ATIF(ZBAI) - 2024 Q1 - Quarterly Report

Cover Page Information Filing and Registrant Details This section provides the basic filing information for the Form 10-Q, identifying ATIF Holdings Limited as the registrant, its jurisdiction of incorporation, principal executive offices, and contact number - The report is a Quarterly Report on Form 10-Q for the period ended October 31, 2023[2] - The registrant is ATIF HOLDINGS LIMITED, incorporated in the British Virgin Islands, with Commission File Number: 001-38876[2][3] Securities and Filer Status This section details the company's registered securities and its classification under SEC filing requirements, indicating its compliance status and filer type Title of each class | Title of each class | Trading Symbol | Name of exchange on which registered | | :------------------ | :------------- | :----------------------------------- | | Ordinary Shares | ATIF | The Nasdaq Stock Market | - The registrant has filed all required reports during the preceding 12 months and has been subject to such filing requirements for the past 90 days[4] Filer Status | Filer Status | Status | | :---------------------- | :----- | | Large accelerated filer | ☐ | | Accelerated filer | ☐ | | Non-accelerated filer | ☒ | | Smaller reporting company | ☒ | | Emerging growth company | ☒ | Shares Outstanding This section provides the total number of common stock shares outstanding as of a recent date - As of December 15, 2023, there were 9,627,452 shares of the registrant's common stock outstanding[6] TABLE OF CONTENTS FORWARD-LOOKING STATEMENTS Nature and Identification This section clarifies that the report contains forward-looking statements reflecting current expectations about the Company's future, identifiable by specific terminology, and based on available information and management's interpretation of significant factors - Forward-looking statements reflect current expectations and projections about the Company's future results, performance, liquidity, financial condition, prospects, and opportunities[10] - These statements are generally identifiable by words such as 'may,' 'should,' 'will,' 'plan,' 'expect,' 'anticipate,' 'estimate,' 'believe,' 'intend,' 'seek,' or 'project'[11] Risks and Reliance This section warns that actual results may differ materially from forward-looking statements due to various risks and uncertainties, advising investors against undue reliance and stating no obligation to update these statements - Actual results, performance, liquidity, financial condition, and results of operations could differ materially from forward-looking statements due to various risks, uncertainties, and other factors, including the ability to raise sufficient capital[11] - Potential investors should not place undue reliance on any forward-looking statements, and there is no undertaking to publicly update or revise them[12] - The report also contains estimates and statistical data from independent parties and the Company, which involve assumptions and limitations, and should not be given undue weight[14] PART I-FINANCIAL INFORMATION ITEM 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations and comprehensive loss, statements of changes in equity, and statements of cash flows, along with detailed notes explaining the company's organization, accounting policies, liquidity, and other financial details for the reported periods Unaudited Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights | Metric | October 31, 2023 (unaudited) | July 31, 2023 | | :----------------- | :--------------------------- | :------------ | | Total Current Assets | $1,953,257 | $2,542,780 | | Total Assets | $3,040,594 | $3,768,570 | | Total Current Liabilities | $1,495,717 | $1,539,719 | | Total Liabilities | $2,126,704 | $2,229,217 | | Total Equity | $913,890 | $1,539,353 | - Total assets decreased by approximately $727,976 (19.3%) from July 31, 2023, to October 31, 2023[19] - Total equity decreased by approximately $625,463 (40.6%) from July 31, 2023, to October 31, 2023[19] Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statements of Operations and Comprehensive Loss Highlights | Metric | Three Months Ended Oct 31, 2023 | Three Months Ended Oct 31, 2022 | | :------------------------- | :------------------------------ | :------------------------------ | | Revenues | $125,000 | $300,000 | | Total operating expenses | $781,779 | $567,896 | | Loss from operations | $(656,779) | $(267,896) | | Net loss and comprehensive loss | $(625,463) | $(112,515) | | Loss Per share – basic and diluted | $(0.06) | $(0.01) | - Revenues decreased by 58.3% from $300,000 in Q1 2023 to $125,000 in Q1 2024[20] - Net loss increased significantly by 455.9% from $(112,515) in Q1 2023 to $(625,463) in Q1 2024[20] Unaudited Condensed Consolidated Statements of Changes in Equity Condensed Consolidated Statements of Changes in Equity Highlights | Metric | October 31, 2023 | October 31, 2022 | | :---------------------- | :--------------- | :--------------- | | Balance at period end | $913,890 | $4,309,137 | | Net loss for the period | $(625,463) | $(112,515) | - Total equity decreased