, the equity interest in which were transferred in May 2022.
Removed
For the year ended July 31, 2022, interest income represented 1) the interest income of $0.4 million from outstanding balance of $2.3 million due from buyers of LGC arising from the Company’s disposition of 51.2% equity interest in LGC. The interest rate for outstanding balance was 10% per annum, and 2) the minimal interest income from bank deposits.
Removed
For the year ended July 31, 2023, the Company reported a gain of approximately $56,000 from disposal of ATIF GP. For the year ended July 31, 2022, the Company reported a gain of $1.0 million from disposal of ATIF HK and Huaya. Income taxes. We are incorporated in the British Virgin Islands.
Removed
ATIF HK is incorporated in Hong Kong and is subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws.
Removed
The applicable tax rate for the first HKD$2 million of assessable profits is 8.25% and assessable profits above HKD$2 million will continue to be subject to the rate of 16.5% for corporations in Hong Kong, effective from the year of assessment 2018/2019.
Removed
ATIF HK did not generate any assessable profits arising in or derived from Hong Kong for the period from July 1, 2021 through May 31, 2022 when the Company transferred its equity interests in ATIF HK. Accordingly no provision for Hong Kong profits tax has been made in the period. Huaya was incorporated in the PRC.
Removed
The federal tax rate is 21% and state tax rate is 8.84%.
Removed
Income tax expense was $nil for the years ended July 31, 2022 due to significant net operating loss in fiscal year of 2022 which resulted in taxable losses. Net loss.
Removed
Net cash used in financing activities was $2.0 million in fiscal year 2022, primarily consisting of payment of $3.0 million to three limited partners of ATIF LP, as withdrawal of investment, partially offset by proceeds of $1.1 million in relation to exercise of warrants by investors who subscribed for ordinary shares offered in registered direct offering which closed in November 2020.