Financial Performance - The company generated total revenues of approximately $5.3 million, $3.1 million, and $0.7 million for the fiscal years ended July 31, 2018, 2019, and 2020, respectively[216]. - Revenues from going public consulting services were $5.2 million, $3.1 million, and $0.6 million for the fiscal years ended July 31, 2018, 2019, and 2020, respectively[216]. - For the fiscal year ended July 31, 2020, consulting services generated $0.6 million, accounting for 94.0% of total revenues, while total revenues for the fiscal year ended July 31, 2019, were $3.1 million[266]. - The number of new consulting service clients decreased from twelve in 2018 to two in 2020, indicating a focus on fewer clients with higher revenue potential[266]. Business Strategy and Expansion - The company aims to assist Chinese enterprises in entering international capital markets, having successfully helped seven companies to be quoted on the U.S. OTC markets since inception[220]. - The company plans to expand operations to other Asian countries, such as Malaysia, Vietnam, and Singapore, by 2021[220]. - The company aims to expand its consulting services from China to the rest of Asia, with a focus on building an international consulting service company[241]. - The company plans to expand its going public consulting services to include Chinese domestic exchanges and the Stock Exchange of Hong Kong, following new listing rules announced in April 2018[244]. Consulting Services - The consulting fees for going public services range from $1,000,000 to $2,500,000, based on the complexity and conditions of each client[263]. - The "Becoming Public" program for enterprise clients is offered at a fee of $20,000 and covers various aspects of capital markets and IPO processes[281]. - The consulting services provided to clients such as Agrecoe and ELRE are currently limited to due diligence work and preliminary planning due to delays caused by the COVID-19 pandemic[272][273]. - The company aims to develop personalized going public consulting services for enterprises preferring to list on domestic exchanges rather than abroad[244]. Acquisitions and Investments - The company acquired approximately 51.2% of Leaping Group Co., Ltd. (LGC) in April 2020, consolidating LGC's financial statements with its own[253]. - The total option price for purchasing equity interests in Qianhai is approximately $730,000, based on the registered capital[230]. Impairment and Losses - A full impairment loss of $384,492 was applied against the financial and news platform acquired in September 2018 due to lack of revenue generation[217]. - The company has not generated any revenue from the acquired financial and news platform CNNM, leading to a full impairment loss of $384,492 for the year ended July 31, 2020[248]. Team and Expertise - The company has a highly qualified professional service team with an average of five years of experience in international finance and capital markets[236]. - The CEO of Qianhai has 10 years of experience in the Chinese, U.S., and Hong Kong capital markets and has assisted three companies to go public in the U.S.[236]. Legal and Regulatory Compliance - The company is classified as an "emerging growth company" and can remain in this status for up to five years or until certain revenue or market value thresholds are met[212]. - The establishment and operation of wholly foreign-owned enterprises (WFOEs) in China require approval from MOFCOM, ensuring compliance with relevant laws[326]. - The management consulting industry is categorized as a permitted industry under the Catalogue for the Guidance of Foreign Investment Industries, encouraging foreign investment[327]. - The Foreign Investment Law, effective January 1, 2020, repealed previous laws governing foreign investment, streamlining regulations for foreign enterprises[325]. Advertising and Media Operations - LGC's multi-channel advertising services include pre-movie advertisements, with prices for 15-second slots ranging from $3,810 to $5,276 based on various factors[290]. - LGC operates three movie theaters in Shenyang with a total of 17 screens, enhancing its Multi-Channel Advertising and Film Production businesses[292]. - The company's revenues from the Movie Theater Operating Business are seasonal, peaking during summer and holiday seasons due to movie release timings[311]. Challenges and Risks - LGC is currently involved in legal proceedings related to a consulting agreement, with a potential liability of $261,724 as of July 31, 2020[313]. - LGC has not completed the necessary filing procedures for its original Internet film "The Master-Hand," which may delay or cancel its release, adversely affecting the business and financial condition[371]. - LGC operates through various domestic consolidated affiliated entities due to restrictions on foreign investment in film production, which may lead to uncertainties regarding compliance with PRC laws[373]. Intellectual Property and Trademarks - The company is in the process of registering multiple trademarks, including "IPOEX" in various jurisdictions, enhancing its intellectual property portfolio[321]. - The Trademark Law protects registered trademarks, granting exclusive rights to use and legally protect them[331]. Taxation and Financial Regulations - The Enterprise Income Tax (EIT) rate for resident enterprises in the PRC is 25%, while non-resident enterprises may pay a reduced rate of 10% if they have no substantial connection with their institutions in the PRC[347]. - Dividends declared to non-PRC resident investors are typically subject to a withholding tax rate of 10%, which can be reduced to 5% under specific conditions for Hong Kong resident enterprises[352][353].
ATIF (ATIF) - 2020 Q4 - Annual Report