from $1,539,353 at July 31, 2023, to $913,890 at October 31, 2023, primarily due to a net loss of $625,463 for the period[21] Unaudited Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows Highlights | Cash Flow Activity | Three Months Ended Oct 31, 2023 | Three Months Ended Oct 31, 2022 | | :----------------------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $195,353 | $363,709 | | Net cash used in investing activities | $(440,150) | $(242,837) | | Net (decrease) increase in cash | $(244,797) | $120,872 | | Cash, end of period | $361,225 | $1,871,009 | - Net cash provided by operating activities decreased by 46.3% from $363,709 in Q1 2023 to $195,353 in Q1 2024[23] - Net cash used in investing activities increased by 81.2% from $(242,837) in Q1 2023 to $(440,150) in Q1 2024[23] NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS This section provides detailed explanations and disclosures for the unaudited condensed consolidated financial statements, covering the company's organization, significant accounting policies, liquidity, related party transactions, contingencies, and subsequent events NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS ATIF Holdings Limited, incorporated in the British Virgin Islands, operates as a holding company primarily providing business advisory and financial consulting services to small and medium-sized enterprises, with recent expansion into US-based subsidiaries - ATIF Holdings Limited was incorporated on January 5, 2015, in the British Virgin Islands and is primarily engaged in providing business advisory and financial consulting services to SMEs[24] - The Company established several wholly-owned subsidiaries in the U.S. (ATIF BC, ATIF BM, ATIF BD) and BVI (ATIF Investment) between 2021 and 2022 to expand its operations[25][27] - On August 1, 2022, the Company sold all its equity interest in ATIF GP for $50,000, which was not considered a strategic shift[26] NOTE 2 – LIQUIDITY AND GOING CONCERN The Company reported net losses and declining operating cash flows, leading to a working capital deficit and substantial doubt about its ability to continue as a going concern, necessitating immediate additional capital Net Loss and Operating Cash Flow | Metric | Three Months Ended Oct 31, 2023 | Three Months Ended Oct 31, 2022 | | :---------------------- | :------------------------------ | :------------------------------ | | Net loss | $(0.6) million | $(0.1) million | | Operating cash inflows | $0.2 million | $0.4 million | - As of October 31, 2023, the Company had $0.4 million in cash and $0.7 million in accounts receivable, but current liabilities of $1.5 million, including $0.7 million due to related parties[29] - Losses from operations, a working capital deficit, and the need for additional capital raise substantial doubt about the Company's ability to continue as a going concern[30] NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the key accounting principles and policies used in preparing the financial statements, including the basis of presentation, use of estimates, revenue recognition, and treatment of financial instruments, income taxes, and segment reporting Basis of Presentation and Principles of Consolidation The interim unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and include the accounts of the Company and its subsidiaries, with all intercompany balances and transactions eliminated - Financial statements are prepared in accordance with U.S. GAAP and SEC rules, without audit, and should be read with the annual Form 10-K[32][33] - The consolidated financial statements include the accounts of the Company and its subsidiaries, with intercompany balances and transactions eliminated[35] Use of Estimates Management makes significant estimates and assumptions in preparing the financial statements, which affect reported amounts of assets, liabilities, revenues, and expenses, and actual results may differ - Significant estimates include allowance for credit losses, useful lives of assets, recoverability of long-lived assets, revenue recognition, contingent liabilities, and realization of deferred tax assets[36] Accounts Receivable, net The Company adopted ASU 2016-13 (CECL model) on August 1, 2023, for measuring credit losses on financial instruments, which involves using loss-rate methods and individual assessment for limited customers - The Company adopted ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), on August 1, 2023, using a modified retrospective transition method[37] - The new guidance replaces the incurred loss impairment model with a forward-looking current expected credit losses (CECL) model[37] - The Company maintains an allowance for credit losses as an offset to accounts receivable, estimated using loss-rate methods and individual assessment due to a limited customer base[39] Fair Value of Financial Instruments The Company uses a three-level fair value hierarchy for financial instruments, with trading securities valued at Level 1 (quoted prices in active markets) and other short-term instruments approximating fair value - Fair value is defined as the price received