Financial Performance - Revenues for January 2024 were $150,000, compared to $1,900,000 in January 2023, representing a decrease of about 92.1%[14] - Net loss for January 2024 was $407,638, compared to a net income of $810,981 in January 2023, indicating a significant turnaround in performance[14] - For the six months ended January 31, 2024, the company reported a net loss of approximately $1.0 million, compared to a net income of approximately $0.7 million for the same period in 2023[27] - The company reported a net loss of $1,033,101 for the three months ended January 31, 2024, compared to a net income of $698,466 for the same period in 2023[18] - The company anticipates needing to raise additional capital immediately to continue funding its operations due to ongoing losses and working capital deficit[29] Assets and Liabilities - Total current assets decreased from $2,542,780 to $1,619,991, a decline of approximately 36.3%[12] - Total liabilities decreased from $2,229,217 to $1,982,467, a reduction of approximately 11.1%[12] - Cash and cash equivalents dropped from $606,022 to $139,152, a decline of approximately 77%[12] - Total equity decreased from $1,539,353 to $506,252, a decline of approximately 67%[12] - As of January 31, 2024, the company had cash of approximately $0.1 million and current liabilities of approximately $1.5 million, with about $0.7 million due to related parties[28] Operating Expenses - Operating expenses increased to $1,354,295 in January 2024 from $1,134,008 in January 2023, an increase of about 19.4%[14] - The company experienced a net cash used in operating activities of $17,413 for the six months ended January 31, 2024, compared to approximately $0.8 million for the same period in 2023[27] - The company reported depreciation and amortization expenses of $59,338 for the three months ended January 31, 2024[18] - Rent expense for the three months ended January 31, 2024, was $120,692, a slight decrease from $130,169 for the same period in 2023[70] Revenue Recognition and Customer Concentration - The Company recognizes revenue from consulting services ratably over the estimated completion period for Phase I and Phase II services, while Phase III revenue is recognized upon completion of the transaction[51] - For the three months ended January 31, 2024, one customer accounted for 100% of the Company's consolidated revenue, while for the same period in 2023, three customers accounted for 34%, 34%, and 32% of the revenue[59] - 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% for the same period in 2023[59] - The Company plans to transition its consulting services from PRC-based customers to more international customers to mitigate concentration risk[60] Tax and Deferred Tax Assets - The Company has established a 100% valuation allowance against deferred tax assets due to uncertainty in realization, primarily from net operating losses (NOL) as of January 31, 2024[95] - The Company follows ASC 740 for income taxes, recognizing deferred tax assets and liabilities based on enacted tax laws and statutory tax rates[94] - The Company periodically evaluates the likelihood of realization of deferred tax assets based on factors such as cumulative earnings experience and future income expectations[95] - The Company has not recognized any uncertain tax positions or liabilities as of January 31, 2024, and all income tax returns for the years ended December 31, 2019, through December 31, 2023, remain open for examination[55] Legal Proceedings - The Company is involved in a pending legal proceeding with Boustead Securities, LLC, regarding a breach of contract claim related to a 51.2% equity interest acquisition in LGC[100] - Boustead's lawsuit seeks recovery of an amount equal to a percentage of the value of the transaction conducted with LGC, alleging breach of contract and other claims[100] - The Company is also facing a lawsuit from J.P. Morgan Securities LLC, claiming $5,064,160 in damages related to a stock transaction by ATIF-1 GP, LLC[106] - Management believes the Company will not be liable for the claim from J.P. Morgan Securities LLC, as it sold ATIF-1 GP, LLC in August 2022[106] - Mediation for the dispute with J.P. Morgan Securities LLC is scheduled for May 6, 2024[106] Other Financial Metrics - The accumulated deficit increased from $(27,666,624) to $(28,699,725), reflecting a worsening financial position[12] - The company had accounts receivable of approximately $0.5 million and short-term investments of approximately $0.5 million as of January 31, 2024[28] - The total prepaid expenses and other current assets decreased from $429,570 as of July 31, 2023, to $300,724 as of January 31, 2024[63] - The total operating lease liabilities decreased to $818,107 as of January 31, 2024, from $1,104,909 as of July 31, 2023[73] - Accrued payroll expenses increased to $361,699 as of January 31, 2024, compared to $212,953 as of July 31, 2023[79]
ATIF (ATIF) - 2024 Q2 - Quarterly Report