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’s stockholders' equity as of July 31, 2025, was $9,663,475 [53]. - The company faces substantial doubt about its ability to continue as a going concern due to operating losses and the need for additional capital [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 Funding - 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 entered into a Securities Purchase Agreement to sell 1,092,512 ordinary shares at $1.23 per share, generating gross proceeds of $1,343,789.76 [43]. - The Company agreed to sell 5,434,782 ordinary shares at $0.368 each, resulting in gross proceeds of $2 million from the offering [50]. - The Company plans to sell up to 9,000,000 units at $3.26 per unit, aiming for gross proceeds of approximately $29.34 million for working capital [51]. - A registered direct offering on February 4, 2025, involved selling 1,580,000 ordinary shares and pre-funded warrants for approximately $2.5 million [152]. Regulatory and Compliance Risks - The company operates in an industry that may be subject to increasing regulation by governmental agencies in China, which could impact its operations [42]. - The company is closely monitoring regulatory developments in China regarding approvals required for business operations, with significant uncertainty remaining [95]. - The Data Security Law and Cybersecurity Review Measures impose obligations on companies operating in China, which could lead to compliance challenges and operational disruptions [96][97]. - The PCAOB's ability to inspect auditors in China remains uncertain, which could impact investor confidence and lead to potential trading prohibitions on U.S. exchanges [100][102]. - 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]. Legal Matters - Boustead's complaint against the Company includes four causes of action: breach of contract, breach of the implied covenant of good faith and fair dealing, tortious interference with business relationships, and quantum meruit [69]. - The United States District Court granted ATIF's motion to dismiss Boustead's first amended complaint, allowing Boustead to amend its claims regarding breach of contract and tortious interference [71]. - A settlement agreement was reached on September 24, 2024, where the Company will pay Boustead a total of $1,000,000 in three installments [74]. - J.P Morgan Securities LLC filed a lawsuit against ATIF Holdings Limited and others for $5,064,160 in damages related to a stock transaction [75]. - The company is currently involved in arbitration proceedings with Boustead, with a hearing scheduled for February 29, 2024 [209]. Business Operations and Strategy - 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 has shifted its business focus away from mainland China, leading to the cessation of operations at the AT Consulting Center [141]. - The company aims to expand its operations to North America, including Mexico, due to perceived market potential [140]. - 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 has established multiple subsidiaries in California for business consulting, asset management, and investment services to enhance its operational capabilities [161]. Client and Revenue Concentration - The company relies heavily on a limited number of clients, which poses a risk to its revenue stability [33]. - The company expects to mitigate risks arising from customer concentration as it continues to expand its client base [187]. - The consulting fees for going public services range from $800,000 to $2,500,000 based on client needs and complexity [170]. - 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]. Internal Controls and Management - 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 [113]. - The company does not intend to pay dividends for the foreseeable future, opting to retain earnings for business operations and expansion [110]. - The company has a highly qualified professional service team with an average of five years of experience in their respective fields [178]. Market Conditions - The financial consulting market is experiencing increased competition, which may negatively impact the Company's revenues and profit margins [62]. - 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 impacting net income by approximately $135.1 million for the nine months ended September 30, 2025 [107].
ATIF(ZBAI) - 2025 Q4 - Annual Report