to sell an asset or paid to transfer a liability in an orderly transaction[40] - A three-level fair value hierarchy prioritizes inputs: Level 1 (quoted prices in active markets), Level 2 (quoted prices for similar assets/liabilities or observable market data), and Level 3 (unobservable inputs)[40][41] - Investment in trading securities are based on Level 1 inputs, while other financial instruments approximate fair value due to their short-term nature[41][42] Revenue Recognition The Company recognizes revenue from consulting services in accordance with ASC 606, categorizing services into three phases (Phase I, II, III) with revenue recognized ratably over the estimated completion period for Phase I and II, and upon transaction completion for Phase III - The Company recognizes revenue in accordance with ASC 606 Revenue from Contracts with Customers[43] - Consulting services are categorized into three phases: Phase I (due diligence, market research, etc., ~3 months), Phase II (reorganization, pre-listing education, etc., ~8 months), and Phase III (shell company identification, public filing assistance)[46][47][48] - Revenue for Phase I and II is recognized ratably over the estimated completion period, while Phase III revenue is recognized upon completion of the reverse merger or IPO transaction[49] Income Taxes The Company accounts for income taxes under ASC 740, recognizing deferred tax assets and liabilities for temporary differences and establishing valuation allowances when realization is uncertain - The Company accounts for income taxes under ASC 740, recognizing deferred tax assets and liabilities for future tax consequences of temporary differences[51] - Uncertain tax positions are recognized if it is 'more likely than not' that the position would be sustained in an examination[52] Segment reporting Based on management's assessment, the Company operates in a single reporting segment, which is the consulting service business - The Company's Chief Operating Decision Maker (CODM) is Mr. Liu, the Chairman and CEO[53] - As of October 31, 2023, and July 31, 2023, the Company operates in one operating segment: the consulting service business[54] Risks and Uncertainty The Company faces credit risk from cash deposits and unsecured accounts receivable, and significant concentration risk with a few customers accounting for a large portion of revenue and receivables. Other risks include natural disasters and health epidemics - The Company's cash and cash equivalents are deposited in US banks, with FDIC insurance up to $250,000[55] - For the three months ended October 31, 2023, three customers accounted for 48%, 40%, and 12% of consolidated revenue, respectively[57] - As of October 31, 2023, two customers accounted for 56% and 44% of consolidated accounts receivable[58] - The Company plans to mitigate concentration risk by transitioning consulting services from PRC-based customers to more international customers[59] NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets primarily consist of prepayments for advertising services, which decreased from July 31, 2023, to October 31, 2023 Prepaid Expenses and Other Current Assets | Item | October 31, 2023 (unaudited) | July 31, 2023 | | :------------------------------ | :--------------------------- | :------------ | | Prepayment for advertising service fee | $336,000 | $408,000 | | Advance to vendors | $- | $10,000 | | Others | $36,540 | $11,570 | | Total | $372,540 | $429,570 | - Prepayment for advertising services decreased by $72,000 from July 31, 2023, to October 31, 2023[62] NOTE 5 – PROPERTY, PLANT AND EQUIPMENT, NET Net property and equipment decreased slightly from July 31, 2023, to October 31, 2023, with depreciation expense also decreasing year-over-year Property and Equipment, Net | Item | October 31, 2023 (unaudited) | July 31, 2023 | | :---------------------------- | :--------------------------- | :------------ | | Furniture, fixtures and equipment | $208,536 | $204,204 | | Less: accumulated depreciation | $(120,236) | $(110,567) | | Property and equipment, net | $88,300 | $93,637 | - Depreciation expense for the three months ended October 31, 2023, was $9,669, a decrease from $16,656 in the same period of 2022[63] NOTE 6 – INTANGIBLE ASSETS Net intangible assets, primarily software, decreased from July 31, 2023, to October 31, 2023, with consistent amortization expense year-over-year Intangible Assets, Net | Item | October 31, 2023 (unaudited) | July 31, 2023 | | :------------------------ | :--------------------------- | :------------ | | Software | $320,000 | $320,000 | | Less: accumulated amortization | $(266,669) | $(246,669) | | Intangible assets | $53,331 | $73,331 | - Amortization expense remained constant at $20,000 for both the three months ended October 31, 2023, and 2022[64] NOTE 7 – INVESTMENTS IN TRADING SECURITIES The Company's investments in trading securities significantly increased from July 31, 2023, to October 31, 2023, but also resulted in a higher loss from fair value changes during the period Investments in Trading Securities | Metric | October 31, 2023 (unaudited) | July 31, 2023 | | :----------------------------------- | :--------------------------- | :------------ | | Balance of investments in trading securities | $459,353 | $130,649 | Loss from Investment in Trading Securities | Period | Loss from Investment in Trading Securities | | :----------------------------------- | :----------------------------------------- | | Three months ended October 31, 2023 | $(109,403) | | Three months ended October 31, 2022 | $(20,004) | - The loss from investment in trading securities increased by $89,399 (446.9%) from the prior year period[65] NOTE 8 – OPERATING LEASES The Company leases office space and a car under non-cancelable operating leases, with ROU assets and lease liabilities decreasing slightly from July 31, 2023, to October 31, 2023, while the weighted average discount rate remained constant Operating Lease Related Assets and Liabilities | Item | October 31, 2023 (unaudited) | July 31, 2023 | | :------------------------------ | :--------------------------- | :------------ | | Right-of-use assets, net | $945,706 | $1,058,822 | | Operating lease liabilities, current | $375,278 | $415,411 | | Operating lease liabilities, noncurrent | $630,987 | $689,498 | | Total operating lease liabilities | $1,006,265 | $1,104,909 | Weighted Average Lease Terms and Discount Rates | Metric | October 31, 2023 (unaudited) | July 31, 2023 | | :------------------------------ | :--------------------------- | :------------ | | Weighted average remaining lease term (years) | 3.26 | 3.35 | | Weighted average discount rate | 4.90% | 4.90% | - Rent expense for the three months ended October 31, 2023, was $125,679, an increase from $120,692 in the same period of 2022[66] NOTE 9 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities increased from July 31, 2023, to October 31, 2023, primarily driven by a rise in accrued payroll expenses Accrued Expenses and Other Current Liabilities | Item | October 31, 2023 (unaudited) | July 31, 2023 | | :---------------------- | :--------------------------- | :------------ | | Accrued payroll expenses | $308,620 | $212,953 | | Rental deposit payable | $66,000 | $66,000 | | Others | $2,361 | $14,187 | | Total | $376,981 | $293,140 | - Accrued payroll expenses increased by $95,667 (44.9%) from July 31, 2023, to October 31, 2023[70] NOTE 10 – DEFERRED REVENUE Deferred revenue decreased to zero as of October 31, 2023, with $70,000 recognized as other income due to customer agreement terminations where advances were not refunded Deferred Revenue Balance | Date | Deferred Revenue | | :-------------- | :--------------- | | October 31, 2023 | $nil | | July 31, 2023 | $70,000 | - For the three months ended October 31, 2023, $70,000 of advance from customer balance as of July 31, 2023, was recognized as other income due to terminated agreements[72] NOTE 11 – RELATED PARTY TRANSACTIONS The Company engaged in various transactions with related parties, including loan repayments and collections, resulting in significant balances due to and from these parties as of October 31, 2023 - Key related parties include Huaya (wholly owned by former CEO Mr. Pishan Chi) and Asia International Securities Exchange Co., Ltd. (wholly owned by current CEO Mr. Jun Liu)[73] - For the three months ended October 31, 2023, the Company repaid $17,710 to Asia International Securities Exchange Co., Ltd. and collected $20,000 from Huaya[74] Balances with Related Parties (October 31, 2023) | Item | Balance (unaudited) | | :------------------------ | :------------------ | | Accounts receivable (Asia International Securities Exchange Co., Ltd.) | $- | | Other receivable (Huaya) | $20,539 | | Other payables (Asia International Securities Exchange Co., Ltd.) | $712,258 | NOTE 12 – TAXES The Company's BVI entities are not subject to income tax, while its US entities are subject to federal and state income taxes. No income tax expenses were incurred in the reported periods, and a 100% valuation allowance is provided against deferred tax assets due to net operating losses - The Company's BVI entities (ATIF and ATIF Investment) are not subject to income or capital gains tax in the British Virgin Islands[78] - US subsidiaries (ATIF Inc., ATIF BC, ATIF BM, ATIF BD) are subject to federal (21%) and state (8.84%) income taxes[79] - No income tax expenses were incurred for the three months ended October 31, 2023, and 2022[80] - A 100% valuation allowance has been provided against deferred tax assets due to the uncertainty of their realization, primarily stemming from net operating losses[82] NOTE 13 – CONTINGENCIES The Company is involved in a pending legal proceeding with Boustead Securities, LLC, concerning an alleged breach of an underwriting agreement. The case is currently in arbitration, with a hearing on contract interpretation extended to February 29, 2024, and the outcome is premature to assess - On May 14, 2020, Boustead Securities, LLC filed a lawsuit against the Company and LGC for breaching an underwriting agreement[85] - The lawsuit alleges that the Company's acquisition of LGC during an exclusive agreement period deprived Boustead of compensation[86] - The case is