Financial Performance - Revenues for the three months ended January 31, 2024, were $25,000, a significant decrease from $1,900,000 for the same period in 2023, indicating a decline of approximately 98.7%[22] - Net loss for the six months ended January 31, 2024, was $1,033,101, compared to a net income of $698,466 for the same period in 2023, marking a shift of approximately 248.5%[26] - For the three months ended January 31, 2024, the Company reported a net loss of approximately $0.4 million, compared to a net income of approximately $0.8 million for the same period in 2023, indicating a significant decline in performance[31] - For the six months ended January 31, 2024, the Company reported a net loss of approximately $1.0 million, while for the same period in 2023, it reported a net income of approximately $0.7 million[31] - Total revenue decreased by approximately $1.9 million, from $1.9 million for the three months ended January 31, 2023, to $25,000 for the three months ended January 31, 2024, representing a 99% decrease[114][116] - For the six months ended January 31, 2024, total revenue decreased by approximately $2.0 million, from $2.2 million for the same period in 2023 to approximately $150,000, a 93% decrease[126][128] - Net loss for the three months ended January 31, 2024, was approximately $0.4 million, a change of approximately $1.2 million from net income of $0.8 million for the same period in 2023, representing a 150% decrease[124] - Net loss for the six months ended January 31, 2024, was approximately $1.0 million, a change of $1.7 million from net income of approximately $0.7 million for the same period in 2023, representing a 248% decrease[137] Assets and Liabilities - Total current assets decreased from $2,542,780 as of July 31, 2023, to $1,619,991 as of January 31, 2024, representing a decline of approximately 36.3%[19] - Total liabilities decreased from $2,229,217 as of July 31, 2023, to $1,982,467 as of January 31, 2024, reflecting a reduction of about 11.1%[20] - Total assets decreased from $3,768,570 as of July 31, 2023, to $2,488,719 as of January 31, 2024, a decline of approximately 34%[20] - Cash and cash equivalents dropped from $606,022 as of July 31, 2023, to $139,152 as of January 31, 2024, a decrease of approximately 77%[19] - Current liabilities amounted to approximately $1.5 million, with approximately $0.7 million due to related parties, raising concerns about the Company's liquidity[32] - The accumulated deficit increased from $(27,666,624) as of July 31, 2023, to $(28,699,725) as of January 31, 2024, representing a deterioration of approximately 3.7%[19] Operating Expenses - Operating expenses for the three months ended January 31, 2024, totaled $572,516, slightly higher than $566,112 for the same period in 2023, indicating a marginal increase of about 1%[22] - Selling expenses for the three months ended January 31, 2024, increased by $45,000, or 94%, to $93,000 from $48,000 for the same period in 2023[117] - Selling expenses for the six months ended January 31, 2024, increased by $112,000, or 211%, to $165,000 from $53,000 for the same period in 2023[129] - General and administrative expenses for the three months ended January 31, 2024, were approximately $479,516, a decrease of $38,596, or 7%, from $518,112 for the same period in 2023[119] - General and administrative expenses for the six months ended January 31, 2024, increased from approximately $1.1 million in 2023 to approximately $1.2 million in 2024, primarily due to increased payroll expenses[131] Cash Flow - The Company reported operating cash outflows of $17,413 for the six months ended January 31, 2024, compared to approximately $0.8 million for the same period in 2023[31] - Net cash used in operating activities for the six months ended January 31, 2024, was $17,413, compared to $754,714 for the same period in 2023, indicating a significant reduction in cash outflow[147][148] - The Company experienced a net decrease in cash of $466,870 for the six months ended January 31, 2024, compared to a decrease of $920,750 for the same period in 2023[147] Revenue Recognition - Revenue is primarily generated from consulting services for clients intending to go public, with services categorized into three phases[49][50][51] - Revenue from Phase I and Phase II consulting services is recognized ratably over the estimated completion period, while Phase III revenue is recognized upon completion of the transaction[53] - As of January 31, 2024, one customer accounted for 100% of the Company's consolidated revenue for the three months ended, compared to three customers accounting for 34%, 34%, and 32% in the same period of 2023[61] - For the six months ended January 31, 2024, four customers accounted for 40%, 33%, 17%, and 10% of the Company's consolidated revenue, compared to 30%, 30%, 27%, and 14% in the same period of 2023[62] Legal Proceedings - The company is currently involved in a legal proceeding with J.P. Morgan Securities LLC, which claims damages of $5,064,160 related to a stock transaction[102] - The company has a pending legal proceeding with Boustead Securities, LLC, which alleges breach of contract and is currently in arbitration[100] - The Company is involved in ongoing legal proceedings, including a lawsuit filed by Boustead, which may have material adverse effects on its business and financial condition[160][170] Future Outlook - The Company anticipates needing to raise additional capital immediately to continue funding its operations, indicating substantial doubt about its ability to continue as a going concern[33] - 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 costs[143][144] - The company plans to expand operations to other Asian countries, including Malaysia, Vietnam, and Singapore, while continuing to focus on the North American market[108] Miscellaneous - The Company adopted ASU No. 2016-13 for credit loss measurement, which had no impact on the allowance for credit losses for accounts receivable upon adoption[41] - The financial statements have been prepared on a going concern basis, reflecting the Company's ability to realize assets and satisfy liabilities in the ordinary course of business[34] - The Company has established several subsidiaries, including ATIF Business Consulting LLC and ATIF Business Management LLC, to expand its business advisory and financial consulting services[27] - The Company has not declared or paid any cash dividends to shareholders and does not plan to do so from its restricted net assets as of January 31, 2024[146] - The Company is currently evaluating steps to remediate the ineffectiveness of its disclosure controls and procedures, including hiring qualified accounting personnel and implementing training programs[157] - The certifications attached to the quarterly report comply with the Sarbanes-Oxley Act of 2002[177] - The report was signed by the Chief Executive Officer and Chief Financial Officer on March 18, 2024[181][182]
ATIF(ZBAI) - 2024 Q2 - Quarterly Report