Financial Performance - For the fiscal year ended July 31, 2025, the company incurred a net loss of $4.6 million, with expectations of continued losses in the near future due to a declining economic environment and regulatory uncertainties in China [39]. - The Company reported net revenue of $1.2 million for the year ended July 31, 2025, compared to $0.6 million for the previous year, while net loss increased to $4.6 million from $3.2 million [56]. - The Company faces substantial doubt about its ability to continue as a going concern due to ongoing losses and cash flow challenges [57]. - The private equity fund ATIF LP lost $1.5 million in fiscal year 2022 compared to a gain of $0.2 million in fiscal year 2021 due to significant stock market volatility [146]. Capital and Equity - As of July 31, 2025, the company had cash of approximately $9.0 million and may seek additional capital through various means, which could lead to dilution of existing stockholders' ownership [40]. - The company's stockholders' equity was reported at $1,539,353, which does not meet the Nasdaq minimum requirement of $2,500,000 for continued listing, with a deadline to submit a compliance plan by January 8, 2024 [41]. - As of April 30, 2024, the Company's pro forma shareholders' equity was estimated at $2,683,042, indicating compliance with Nasdaq's stockholders' equity requirement [46]. - The Company’s stockholders' equity as of July 31, 2025, was $9,663,475 [53]. - The Company entered into a Securities Purchase Agreement to sell 1,092,512 newly issued ordinary shares at a price of $1.23 per share, resulting in gross proceeds of $1,343,789.76 [43]. - The Company agreed to sell 5,434,782 ordinary shares at a price of $0.368 per share, generating gross proceeds of $2 million [50]. - The Company plans to sell up to 9,000,000 units at a price of $3.26 per unit, with an expected aggregate purchase price of approximately $29.34 million [51]. - A reverse share split at a ratio of 1-for-18 was approved, reducing the number of outstanding shares from approximately 18.2 million to about 1.01 million [49]. Regulatory and Legal Risks - The company may face increasing regulatory scrutiny in China, which could adversely affect its operations and growth prospects [42]. - The legal system in China presents uncertainties that could adversely affect the Company's operations and financial condition [89]. - The Company is subject to a lawsuit filed by J.P Morgan Securities LLC seeking $5,064,160 in damages related to a stock transaction [75]. - The Company and Boustead entered into a settlement agreement requiring a total payment of $1,000,000, with installments of $250,000, $500,000, and $250,000 due by specified dates [74]. - The Company is currently involved in arbitration proceedings with Boustead, with a hearing scheduled for February 29, 2024 [209]. - The Holding Foreign Companies Accountable Act (HFCAA) was signed into law on December 18, 2020, requiring foreign companies to certify they are not controlled by foreign governments if PCAOB cannot audit them [226]. - Future regulatory changes by PRC regulators could limit the auditor's ability to provide documentation for PCAOB inspection, potentially restricting access to U.S. capital markets [226]. Operational Risks - The company has a limited operating history since its inception in November 2015 and has faced significant risks typical of early-stage companies [35]. - The company relies heavily on a limited number of clients, which poses a risk to its business stability [34]. - The company may not be able to attract and retain qualified professionals, which could hinder its operational effectiveness [42]. - The company has experienced fluctuations in operating results, which may impact its financial performance [39]. - The company is at risk of losing its trademarks and intellectual property rights, particularly in China, which could harm its competitive advantages [80][81]. - The company is exposed to risks related to changes in China's economic, political, or social conditions, which could impact its business operations [88]. Business Strategy and Expansion - The company has initiated a strategic expansion into the Bitcoin sector with a five-year plan to accumulate 1,000 BTC through purchases and mining operations [103]. - The company aims to leverage strategic partnerships to grow its business centers in other jurisdictions [142]. - The company has established long-term relationships with third-party professional providers, enhancing the quality of its consulting services [180]. - The company is actively seeking new marketing channels to expand its international presence [184]. - The company aims to become an international financial consulting firm with a focus on SMEs, having established an office in California in January 2021 [161]. Consulting Services - The consulting fees for going public services range from $800,000 to $2,500,000 based on client needs and complexity [170]. - The consulting services generated revenues of $1.2 million, $0.6 million, and $2.5 million for the fiscal years ended July 31, 2025, 2024, and 2023, respectively [187]. - The number of consulting service clients was five, eight, and three for the fiscal years ended July 31, 2025, 2024, and 2023, respectively [187]. - The company has successfully assisted nine clients to be quoted on the U.S. OTC markets and three clients listed on the U.S. Nasdaq market since its inception in 2015 [179]. - The company is currently assisting multiple clients in their going public processes, including a full-service real estate agent and a multimedia investment company [192][193]. Internal Controls and Compliance - The company plans to remedy material weaknesses in internal controls to comply with Section 404 of the Sarbanes-Oxley Act [113]. - The company may face challenges in maintaining effective internal controls, which are necessary for reliable financial reporting and fraud prevention [113]. - The company is subject to reporting obligations under U.S. securities laws, which may strain management and operational resources [111]. Market Conditions - The market price of Ordinary Shares may be volatile, influenced by factors beyond the company's control, including market fluctuations and analyst reports [117]. - Bitcoin's trading price has significantly declined in the past, with a hypothetical 50% fluctuation potentially impacting net income by approximately $135.1 million for the nine months ended September 30, 2025 [107].
ATIF (ATIF) - 2025 Q4 - Annual Report