currently in arbitration, initiated on March 10, 2023, with a hearing on contract interpretation extended to February 29, 2024[91] - Management believes it is premature to assess and predict the outcome of this pending arbitration[92] NOTE 14 – SUBSEQUENT EVENT On December 4, 2023, the Company received correspondence from J.P. Morgan Securities LLC regarding a potential lawsuit for $5,064,160 in damages related to a stock transaction by ATIF-1 GP, LLC, which management believes it is not liable for due to the prior sale of the entity - On December 4, 2023, the Company received correspondence from J.P. Morgan Securities LLC concerning a potential lawsuit for $5,064,160 in damages[93][94] - The claim relates to a stock transaction by ATIF-1 GP, LLC, which the Company sold in August 2022[94] - Management believes the Company would not be liable for the claim as ATIF-1 GP, LLC was sold prior to the alleged event[94] ITEM 2. Management's Discussion And Analysis Of Financial Condition And Results Of Operations This section provides management's perspective on the Company's financial condition and results of operations, including a business overview, key factors affecting the business, detailed analysis of revenues and expenses, liquidity, capital resources, and critical accounting policies Business Overview ATIF Holdings Limited offers financial consulting services to SMEs in Asia and North America, specializing in 'going public' services. The company has shifted its geographic focus to North America and plans further international expansion, while also diversifying into asset management, investment holding, and media services - The Company provides financial consulting services to small and medium-sized enterprise customers in Asia and North America, with a focus on comprehensive 'going public' consulting services[96] - In May 2022, the Company shifted its geographic focus for consulting services from China to North America, aiming to help mid and small companies list on U.S. capital markets[98] - Total revenue from consulting services decreased from $0.3 million for the three months ended October 31, 2022, to $0.1 million for the same period in 2023[100] Key Factors that Affect our Business The Company's business success is significantly influenced by its ability to effectively acquire and retain customers, navigate intense market competition, and attract and retain key personnel - Business success depends on the ability to acquire customers effectively through sales, marketing, and referrals, with potential adverse effects if channels become less effective[101] - The consulting business faces strong market competition from entities with greater resources, and the Company's growth depends on its ability to differentiate its services[102] - The Company relies heavily on the expertise of its directors and officers and its ability to attract and retain qualified financial consultancy professionals for sustained growth[103] Results of Operations The Company experienced a significant decline in revenue and a substantial increase in net loss for the three months ended October 31, 2023, compared to the prior year, driven by increased selling and general & administrative expenses, and higher losses from trading securities Results of Operations Summary (Three Months Ended October 31) | Metric | 2023 | 2022 | Change Amount | Change Percentage | | :-------------------------------- | :---------- | :---------- | :------------ | :---------------- | | Revenues | $125,000 | $300,000 | $(175,000) | (58)% | | Selling expenses | $72,000 | $5,000 | $67,000 | 1,340% | | General and administrative expenses | $709,779 | $562,896 | $146,883 | 26% | | Loss from operations | $(656,779) | $(267,896) | $388,883 | 145% | | Other income, net | $140,720 | $59,500 | $81,220 | 137% | | Loss from investment in trading securities | $(109,404) | $(20,004) | $89,400 | 447% | | Net loss | $(625,463) | $(112,515) | $512,948 | 456% | - Revenues decreased by $0.2 million (58%) due to providing IPO assistance to three customers in 2023 ($0.1 million) compared to completing Phase II service for one customer in 2022 ($0.3 million)[106][107] - Selling expenses surged by 1,340% to $72,000, primarily due to $72,000 in monthly promotion expenses incurred since December 2022[108] - General and administrative expenses increased by $0.1 million (26%), mainly due to a rise in payroll and welfare expenses[112] - Other income, net, increased by $81,220, primarily from a $70,000 reversal of deferred revenues due to customer agreement terminations[114] Liquidity and Capital Resources The Company's liquidity is strained by net losses and a working capital deficit, necessitating immediate additional capital. Cash flows from operating activities decreased, while cash used in investing activities increased, leading to a net decrease in cash for the period - The Company anticipates needing to raise additional capital immediately to fund operations due to losses, working capital deficit, and the requirement of additional capital[120][123] Cash Flow Summary (Three Months Ended October 31) | Cash Flow Activity | 2023 | 2022 | | :----------------------------- | :---------- | :---------- | | Net cash provided by operating activities | $195,353 | $363,709 | | Net cash used in investing activities | $(440,150) | $(242,837) | | Net (decrease) increase in cash | $(244,797) | $120,872 | | Cash, end of period | $361,225 | $1,871,009 | - Net cash provided by operating activities decreased due to net loss, loss from trading securities, and changes in accounts receivable, prepaid expenses, deferred revenue, and accrued expenses[127] - Net cash used in investing activities primarily consisted of $0.4 million in investments in trading securities[130] Critical Accounting Policies and Estimate Management states that due to the current level of activity and lack of complex transactions, there are no critical accounting policies and estimates that materially affect the preparation of the financial statements - Critical accounting policies involve difficult, subjective, or complex judgments that could materially affect financial condition or results of operations[132] - Due to the level of activity and lack of complex transactions, the Company believes there are currently no critical accounting policies and estimates that affect the preparation of its financial statements[133] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, ATIF Holdings Limited is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is not required to provide information regarding quantitative and qualitative disclosures about market risk[134] ITEM 4. Controls and Procedures The Company's disclosure controls and procedures were deemed ineffective as of October 31, 2022, due to insufficient accounting personnel, lack of documented financial closing procedures, and inadequate risk assessment. Management is evaluating remediation steps, and no material changes occurred in internal control over financial reporting during the quarter Disclosure Controls and Procedures - As of October 31, 2022, the Company's disclosure controls and procedures were not effective[135] - Ineffectiveness was attributed to insufficient full-time accounting and financial reporting personnel, lack of documented financial closing procedures, and lack of risk assessment in accordance with the COSO 2013 framework[135] - Management is evaluating remediation steps, including hiring more qualified accounting personnel, implementing training programs, and establishing an internal audit function[135] Changes in Internal Control over Financial Reporting - Except for the disclosed ineffectiveness of disclosure controls and procedures, there have been no material changes in internal controls over financial reporting during the fiscal quarter ended October 31, 2023[136] PART II-OTHER INFORMATION ITEM 1. Legal Proceedings The Company is involved in an ongoing legal proceeding with Boustead Securities, LLC, alleging breach of an underwriting agreement. The case has progressed to arbitration, with a hearing on contract interpretation scheduled for February 29, 2024, and the outcome remains uncertain - On May 14, 2020, Boustead Securities, LLC filed a lawsuit against the Company and Leaping Group Co., Ltd. (LGC) for breaching an underwriting agreement[140] - Boustead alleges that the Company's acquisition of LGC during an exclusive agreement period deprived Boustead of compensation[141] - The case is currently in arbitration before JAMS in California, with a hearing on contract interpretation extended to February 29, 2024[147] - Management believes it is premature to assess and predict the outcome of this pending arbitration[148] ITEM 1A. Risk Factors As a smaller reporting company, ATIF Holdings Limited is not required to provide specific disclosures regarding risk factors - As a smaller reporting company, the registrant is not required to provide the information regarding risk factors[149] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable to ATIF Holdings Limited for the reporting period - This item is marked as 'Not applicable'[150] ITEM 3. Defaults Upon Senior Securities This item is not applicable to ATIF Holdings Limited for the reporting period - This item is marked as 'Not applicable'[151] ITEM 4. Mine Safety Disclosures This item is not applicable to ATIF Holdings Limited for the reporting period - This item is marked as 'Not applicable'[152] ITEM 5. Other Information This item is not applicable to ATIF Holdings Limited for the reporting period - This item is marked as 'Not applicable'[153] ITEM 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the Chief Executive Officer and Chief Financial Officer, as well as Inline XBRL documents - Exhibits include certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) and Section 906 of the Sarbanes-Oxley Act of 2002[155] - The filing also includes various Inline XBRL Taxonomy Extension Documents and a Cover Page Interactive Data File[155] SIGNATURES Report Signatures The report is duly signed on behalf of ATIF Holdings Limited by its Chief Executive Officer, Jun Liu, as of December 15, 2023 - The report was signed by Jun Liu, Chief Executive Officer of ATIF Holdings Limited, on December 15, 2023[158][160]